Goldman Sachs, as reported by the media, is currently intensifying its efforts aimed at expanding the scale of interaction between wealthy clients with this bank and increasing the base of rich consumers receiving the lender’s services.
The specified financial institution focuses on lending to private wealthy individuals. In this case, it means those consumers whose average amount of money in deposit accounts is $60 million. The relevant information was published by the media at the end of last week.
Goldman Sachs is also currently increasing lending to clients such as hedge funds. Appropriate efforts will ensure that the financial institution’s trading partners receive the highest income in at least three years.
At the end of the third quarter of 2023, outstanding loans from a financial institution and lending commitments, not including consumer loans, were fixed at $327.5 billion. This indicator is about a third higher than the figure recorded in the third quarter of 2020.
Goldman Sachs is currently interested in new ways to diversify income. This desire of the financial institution is explained by the gradual cessation of activity in consumer lending.
This week, the bank plans to release its income statements. It is expected that the financial institution will record an increase in non-consumer lending volumes against the background of a larger downturn in dealmaking.
Nishi Somaiya, global head of private banking and lending at Goldman Sachs, commenting on efforts to expand the scale of interaction with ultra-rich clients, said that this is a strategic decision. According to her, the relevant aspirations affect everything really important for a financial institution.
Currently, it is known that Goldman Sachs’s revenue from private banking and lending to wealthy clients increased by 12% in the first nine months of last year compared with the result for the same period in 2022. The bank’s revenue from equity financing in January-September 2023 turned out to be higher than in the same periods of the previous three years.
Goldman Sach’s shift away from consumer lending last year was marked by the completion of its credit card partnerships with Apple and General Motors.
The lender also sold the GreenSky consumer finance platform and loans associated with it in 2023. David Solomon, chairman of the Management Board and Chief executive Officer of Goldman Sachs, says that this deal demonstrates the bank’s further progress in narrowing the focus of its consumer business. He noted that Green Sky was an attractive business, but the financial institution intends to focus its efforts on global banking, markets, and asset/wealth management operations.
The deal to sell the mentioned platform has become a kind of example of how difficult the path to creating new business lines involving digitization and modernization of payment transactions and lending can be.
Goldman Sachs has agreed to acquire Green Sky in 2021. The corresponding deal was implemented in 2022, costing $1.7 billion. In the second quarter of 2023, the financial institution recorded losses of $504 million from the impairment charge of the consumer platforms business, which included GreenSky at that time.
As we have reported earlier, Goldman Sachs Expects Indian Businesses to Increase Investment.