Goldman Sachs chief executive David Solomon signaled on Wednesday he’s working on the “assumption” that the coronavirus-driven recession will continue at least through the end of this year.
After seeing the $80 billion bank’s first-quarter profit nearly cut in half by the pandemic, CEO Solomon kicked off Goldman’s earnings call on a somber tone, making it clear that not even the global investment banking giant is immune to the economic devastation of the deadly bug.
“You have to operate under the assumption that we’ll be operating in a recession for the rest of 2020,” Solomon told one analyst later in the call about when he projects the recovery to begin. “Anyone who’s telling you they’re sure it will look like this or look like that…I don’t think they’re so sure.”
Unlike his peers at other banks, who have spent earnings calls predicting a strong finish to 2020, Solomon was consistent in his refusal to offer a timeline on when the economy will bounce back.
“We have to rebuild confidence in people’s safety regarding the virus first,” the 58-year-old CEO said late in the call. “Without that confidence, there will be no recovery.”
But like his predecessors, Solomon did offer investors one glimmer of hope that his bank will manage to find some upside in the unprecedented downturn, stating “You should expect us to manage through this crisis dynamically.”
The bank posted earnings of $3.11 a share, down 46 percent from the year-earlier quarter and slightly missing the $3.35 analyst estimate.
Goldman’s dismal results were nevertheless better than its consumer banking-focused peers thanks in large part to its trading desk, which posted $8.74 billion of revenue for the first three months of 2020.
On Tuesday, JPMorgan said its first-quarter profit slumped 70 percent as it set aside a $6.8 billion cash reserve in anticipation that flailing businesses will default on their loans in the months ahead.
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