Goldman Sachs Group intends to implement further job cuts in response to the impact of a challenging economic climate on dealmaking, with a projected 25% decline in trading revenue expected for this quarter.

During an investor conference, John Waldron, the president and chief operating officer of Goldman Sachs, acknowledged the exceptionally difficult macroeconomic conditions without providing specific details regarding the extent of the forthcoming job reductions, reported Reuters. 

On Thursday, Goldman Sachs shares experienced a decline of 2.3%, in contrast to the 1.1% increase observed in the S&P 500 financial index (.SPSY) on the same day.

According to a source familiar with the matter who spoke to Reuters in May, the firm is anticipated to reduce its workforce by slightly less than 250 positions in the upcoming weeks. This follows the significant reduction of approximately 3,200 employees in January, marking the largest reduction in headcount for Goldman Sachs since the 2008 financial crisis.

The implementation of staffing cutbacks will enable the Wall Street giant to achieve its objective of reducing payroll expenses by $600 million, according to Waldron.  This target was established in February and there is a possibility that it will be surpassed by the end of the year.

It is anticipated that revenue from both equities and fixed-income trading will decrease by 25% in the current quarter compared to the corresponding period the previous year. The prior year's revenue was driven by increased market activity resulting from rising interest rates and the conflict in Ukraine, which led to a notable 32% surge in revenue for Goldman Sachs' trading division.

Waldron mentioned that when considering global banking and markets, the capital markets activity is slower, and there is a subdued level of activity in equities and fixed income. His remarks align with the sentiments expressed by competitors on Wall Street. 

Morgan Stanley's co-president, Andy Saperstein, cautioned on Wednesday that trading outcomes in the second quarter would be significantly lower compared to the same period last year, and further noted that investment banking is facing considerable challenges as well.

Since assuming leadership in 2018, the bank's CEO, David Solomon, had been a strong advocate of its expansion into consumer banking. However, the retail business struggled to gain significant momentum in the face of competition from well-established players, resulting in substantial financial losses. 

Waldron highlighted that Goldman Sachs has managed to boost its financing revenue by $3 billion over the past three years. He also emphasised that there is an opportunity for the bank to capture additional market share, particularly as other lenders, such as regional banks, scale back their operations.