Rising interest rates have been a gift to big U.S. banks – except Goldman Sachs (GS). The Wall Street firm reported a 5% year-on-year drop in revenue on Tuesday, as trading and investment banking fees sagged from their levels a year ago. Boss David Solomon is reshaping the firm, but for now, Goldman has to earn its money the hard way.

Tighter monetary policy has been a windfall for firms with big loan books and loyal depositors, who lend at high rates and borrow at low ones. JPMorgan (JPM), Bank of America (BAC), and Citigroup (C) collectively made 34% more in interest in the first three months of 2023 than they did the same period a year earlier. Goldman, with interest just 15% of its revenue compared with roughly half at its banking peers, missed out. It’s trying to amass its own deposit hoard, but at a cost, as evinced by the rich interest rate offered on a savings account it launched with iPhone maker Apple this week.

Meanwhile, rising rates have tamped down risk-taking by corporate bosses and private equity firms, with dismal results for Goldman’s investment bankers. They contribute around a quarter of its revenue in a good year, more than twice the share at JPMorgan or Citigroup. Trading securities didn’t help it much this quarter either, with a 17% drop in fixed-income securities revenue – which looks worse than it is because Goldman’s commodity desk was booming this time last year. Solomon is pivoting towards lending to trading clients rather than just shifting securities for them, something that does benefit from rising rates. But that business is still relatively small.

Finally, there’s the consumer business, which continues to be a source of red ink. Solomon is now considering a sale of Greensky, a buy-now-pay-later outfit his firm bought only a year ago. Goldman also wrote off 4.6% of its credit card and installment loans in the quarter. Serving consumers is still a strong business, as the 40% return on equity at JPMorgan’s retail bank shows. But building that business from scratch as the credit cycle turns is the kind of expensive ambition that tests investors’ patience.

Aside from his consumer-banking U-turn, Solomon isn’t to blame for the forces holding Goldman back. It’s just that, right now, the areas where the bank excels look better when rates are low and high-yielding investments of the kind it peddles are hard to find. Solomon wants to remold Goldman as a bank for all seasons, but he isn’t there yet.

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Goldman Sachs reported $3.2 billion of earnings for the first quarter of 2023, 18% less than the same period a year earlier, as revenue from investment banking and trading fell. The Wall Street firm said revenue was $470 million lighter because of a partial sale of loans made under its Marcus consumer brand. That loss was partly offset by being able to reverse $440 million of previously-booked bad debt charges. Goldman’s fixed-income trading revenue fell 17% year-on-year, with “significantly lower” revenue in currencies and commodities. Equities trading fell 7%. Bank of America separately reported a 29% increase in fixed-income trading for the quarter, driven by strong trading of mortgage and interest-rate related products.

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