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Will Goldman Sachs's Q2 2026 provision for credit losses exceed $450M?
Current Prediction
Why This Question Matters
The Q1 2026 PCL build of $315M included a forward-looking macro overlay — the first explicit sign management sees more credit risk than a quarter ago. Sustained elevation would validate the early-cycle concern and feed directly into the credit cycle thesis. This is the single best leading indicator of whether the benign credit environment assumption holds.
Prediction Distribution
Individual Predictions(9 runs)
Q1 PCL at $315M already included a qualitative macro overlay. For Q2 to exceed $450M requires either a material new wholesale impairment event ($100M+), a significant worsening of the macro overlay, or both. Loan book growth alone adds maybe $25-50M mechanically. The macro overlay component is the swing factor — if management becomes more cautious, it could materially increase. Base case Q2 PCL is $325-400M range, below the $450M bar.
The early-cycle signal from the macro overlay is meaningful but directionally modest. GS's wholesale book is high quality. I estimate 30% probability of exceeding $450M based on compound scenario: continued macro deterioration + additional single-name + loan growth. Not base case but meaningfully possible given Q1 trajectory.
26% probability. The trajectory is up but the bar ($450M) is 43% above Q1. Most quarters in a rising-PCL environment see increases in the 10-25% range, not 43%. A breach requires either a sharp single-name event or sustained macro deterioration. I weight the single-name tail risk lightly since GS has diversified exposure.
PCL volatility at GS is typically contained because wholesale book dominates. The Q1 forward-looking overlay is the key new information — it signals management sees more risk. If Q2 environment worsens, overlay grows; if it stabilizes, PCL might actually come down slightly. 27% reflects moderate probability of breach weighted against management's typical conservatism.
The $450M threshold is a ~43% increase QoQ. Historical PCL increases of that magnitude typically require a specific identifiable event — either a large wholesale write-down or a sharp macro shift. Neither is in evidence today but both are possible. Base case is continued elevation to $350-425M, not breach.
I weight moderately higher than peers because the Q1 macro overlay is a trend signal — it rarely reverses in one quarter. If management continued to see elevated risk into May/June, the Q2 overlay could grow meaningfully. Combined with loan growth and possible single-name events, 30% is reasonable.
Q1 $315M + typical sequential growth + additional macro caution = Q2 range of $350-450M, centered around $400M. The $450M bar is at the upper edge of a reasonable distribution. 28% probability of exceeding reflects that the bar is high but achievable under modest adverse conditions.
27%. The base case is PCL in the $325-400M range for Q2 — up from $315M but below the $450M threshold. Requires specific adverse event for breach.
29% — weighted slightly higher for the compound risk. The combination of continued growth + macro overlay expansion + possible single-name events creates a realistic path to $450M+. Still below base case but meaningfully possible.
Resolution Criteria
Resolves YES if Goldman Sachs's reported Q2 2026 firmwide provision for credit losses exceeds $450 million (as disclosed in the July 2026 earnings release). Resolves NO if PCL is at or below $450M.
Resolution Source
GS Q2 2026 earnings release
Source Trigger
Provision for Credit Losses (Firmwide) — sustained elevation signals credit cycle turn
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