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2,700 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Brennan Hawken: Great. And then we've seen several partnerships and some innovation getting announced in the private credit world recently. And given your heritage in that business, how do you plan to approach and prosecute that opportunity?
David Solomon: Sure. We have a very broad and interesting credit platform that is integrated in a one GS way, to some degree, on a differentiated way than many of the people we compete with. We obviously, as a credit originator in our investment banking business are one of the leading credit originators is not a leading position in leveraged loans and high-yield debt for quite some time and a leading position with sponsors and the origination of that, we obviously, we originate and distribute. We also in our Asset & Management business, we are a leading player in private credit with $140 billion of private credit assets and growing and investing in that. I think one of the things that's interesting when you look at the discussion and the integration of this around the street, there is plenty of capital that is interesting in deploying into private credit. The valuable part of the ecosystem is origination channels. And there are obviously some private credit players that have interesting origination channels and paltforms. But I would say when you look across Goldman Sachs, our origination ecosystem across both our Global Banking & Networks business and also in our Asset & Wealth Management business, is unique and differentiated and something that I think will continue to differentiate the firm as we continue to lean into and grow our private credit platform.
Operator: We'll go next to Steven Chubak with Wolfe Research. |
2,701 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: We'll go next to Steven Chubak with Wolfe Research.
Steven Chubak: I wanted to spend some time just looking at or unpacking some of the self-help levers, recognizing that the business is still burdened by capital consumption from some of the noncore assets, whether it's in consumer or equity investments. Denis, I believe in your prepared remarks, you alluded to an 80 bp drag on ROE from consumer. And I was hoping you could maybe provide a more holistic picture, just frame the drag on returns from various noncore activities today. And are there any remaining self-help levers that could bolster returns which may still be on the come?
Denis Coleman: Sure. I think the 80-basis point drag is the simplest way to understand the impact of those items, which we have identified as the selected items, which we have announced, we are in the process of disposing of. Obviously, if we complete -- if we were to completely exit all consumer-related activities, there would be more associated capital relief potential. And we can obviously across the AWM franchise moved down the vast majority of the HPI exposure, that currently has a little over $4 billion of attributed equity associated with it. So, you have the dynamic of sort of reducing the P&L components. And then over time, we will remove the capital. So, removing the capital associated with HPI and then ultimately moving the capital associated with the consumer businesses that will provide incremental tailwinds to us over time.
Steven Chubak: That's great. And just for a follow-up on buybacks. Just stock is currently trading at 1.6x book, does suggest some expectation in the market for returns to get closer to mid-teens ROE target. Just wanted to hear your perspective on price sensitivity to buy back at current valuation levels and in anticipation, at least of David's response, citing prioritization of organic growth where do you see the most attractive opportunities to deploy capital organically today? |
2,702 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Our capital deployment philosophy unchanged. I think if you take some of our comments in the prepared remarks about the outlook that we have, some of the engagement we're seeing from clients, potential opportunities for the capital markets reopening to take the next step forward and see capital committed acquisition financing, that is an activity that's very core to Goldman Sachs. We have a historical leading market share position there given netting up our advisory franchise and our underwriting capabilities. And so that would be an attractive place for us to deploy incremental capital continuing to drive the recurring revenue streams across wealth and the financing business and public is an attractive place to deploy capital. And that is our priority as we sit here today with our 90 basis point buffer heading into the fourth quarter. But we also remain very committed, as we've said before, to sustainably growing our dividend. That's a core part of our philosophy. And we do believe it's important to also continue to return capital to shareholders. We do have a higher valuation. We do think about that. We are sensitive to that, but I don't believe that our current valuation is such that we shouldn't be also returning capital to shareholders.
Operator: We'll go next to Devin Ryan with Citizens JMP.
Devin Ryan: Question on just the alternative asset management fundraising. And looking at the fee rates. So, the largest at bucket corporate equity is seeing a declining fee rate since the end of 2022. I know there were some legacy funds in there that are sensing, but it would just be great to get an update on the outlook for the fee rates, just given all that fundraising that you've done in alts in recent years. And just when we should think about the inflection occurring as recently raised AUM moves into fee earnings? And then we should think about kind of the right steady state because it would seem like out there. |
2,703 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. Thank you. Appreciate the question. Obviously, we put that disclosure out there, so you can track it and follow it over time. It's obviously very much mix dependent in terms of the nature of the particular at assets that are coming in thing which is a strategic initiative that is very valuable to growth of our asset management franchise, an important to a lot of our investment in our clients are the services we provide through our OCIO offerings. But in certain of those portfolios, we do bring on board some Alts assets and the effective fee associated with that is lower than paid Goldman Sachs fund generated alternative fee. So, we have a multichannel asset accumulation strategy that we're deploying to grow the overall scale and scope of that business. And for us, having scale is an important contributor, ultimately, to driving margins, efficiencies and returns in the business, but not each of the channels comes with the same exact effective fee. So, you may see some slight variation in that over time.
Devin Ryan: Okay. And then just a follow-up on the trading business, obviously, results have been incredibly resilient and the firm has gained market share. And so, I'd love to get a little bit of a flavor, if you can, just around how much of trading revenue today is driven by your electronic trading capabilities and how that's evolved over the past handful of years. I know there's been a lot of investment there, and you guys have some pretty differentiated offering. So, I just wanted to get a little bit of sense of that. And then how that plays into the story of market share from here just as you become more relevant with clients. |
2,704 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. Thanks for the question. I mean we look at equity and then frankly, even FICC trading activities, the strategy facing clients is multichannel again. So, we have voice. We have high-touch voice, and we have electronic, and increasingly, we're finding ways to integrate those activities to optimize ultimately the way that we can make markets and deliver solutions for clients. So, we have both, call it, run rate, more plain vanilla intermediation activities. Now we have the capacity to either take on board more interesting structure or complicated trades with or without deployment of risk capital in the process. and the approach is to have a distributed set of channels across the public side trading businesses.
Operator: We'll go next to Dan Fannon with Jefferies.
Dan Fannon: Denis, I want to come back to a comment you made about reiterating the $1 billion goal for performance fees. And I think you said $4 billion of unrecognized gains. You're obviously run rating well below that here year-to-date. Can you talk about the time period you think to get to that $1 billion? And is there seasonality with certain maybe liquid products that are typically more recognized in the fourth quarter? Or is this something that should be more pro rata? |
2,705 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: So, the $4 billion is versus the stock of outstanding funds that are in process of deploying, completing harvesting and migrating their way to the end to their investment cycle. Given a lot of the other commentary that we've been discussing about level of activity, strategically, openness of capital markets, in particular, equity capital markets, sponsor monetization activity, et cetera, as it relates to our portfolio where we own some balance sheet investments, and we own investments in funds, we have not had as much monetization in line with where the market has been generally. So as activity improves, we will also see more monetization and we expect that over the next several years, we will move towards those medium-term targets of a run rate, $1 billion worth of incentive fees. But I can't tell you exactly the rates that comes in, that will be dependent on how ultimately these funds harvest and when we're in a position to ultimately pay carry to investors and recognize our own incentive fees.
Dan Fannon: Got it. And then just a follow-up on wealth management, understanding the strategy of growing lending. But can you talk about the growth overall of the adviser base and how you're thinking about that over the next kind of one to two years in terms of net recruiting, hires and ultimately, investment in that business beyond just diversifying the revenue streams? |
2,706 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. So, I think we have made a strategic decision that the investment in advisers needs to be a strategic and sustained investment program. So rather than having it a sort of ebb and flow across different market environments or based on what the firm's perceived capacity to invest may or may not have been at different years in the past. I think part of the strategy of investing in what is a really outstanding business at Goldman Sachs, where we're the premier ultra-high net worth firm, we are making a sustained commitment to invest in advisers over multiple years. And so that is sort of a foundational underpinning of how we're looking to invest in that business. And when David makes comments about our ability to drive growth and returns across AWM and that we are focused not just on margins and returns, but investing to grow. One of the places that we think is an attractive place to invest and grow is actually in the adviser footprint.
Operator: We'll go next to Gerard Cassidy with RBC.
Gerard Cassidy: Can you guys share with us your Goldman is in a unique position, I think, to be able to share with investors the benefits of private credit. I think, David, you mentioned you have $140 billion in private credit assets. And when you see your clients choosing a channel to access monies from you, whether it's private credit or just lending. Can you share with us the advantages that you see through private credit or the regular loan portfolio that your customers may benefit from? |
2,707 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: So, I appreciate the question, Gerard. I think one of the things that's interesting about this is, this gets framed in very binary ways. And obviously, private credit is a broad term and it refers to a lot of things. It certainly refers to a lot of investment-grade lending, a lot of which is on insurance company balance sheets. It can refer to direct lending in the below investment-grade business, which, by the way, is a component of our syndication activity and origination activity, particularly with sponsors. It can be direct lending for small and medium-sized enterprises. So, there's a wide range of things. When I listened to your question, when I pull away as you're asking in particular about leverage finance activity and how our clients choose channels in terms of where to get capital. And I'd say they don't go in through the bias, they're actually looking for a capital structure that works for their particular solution. And I think that one of the things that positions us well is we are a unique player that we have an ability to either syndicate and underwrite distribute. We have an ability to direct lend. We have an ability to show clients alternatives that can best meet their needs and their might needs might be different in different transactional situation. So, we like our positioning there. I do say that I believe from a secular perspective, there will be continued growth in private credit, particularly in the leveraged finance space. And so, we're looking to capture that. but it's more complicated. There are different channels, there's different origination efforts than sometimes the way this is all for trade. But we feel like we're well positioned across the spectrum to be a significant participant in this space.
Gerard Cassidy: And David, just a quick follow-up on that. That was very thorough. Who do you find these your primary competitors? Again, you're in a unique position, I think, to be able to benefit from this. Who do you bump into the most? |
2,708 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Well, it depends what you're doing. So, it goes back to exactly what I said it, it depends what you're doing. If you're in the leverage finance market and you're looking at a syndicated capital structure and you're competing for that, you're going to bump into JPMorgan, for example. If on the other hand, you're looking at direct lenders, then you're going to bump into a bunch of people that play a leading role in that space, which can include people like HPS or Ares or other direct platforms. If you're looking at investment grade, insurance company balance sheet, you might run into Apollo. I mean it really depends on who the client is, what their need is and what the activity is. And it's actually quite a broad and complicated space.
Denis Coleman: I mean the only thing I'd add, Gerard, if you just think about it, I think David has laid this out really well. If you think about where Goldman Sachs is positioned against this opportunity set. We have capacity to lend to alternative clients, for example, who are deploying into the private credit space. We have the capacity to underwrite and distribute different types of investment-grade and noninvestment-grade capital structures and we have the capacity to offer investment opportunities to clients who want to get exposed to the asset class. And while we compete with all of those different parties that David enumerated, I'm hard-pressed to find many people that have the breadth of exposure to each aspect of this ecosystem relative to us. So we really like our position in terms of the secular trends there and how we can support clients in each and every aspect of the continuum.
Operator: We'll take our next question from Saul Martinez with HSBC. |
2,709 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: We'll take our next question from Saul Martinez with HSBC.
Saul Martinez: I wanted to ask about the margin trajectory in Asset & Wealth Management. Year-to-date, you're at -- you got a 24% pretax margin. You've already reach the mid-20s medium-term target. I know you've talked about that margin expanding beyond mid-20s. But how do we think about where it can ultimately land in the time horizon around it? Obviously, you're growing your all business, you have $4 billion of unrecognized incentive fees. You talked about the private banking and lending platform. Just can you get to a pretax margin of above 30% like your peers? And again, how do we think about the glide path from here and the time horizon around that?
Denis Coleman: Sure. Thank you, Saul. So obviously, we've just arrived at our mid-20s target. I think it's important that we consolidate our position there. We think there are plenty of opportunities to continue to drive that margin higher as we scale top line, as we improve the mix of alternatives across our platform, and we look to drive other operating efficiencies across the business segment. There are plenty of competitors that have margins as you cite, that are 30% or higher. So, our commitment is to continue to improve the margins. But we're also thinking increasingly about opportunities we have to scale and create value for the long term. So, we are going to try and find the balance between incremental margin improvement and making the right investment decisions that unlock long-term value in this segment. But for the time being, we think that both can be achieved. |
2,710 | GS | 3 | 2,024 | 2024-10-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Saul Martinez: Okay. Got it. That's helpful. And then maybe if I could follow up on capital and just how you're thinking I know you talked about your capital strategy a bit. But how are you thinking about just capital allocation buybacks given the uncertainty around Basel, we have a proposal, we have the speech outlining the reproposal. We have an agency that seemingly one of the agencies, obviously, resisting seemingly the reproposal. We have an election that could play a big role in terms of influencing whatever outcome happens. So just -- I mean, how are you thinking about your capital? And why do you think a 90-basis point buffer is the write buffer given all that uncertainty.
Denis Coleman: Okay. Thank you. Look, what I would say for the last period of quarters and years, we've been operating in an environment with a bunch of regulatory uncertainty. There's also been operating uncertainty as well. I think the economic trajectory, outlook and client franchise is coming more into focus frankly, that presents opportunities. So, we run a buffer so that we have pent-up capacity to support incoming client opportunities. But we also run the buffer given other uncertainties in the world, which include regulatory. As to when we will have the next bit of clarity and be able to interpret exactly what that means for our capital position, I couldn't tell you right now. But we have a long history of making adjustments to our activities when we get that regulatory feedback. From everything we know, there are generally time lines associated with those rules coming into effect. And we feel like this is the right place to run our capital to support the client franchise and be prepared for other unexpected developments, including regulatory.
Operator: Thank you. At this time, there are no additional questions. Ladies and gentlemen, this concludes the Goldman Sachs third quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. |
2,711 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Good morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs' Second Quarter 2024 Earnings Conference Call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audiocast is copyrighted material of The Goldman Sachs Group, Inc., and may not be duplicated, reproduced, or rebroadcast without consent. This call is being recorded today, July 15th, 2024. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Dennis Coleman. Thank you. Mr. Solomon, you may begin your conference. |
2,712 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Thank you, operator, and good morning, everyone. Thank you all for joining us. I want to begin by addressing the horrible act of violence that occurred over the weekend, the attempted assassination of former President Trump. We are grateful that he is safe. I also want to extend my sincere condolences to the families of those who were tragically killed and severely injured. It is a sad moment for our country. There is no place in our politics for violence. I urge people to come together and to treat one another with respect, civility, dignity, especially when we disagree. We cannot afford division and distrust to get the better of us. I truly hope this is a moment that will spur reflection and action that celebrate, that celebrate what unites us as citizens and as a society. Turning to our performance. Our second quarter results were solid. We delivered strong year-on-year growth in both global banking and markets and asset wealth management. I am pleased with our performance where we produced a 10.9% ROE for the second quarter and a 12.8% ROE for the first-half of the year. We continue to harness our One Goldman Sachs operating approach to execute on our strategy and serve our clients in dynamic environments. Global banking and markets, we maintained our long-standing number one rank in announcement completed M&A and ranked number two in equity underwriting. Our investment banking backlog is up significantly this quarter. From what we're seeing, we are in the early innings of the capital markets and M&A recovery. And while certain transaction volumes are still well below their 10-year averages, we remain very well positioned to benefit from a continued resurgence in activity. We saw a solid year-over-year revenue growth across both FIC and equities as our global broad and deep franchise remained active in supporting clients' risk intermediation and financing needs. We continue to be focused on maximizing our wallet share and we have improved our standing to be in the top three with 118 of our top |
2,713 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | to be focused on maximizing our wallet share and we have improved our standing to be in the top three with 118 of our top 150 clients. In asset wealth management, we are growing more durable management and other fees in private, banking, and lending revenues, which together were a record $3.2 billion for this quarter. Our Assets Under Supervision had a record of $2.9 trillion and total wealth management client assets rose to roughly $1.5 trillion. We delivered a 23% margin for the first-half of the year and are making progress on improving the return profile of AWM. In alternatives, we raised $36 billion a year-to-date. We completed a number of notable fund closings during the quarter, including $20 billion of total capital for private credit strategies, and approximately $10 billion across real estate investing strategies. Given the stronger-than-anticipated fundraising in the first-half of the year, as well as our current pipeline, we expect to exceed $50 billion in alternatives fundraising this year. This is a testament to our investment performance, track record, and intense focus on client experience. We are excited about the additional growth opportunities for our asset growth management platform. Let me turn to the operating environment, which remains top of mind for clients. On the one hand, there is a high level of geopolitical instability. Elections across the globe could have significant implications for forward policy. And inflation is proven to be stickier than many had anticipated. On the other hand the environment in the U.S. remains relatively constructive. Markets continue to forecast a soft landing as the expected economic growth trajectory improves and equity markets remain near all-time highs. I am particularly encouraged by the ongoing advancements in artificial intelligence. Recently, our Board of Directors spent a week in Silicon Valley where we spoke with the CEOs of many of the leading institutions at the cutting edge of technology and AI. We all left with a sense of optimism about the |
2,714 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | of many of the leading institutions at the cutting edge of technology and AI. We all left with a sense of optimism about the application of AI tools and the accelerating innovation in technology more broadly. The proliferation of AI in the corporate world will bring with it significant demand-related infrastructure and financing needs, which should fuel activity across our broad franchise. Before I turn it over to Dennis, I want to cover a couple of additional topics that are top of mind for me. First, our recent stress test results. The year-over-year increase in our stress capital buffer does not seem to reflect the strategic evolution of our business and the continuous progress we've made to reduce our stress loss intensity, which the Federal Reserve had recognized in our last three tests. Given this discrepancy, we are engaging with our regulators to better understand its determinations. Despite the increase in requirements, we remain very well positioned to serve our clients and will continue to be nimble with our capital. In the second quarter, we repurchased $3.5 billion of shares, which illustrates our ability to dynamically manage our resources and opportunistically return capital to the shareholders. Despite the increase in our repurchase activity, our common equity Tier 1 ratio ended the quarter at 14.8% under the standardized approach, 90 basis points above our new regulatory minimum and above our ratio in the first quarter. We also announced a 9% increase in our quarterly dividend which underscores our confidence in the durability of our franchise. Since the beginning of 2019, we have more than tripled our quarterly dividend to its current level of $3 a share. I'd also like to reflect on the significant milestone we hit in the second quarter, our 25th anniversary as a public company. We went public in 1999, which is also the year I joined the firm, and it's been an eventful 25-years since then. We have persevered through a number of significant global events, including through the dotcom bubble, |
2,715 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | 25-years since then. We have persevered through a number of significant global events, including through the dotcom bubble, NASDAQ crash, September 11th, the financial crisis, and the pandemic. When I look back at how we overcame these challenges, immediately think of our culture, one that has evolved, no doubt, but always stayed true to our core values. I know that the preservation of our culture is paramount to serving our clients with excellence, maintaining our leading market positions, growing our businesses, and continuing to attract and retain the most talented people. In closing, I'm very confident about the state of our client franchise. We are delivering on our strategy by leaning into our core strengths effectively serving clients in what remains a complicated operating environment. Now let me turn it over to Dennis to cover our financial results in more detail. |
2,716 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Thank you, David, and good morning. Let's start with our results on page one of the presentation. In the second quarter, we generated net revenues of $12.7 billion and net earnings of $3 billion, resulting in earnings per share of $8.62, an ROE of 10.9%, and an ROTE of 11.6%. Now turning to performance by segment starting on page four. Global banking and markets produce revenues of $8.2 billion in the second quarter, up 14% versus last year. Advisory revenues of $688 million were up 7% versus the prior year period. Equity underwriting revenues rose 25% year-over-year to $423 million as equity capital markets have continued to reopen. No volumes remain well below longer term averages. Debt underwriting revenues rose 39% to $622 million amid strong leverage finance activity. We are seeing a material increase in client demand for committed acquisition financing, which we expect to continue on the back of increasing M&A activity. Our backlog rose significantly quarter-on-quarter, driven by both advisory and debt underwriting. FIC net revenues were $3.2 billion in the quarter, up 17% year-over-year. Intermediation results rose on better performance in rates and currencies. FIC financing revenues were $850 million, a near record, and up 37% year-over-year. Equity's net revenues were $3.2 billion in the quarter up 7% year-on-year as higher intermediation results were helped by better performance in derivatives. Equity's financing revenues were $1.4 billion, down modestly from a record performance last year, but up 5% sequentially. Taken together, financing revenues were a record $2.2 billion for the second quarter and a record $4.4 billion for the first-half of the year. Our strategic priority to grow financing across both FIC and equities continues to yield results as these activities increase the durability of our revenue base. I'm moving to asset wealth management on page five. Revenues of $3.9 billion were up 27% year-over-year. As David mentioned, our more durable management and other fees and |
2,717 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | five. Revenues of $3.9 billion were up 27% year-over-year. As David mentioned, our more durable management and other fees and private banking and lending revenues reached a new record this quarter of $3.2 billion. Management and other fees increased 3% sequentially to a record $2.5 billion, largely driven by higher average assets under supervision. Private banking and lending revenues rose 4% sequentially to $707million. Our premier ultra-high net worth wealth management franchise has roughly $1.5 trillion in client assets. This business has been a key contributor to our success in increasing more durable revenues and provides us with a strong source of demand for our suite of alternative products. A great example of the power of this unique platform. We expect continued momentum in this business as we also deepen our lending penetration with clients and grow our advisor footprint. Our pre-tax margin for the first-half was 23%, demonstrating substantial improvement versus last year and approaching our mid-20s medium term target. Now moving to page six. Total assets under supervision ended the quarter at a record of $2.9 trillion, supported by $31 billion of long-term net inflows, largely from our OCIO business, representing our 26th consecutive quarter of long-term fee-based inflows. Turning to page seven on alternatives. Alternative AUS totaled $314 billion at the end of the second quarter, driving $548 million in management and other fees. Rose third-party fundraising was $22 billion for the quarter and $36 billion for the first-half of the year. In the second quarter, we further reduced our historical principal investment portfolio by $2.2 billion to $12.6 billion. On page nine, firmwide net interest income was $2.2 billion in the quarter, up sequentially from an increase in higher yielding assets and a shift towards non-interest bearing liabilities. Our total loan portfolio at quarter end was $184 billion, flat versus the prior quarter. For the second quarter, our provision for credit losses was $282 |
2,718 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | quarter end was $184 billion, flat versus the prior quarter. For the second quarter, our provision for credit losses was $282 million, primarily driven by net charge-offs in our credit card portfolio and partially offset by a release of roughly $115 million related to our wholesale portfolio. Turning to expenses on page 10. Total quarterly operating expenses were $8.5 billion. Our year-to-date compensation ratio net of provisions is 33.5%. Quarterly non-compensation expenses were $4.3 billion, and included approximately $100 million of CIE impairments. Our effective tax rate for the first-half of 2024 was 21.6%. For the full-year, we continue to expect the tax rate of approximately 22%. Next capital on slide 11. In the quarter we returned $4.4 billion to shareholders, including common stock dividends of $929 million and common stock repurchases of $3.5 billion. Given our higher than expected SCB requirement, we plan to moderate buybacks versus the levels of the second quarter. We will dynamically deploy capital to support our client franchise, while targeting a prudent buffer above our new requirement. Our board also approved a 9% increase in our quarterly dividend to $3 per share beginning in the third quarter, a reflection of our priority to pay our shareholders a sustainable growing dividend and our confidence in the increasing durability of our franchise. In conclusion, we generated solid returns for the first-half of 2024, which reflects the strength of our interconnected businesses and the ongoing execution of our strategy. We made strong progress in growing our more durable revenue streams, including record first-half revenues across FIC and equities financing, management and other fees, and private banking and lending. We remain confident in our ability to drive strong returns for shareholders, while continuing to support our clients. With that, we'll now open up the line for questions. |
2,719 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. Please stand by as we assemble the Q&A roster. [Operator Instructions] We'll take our first question from Glenn Schorr with Evercore.
Glenn Schorr: Hi there. Thanks very much. So I liked your forward leaning comments on the IBC pipeline and I think I heard you say the demand for committed acquisition financing is high. Does that infer anything about us being any closer to an inflection point in private equity related M&A, sponsor related M&A? And then how much of an [Technical Difficulty] think you have as being maybe the big -- the only big bank that has a full on private credit platform, obviously DCM platform and lending platform? Thank you. |
2,720 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure, good morning Glenn, and thanks for the question. You know, we're forward leaning in our comments, because we definitely see momentum pick up. But I just, again, want to highlight something that was definitely my part of the script. And I think Dennis amplified, which were still despite the pickup, we're still operating at levels that are still significantly below 10-year averages. And so for example, I think we've got kind of another 20% to go to get to 10-year averages on M&A. One of the reasons that M&A activity, one of the reasons, not the only reason, but one of the reasons why M&A activity is running below those averages is because sponsor activity is just starting to accelerate. And so I think, especially given the environment that we're in, that you're going to see over the next few quarters into 2025 kind of a reacceleration of that sponsor activity. We're seeing it in our dialogue with sponsors. And obviously, it's been way, way below the overall M&A activity as kind of another 20% to get to 10-year averages, but sponsor has been running below that and we're starting to see that increase. Now, as that increases, I just think the firm's incredibly well positioned, given the breadth of both our leading position. We've been top kind of one, two, three in what I'll call leverage-financed activity from a league table perspective and with the sponsor community, but we combine it with a very, very powerful direct lending private credit platform. And so I just think we're in a very, very interesting position. The size and the scope of the companies that are out there that have to be refinanced, recapitalized, sold, changed hands, the sponsors continue to look, distribute proceeds, you know, to their limited partners, I think bodes well over the course of the next three to five years. Different environments, but the general trend will be more activity than we've seen in the last two, 2.5 years. |
2,721 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Glenn Schorr: I appreciate that. Maybe one quickie follow-up on, you mentioned in the prepared remarks, in your printed prepared remarks, that real estate gains helped drive the equity investment gains in the quarter? Can you talk about how material it was and what drove real estate gains during the quarter? Thanks.
Dennis Coleman: Sure, Glenn. It's Dennis. I think the important to take away from the year-over-year performance in the equity investment line is that in the prior year period, we actually had significant markdowns as we were sort of an early mover in addressing some of the commercial real estate risk across our balance sheet. And the results that reflect in this most recent quarter do not have the same degree of markdowns as in the prior period. So that is, I think, a large explain of the delta.
Operator: Thank you. We'll take our next question from Ebrahim Poonawala with Bank of America.
Ebrahim Poonawala: Good morning. I just wanted to spend some time on capital, the post, the SCB increase. One, maybe just from a business standpoint, if you could update us whether the capital requirement changes anything in terms of how the firm has been leaning into the financing business. Do you need to moderate the appetite there or business as usual? So one, how does it impact the business? And second, Dennis, your comments on buybacks moderating, should we think more like 1Q levels of buybacks going forward? Thanks. |
2,722 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Sure, Ibrahim. So a couple of comments. I guess first important to observe that the level of capital that we're operating with at the moment is reasonably consistent where we've been over the last several years. So we feel that at that level of capital and with the cushion that we have heading into the third quarter, which at 90 basis points is at the wider end of our historical operating range, we have lots of capacity both to continue to deploy into the client franchise. And with what we're seeing across the client franchise with backlog up significantly, there could be attractive opportunities for us to deploy into the client franchise, whether that's new acquisition financing as David was referencing, or ongoing support of our clients across the financing businesses. We have the capacity to do that, as well as to continue to invest in return of capital to shareholders. Given the $3.5 billion number in the second quarter, we thought it was advisable to indicate we would be moderating our repurchases, but we still do have capital flexibility. And based on what we see developed from the client franchise, we will make that assessment, we'll manage our capital to an appropriate buffer, but we're still certainly in a position to continue to return capital to shareholders.
Ebrahim Poonawala: Got it. So assume no change in terms of how we're thinking about the financing business. And just separately in terms of sponsor-led activity, we waited all year for things to pick up. Is it a troubling sign that the sponsors are not able to monetize assets? Does it speak to inflated valuations that they're carrying these assets on? Just would love any context there, David, if you could? Thank you. |
2,723 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure. I mean, I appreciate that. I don't think it's troubling. I wouldn't use the word troubling. But I do think that there are places where sponsors hold assets and their ability to monetize them at the value that they currently hold them leads them to wait longer and keep the optionality to have that value compound. At the same point, there's pressure from LPs to continue to turn over funds, especially longer-dated funds. And as they take that optionality to wait, the pressure just builds. And so I think we're starting to see a bit of an unlock and more of a forward perspective to start to move forward, accept the evaluation parameters, and move forward. But I just think this is natural cycle and you're going to see a pickup in that activity for sure. I'm just not smart enough to tell you exactly which quarter and how quickly, but we are going to go back to more normalized levels.
Ebrahim Poonawala: Thank you.
Operator: Thank you. We'll go next to Betsy Graseck with Morgan Stanley.
Betsy Graseck: Hi, good morning.
David Solomon: Good morning, Betsy.
Betsy Graseck: Hi, can you hear me okay? Oh, okay. Sorry, [Multiple Speakers] All right. Well, thanks very much. I did just want to lean in on one question regarding how you're managing the expense line as we're going through this environment because, we've had this very nice pickup in revenues and comp ratio is going up a little bit, but I'm just wondering is this a signaling to hold for the rest of this year? Or is this just a one-off given that some of the puts and takes you mentioned on deal activity earlier on the call? |
2,724 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure, Betsy. So if you look at year-to-date change in our reviews net of provision, that is tracking ahead of the year-to-date change in our compensation and benefit expense. We are sort of following the same protocol that we always do which is making our best estimate for what you know we expect to pay for on a full-year basis and doing that in a manner that reflects the performance of the firm, as well as the overall competitive market for talent. So based on what we see we think this is the appropriate place to accrue compensation, but we'll obviously monitor that closely as the balance of the year evolves.
Betsy Graseck: Okay and as we anticipate a continued pick up here in M&A, given everything you mentioned earlier, I would think that, that's positive operating leverage that should be coming your way. Would you agree with that or do I have something wrong there? Thanks.
Dennis Coleman: No, so we are certainly hopeful that the business will continue to perform and that we will grow our revenues in line with what the current expectation is based on backlog. And we would love to generate incremental operating leverage if we perform in line with our expectations.
Betsy Graseck: All right. Thank you.
Operator: We'll take our next question from Brennan Hawken with UBS.
Brennan Hawken: Good morning. Thanks for taking my questions. You flagged, Dennis, the record financing revenue, which clearly shows momentum behind the business. And it would be my assumption that given rates have been more stable for quite some time now, it seems to reflect balance growth. So one, I want to confirm that that's fair? And could you help us understand how we should be thinking about rate sensitivity as it seems as though maybe a few rate cuts might be on the horizon? |
2,725 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Sure. Thank you, Brendan. So we have been on a journey for several quarters and years in terms of committing ourselves to the growth of the more durable revenue streams within global banking and markets. We have our human capital and underwriting infrastructure set up in place. We have relationships with a large suite of clients that are frequent users of these products. The business is very diversified by sub-asset class, and it's a business that we are looking to grow on a disciplined basis. We've had an opportunity to deploy capital in a manner that is generating attractive, risk-adjusted returns. That's something that we're going to remain mindful of. But we believe, given the breadth of that franchise, that we should be able to continue to support the secular growth that our clients are witnessing, even as various rate environments should moderate.
Brennan Hawken: Okay. And then next question is really sort of a follow on from Betsy's line of questioning. So year-to-date you've got a 64% efficiency ratio. You know, when we take a step back and think about your targets and aspirations for that metric and an environment, consider an environment that seems to be improving steadily, you know, how should we be thinking about margins on incremental revenue? You know, could you help us understand how revenue growth will continue to drive improvement in that efficiency ratio? |
2,726 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Sure. So, thank you for that question and thank you for observing the improvement that we're seeing. Obviously, our year-to-date efficiency ratio at 63.8% is nearly 10 points better on a year-over-year basis. Still not at our target of 60%, but we are making progress. As we continue to grow our revenues, we should be able to deliver better and better efficiency. But ultimately, the type of revenues that we grow and the extent to which they attract variable or volume-based expenses is a contributing factor. But we do have visibility, for example, as we continue to move out of some of our CIE exposures that we should be able to reduce some of the operating expenses associated with that. And we do have a very granular process internally, looking at each of our expense categories on a granular basis and trying to make structural improvements to drive efficiencies over time, while we at the same time look to drive top line revenues.
Operator: Thank you. We'll go next to Mike Mayo with Wells Fargo Securities.
Mike Mayo: Hi. I'm just trying to reconcile all the positive comments with returns that are still quite below your target. I mean, you highlight revenue growth in global banking markets and wealth and asset management. You have record financing for equities and FIC combined. You're number one in M&A. You have record management fees and record assets under supervision. Your efficiency has gone from 74% to 64%. Increase your dividend by 9% to signal your confidence, your CET1 ratios, 90 basis points above even the higher Fed requirements. David, you start off the call saying the results are solid, but then you look at the returns and you say 11% ROE in the second quarter, that's not quite the 15% where you want it to be. So where's the disconnect from what you're generating in terms of returns and where you'd like to be? Thanks. |
2,727 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Yes, thanks Mike. Appreciate the question. Look, we're on a journey. And, you know, the way I look at it, our returns for the first-half of the year at 12.8%. There are, you know, I think there are a couple of things, give gets in that. One, for sure, we still have a little bit of drag from the enterprise platforms which we're working through. And so that will come out. And at some point as we work through that, over the next 12 to 24 months, we'll continue to make progress on that for the returns in the first-half of the year would be a little higher exit. And then on top of that, as we've said repeatedly on the call and have given a bunch of information, we're still operating meaningfully below 10-year averages in terms of investment banking activity. And I think that'll come back. I obviously can't predict. But if you look at the returns of the firm, we have materially uplifted the returns of the firm. And we're going to continue to focus on that. Now the next step to the puzzle is our continued progress in AWM. So you know and you can see the performance over the course of the last few years of global banking and markets, but we've said the AWM, ROE is not where it needs to be. You heard our comments about the fact that we've gotten the margin up to 23%, but the ROE is still around 10%. We think we can continue to grow the business. As we've said, high-single-digits, we can continue to improve the margin and ultimately bring up that AWM, ROE. And then you look across the firm and you have a stronger return profile. So I think we're making good progress. We didn't say and have not worked to do for sure. But we feel good about the progress.
Mike Mayo: And I assume part of your expectation is a sort of multiplier effect when mergers really kick in. Can you just describe what that multiplier effect could potentially look like based on pass cycles? |
2,728 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: What I would say is one of the things that should be a tailwind for further momentum in our business is a return to average levels. I'm not sitting here saying we're going to go back to periods of time where we went well above 10-year averages, but there's obviously, if we did get back to that period, and there will be some point in the future where we run above average too, and not just below average, we have a tailwind for that. But as a general matter, when there are more M&A transactions, whether with financial sponsors or big corporates, there is more financing attached to that. People need to raise capital to finance those transactions. They need to reposition balance sheets. They need to manage risks through structured transactions. And so there's a multiplier effect as those activities increase. We don't put a multiplier on it, but our whole ecosystem gets more active as transaction volumes increase on the M&A side.
Mike Mayo: And then lastly, for your returns, the denominator is a big factor. How does that work with the Fed? I know you can't say too much and regional people can disagree, but your whole point is that you've de-risked the balance sheet and the company and then here we have the Fed saying that maybe you haven't done so. So how does this process work from here? Will we hear results about the SEB ahead, or is this something that's just behind closed doors? |
2,729 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Look, as a general matter, what I'd say, Mike, as a general matter, we're supporters of stress testing. We believe it's an important component of the Fed's mandate to really ensure the safety and soundness of the banking system. However, we've maintained for some time that there are elements of this process that may be distracting from these goals of safety and soundness. The stress test process, as you just highlighted, is opaque. It lacks transparency. It contributes to excess volatility and the stress capital buffer requirements, which obviously makes prudent capital management difficult for us and all of our peers. We don't believe that the results reflect the significant changes we've made in our business. They're not in line with our own calculations, despite the fact that the scenarios are consistent year-over-year. Now, despite all that, you know, we've got the capital flexibility to serve our clients. We'll continue to work with that capital flexibility and we'll also continue to engage around this process to ensure that over time we can drive the level of capital that we have to hold in our business mix down. But obviously we have more work to do given this result.
Mike Mayo: All right, thank you.
Operator: We'll take our next question from Steven Chubak with Wolfe Research.
Steven Chubak: Hi, Good morning. So I wanted to start off with a question. Just want to start with a question on the consumer platform fees. They were down only modestly despite the absence of the Green Sky contribution. Just wanted to better understand what drove the resiliency in consumer revenues, whether the quarterly run rate of $600 million is a reasonable jumping off point as we look at the next quarter? |
2,730 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: So, Steve, thank you for the question. I mean on a sequential basis, they're down, but that's because we have the absence of the Green Sky contribution. There actually is growth across the card portfolio. I think you've seen that the level of growth has slowed as we have sort of implemented several rounds of underwriting adjustments to the card originations and so our expectation is that on the forward you know the period-over-period growth should be more muted.
Steven Chubak: Understood and maybe just one more clarifying question. I know there's been a lot asked about the SEB. Really just wanted to better understand, Dennis, since you noted that you're running with 90 bps of cushion, which is actually above normal. Just how you're handicapping the additional uncertainty related to Basel III endgame. There's certainly been some favorable momentum per the press reports and even some public comments from regulators? But just want to better understand, given the uncertainty around both the SEB and Basel III endgame, where you're comfortable running on a CET1 basis over the near to medium term?
Dennis Coleman: Sure, thanks and I appreciate that question. I think obviously there's been a lot of changes, there's been some changes and expectations. And I think in highlighting that we are operating at the wider end of our range, it is to signal flexibility. And certainly embedded in that is to address some of the uncertainty which does remain with respect to Basel III endgame, both the quantum and timing of its resolution. It sounds from some of Powell's latest comments that, that may not be something that comes into effect until perhaps into 2025, but we are sort of maintaining a level of cushion that think is appropriate in light of what we know and we don't know about the future opportunity set for Goldman Sachs, but that buffer is designed to support clients return capital shareholders, while maintaining a prudent buffer with some of the lingering uncertainty with respect to future regulatory input. |
2,731 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Steven Chubak: Helpful color. Thanks for taking my questions.
Dennis Coleman: Thank you.
Operator: We'll go next to Devin Ryan with Citizens JMP.
Devin Ryan: All right, great. Good morning, David and Dennis. A couple questions on AWM progress. So the first one is on the alts business specifically, and you're tracking obviously well ahead of the fundraising targets relative to when you set the $1 billion medium term target for annual incentive fees? And now with over $500 billion in alts AUM and obviously growing, that would seem pretty conservative. So I appreciate there's a lot of work to do to generate the returns ahead here, but how should we think about the underlying assumptions for incentive fees in a more normal harvesting environment, just given the mixed shift and the growth that you're seeing in AUM there? |
2,732 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: So Devin, I think it's a good question, and I think we share your expectation that, that's going to be a more meaningful contributor on the forward. We laid it out as one of the building blocks at our Investor Day. The contribution coming through that line since then has been not as high as we have modeled from an internal medium to longer term perspective. We do give good disclosure that the balance of unrealized incentive fees at the end of the last quarter were $3.8 billion, so you can make you know various assumptions as to what the timing of the recognition of those fees are they can obviously you know bounce around from time-to-time it is a granular you know vehicle-by-vehicle build-up, but you know given the current outlook and status of those funds that our best expectation of what level of fees could be coming through that line over the next several years. So I think it is an important incremental contributor and should be, you know, should help the return profile of asset wealth management on the forward, couple that with the success that we're having with ongoing alts fundraising and that will help to feed future investments and funds, which in turn will generate some backlog of potential incentive fees above and beyond what's already in the unrealized disclosures. |
2,733 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Devin Ryan: Yes, okay, thanks, Dennis. And then follow-up, this is also kind of connected, but at a recent conference, you highlighted the margin profile of all the standalone businesses and asset and wealth management of public peers so kind of as a comparison and highlighted 35% plus for alts and some of the public firms we know are obviously well above that. So I appreciate you're running the AWM segment is kind of one segment, but if alts does accelerate and we're looking at 60% of alts AUM isn't even the fee earning yet, what does that mean for segment margins relative to kind of that mid-20% target, because you're already at 23% thus far in ‘24. So just trying to think about the incremental margins coming from the acceleration in growth, particularly from the alts segment as well?
Dennis Coleman: So that's a good question, Devin. I mean, it should be a significant unlock for us, because despite the breadth and the longevity with which we've been running our alts businesses, there is significant opportunity for us to actually improve the margin profile of the alts activities in particular relative to the overall AWM margin, particularly as we develop incremental scale by strategy. And so in addition to just overall growth in the segment, which should unlock margin improvements, actually within our portfolio of activities, the alts business, again, despite its current scale, presents a big opportunity for incremental margin contribution.
Devin Ryan: Great. Thank you.
Operator: We'll go next to Dan Fannon with Jefferies.
Dan Fannon: Thanks, good morning. In terms of your on-balance sheet investments, you continue to make progress in reducing that this quarter. Can you talk about the outlook for this year or any line of sight in terms of exits that we can think about? |
2,734 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Sure. Thank you. Obviously, an ongoing commitment of ours to move down those on balance sheet exposures, also part of the equity and capital story and returns in the segment at $2.2 billion for the quarter, that was a decent reduction. We obviously have a target out there to sell down the vast majority of that balance, which is now at $12.6 billion by the end of next year. But our expectation is that we will continue to chip away at it across both the third and the fourth quarter of this year and then on into 2025. There's really no change on our commitment to sell down the vast majority of that by the end of next year.
Dan Fannon: Understood. And as a follow-up, just within asset and wealth, particularly on the alts side, the fundraising target raised for the full-year given the success you've had. The private credit fund closing here in the first-half was big. Can you talk to some of the other strategies that have the potential to scale as you mentioned earlier and/or maybe are a little bit smaller that have really large or increasing momentum as you think about second-half, but also as we even into next year?
Dennis Coleman: Sure. So, you know, obviously taking a step back, you're talking about the targets that we set, you know, once upon a time it was $150 billion, we moved it to $225 billion. It's now at $287 billion and with $36 billion raised through the first-half and us expecting to surpass $50 billion, that means we should be north of $300 billion by the end of this year. And I think one of the things that we find attractive about our platform is that we have opportunities to scale across multiple asset classes within alternatives, equity, credit, real estate, infrastructure. We had notable fundraisings in private credit and real estate this quarter, but you can see contribution from other strategies like equity on the forward and a number of different strategies, both by asset class and by region. So we think we have a diversified opportunity set to continue to scale the alts platform. |
2,735 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. We'll go next to Matt O'Connor with Deutsche Bank.
Matt O'Connor: Good morning. I was wondering if you could just elaborate a bit on the competitive landscape specifically in banking and markets. I know it's always competitive, but some of the really big bank peers, you know, are leaning in who haven't been a few years ago. And all these regional banks that I cover are also realizing that they need broader cap and market capabilities. So you're obviously an industry leader in a lot of the areas across banking and markets. And I'm just wondering how you're seeing the competition impact you at this point? |
2,736 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure, Matt, and I appreciate the question. I just say, you know, investment banking and the markets business, the trading business, they've always been competitive businesses. I think our integrated One GS approach is a very, very competitive offering. I mean, we can have debates, but it's, I think, one of the top two offerings out there, depending on how you look at it what you look at. There's always going to be competition there are always going to be people that come in and make investments in niche areas, but broadly speaking you know we've had leading M&A share for 25-years. We have leading share in capital raising for an equivalent period of time. We've continued to invest in our debt franchises over the last more than decade. An then our trading businesses and our ability to intermediate risk I think have been second to none or viewed as second to none for a long, long time. And so the combination of our focus on serving our clients, making sure we're giving them the right resources, both human capital and financial capital, to accomplish what they need to accomplish, the fact that we have global scale positions is very well. They'll always be competitors, but I like where our franchise sits. And I don't see any reason why we shouldn't be able to continue to invest in it, strengthen it, and continue to have it operating as a leader in what's always been and will continue to be a very competitive business.
Matt O'Connor: Okay helpful, it's unagreed. And then just separately, I hate to ask you about activity levels and stuff like that since the debate three, four weeks ago, but maybe I'll frame it. From your experience in presidential election periods like this, where there's maybe just more uncertainty than normal, like how do both institutional and corporate clients react? Do they kind of say, well, let's wait and see the other side? Is it just noise, because we've been going through it for some time here, but what are your thoughts on that? Thank you. |
2,737 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: There are always exogenous factors that affect corporate activity and institutional client activity. I don't have a crystal ball, so I can't see what the next 100 days leading up to our election will bring, but I think we're well positioned to serve our clients, regardless of the environment. And clients are very active at the moment, and I think they're probably going to continue to be active.
Matt O'Connor: Thank you.
Operator: We'll take our next question from Gerard Cassidy with RBC.
Gerard Cassidy: Thank you. Good morning, David. Good morning, Dennis. David, you said in your opening comments that you took the board out to Silicon Valley and you were impressed with the artificial intelligence and what we could expect in the future and the opportunities for Goldman to be able to finance some of the infrastructure needs that may come of that? Can you share with us the artificial intelligence that you guys are implementing within Goldman and how it's making you more productive, generating maybe greater revenues or even making it more efficient? |
2,738 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure, I mean, at a high level, Gerard, we as most companies around the world are focused on how you can create use cases that increase your productivity. And if you think about our business as a professional service firm, a people business, where we have lots of very, very highly productive people creating tools that allow them to focus their productivity on things that advance their ability to serve clients or interact in markets is a very, very powerful tool. So, you know we you know if you look and you think across the scale of our business I think you can think of lots of places where the capacity to use these tools to take work that's always been done on a more manual basis and allow the very smart people to do that work to focus their attention on clients are quite obvious. You can look at it in an area like the equity research area as every quarter. You're all analysts on the phone. There's lots of ways that these tools can leverage your capacity to spend more time with clients. You think about our investment banking business and the ability in our investment banking business to have what I'll call the factory of the business prepare information, thoughtful information for clients, the revolution's there. When you look at the data sets we have across the firm and our ability to get data and information to clients, so that they can make better decisions around the way they position in markets, that's another obvious use case. For our engineering stack and we have close to 11,000 engineers inside the firm, the ability to increase their coding productivity is meaningful. So those are a handful. There are others. We have a broad group of people that are very focused on this. But again, I'd step back. Well, this will increase our productivity. The thing that we're most excited about is all businesses are looking at these things and are looking at ways that it adapts and changes their business. And that will create more activity in a tailwind broadly for our businesses. People will need to make |
2,739 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | changes their business. And that will create more activity in a tailwind broadly for our businesses. People will need to make investment, they'll need financing, they'll need to scale. And so we're excited about that broad opportunity. |
2,740 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Gerard Cassidy: Very good. And then as a follow-up, Dennis, you talked about credit, and it was impressive that you didn't have any charge-offs in the wholesale book. Can you give us some color on what you're seeing there? It seems like there must be some improvement since obviously you didn't have any charge-offs in the wholesale book?
Dennis Coleman: Sure. Thanks, Gerard. As you observe, the charge-off rate for us in the wholesale is approximately 0%. What we did see in this quarter was release, and we've been able to improve some of our models and be able as a consequence to release some of the provisions in the wholesale segment. So while that was a contributing benefit to sort of call it the net PCL of the quarter with consumer charge-offs offset by that wholesale release, that's not necessarily something that we would expect to repeat each quarter in the future. And although we manage our credit and our wholesale risk very, very diligently and consistently, it is more likely the case that we will have some degree of impairments given our size and scale and representation in the business. But we're pleased that the overall credit performance in terms of charge-offs is about 0%.
Gerard Cassidy: Thank you.
Operator: We'll go next to Saul Martinez with HSBC.
Saul Martinez: Hi, good morning. Thanks for taking my question. Just a follow-up on capital, I mean, it certainly is encouraging that your CET1 ratio rose 20 bps in a quarter where you bought back $3.5 billion of stock and you did have a -- I think, a $16 billion reduction in RWA as your presentation talks about credit RWA is falling this quarter? I guess, can you just give a little bit more color on what drove that reduction? And I guess more importantly, is there continued room for RWA optimization from here to help manage your capital levels? |
2,741 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: Sure, thanks, Saul. I appreciate that question. Capital optimization, RWA optimization, is something that we've been committed to for a very long period of time. On the quarter, there were reductions both in credit and market risk RWAs. Drivers included less derivative exposure, reduced equity investment exposure and in some places lower levels of volatility. We try to get the right balance between deploying on behalf of client activity, as well as being efficient and rotating out of less productive activities or following through on our strategic plan to narrow focus and reduce balance sheet exposure. So that is something that was contributed to quarter-over-quarter benefit despite the buyback activity we executed. And it's something we'll remain very focused on just given the multiplicity of binding constraints that we operate under.
Saul Martinez: Thank you, that's helpful. And maybe a follow-up on financing, FIC financing up 37% equities, the equity financing, now something close to 45% of all of your equity sales and trading revenues. I guess how much more room is there, or how should we think about sort of the size of the opportunity set, you know, to continue to grow from here? How much more space is there, you know, to use finding a thing as a mechanism to help deepen penetration with your top institutional clients? |
2,742 | GS | 2 | 2,024 | 2024-07-15 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Dennis Coleman: That's a good question, Saul. I think on the FIC financing side, as I indicated, we do think that we are helping clients participate in the overall level of growth that they're seeing in their businesses. And you know, we think based on what we see currently, that we can calibrate the extent of our growth based largely on how we assess the risk return opportunities that across the client portfolio. So we're being disciplined with respect to our growth, but trying also to support clients in their growth and drive a more durable characteristic across the GBM business. In equities, the activity and the balances, et cetera, obviously have benefited from equity market inflation over the course of the year, but it's also an activity that we remain committed to in terms of supporting clients. And clients look to us on a holistic basis really across both FIC and equities to ensure that across all of the activities they're doing with us that we're finding some balance between helping them through financing activities, helping them with intermediation, helping them with human capital. So both of those activities are part of more interconnected activities with clients and something that we remain very focused on and think we can continue to grow.
Saul Martinez: Okay, great, thank you.
Operator: Thank you. At this time there are no additional questions in queue. Ladies and gentlemen, this concludes the Goldman Sachs second quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. |
2,743 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Good morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs' First Quarter 2024 Earnings Conference Call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audiocast is copyrighted material of The Goldman Sachs Group, Inc., and may not be duplicated, reproduced, or rebroadcast without consent. This call is being recorded today, April 15th, 2024. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Dennis Coleman. Thank you. Mr. Solomon, you may begin your conference. |
2,744 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Thank you, Operator, and good morning, everyone. Thank you all for joining us. We feel very good about our first quarter results, which reflect the strength of our world-class and interconnected franchises and the earnings power of our firm. This performance was aided by the swift actions we took last year to narrow our strategic focus and play to our core strengths. As you can see, we are delivering on our strategy and we are pleased with the returns we generated this quarter. As laid out in January, we have three strategic objectives, to harness One Goldman Sachs to serve our clients with excellence; to run world-class differentiated and durable businesses; and to invest to operate at-scale. Across the firm, we are effectively serving clients in what remains a complex operating environment. Looking back on the last year or so, one of the most common questions clients and investors have asked is around the timing of a broader reopening of the capital markets. I've said before that the historically depressed levels of activity wouldn't last forever. CEOs need to make strategic decisions for their firms, companies of all sizes need to raise capital, and financial sponsors need to transact to generate returns for their investors. Where we stand today, it's clear that we're in the early stages of a reopening of the capital markets, with the first few months of 2024 seen an reinvigoration in new issue market access. For example, there were a number of large IPOs across geographies and the strong reception across transactions, including the IPOs for Galderma, Reddit, and Rank is the latest sign that investors' risk appetite is growing. In debt capital markets, tighter spreads have contributed to a constructive issuance environment and investment grades with volumes hitting a record for the first three months of the year. Additionally, refinancing was a major theme with robust high-yield and institutional loan refinancing volumes. Given a more accommodative issuance backdrop as well as the potential for |
2,745 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | and institutional loan refinancing volumes. Given a more accommodative issuance backdrop as well as the potential for increased acquisition financing, alongside higher M&A activity, we expect solid levels of debt underwriting activity to continue this year. With our long-standing leadership positions across the global capital markets, we have been at the forefront in helping our clients access the markets and our firm stands to benefit further as transaction volumes rise from the 10-year lows. It's important to note that alongside the reopening, we are seeing in capital markets, our intermediation businesses continue to be active in supporting our clients' needs. And we're growing financing revenues across FICC and Equities, which together were a record this quarter and rose 18% sequentially. All-in, our top-tier intermediation franchise, and more durable financing results are helping raise the floor in global banking and markets. In Asset & Wealth Management, assets under supervision rose to a new record of $2.8 trillion this quarter, which represented our 25th consecutive quarter of long-term fee-based net inflows. We have a diversified platform across public and private markets and are delivering solid performance across asset classes, and we continue to invest resources in growing this business, particularly across Wealth Management, Alternatives, and Solutions. In Wealth Management, we saw significant strength this quarter with total client assets ending at $1.5 trillion. In Alternatives, we raised $14 billion in commitments despite a more difficult fundraising environment. And in Solutions, we continued -- we saw continued demand for our outsourced CIO and SMA offerings. These are all areas in which we still see significant opportunities and we have a proven track record and demonstrated right to win. I also want to touch on a topic coming up in virtually every client conversation I have, Artificial Intelligence. While there is broad consensus about the transforming potential of AI, there is an enormous |
2,746 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | I have, Artificial Intelligence. While there is broad consensus about the transforming potential of AI, there is an enormous appetite for perspectives on how certain aspects may play out, including the timeline for commercial impact, shape of potential regulations, impact on jobs, and where value will accrue in the ecosystem. Today, we are proud to be at the forefront of advising clients on these topics and how to think about potential use cases in their operations. As we look longer-term, to the extent that this technology develops in line with expectations, there will be significant demand for AI-related infrastructure and as a result, financing, which will be a tailwind to our business. For our own operations, we have a leading team of engineers dedicated to exploring and applying machine learning and artificial intelligence applications. We are focused on enhancing productivity, particularly for our developers, and increasing operating efficiency while maintaining a high bar for quality, security, and controls. Like with any emerging technology, a thoughtful approach and keen eye on risk management will be crucial. Turning to the macro-environment, we continue to be constructive on the health of the US economy. The Fed most recently telegraphed three rate cuts in 2024, but last week's CPI print has lowered market expectations. This will continue to evolve and be highly data-dependent. I am also mindful that US equity markets are hovering near-record levels at a time when we see -- when we continue to see headwinds, including concerns around inflation, the commercial real estate market, and escalating geopolitical tensions around the world. This combination could slow growth. But that said, the US economy has proven to be resilient, supported by a number of factors, including government spending as well as labor force growth driven by above-trend levels of immigration. So, while the environment is constructive and markets expect a soft landing, the trajectory is still uncertain. Nonetheless, I'm very |
2,747 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | the environment is constructive and markets expect a soft landing, the trajectory is still uncertain. Nonetheless, I'm very confident about the state of our client franchise, the caliber of our people, and our culture of collaboration and excellence. Every day as I interact with the people of Goldman Sachs around the world, I am consistently impressed by their talent, capabilities, and how tirelessly they work to serve our clients. The quality of our people reinforces my conviction in the long-term opportunity set for Goldman Sachs and our ability to deliver for clients and shareholders. I will now turn it over to Dennis to cover our financial results for the quarter. |
2,748 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Thank you, David. Good morning. Let's start with our results on Page 1 of the presentation. In the first quarter, we generated net revenues of $14.2 billion and net earnings of $4.1 billion, resulting in earnings per share of $11.58, an ROE of 14.8%, and an ROTE of 15.9%. We provide details on the financial impact of selected items in the bottom table, the aggregate of which was immaterial this quarter. Let's turn to performance by segment, starting on Page 3. Global Banking & Markets produced revenues of $9.7 billion in the first quarter and generated an 18% ROE on a fully allocated basis. Turning to Page 4. Advisory revenues of $1 billion were up versus a year ago amid higher completed transactions. We remain number one in the league tables for both announced and completed M&A. Equity underwriting revenues of $370 million and debt underwriting revenues of $699 million, both rose significantly year-over-year amid an increase in industry volumes. Our backlog fell quarter-on-quarter as we successfully brought transactions to market, though client engagement and dialogues remain robust. FICC net revenues were $4.3 billion in the quarter, up from a strong performance last year as our global scaled franchise continued to serve clients amid a dynamic operating environment. Intermediation results were driven by better performance in mortgages, credit, and currencies. Our long history of risk-taking acumen enabled us to effectively make markets across a number of different geographies and asset classes. We produced record FICC financing revenues of $852 million, which rose sequentially primarily on better results in repo. We remain confident in our ability to continue to grow balances and drive growth in this business over time. Equities net revenues were $3.3 billion in the quarter. Equities intermediation revenues of $2 billion rose 14% year-over-year on better performance in derivatives. Equities financing revenues of $1.3 billion were modestly higher year-over-year as record average prime balances |
2,749 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | derivatives. Equities financing revenues of $1.3 billion were modestly higher year-over-year as record average prime balances during the quarter were only partially offset by lower financing spreads. Moving to Asset & Wealth Management on Page 5. Revenues of $3.8 billion were 18% higher year-over-year. Record management and other fees were up 7% year-over-year to $2.5 billion. As a reminder, we closed the sale of Personal Financial Management in November of last year, which contributed approximately $60 million in fees in the year-ago period. Incentive fees for the quarter were $88 million, up sequentially and year-over-year. Based on our bottoms-up analysis, we expect to reach our target of $1 billion in annual incentive fees over the medium term, supported by an estimated $3.8 billion of unrecognized incentive fees as of year-end. Private banking and lending revenues were $682 million, up substantially as revenues in the prior year period were negatively impacted by the partial sale of our Marcus loan portfolio. Equity investments and debt investments revenues totaled $567 million. In equity investments, we saw improved performance year-over-year in our private portfolio that was largely offset by a markdown on a large public position. Now moving to Page 6. Total assets under supervision ended the quarter at a record $2.8 trillion. We had $24 billion of long-term net inflows, largely in fixed income, representing our 25th consecutive quarter of long-term fee-based inflows. Turning to Page 7, on Alternatives. Alternative assets under supervision totaled $296 billion at the end of the first quarter, driving $486 million in management and other fees. Gross third-party fundraising was $14 billion in the quarter. We continue to expect to raise between $40 billion and $50 billion in Alternatives across private equity and other strategies this year. More broadly, we are leveraging our long-standing leadership position in private credit to capitalize on this secular growth opportunity and expect to grow our assets |
2,750 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | leadership position in private credit to capitalize on this secular growth opportunity and expect to grow our assets from roughly $130 billion to $300 billion over the next five years. On-balance sheet Alternative investments totaled approximately $44 billion. In the first quarter, we reduced our historical principal investment portfolio by $1.5 billion to $14.8 billion. We expect reductions at roughly this pace for the rest of 2024 and expect to sell down the vast majority of our HPI portfolio by the end of 2026 consistent with our target. Next, Platform Solutions on Page 8. Revenues were $698 million. Overall, segment profitability has improved with a pre-tax net loss of $117 million for the quarter. In line with our target, we expect to drive this business to pre-tax breakeven next year. On Page 9, firmwide net interest income was $1.6 billion in the first quarter, up sequentially on an increase in interest-earning assets. Our total loan portfolio at quarter-end was $184 billion, roughly in line with the fourth quarter, as an increase in other collateralized lending was partially offset by the sale of the remaining GreenSky portfolio. Our provision for credit losses was $318 million, which reflected net charge-offs in our credit card lending portfolio. Within our wholesale portfolio, impairments trended modestly lower versus the levels in the last few quarters. Turning to Page 10. We continue to provide additional information detailing our CRE exposure. As you know, we moved early in actively risk managing our CRE exposure and currently have $26 billion in loans, $4 billion in AWM alternative equity and debt securities, and $2 billion in equity at-risk related to CIEs. Turning to expenses on Page 11. Total quarterly operating expenses were $8.7 billion, resulting in an efficiency ratio of 60.9%. Our compensation ratio net of provisions was 33%, reflecting improved operating performance for the firm. Non-compensation expenses were $4.1 billion. These costs declined year-on-year, even inclusive of a $78 million |
2,751 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | for the firm. Non-compensation expenses were $4.1 billion. These costs declined year-on-year, even inclusive of a $78 million FDIC special assessment charge, and were down sharply versus the fourth quarter. Our effective tax rate for the quarter was 21.1% and for the full year, we expect a tax rate of approximately 22%. Now on to Slide 12. Our Common Equity Tier-1 ratio was 14.7% at the end of the first quarter under the standardized approach. In the quarter, we returned $2.4 billion to shareholders, including common stock repurchases of $1.5 billion and common stock dividends of $929 million. We are currently running with a 170 basis point buffer above our capital requirements. Given expectations for significant modifications to the Basel III proposed rule, we should have materially more flexibility on capital deployment. We also remain committed to paying our shareholders a sustainable and growing dividend. In conclusion, our first quarter results reflect the strength of our leading global banking and markets franchise and our growing Asset & Wealth Management business. Simply put, we are delivering on the things we said we would do. We are focused on our strategic objectives and the execution focus areas for 2024 that we laid out in January, which will help our businesses produce mid-teens returns through the cycle. We are confident in our ability to deliver for shareholders while continuing to support our clients and remain optimistic about the future opportunity set for Goldman Sachs. With that, we'll now open up the line for questions. |
2,752 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. Ladies and gentlemen, we will now take a moment to compile the Q&A roster. [Operator Instructions] We'll go first to Glenn Schorr with Evercore.
Glenn Schorr: Hi. Thanks very much. It's a tough one because you are definitely executing on a lot of the objectives you laid out. And of course, the sustainability of banking is what it is. I noticed your lower pipeline. But the real question I have is, the sustainability of the whole package, meaning, you just had really strong revenue across the board on everything. Comp was up with that normally, but non-comp is down, the provision is down and RWA didn't increase even though you were growing your financing. So I'm giving you a softball here and just saying, what of that package can continue to stick? |
2,753 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Well, I appreciate it, Glenn. And I think there are a bunch of things that continue to stick because one of the things you know that we've been focused on is building a more durable business and that there are a handful of things when you look across the whole package. We've made significant progress over the course of the last five years. Certainly, building our financing business in our markets business is something that's more durable and more sustainable. We still think there's lots of room to grow. And look, the world is growing and when the world grows and our clients grow, they need us to finance them. We've got the capital to deploy as long as we can drive attractive returns with that client base. And so we stay focused on that. We've doubled our management fees on our Asset & Wealth Management business over the last five years and we continue to be very focused on fundraising, our ability to deliver on that. Those are more durable revenues. And there's operating leverage around that business that we still think we have yet to achieve. You've seen the margin improvement obviously in that business, but that business still has a higher capital density than we'd like that business to have and we continue to focus on our historical principal investments and making progress there. Overall, I think, we've meaningfully improved the client franchise and taken wallet share, and we're just very, very focused on our relative participation in the market opportunity that exists with our big institutional clients. And we've said over the course of the last few years and there have been lots of questions on it, are those wallet shares sticky? I think the wallet shares are. What I can't tell you for sure is what the opportunity set is on every quarter-to-quarter. But when you look at the breadth, the leadership position, the global nature of these businesses and you look at the whole package, these are durable businesses that produce accretive returns where we're very well-positioned. And we continue to |
2,754 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | whole package, these are durable businesses that produce accretive returns where we're very well-positioned. And we continue to focus on executing and enhancing that position. |
2,755 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Glenn Schorr: I definitely appreciate all that. Can we talk just follow up on just the non-comp piece and talk -- you had some big drops in amortization and depreciation and some marketing and stuff. So are those at actually run-rate levels now going forward also because that was a nice positive surprise?
Denis Coleman: Good morning, Glenn. It's Dennis. As we've said over the last number of quarters, we've been very, very focused on non-comp and containing the growth of non-comp. There clearly are inflationary pressures that impact a number of items in our non-comp expense. The sharp decrease sequentially we're pleased with, as well as the year-over-year decrease, but there were a number of items over the course of last year that we didn't necessarily expect to repeat. And so it's good to get on to a more normalized operating trajectory with respect to our non-comp expense base, but it's something we're going to remain very, very focused on managing in a disciplined fashion. But I think this quarter is a much more normal quarter than some of the preceding quarters.
Operator: Thank you. We'll go next to Ebrahim Poonawala with Bank of America.
Ebrahim Poonawala: Good morning. I guess I just wanted to follow up, David. You mentioned AI and would love this -- it's hard in our seats to figure out what's hype, what's real. If you can double-click on some of the comments you made around comparing what's going on with AI today versus maybe the dotcom bubble around the runway this might create for capital markets, IB, not just for this year, but beyond? And then also the other side around, is there line-of-sight of how much more efficient Goldman itself can get by deploying AI? Thank you. |
2,756 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure. So, I mean, big picture and look, I'm not a stock picker, so I'm not going to comment when you make a comparison to the Internet explosion in 1999, 2000, 2001, I'm not going to comment around that. I think we have -- we've got a lot of stock market capitalization that's being driven by big platforms that I think have an enormous competitive advantage around the scaling of these technologies. But broadly speaking, these technologies require certain things, including infrastructure, power, and these things require financing to drive the scale that's going to be necessary for people to execute on the investments that they see as important to keep their businesses competitive at pace. And that is creating an ecosystem of activity in our investment banking and markets business that we've seen in the context of other areas of significant shift or macro expansion over a long period of time. So I actually think there's a very, very constructive runway of opportunity set for us with our clients as people reposition their businesses, and we're talking about a level of scale that is -- that is candidly unprecedented. And so I think that opportunity is something over the course, this is not a quarter-to-quarter thing, this is over the next five to 10 years and we're very, very focused on it and very engaged. And by the way, it's not just companies, it's governments, obviously that are making enormous investments in bringing infrastructure into their locale. And so all of this is something that we're very strategically focused on. Double-clicking and getting more narrowly focused on Goldman Sachs, I would just say we see enormous opportunities for productivity gains and also opportunities for efficiency. Our use cases that we're testing and that we're implementing focus on those two areas. But I'd really like the focus to be more on productivity and the ability to scale our smartest people to do more with our clients rather than expecting an efficiency gain that becomes very cost accretive. I think one |
2,757 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | people to do more with our clients rather than expecting an efficiency gain that becomes very cost accretive. I think one of the most important things for this firm and the success of this firm is the time our people spend with clients, serving our clients, executing for our clients, and these tools give us more productivity, and also when we look at our datasets and what we have internally and ability to deliver them a value-added package of information, thought process that we think can be differentiated. And so we're very focused on the productivity side, although, of course, we have analog systems and processes where there will be efficiency and we're also focused on bringing those to bear when we look at our overall cost structure. |
2,758 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Ebrahim Poonawala: That's good color. Thank you. And just separately, for the Goldman stock, right, I think from an investor standpoint, a lot of focus on how quickly we can grow the share of Asset Management. You've talked about the HPIs coming down, alt assets going up. Is -- how else should shareholders and prospective investors think about strategy around growing the Asset Management revenues and is inorganic growth at all part of the strategy and in terms of how management is thinking about things today? Thank you.
David Solomon: So we -- in January, we said to you, we thought high single-digit growth with margin improvement and less capital density over time. We're executing on that. We are very focused at the moment on our organic execution. Firm obviously generates a lot of capital. There could be a time in the future where something might come up that could be interesting and could accelerate that pace in the overall mix. But at the moment, our focus is on the execution of what we have in front of us and we are making good progress. But I think we put out a handful of metrics, both in terms of top-line growth, our ability to continue to fundraise, you saw that we highlighted $15 billion of fundraising in Alternatives in the first quarter. We said we expect to raise $40 billion to $50 billion this quarter -- this year. Obviously, the $15 billion keeps us on pace for the $40 billion to $50 billion we said we could raise this year. That doesn't stop this year. We think we have a very strong fundraising machine that can continue for a number of years going forward. So we're focused on the things that matter in Asset Management. What matters? Performance matters, client experience matters. We're incredibly focused on both those things and working hard to make sure we use our global scale and the depth that we have around the world to execute very -- very effectively.
Operator: Thank you. We'll go next to Christian Bolu with Autonomous Research. |
2,759 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. We'll go next to Christian Bolu with Autonomous Research.
Christian Bolu: Good morning, guys. Maybe I'll ask Glenn's question in a different way. If I look at that 18% ROE for the Global Bank and the Markets business, it really -- it really catches my eye here. So how would you characterize this quarter's performance? Is it like sort of normal-ish to you? Does it feel maybe peak-ish to you? Again just trying to figure out if 18% ROE is anywhere sustainable for that business.
David Solomon: That was -- it was a -- it was -- there's no way to shade this. It was a strong quarter for Global Banking and Markets. Peak, I mean, I can point in the last few years to quarters in Global Banking and Markets where the returns were higher. But I certainly wouldn't say that this is what we expect to be an average quarter in Global Banking and Markets. We've said clearly, we think this is a mid-teens business through the cycle. The performance this quarter was higher. There were performance last year was meaningfully lower. I think the right thing to focus on, Christian, is mid-teens through the cycle. That's the way we think about it. And there was client activity and opportunity set for us this quarter and I think one of the things that we continue to try to talk about is that when there is opportunity with our clients, there is opportunity in the market. We're good at capturing that, delivering that for shareholders. And then when the environment is more tough though, this is a more durable and sustainable business than people may have looked at the past. But I would view this as a very strong quarter on Global Banking and Markets and not what we would target as the average run-rate for the business. |
2,760 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Christian Bolu: Okay. That's very helpful. Maybe on to private wealth, if I'm reading Slide 9 correctly, you had something like $17 billion of inflows into Wealth Management AUS. So that would equate to something like 9% organic growth, which is well above peers, I would call it best-in-class. So can you give more color on what's driving that growth? Maybe any color by regions or products as to what's resonating with clients? And again, longer-term, how are you thinking about sustainability of that level of organic growth? |
2,761 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Yes. Again, this I think comes down to focus and you know we made some very -- we talked about conscious decisions. We have talked about broadening our Wealth platform to get much more broadly into what I'd call kind of high net-worth Wealth Management. And with the sale of United Capital, we continue to be very focused on our ultra-high net-worth platform. It is an extraordinary platform. I do think it's a best-in-class platform. I do think that the ultra-high net-worth business is still a very fragmented business. While we have leading share, I think those shares are still on a global basis, a leader is a single-digit share. There's a lot of wealth in the world, there's a lot of wealth accumulating. But we are very, very well-positioned to continue to capture that secular trend. And I think the business is performing very, very well. So, our alts franchise, I think is differentiated and we're allowed to deliver alts in an effective way to wealth clients. I think that's something that gives us a strong secular tailwind. We're expanding our private banking activity. That's not something that we have been focused on, which I think is also strengthening our position as a wealth manager. So, I think there's a good runway for this business. I do think it's a best-in-class franchise that has room to grow. And I think you're seeing it perform well and we're very focused on it. I think the sharp decision around how we're going to focus this business, I think we're benefiting from at the moment.
Christian Bolu: Great. Thank you.
Operator: We'll go next to Betsy Graseck with Morgan Stanley.
Betsy Graseck: Hi. Good morning. Can you hear me okay?
David Solomon: Good morning, Betsy.
Denis Coleman: Good morning.
Betsy Graseck: Okay. All right. Great. Just want to make sure.
David Solomon: We can hear you fine. Thank you. |
2,762 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Betsy Graseck: Okay. All right. Great. Just want to make sure.
David Solomon: We can hear you fine. Thank you.
Betsy Graseck: All right. Thanks. So, just two follow-ups. One, I heard all the commentary about how the 1Q is run rate a little bit better than run rate on average over time. But it doesn't take away from the fact that 1Q was very strong. And I just wanted to understand, was there anything that we should understand about the revenues in equities and fixed income, for example, that were different this quarter? And the reason I ask is, VaR efficiency was so strong, right? You've delivered very strong trading revenues on VaR that was, you know, basically flat Q-on-Q. I mean, a little down, a little up, depending on which asset -- which asset class you're looking at. So, was there anything in the -- in -- when you mentioned, you stepped into client activity and opportunity set, was there anything unique about that opportunity set that enabled you to do this in a way that didn't really tag VaR at all?
Denis Coleman: Sure. So, Betsy, it's Denis. Nice to hear from you.
Betsy Graseck: Thanks. |
2,763 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. So, Betsy, it's Denis. Nice to hear from you.
Betsy Graseck: Thanks.
Denis Coleman: Look, to give you some color on that, I wouldn't point to any particular discrete item. I would say the revenue generation, the activity was broad-based. But in addition to the consequence of the focus on market share and wallet share that we've made across the client franchise over time, we also did see good opportunities to risk intermediate on behalf of clients across geographies, across asset classes. And I would observe that over the course of the quarter, it was just a very benign operating environment. Credit spreads were tightening, equity valuations were going up, and that provides a tailwind to our performance across portions of our Global Banking and Markets business as well. The first quarter is obviously often seasonally strong as well. So we think we really captured a lot of the opportunity that was presented by both the environment and our client engagement. And as David said, that may not necessarily be the case each and every quarter, particularly in FICC and Equities. So, when we talk about like a Global Banking and Markets segment overall, clearly more upside across banking, but a strong performance across both FICC and Equities in Q1.
Betsy Graseck: Super. That's really helpful. Thanks for the incremental color there. Just one other follow-up. David, you mentioned you're able to deliver alts in a unique way to the Wealth platform that you've got. Could you just give us a little more color as to what you're thinking about there that we should understand? Thanks so much. |
2,764 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure. I think one of the things that our Wealth Management franchise finds very attractive is, we want an open platform. And so when it comes to alts, we obviously have a very, very broad, very, very deep, very, very unique offering as one of the top five or six alts providers on an integrated basis in the world with our own products, what we're manufacturing out of our Asset Management business. But in addition, we want an open platform where we deliver them access to alternative solutions and products from all different world-class managers around the world across the spectrum. And so I think that's a very, very unique offering that very, very affluent people who wealth manage at Goldman Sachs find super attractive and super differentiated.
Operator: Thank you. We'll go next to Brennan Hawken with UBS.
Brennan Hawken: Good morning. Thanks for taking my question. So I wanted to ask one on your M&A franchise. So the recovery in announced M&A has been really impressive, but really kind of dominated by strategic, and given your strong franchise among sponsors, I'm curious to get an update about what you're seeing among that cohort and maybe when you might expect we will see a ramp in announcements from the sponsor side. |
2,765 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Yes. Brennan, that's -- I appreciate that question. And that's a sharp observation on your part. The sponsor activity is still muted, but I would say it's definitely picking up. The engagement with sponsors in the quarter was meaningfully improved. And as I've said before, sponsors make money both for themselves and for their investors by buying things and selling things. And the level of activity has been incredibly muted. And when you look at the LP community, the LP community is putting a lot of pressure on the financial sponsor community to return more capital and increase the velocity of capital return. And so I do think the pace is going to pick up in the coming quarters. I'd say the activity and interaction and engagement is higher in the first quarter than it was throughout 2023. But I would say it's still operating at lower levels. There's a lot of upside for our business. Our business is very correlated to a pickup in sponsor activity. And so to the degree that it did pick up, that would be a very big tailwind for our business across banking and markets broadly. When I look at our leveraged finance deals book, it's still operating at historically very, very low levels. We feel fortunate that we've got a good amount of capital flexibility. That was to accelerate to deploy which is obviously very accretive and attractive business. We're not seeing it really accelerate yet, but I think it's coming. And certainly, the sustained level we've had over the -- the level we've had over the course of the last 12 to 18 months is not sustainable. It will pick up. It's just a question of when. And so that is a potential tailwind for our business in future quarters. |
2,766 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Brennan Hawken: Great. Thanks. Thanks for that color, David. I appreciate it. And then another question on alts. So, fundraising looks really good. I know there can be some noise in the revenue. So, just curious about the alts revenue down year-over-year and the AUS only up sort of marginally sequentially. Could you give some color around what was happening in those lines and maybe any potential noise?
Denis Coleman: Sure. Brennan, it's Denis. So, a couple of things. Obviously, the movement in AUS is a function of how we fundraise, how we deploy, and overall levels. We have had a lot of success fundraising, not just in the last quarter at $14 billion, but now with the whole $265 billion-plus since the original Investor Day. But there is a lag in terms of when some of that capital is put to use and actually moves into AUS. Not all of our funds that are raised are AUS-ing immediately. So I think that is something you can look out for in future periods. And then in terms of some of the sequentials on alts, as David was walking through our platform, our Wealth platform in terms of having Goldman Sachs proprietary funds, also open architecture, and third-party platform, some of the alts fees we generate in raising capital for other managers on our platform, and if we look over the sequential period, we had less by way of placement fees associated with those capital raises in the first quarter than we did in the fourth quarter last year.
Operator: Thank you. We'll go next to Mike Mayo with Wells Fargo. |
2,767 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. We'll go next to Mike Mayo with Wells Fargo.
Mike Mayo: Hi. David, you reiterated the desire for Goldman to have a more narrow strategic focus, but you still have some cleanup from the past charges this quarter for GreenSky, the GM Card, Platform Solutions still lost $117 million. So I'm just trying to figure out in this context where transaction banking stands. I mean, you had 8% year-over-year growth. So, that's decent. But three years ago, March 1st, you guys said transaction banking, you're building global payments around the world. And then March 8th of this year on Bloomberg, it says that you're closed in Japan and now you're focusing on the US and Europe. So on the one hand, are you simply pulling back your ambitions? On the other hand, maybe you have more financial discipline. You're making sure these adjacent activities are generating profits instead of just growth. |
2,768 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Look, Mike, I think you summarized it well. I think it's yes to a bunch of the things that you said. We're looking hard -- we are -- I think it's very important for me to say that we're very committed to transaction banking. We think we've got very, very good technology and a good platform that we can grow and continue to scale over time. But there's no question we're very focused on making sure that we execute appropriately and that it's not just top-line growth that it delivers profitability. It's something that sits in our client franchise and adds to the portfolio of things that we can bring to our clients. I think some of the ambitions might have been too broad in terms of our ability to execute immediately. And so we've narrowed that, but we remain committed, focused, and growing. And I think this is a medium and longer-term project that we will deliver on. It's small, but I think we've got the right focus. We made a hire to bolster the expertise in the leadership and we're moving forward on that strategy. And with respect to the cleanup, we continue to narrow and cleanup. The after-tax loss from the platforms was less than $100 million. We've said clearly that we believe that we can bring the platforms to breakeven or profitability in 2025 and we're executing against that.
Mike Mayo: Just to follow up on the transaction banking. You said some ambitions were too broad. Again, it's better to have profitable growth than just growth. So, point acknowledged. But what happened? I mean, where were you kind of underestimating expenses or the build-out costs or what was more difficult than you had anticipated? |
2,769 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Well, I think there were a number of things, Mike, that came together. I think when you're building new businesses, you give authority to the people that are building those businesses and you create metrics and you hold people accountable as you advance. And I think there were things where we thought we could do more globally and candidly when we really looked at the cost of executing and delivering, there was more friction in that context. And so we've chosen to narrow some of that in terms of the global footprint of that. That doesn't mean later there might not be opportunity to do it, but we think for now, that's the right action. I'd say secondarily, the regulatory environment changed massively and has also raised the bar and created headwinds in a different lens with which we look at the expansion of these kinds of activities. And so that's something else that went into the mix. And so look, I think one of the things that we try to do is to look at everything with facts, with data, with information to be unemotional and to be willing to say, okay, this isn't exactly right. So we're going to adjust. And I think we're showing that we're willing to adjust and make adjustments always with a goal of growing the firm and delivering for shareholders, driving profitable businesses that deliver accretive returns for shareholders. We'll get some things right, we'll get some things wrong. But when we look at the information of the data and it's not exactly perfect, we'll adjust.
Operator: Thank you. We'll go next to Steven Chubak with Wolfe Research.
Steven Chubak: Hey, good morning. So, wanted to follow up, David, on --
Denis Coleman: Good morning.
David Solomon: Good morning. |
2,770 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Good morning.
David Solomon: Good morning.
Steven Chubak: Good morning, guys. Wanted to follow up, David, with the earlier discussion just on sponsor-related activity. Private credit fundraising remains robust, but the syndicated markets are also reopening. Just wanted to better understand what you're seeing in terms of competition in syndicated versus private markets, how it's impacting your IB&O franchises. And just given some of the recent price coverage, maybe just speak to your growth ambitions in the private credit space more broadly. |
2,771 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure. I'm going to -- I'll make a couple of comments, but I'm going to ask Denis to comment too because as you know, Denis -- Denis ran these businesses for us for an extended period of time. But I'd just say first, the narrative that in some way, shape or form, this is -- this is about the syndicated market versus the private market, I think is an oversimplification. As transaction volumes increase, particularly in the sponsor community, the amount of activity that will come out of the syndicated market will obviously increase meaningfully. We're very well-positioned for that. We are one of the largest players in that and that area is operating at cyclical lows at the moment. But that's going to continue to be a very, very important part of capital formation and it's not going away. The growth in private credit will continue. I think we're very well-positioned for that. We have about $130 billion of private credit assets, which makes us one of the largest players. I've said publicly, we have aspirations to continue to invest and grow, and we see a number of places where we can do that. We're very focused on that. I do think it's important to highlight that we've not been through a credit cycle in a very long time. And so while there are lots of private credit players that continue to grow and expand, how those platforms and those businesses will respond when we do go through a credit cycle and we will go through a credit cycle, is a little bit unclear at the moment. But I think strategically, we're in a very, very interesting position because we have the ability to marry for our clients both our capabilities in the syndicated market and also our private credit capabilities. And you can see that. I mean, I can point to a transaction that was done in the last -- in the last few months we did just that. And in fact, it wasn't just in credit, it was in equity too, you can look at the Endeavor transaction and you can look at our ability to participate and lead both as a syndicated lender, but also as |
2,772 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | at the Endeavor transaction and you can look at our ability to participate and lead both as a syndicated lender, but also as a capital provider across the capital structure for our investors as an example of the way that I think that our franchise and our platform is differentiated. Denis, do you want to add anything to those comments? |
2,773 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. I think it's well-covered. I mean, I think there was -- there's been a lot of discussion over the past of the -- past year of sort of private credit versus syndicated alternative, but the reality is, the syndicated alternative didn't really exist. And so it was really just a discussion around private credit. With first quarter activity levels, you now see a viable, functioning, and healthy syndicated loan market. The vast majority of the activity was actually refinancing. A lot of that refinancing was refinancing private credit capital structures with the more attractive pricing available in the broad-based syndicated market. So the reality is, these are all just forms of credit made available to different borrowers. And over time, I think there'll be a much more normalized mix where you'll see underwritten as well as directly lent solutions, in some cases, existing in the same capital structure. And I think we're just in a healthier environment, but from Goldman Sachs' perspective is positive because the data points that we now see across the leverage lending market make sponsor estimated weighted-average cost of capital much more observable and that should unlock their ability to start to price and put together transactions that should fuel some incremental sponsor-related change of control activity. So, I think the sort of two markets functioning side-by-side is good in terms of activity and what it means on the forward for Goldman Sachs. |
2,774 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Steven Chubak: Really helpful color. And for my follow-up, just on capital management. CET1 continues to build, you're well in excess of the regulatory minimums, the direction of travel on Basel III in terms of expectations around the proposal is certainly more favorable. At the same time, it now looks like you might be more constrained by the SLR, which declined to 5.4%. I know that's never intended to be the binding constraint, but I was hoping you could just speak to how you're managing to leverage constraint, which at least appears to be binding at the moment, and what we should expect in terms of the pace of buyback and whether that actually informs your expectation there.
Denis Coleman: Sure. Thanks, Steven. So, yes, you're right on all counts. Obviously, we have a variety of both capital and liquidity ratios that we manage to over time. The SLR is a slower-moving ratio as you know, but our bindingness can move back and forth between various ratios over time. And we have a bunch of levers that we can pull with respect to our activities to manage that. But I appreciate the question.
Operator: Thank you. We'll go next to Devin Ryan with Citizens JMP.
Devin Ryan: Great. Thanks so much. The first question just on kind of maybe a bigger picture on the wallet share in Markets. I know this has really been ongoing work for the firm and obviously, not just the quarter, but really the past few years, this has been pretty consistent story. So, if we kind of move aside financing, love to maybe just drill down on some of the individual products that are accelerating in Equities and FICC and where you're most pleased with the execution that has occurred over the last several years and then still where you see the biggest room to close any gaps that are maybe still there. Thanks. |
2,775 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Well, at a high level, and this was one of the things that we observed and I think we got right over a period of time, that we started with the top 100, we're now focused on the top 150 clients in this business. The top 150 clients provide a very significant portion of all the activity in this franchise. And so your share with them and managing the share with them has a big impact on your wallet shares. I think the thing that we've done well and that we see is really the case is that they all operate across all products and all activities and all silos and the ability to create a very seamless experience for them across the firm is a big change for us versus where we might have been a decade ago. And so it's something we're very focused on. There are times when there's more activity in commodities, there's time when there's more activity in credit, there's time when there's more activity in mortgages. It moves and it ebbs and flows, but what we're really trying to do is to make sure we have the full package to serve them in the most effective way and we've made real progress in that over the course of the last couple of years. I think the opportunity for us to continue to make progress comes from the fact that in the top 150, I think we stand at slightly under top three with 117 of them, don't hold me to that number exactly. It's probably, okay, 117 of them. So, obviously, we have progress to make because there's no reason why Goldman Sachs shouldn't be top three with the overwhelming majority much closer to 90% of those 150. And also when you look at top three, there are also clients where we're third, where we absolutely should be first or second. And so we continue to drill down. We continue to go, talk to our clients, listen to our clients, get feedback on how we can do a better job serving them. And that discipline and that rigor, I think is helping us execute for them, but there's more work to do and we don't take our position for granted. We try to create the right culture of focus and |
2,776 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | them, but there's more work to do and we don't take our position for granted. We try to create the right culture of focus and intensity that allows us to continue to deliver and execute both. |
2,777 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Devin Ryan: Yes. Okay. Great. Thanks, David. Maybe a quick follow-up here for Denis. Just on the equity investments line, not a great quarter there, not a drag either. It feels like it's been some time since we've seen maybe a more normal quarter without big puts and takes. And so just given the reconstitution of that book, how would you frame what a more normal quarter should look like from a revenue perspective? And then how the private portfolio is positioned if we are moving into a better exit environment. Obviously, it's been tough there as well. Thanks.
Denis Coleman: Sure. Thanks for the question. So, a couple of things, and may have been embedded in your question. But obviously looking at some of the -- on the progress in the equity investments line on a sequential basis. Just a reminder that in Q4 when we sold Personal Financial Management, that was reflected as a gain in equity investments of about $350 million that did not repeat. So that will give you some -- some insight into how that's trending sequentially. On a year-over-year basis, we are seeing performance in the private portfolio, sort of in line with what you're suggesting we might expect. And what we did see a particular markdown in the public portfolio that sort of netted into the ultimate equity investment results. We also, as you know, have been -- have focused on selling down a portion of our historical principal investments. So a combination of the ultimate size of the notional remaining in our portfolio combined with what the market conditions are, will obviously contribute -- contribute to the ultimate performance. The other guidance that we've put out there generally, medium-term guidance is that across both equity and debt investments, you're looking at a number of about $2 billion on a year. So you could put that in the quarter, about $500 million. Those are some pieces of color I'd give you.
Operator: We'll go next to Matt O'Connor with Deutsche Bank. |
2,778 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: We'll go next to Matt O'Connor with Deutsche Bank.
Matt O'Connor: Good morning. Actually, just to follow up on the last question and comment, the run-off of the historical principal investment from the $15 billion here, the $2 billion that you just referenced, is that the run-off that you expect, or was that alluding to the revenues per year?
Denis Coleman: Sure. Thanks. Let me clarify. I was making a comment with respect to revenue and then separately as it relates to the rundown of that portfolio, I guess the way to think of it, picking up questions from last earnings and/or this one. The progress that we made in the first quarter of roughly $1.5 billion, we think that's decent assumption for the pace over the course of this year. And then we just reiterated our commitment to selling down substantially all of it in line with our target.
Matt O'Connor: Okay. So $1.5 billion per quarter is what you're implying from here for the rest of the year?
Denis Coleman: On the historical principal investment portfolio, yes, we would expect something roughly in line with $1.5 billion per quarter for the balance of the year.
Operator: We'll go next to Saul Martinez with HSBC.
Saul Martinez: Hi. Thanks for taking my questions. I wanted to ask about your financing business in Markets. And obviously, there's uncertainty about the Basel end-game proposal. As you mentioned, the direction of travel seems to be for it to be materially lightened or even re-proposed. But one of the areas where it is very punitive versus other jurisdictions is in securities financing, the risk weightings for unlisted entities. And if that part of the proposal isn't materially altered, it doesn't seem like it necessarily is a focus, does that impact your ability to grow your financing revenues? Is it a threat? Is it not a big deal? Can you offset it through pricing, product design? Just curious if you can provide a little color on that. |
2,779 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. So, obviously, where Basel III ends up and which components of the rule actually are put in place and how they're drafted and how they're calculated, et cetera, will be highly determinative. But I'd say the breadth of our financing activities across both FICC and Equity are much broader than that particular component. And we expect that the underlying demand from our clients for financing across both FICC and Equities will remain high. We have leading market shares and capabilities there. So we'll expect to be able to deliver in that regard. And depending on where various pieces of regulation end up, we'll make whatever adjustments we need, either to pricing or the mix of our businesses or look for other ways to serve our clients.
Saul Martinez: Okay. Thanks. That's helpful. And then maybe just following up on Basel and the implications of it being softened, Denis, you mentioned more flexibility on capital deployment, if given the direction of travel on Basel. I mean, how should we be thinking about buyback activity from here? You did $1.5 billion. Is there -- do you feel like there is scope to increase that and potentially bring your payout ratio even closer to 100% of earnings? |
2,780 | GS | 1 | 2,024 | 2024-04-15 09:00:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Sure. I appreciate the question. We were deliberate in our script remarks about the degree of capital flexibility that we expected, but also pick up on something that David said earlier on the call, which is that we remain very committed to our capital deployment hierarchy, which starts with our client franchise. And some of the activities where historically we've been able to deploy capital have been less active. And so we have a good amount of cushion and flexibility at this point in time. As our clients become more active, the first place that we're going to look to deploy our capital is to support our clients and their activities. And after that, we would, of course, as you note, continue to be focused on a sustainable and growing dividend. And only after that would we think about return of capital.
Operator: Thank you. At this time, there are no further questions. Ladies and gentlemen, this concludes the Goldman Sachs' first quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect. |
2,781 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs First Quarter 2025 Earnings Conference Call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audio cast is copyrighted material of The Goldman Sachs Group, Inc., and may not be duplicated, reproduced or rebroadcast without consent. This call is being recorded today, April 14, 2025. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Denis Coleman. Thank you. Mr. Solomon, you may begin your conference. |
2,782 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Thank you very much, operator. Good morning, everyone. Thank you all for joining us. In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, an ROE of 16.9% and an ROTE of 18%. In a highly dynamic environment, we produced very strong results. This quarter was characterized by rapidly shifting sentiment with the market backdrop ending in a very different place than where it started. Still, our leading global franchise underpinned by our best-in-class talent, risk management, and execution capabilities delivered for our clients. Our performance underscores the importance of having a scaled franchise with a presence around the world. Being a leading global financial institution requires a deep expertise and diversification that can only come from long-term consistent investment in our client franchise, a deep risk management culture, and our strong people. This is what brings clients to Goldman Sachs. In Global Banking & Markets, ongoing policy uncertainty and market volatility drove many clients to reposition their portfolios, driving higher activity in our FICC and equities businesses. I'm proud that we were able to support the intermediation and financing needs of our clients, all while keeping a keen eye on risk management. In these businesses, we have demonstrated our ability to deliver strong results in a broad array of market environments. We've consistently grown financing and while intermediation activity across various asset classes can ebb and flow in any given quarter, our overall results have been remarkably resilient over time. In Investment banking, the volatile backdrop led to more muted activity relative to the levels we had expected coming into the year, but it is especially in environments like this that clients come to Goldman Sachs for help with their most important strategic decisions. We are the number one M&A advisor globally and have been for the last 20 years. We've built our leadership position through decades of investment and our |
2,783 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | advisor globally and have been for the last 20 years. We've built our leadership position through decades of investment and our incredible teams in the Americas, Europe and Asia. This allows us to help clients execute marquee transactions like Google's $32 billion acquisition of Wiz, the largest transaction in Israeli history or the $24 billion take private of Walgreens Boots Alliance, a firm with presence across the US, Europe and Latin America. As we stand today, our client dialogues remain elevated and our backlog is up for the fourth consecutive quarter. That being said, our ability to execute on these transactions will, of course, be dependent on market conditions. In Asset & Wealth Management, our clients continue to come to us for the quality of our advice and track record of investing acumen across asset classes, which is especially valued in turbulent markets. This quarter, our assets under supervision rose to a record of $3.2 trillion. This represents our 29th consecutive quarter of long-term fee-based net inflows, and we're making strong progress across our key growth opportunities in this business, alternatives, wealth management and solutions. At alternatives, our long track record of performance continues to support our fundraising efforts. We raised another $19 billion in the quarter, bringing our total fundraising of alternatives since 2019 to $342 billion. We also recently launched multiple flagship funds across strategies, including infrastructure, growth equity, and private credit. In Wealth Management, we continue to scale our premier ultra-high net worth franchise. Total Wealth Management revenue grew 11% year-over-year to $2.2 billion, while client assets reached another record of $1.6 trillion. Supporting this platform, we have over 1,000 private wealth advisors with an average tenure of more than 15 years. Leveraging the firm's investment platform, global network and banking capabilities, they work tirelessly to deliver unique and tailored solutions to our ultra-high net worth clients. We |
2,784 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | and banking capabilities, they work tirelessly to deliver unique and tailored solutions to our ultra-high net worth clients. We recently received a number of accolades from Euromoney, including being named the World's Best Private bank for 2025. These awards are a recognition of our excellence and longstanding commitment to serving the needs of our ultra-high net worth client base. Across our businesses, our clear priority is to serve clients with excellence. To that end, we are always seeking ways to enhance the client experience while improving efficiency. As highlighted in our strategic update this January, we are investing to strengthen our franchise and operate more effectively at scale. This includes taking steps to unlock efficiencies in technology and automation. As an example, we are leveraging AI solutions to scale and transform our engineering capabilities as well as to simplify and modernize our technology stack. Today, many of our people have access to Generative AI powered tools to help them serve clients more efficiently and increase productivity. These include a developer co-pilot coding assistant and a natural language GS AI assistant. We continue to believe an acceleration in AI adoption will allow for further efficiencies for our own business and for companies large and small. As it is utilized more broadly, productivity gains for the economy will be significant. Turning to the macroeconomic backdrop more broadly, as I said at the outset, we are entering the second quarter with a markedly different operating environment than earlier this year. Our economists' expectation for growth in the US has fallen meaningfully from over 2% to 0.5%. The prospect of a recession has increased with growing indications that economic activity is slowing down around the world. Our clients, including corporate CEOs and institutional investors are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path |
2,785 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path forward and fears over the potentially escalating effects of the trade war have created material risks to the US and global economy. We are encouraged by the administration's recent actions to pursue a more gradual policy process that allows for considered negotiations with many countries, but how policies will evolve is still unknown. We are hopeful that feedback from companies large and small, institutional investors, and ultimately consumers will support an approach that will lead to greater economic certainty and long-term growth. In the meantime, markets will likely continue to be volatile until we have further clarity. The administration's focus on trade barriers and strengthening the US competitive position is commendable. At the same time, it is important to recognize that few companies have benefited more from a post-World War II economic and financial order than the US. This doesn't mean meaningful reform in certain areas is not warranted. Today, the US is the largest, most dynamic and resilient economy with the dollar as a reserve currency. We have the broadest and deepest capital markets, which help fuel an unparalleled culture of innovation in sectors like technology and healthcare. These strengths, among others, give us the opportunity to think about how to attract and embed strategic manufacturing as an important driver of the 21st century economy. As a country, it is vital that we continue to leverage our considerable strengths as the global trading system for goods and services adjusts and evolves. On capital and regulation more broadly, we appreciate the administration's strong focus on appropriately calibrating regulation for the financial services industry. Following the recent nomination of Michelle Bowman as Vice-Chairman of Supervision at the Federal Reserve, we will continue to actively engage on these matters and hope to see material progress across capital, |
2,786 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | at the Federal Reserve, we will continue to actively engage on these matters and hope to see material progress across capital, leverage, liquidity, and supervision. As this quarter has shown, it's impossible to predict market outcomes, but it has also demonstrated once again that in times of great uncertainty, clients turn to Goldman Sachs for execution and insight, and our leading franchises have never been better positioned to support our clients. I will now turn it over to Denis to cover the financial results for the quarter. |
2,787 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: Thank you, David. Good morning. Let's start with our results on Page 1 of the presentation. In the first quarter, we generated net revenues of $15.1 billion, earnings per share of $14.12, and an ROE of 16.9%. We provide details on selected items in the bottom table, which in total reduced our EPS by $0.25 and ROE by 30 basis points. Let's turn to performance by segment, starting on Page 3. Global Banking & Markets produced revenues of $10.7 billion in the first quarter and generated an ROE of over 20%. Turning to Page 4, advisory revenues of $792 million were down versus a strong performance a year ago. We remained number one in the league tables for M&A with a lead of over $70 billion in announced volumes versus our next closest peer. Equity underwriting revenues of $370 million were flat year-over-year, while debt underwriting revenues of $752 million rose 8%, driven by asset-backed and investment-grade activity. We ranked first in equity & equity-related underwriting and ranked second in both high yield debt underwriting and leverage lending. Across Investment banking, our backlog rose sequentially, driven by a notable increase in advisory. FICC net revenues were $4.4 billion in the quarter. Intermediation results were driven by higher client activity in currencies and mortgages, offset by lower performance in credit, rates and commodities versus a strong prior year. We produced record FICC financing revenues of $1 billion, driven by solid performance in mortgages and structured lending. We remain confident in our ability to prudently grow this business over time and always with an eye towards risk management. Equities net revenues were a record $4.2 billion in the quarter. Equities intermediation revenues of $2.5 billion rose 28% year-over-year, primarily driven by strong performance in derivatives. Record equities financing revenues of $1.6 billion were higher year-over-year on better portfolio financing results and record average prime balances for the quarter. Across FICC and equities, |
2,788 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | on better portfolio financing results and record average prime balances for the quarter. Across FICC and equities, financing revenues of $2.7 billion rose 22% versus the prior year, reaching a new record for a fifth consecutive quarter. Let's turn to Page 5. Asset & Wealth Management revenues were $3.7 billion. Management and other fees were up 10% year-over-year to $2.7 billion on higher average assets under supervision and down slightly versus the fourth quarter, driven by other fees, which include placement fees that can vary from quarter to quarter. Incentive fees were $129 million, up year-over-year despite the difficult monetization environment during the quarter. We expect to make progress on our target of $1 billion in annual incentive fees over the medium term, supported by an estimated $4.1 billion of unrecognized incentive fees as of year-end. Private banking and lending revenues were $725 million, up 6% year-over-year on higher lending revenues. Sequentially, results were roughly flat as NIM compression on deposits was offset by lending revenue growth. In aggregate, our more durable revenues of $3.4 billion across Management and other fees and Private banking and lending grew 9% versus the prior year. We continue to expect high single-digit annual growth in these lines over time. Revenues from equity investments and debt investments totaled $122 million, largely driven by net interest income in our debt portfolio. Within equity investments, net gains in our private portfolio were more than offset by declines in our public portfolio amid the more challenging market backdrop during the quarter. In the AWM segment, we generated 21% pre-tax margin and roughly 10% ROE. Excluding the impact of historical principal investments and approximately $4 billion of attributed equity, our pre-tax margin would have been 2 percentage points higher and ROE 2.6 percentage points higher. Now moving to Page 6. Total assets under supervision ended the quarter at a record $3.2 trillion. We had $29 billion of long-term net |
2,789 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | to Page 6. Total assets under supervision ended the quarter at a record $3.2 trillion. We had $29 billion of long-term net inflows across asset classes, representing our 29th consecutive quarter of long-term fee-based net inflows. Turning to Page 7 on alternatives. Alternative assets under supervision totaled $341 billion at the end of the first quarter, driving $523 million in Management and Other fees. Gross third-party alternatives fundraising was $19 billion in the quarter. We continue to expect fundraising to be in line with recent years, though this outlook could be impacted by market conditions. On Page 9, firm-wide net interest income was $2.9 billion in the first quarter, up sequentially on a decline in funding costs. Our total loan portfolio at quarter-end was $210 billion, up versus the fourth quarter, primarily reflecting an increase in other collateralized lending. Our provision for credit losses of $287 million, primarily reflects net provisions related to the credit card portfolio, which were driven by net charge-offs, partially offset by releases following a seasonal paydown of card balances. Turning to expenses on Page 10. Total quarterly operating expenses were $9.1 billion, resulting in an efficiency ratio of 60.6%. Our compensation ratio net of provisions, was 33%. Non-compensation expenses were $4.3 billion. David mentioned, we continue to execute on our three-year efficiency plan that we laid out in January, including making adjustments to our pyramid structure. Our effective tax rate for the quarter of 16.1% benefited from the impact of employee stock-based compensation. Excluding this impact, our effective tax rate would have been roughly 9 points higher. For the full year, we expect a tax rate of approximately 21%. Now on to Slide 11. Our common equity Tier 1 ratio was 14.8% at the end of the first quarter under the standardized approach, 110 basis points above our current capital requirement of 13.7%. In the quarter, we returned $5.3 billion to common shareholders, including record |
2,790 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | our current capital requirement of 13.7%. In the quarter, we returned $5.3 billion to common shareholders, including record common stock repurchases of $4.4 billion and common stock dividends of $976 million. We will dynamically deploy capital to support our client franchise while also returning capital to shareholders. We remain committed to paying our shareholders a sustainable and growing dividend. Importantly, our Board recently authorized a multi-year share repurchase program of up to $40 billion, providing us increased capital management flexibility. In conclusion, our performance once again reflects the diversification and strength of our leading client franchises, which enable us to deliver for our clients across a range of market backdrops. We are confident in our ability to continue to support our clients as they navigate this dynamic operating environment. With that, we will now open up the line for questions. |
2,791 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: [Operator Instructions] We'll take our first question from Glenn Schorr with Evercore.
Glenn Schorr: Hi, thanks a lot. So, obviously, really good trading results, but you mentioned also on the financing side, how good it was. I'm curious on the amount of deleveraging that we've seen in April, I'm assuming that's pretty good for intermediation, but how do we think about that in terms of the short-term impacts on financing until we get a kind of reload of leverage?
Denis Coleman: Good morning, Glenn. It's Denis. I'll take that. I think when you think about the components of our overall financing, the reality is we continue to see significant demand across the client base for both our FICC and equity financing. I think what you're referencing given change in asset prices and market activity, we did have a level of record average prime balances over the course of the first quarter, but it's reasonable to expect that some of those balances come down as asset prices reset and then you'll continue to support clients with their financing needs, but perhaps off of a lower base given the adjustment in market prices.
Glenn Schorr: I mean, is that like material in terms of the impact? And when you're at record PB balances and then you have the amount of deleveraging that we saw in early April, if it stays at this level, is that a major contributor to the growth in financing in the quarter?
Denis Coleman: I would not characterize it as material or major. You have a number of things happening at the same time. You have deleveraging activity on behalf of clients and you have changes in their overall level of balances, but you also have lots of different types of activity as clients reposition their portfolios and make sure that they adjust for their evolving views on the outlook.
Operator: Thank you. We'll take our next question from Ebrahim Poonawala with Bank of America. |
2,792 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. We'll take our next question from Ebrahim Poonawala with Bank of America.
Ebrahim Poonawala: Hey, good morning. I wanted to follow up on Glenn's question. I guess, Denis, I think the view is the world in-markets changed a little bit come April 2nd, and the risk from an investor standpoint is activity fallen off the cliff. It's negative for financing. It could be negative for trading. So I'm not sure if you have data in terms of the 10 days for April. And if you can give us -- if you can contextualize just how negative the last 10 days have been following a very strong 1Q and how we should think about just where clients are as we go back to debating good volatility versus bad volatility?
David Solomon: Yeah. I'm going to start, and Denis can jump in. But I'd say a couple of things. First of all, obviously, no one can argue that April 2nd, a handful of things happened that shifted perspectives. But I would say there were things going on before April 2nd that we're shifting perspectives that also led to more activity. So there's no question, and we've talked about this publicly a bunch that we started to see growth showing and slowing in late January and early February. We obviously saw significant moves in equity markets as people positioned for a different kind of trade policies during March, and we saw significant moves in the March period, which actually led to higher activity for us in a variety of ways. We're early in the quarter, and so far the business is performing very well and clients are very active. And so, I know there is a higher level of uncertainty, but at the same point, clients are active, people are shifting positions, and we still see significant activity levels. I mean, Denis, do you want to add to that at all? |
2,793 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Denis Coleman: No, I think that captures the sentiment of where you're coming from, Ebrahim. We obviously have a diversified set of business activities, many of which work well together, some of which mitigate each other. I think the point is, given all the changes in the market and outlooks, our clients have been very active and all the investments that we've made in our franchise with our clients, all the resources we deploy to them and on their behalf has put us in a position to be active with them.
Ebrahim Poonawala: Got it. And if I could follow up, Denis, you mentioned executing on the three-year efficiency plan and the pyramid structure. Just talk to us, I think there were some headlines last month around, I guess, regular sort of merit-based review of the headcount, like what we are doing on the expense side as we think about the 60% efficiency target and maybe some resiliency to earnings on the cost side that we could expect? Thanks.
Denis Coleman: Sure. Thanks, Ebrahim. I appreciate the question. And obviously, we went through on our call in January this three-year efficiency program, which is something we're very committed to, and we're underway in terms of the execution they're under. A lot of the focus of that is to free up capacity for us to make greater investments in technology. But that program had aspects, as you referenced that relate to, pyramid structured also had management of non-compensation spend, and we are looking at and managing all those line items very carefully. To your question on pyramid at headcount, in particular, our expectations that we will undergo our regular annual performance management process, I would expect that we'll record a severance charge in the second quarter of approximately $150 million in connection with a number of those actions.
Operator: Thank you. We'll take our next question from Christian Bolu with Autonomous Research. |
2,794 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Operator: Thank you. We'll take our next question from Christian Bolu with Autonomous Research.
Christian Bolu: Good morning, David and Denis. Maybe just staying on the topic of the markets businesses, I wanted to talk about the competitive landscape. You guys did very well in the quarter on an absolute basis, but it did lag peers in the quarter. And I appreciate it's just one quarter. You do have a track record of share gains, but just curious what you're seeing currently on the competitive landscape in markets.
David Solomon: Yeah, I think, Christian, we feel incredibly strongly about the way our business is positioned and the way it's performing. The comment you referenced, obviously, the way you look at these things is to go back and look at the first quarter last year, we had an extraordinary first quarter where we massively outperformed, and so we've got a tougher comp. But the strength of our position, we feel good about the client feedback we get is extraordinary, particularly at times like this. And I think we'll continue to execute very well along the continuous pattern that we've executed on is a leading provider in these activities and it feels that way.
Christian Bolu: Okay. Thank you. On the buyback, I know it’s impressive that you guys stepped it up fairly meaningfully in the quarter. What was the catalyst that drove the step-up in the buyback? Was it the share price level, just excess capital? I'm just trying to understand if this level of buyback is sustainable going forward. |
2,795 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Sure. Thanks, Christian. Obviously, we did note that the level of buybacks for us in the first quarter was a record. I think our philosophy with respect to capital deployment remains very consistent. First and foremost, we're making available the capital to support the client activities that come into the firm, obviously, focused on a sustainably growing dividend. And then we calibrate our share buybacks relative to how we want to manage the firm's overall capital position in light of the environment. And as you've seen us over the last couple of years take a number of strategic measures to sort of reduce certain balance sheet exposures. Ultimately, we have to get the capital out of the system, and that will help our long-term return profile. So we had a lot of earnings generation. We took the opportunity to buyback some of our stock while ensuring that we still entered the second quarter with a level of capital where we are operating above the wide end of our target operating range to make sure we're in a position in this quarter to support client activity and continue first and foremost to support clients, but then also continue to return capital to shareholders.
Operator: Thank you. We'll take our next question from Betsy Graseck with Morgan Stanley.
Betsy Graseck: Hi. Good morning. Can you hear me okay?
David Solomon: Good morning, Betsy. Yeah. |
2,796 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Betsy Graseck: Hi. Good morning. Can you hear me okay?
David Solomon: Good morning, Betsy. Yeah.
Betsy Graseck: Thank you. So, on the capital question, David, earlier in the prepared remarks, you're talking about the regulatory changes that are being anticipated. And the question I have for you is on the SLR ratio. I believe it's one of the ones you're tighter to. And it would be helpful to understand how you're thinking about if the changes come through as being discussed, take treasuries out of the denominator of the SLR. Is that something that would be a noticeable benefit for you? Is that something that you think you could lean into relatively quickly? Or give us a sense as to how you plan on using these improvements in capital as they come through? Thank you. |
2,797 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | David Solomon: Yeah. So first of all, Betsy, I think you've got to look at this as a very holistic thing because there's a lot going on from a regulatory perspective and de-reg that I think will be a tailwind for the industry broadly. And obviously, it includes SLR reform to the degree it comes. It includes capital reform to the degree it comes. It includes supervisory form to the degree it comes. And so, it's a big package of things. We are CET1 constrained, not SLR constrained at the moment. But I do think for the system broadly, SLR relief would have a benefit to treasury markets. I think it's an important structural reform. And certainly, you've heard messages from both the Fed and from Treasury that this is a very, very high priority. And so, we're certainly hopeful or optimistic given the way they've been messaging around that that there'll be activity on that, and I think that's broadly good for the system. I think secondarily, across capital more broadly, whether it's Basel III, it's CCAR and transparency and continuity and stability around that process and also GSIB, we're certainly over the last decade that was supposed to be scaling based on market cap growth and economic growth, I think there's room for material tailwinds around capital. But most importantly, we hold -- all of the industry holds large buffers, but as we don't have consistency and transparency around these things and any improvement at a minimum would return capital into the system if you had better transparency. So we're hopeful on that. And then on Supervision, there are headwinds in costs and activities that we've had to deploy over the last few years to respond to what I'd say was an unusually high-level of supervisory activity, we see already a different tone around some of that dialogue. And ultimately, that allows us to deploy resources in different places, many of which can support investment and growth as opposed to just regulatory response. So I continue to believe, even in this environment, that there will be progress on |
2,798 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | as opposed to just regulatory response. So I continue to believe, even in this environment, that there will be progress on this. We obviously don't know how this will unfold, but the messages I'm getting leave me optimistic that there will be progress, and that's very good for the industry as a whole. |
2,799 | GS | 1 | 2,025 | 2025-04-14 09:30:00 | The Goldman Sachs Group, Inc. | 398,625 | Betsy Graseck: Okay. Thanks so much. Denis, one for you on VaR, value-at-risk. This quarter was down broadly throughout the different categories Q-on-Q, which I thought was interesting given the heightened volatility that we had across a variety of different markets. Can you remind us how volatility impacts VaR and how we should be thinking about VaR efficiency, which clearly went up dramatically, and just wanted to understand how to think about that on a go-forward basis? Thanks.
Denis Coleman: Sure. Thanks, Betsy. Good question. So obviously, there's multiple components to VaR across the various asset classes and then a diversification effect as well. Over the course of the first quarter for our average daily VaR, we had reduced exposures offset by elevated levels of volatility. So you obviously have both factors across asset classes that factor into the calculation. But to your question, obviously increased or persistent levels of volatility could have upward pressure on a VaR measure.
Operator: Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities.
Mike Mayo: Hi. I mean -- I guess it's good you can have record buybacks and the CET1 ratio doesn't change much. On the other hand, I guess you bought back stock quite a bit higher at the current price, and I know you're not marketizing this or anything. So I'm guessing that reflects your confidence in the amount of excess capital you'll have with the $40 billion new share buyback. So I was just wondering if you could put a little more meat on the bones or the reasoning behind the $40 billion buyback? And specifically, this Reg FD costs, you give material information, how much capital do you think could be freed up once you dispose of your private investments, you've chopped a lot of wood there, I think that's $8.8 billion. And after you -- if and when you dispose of your credit cards? Thank you. |
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