Despite having a record haul from management fees in the third quarter, Goldman Sachs’ Asset and Wealth Management division saw a 20% decline in its net revenues.
That plummet was primarily due to losses in both public and private equity investments, much of the latter in real estate. With its 20% year-over-year drop, Goldman’s net revenue for its Wealth and Asset Management unit stood at $3.23 billion in the third quarter. With expenses deducted from that, its earnings came in at $129 million.
Helping to bolster those numbers were the bank’s roughly $2.4 billion in management fees, a figure up 7% year over year. That marked the first time the fees have risen following three straight quarters of decline.
Goldman said that increase was driven primarily by growth in its assets under supervision, which rose by 10% year over year to $2.68 trillion in the third quarter.
In an earnings call, Goldman Chief Financial Officer Denis Coleman said, “We were very focused on driving growth in the more durable revenue streams of management and other fees as well as private banking and lending, both of which generated record revenues for the year-to-date period.”
All told, Goldman reported $2.1 billion in total profit for all of its businesses. Although that was a 33% year-over-year decrease, it still came in ahead of many analysts’ expectations.
Goldman has spent much of this year backing away from a previous attempt at offering more ground-level services like retail banking and consumer lending. It agreed in August to sell its Personal Financial Management unit to Overland Park, Kansas-based Creative Planning for an undisclosed amount in the fourth quarter. That unit was acquired in 2019 through Goldman’s purchase of the registered investment advisory United Capital.
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Goldman has never broken out certain figures for its wealth management business, including the number of advisors it has retained from the former United Capital. But a series of departures from that unit ahead of the sale to Creative Planning has prompted it to file a slew of arbitration claims seeking to enforce nonsolicitation agreements planners had signed when joining the firm.
Goldman has also entered into a deal to sell its GreenSky loan business, often used to finance home improvements, at a steep loss. The bank took a $504 million write-down from the planned sale in the second quarter and had a roughly $65 million loss in the third quarter.
For more highlights from Goldman Sachs’ wealth management division’s third-quarter earnings, slide down. To read about its second-quarter results, click here. For the first quarter, follow this link.