the second quarter was never going to be a stellar one for goldman sachs goldman sachs’s gs 238increase green up pointing triangle winding journey in consumer banking might be coming to an end but its prolonged exit from its own investment holdings still has miles to go with deal making in a slump and capital markets and trading activity subdued or just starting to grow back the second quarter was never going to be a stellar one for goldman sachs but a rough quarter turned into a grim one with a series of oneoff items that highlighted the bank’s halting transformation into a steadier bank less reliant on the upsanddowns of wall street investors might not have flinched much at a quarter featuring an annualized return on equity of around 9—that is what morgan stanley printed in the second quarter and its shares jumped 65 and that is what goldman said its result would have been without those oneoffs instead it was a quarter featuring a 4 return after those items reduced earnings by 14 billion one item that will grab attention will be a 504 million impairment of the value of greensky an acquired lender that was once a core part of its consumer banking strategy which the firm is now in the process of selling the firm’s broader downshift in consumer was flagged months ago and has been in the works the wall street journal has reported that goldman is even exploring getting out of its creditcard partnership with apple more notable though should be a series of markdowns related to realestate investments these losses highlight that one of the sources of hardtopredict volatility in the firm’s results—marktomarket adjustments in the value of the equity and debt investments goldman carries on its own balance sheet—is still with the firm for now and will be for some time goldman attributed more than 1 billion in losses in the quarter to “historical principal investments” that are part of a legacy portfolio the firm has said it will be winding down over three to five years from the end of 2022 consumer results for now might be noise but they are not as unpredictable as what happens with the firm’s onbalancesheet principal investments this has historically been a reason that investors don’t value the firm’s earnings as highly as peers even when its returns have been higher a key part of goldman’s core strategy under chief executive david solomon is to reduce the use of its balance sheet and shift its vaunted principal investment activities toward funds raised for thirdparty clients that will allow it to redeploy capital reduce its capital requirements and generate steady fees goldman’s historical portfolio is shrinking it declined by 36 billion during the quarter which included the sale of some investments related to commercial real estate it still stood at 238 billion at the end of the second quarter with a target of below 15 billion by yearend 2024 meanwhile the firm raised an additional 11 billion in alternative asset funds during the quarter assets under supervision firmwide went from under 25 trillion a year earlier to a record 27 trillion notably goldman’s revenue in the second quarter actually topped analyst forecasts according to visible alpha despite continuing declines in key businesses such as mergerandacquisition advisory that was aided by assetandwealth management and other fees of about 24 billion alternative investment management fees were up 12 from a year ago to 521 million the path toward steadier more highly valued results remains clear the question is how quickly goldman can get there