Goldman Sachs Warns of Soft Fixed-Income Trading and Higher Expenses

Goldman Sachs CEO David Solomon has warned investors that the bank's third-quarter results could be less favorable due to softer fixed-income trading and higher non-compensation expenses. Speaking at the Barclays Financial Services Conference, Solomon stated that client activity remains strong and corporate confidence is elevated, but there are several one-off factors affecting the quarter.

Goldman expects a more muted contribution from investments after unusually strong activity in the second quarter. Non-compensation transaction costs are running higher due to elevated business activity and accelerated technology spending. The bank has also pulled forward charitable giving, which is expected to add around $500 million to expenses sequentially.

Solomon noted that loan-loss provisions should be slightly higher than last year due to idiosyncratic factors, but the broader operating backdrop remains constructive. He believes corporate CEO confidence is high and S&P 500 earnings growth is running about 30% above expectations from the start of the year.