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Goldman Sachs profit plunges on impact from fintech sale, real estate bets

(Reuters) - Goldman Sachs' profit fell in the third quarter, weighed down by a writedown on its GreenSky fintech business and its investments in real estate.

The Wall Street giant reported net profit of $2.06 billion, or $5.47 per share, for the three months ended Sept. 30, it said on Tuesday. That was lower than $3.07 billion, or $8.25 per share, a year ago.

Shares of the bank dipped 0.4% in premarket trading.

Goldman's ill-fated foray into consumer banking proved costly, losing $3 billion over three years.

CEO David Solomon has shifted the firm's focus back to its traditional strengths - investment banking and trading, and aims to grow in asset and wealth management.

The bank took a $506 million writedown on GreenSky, adding to a $1.4 billion hit linked to the business in the second quarter.

GreenSky, which facilitates home improvement loans for consumers, was sold to a consortium of investment firms led by Sixth Street Partners.

It was bought for $1.7 billion last year although it was valued at $2.2 billion when the deal was first announced in 2021.

Real estate investments were another drag on earnings as the bank booked an impairment charge of $358 million. That weighed on revenue from its asset and wealth management unit, which slipped 20% to $3.23 billion.

But investment banking offered some hope as fees at $1.55 billion was largely unchanged from last year as debt underwriting activity resumed and the market for initial public offerings picked up.

"I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive," CEO Solomon said in a statement.

Investment banking results have been mixed for peers, with JPMorgan Chase (NYSE:JPM) reporting a 6% decline in revenue, while Citigroup (NYSE:C) said fees jumped 34%.

Morgan Stanley is set to report its earnings on Wednesday.

The U.S. Federal Reserve may raise interest rates one more time this year, while several bank executives have said they expected borrowing costs to stay higher for longer.

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