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BENGALURU: Goldman Sachs Group Inc on Tuesday reported a bigger-than-expected 69% drop in fourth-quarter profit as it struggled with a slump in dealmaking and weakness in its wealth management business.

Wall Street banks are making deep cuts to their workforce and streamlining their operations as dealmaking activity, their major source of revenue, stalls on worries over a weakening global economy and rising interest rates.

Goldman is also curbing its consumer banking ambitions as Chief Executive Officer David Solomon refocuses the bank’s resources to strengthen its core businesses such as investment banking and trading.

Goldman’s investment banking fees fell 48% in the quarter, while revenue from its asset and wealth management unit dropped 27% due to lower revenue from equity and debt investments.

It also reported a pre-tax loss of $778 million in its platform solutions unit, which houses transaction banking, credit card and financial technology businesses.

Full-year net loss for the platform solutions business was $1.67 billion, the bank said.

Shares of the bank were down 2% in premarket trading.

Goldman is planning to stop making unsecured consumer loans, a source familiar with the move told Reuters last month, in another sign it was moving away from its consumer business.

Provision for credit losses was $972 million for the fourth quarter of 2022, compared with $344 million a year earlier.

GROWING COSTS Wall Street’s biggest banks have stockpiled more rainy-day funds to prepare for a possible recession, while showing caution about forecasting income growth in an uncertain economy and as higher rates increase competition for deposits.

Total operating expenses at Goldman grew 11% to $8.1 billion in the quarter. Last week, a source told Reuters the bank would lay off 3,000 employees in an attempt to rein in costs.

The bank reported a profit of $1.19 billion, or $3.32 per share, for the three months ended Dec. 31, missing the Street estimate of $5.48, according to Refinitiv IBES data.

“Widely expected to be awful, Goldman Sachs’ Q4 results were even more miserable than anticipated,” said Octavio Marenzi, CEO of consultancy Opimas.

“The real problem lies in the fact that operating expenses shot up 11%, while revenues tumbled. This strongly suggests more cost-cutting and layoffs are going to come,” he added.

Goldman’s trading business was a bright spot as it benefited from heightened market volatility, spurred by the Federal Reserve’s quantitative tightening.

Fixed income, currency and commodities trading revenue was up 44%, while revenue from equities trading fell 5 percent. Overall net revenue was down 16% at $10.6 billion.

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