Goldman Sachs increased its investment in tech in the third quarter amid headcount reductions to boost operational efficiency and cost savings.
The $2.6 trillion investment banking company said today that its tech spend increased to $468 million in Q3, up 2% year over year.
Goldman said in February that it wanted to cut payroll expenses by $600 million in 2023 and 2024 and is “currently tracking to surpass that goal,” Chief Financial Officer Denis Coleman said during the company’s Q3 earnings call.
“These efficiencies allow us to reinvest in our highest-performing people, particularly as the market for top talent remains fiercely competitive,” Coleman said.
Goldman Sachs’ headcount decreased 7% YoY to 45,900 in Q3, according to the company’s earnings supplement.
THE BIG PICTURE: Many banks have been trimming their workforces in the face of uncertain macroeconomic conditions.
PNC slashed its workforce by 3.6% YoY and aims to use the savings to bolster tech, according to the bank’s earnings supplement.
Wells Fargo trimmed its workforce 5% YoY and is investing in automation to make operations more efficient, according to its earnings supplement.
BY THE NUMBERS: In Q3, Goldman reported:
- Net interest income of $1.5 billion, down 24% YoY;
- Total net revenues of $11.8 billion, down 1% YoY; and
- Investment banking revenue of $4.5 billion, down 17% YoY.
NOTEWORTHY: Goldman this month sold its consumer banking business, GreenSky, to a consortium led by Sixth Street Partners.
Goldman reported a write-down of $864 million related to the sale, Chief Executive David Solomon said during the earnings call.
MARKET REACTION: Shares of Goldman Sachs [NYSE: GS] were down 1.9% from market open to $309.29 as of market close today. Goldman Sachs has a market capitalization of $34.19 billion.
FLASHBACK: Goldman Sachs Transaction Banking in March launched three features — automated onboarding, omnichannel for clients, and improved payment tracking — to improve its customer experience.
OF NOTE: Goldman is trying to wind down its consumer banking operations to focus on wealth management and advisory roles, but its relationship with Apple is expected to stay as is.
“Our partnerships with Apple and General Motors are long-term contracts, and we don’t have the unilateral right to exit those partnerships,” Solomon said. “Our focus at the moment is on managing the relationships better, getting rid of the drag, and bringing them to profitability.”
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