Goldman Sachs’ Marcus Consumer Banking Move Turns Costly

The combination of high interest rates and fast inflation has hit Goldman especially hard because of the slowdown in its most profitable businesses. In sales and trading, Goldman’s revenue last quarter shrank roughly twice as fast as that of its peers, according to estimates from Credit Suisse. And the business of advising companies on initial public offerings and mergers tapered off, strangling a big source of revenue for the bank.

Though Goldman maintained its place among peers as the leader in advising companies in 2022, the global revenue it brought in from deals fell to $4.2 billion from $4.8 billion in 2021 — a record year for deal-making, according to Dealogic. Its equity capital markets business felt a far bigger sting, bringing in $323 million in the United States last year, much less than the $2.5 billion it brought in a year earlier.

On Friday, Goldman revised its financial results, going back to 2020. For the first nine months of 2022, the new unit, called platform solutions, lost $1.2 billion, with more than half that loss in the third quarter alone, Goldman said in a securities filing. Its main trading and banking businesses made nearly $12 billion, while the asset management business eked out a $1.3 billion profit.

The bank is likely to provide more details on Tuesday, when it reports fourth-quarter earnings. Analysts project that the bank will report a steep drop in quarterly profit.

Since taking the top job in 2018, Mr. Solomon, 60, has made numerous changes. He has merged fragmentary fiefs inside its asset management division and eliminated antiquated rivalries between different groups of bankers.

With the backing of the bank’s board, Mr. Solomon asserted that the changes were Goldman’s only way forward in an era when technology threatens to weaken the traditional financial system’s hegemony.

His compensation seems to reflect the board’s approval. Mr. Solomon’s pay rose to $39.5 million in 2021, the most recent year for which data is available, from $24.7 million in 2019, his first full year on the job. Since his ascension to chief executive, Goldman’s stock price is up 65 percent, well ahead of its rivals’ average.