Goldman Sachs is a leading global financial institution that operates through three main business segments, providing a wide range of financial services and products . The company engages in strategic advisory, asset management, and consumer banking, catering to both institutional and individual clients . Its offerings include investment products, wealth management solutions, and consumer banking services, with a significant focus on facilitating client transactions and market-making activities .
- Global Banking & Markets - Provides strategic advisory services, including mergers and acquisitions, divestitures, and restructurings, while facilitating client transactions and making markets in fixed income, equity, currency, and commodity products .
- Asset & Wealth Management - Manages assets and offers investment products across major asset classes, providing investing and wealth advisory solutions, financial planning, and brokerage transactions, while also issuing loans and accepting deposits through Marcus by Goldman Sachs .
- Platform Solutions - Focuses on consumer platforms and transaction banking, offering services like deposit-taking, payment solutions, credit card issuance through partnerships, and seller financing loans to small- and medium-sized retailers .
You might also like
What went well
- Goldman Sachs anticipates tailwinds going into 2025, with expectations of increased capital markets activity and CEO confidence, leading to a more constructive environment and potential normalization or improvement over historical averages. , ,
- Strong performance and fundraising in Alternative Asset Management, with expectations to make progress towards the $1 billion annual incentive fee target in 2025 as the market environment improves and capital is deployed.
- Asset & Wealth Management is expected to grow management and other fees at high single digits over the next several years, supported by opportunities in wealth lending and scaling of flagship products in alternatives. ,
What went wrong
- Regulatory uncertainty and potential for increased capital requirements under CCAR, Basel III, and G-SIB could negatively impact Goldman's profitability. The CEO acknowledged that changes in administration and leadership at the Fed make it hard to predict future regulations, which could affect the firm's capital markets business.
- Challenges with Platform Solutions, including the Apple partnership, may continue to be a drag on return on equity (ROE). The CEO mentioned that while the Apple Card is improving towards profitability, there is uncertainty around its future contribution, and it may not be a long-term business for the firm.
- Uncertainty in policy initiatives and potential shifts in market sentiment due to geopolitical risks, changes in immigration, trade, tax, and energy policies, or cyber risks could negatively impact Goldman's business outlook. The CEO emphasized that the world is a complicated place with lots of uncertainties that could derail optimism for the business.
Q&A Summary
-
Regulatory Outlook and Capital Impact
Q: How will regulations affect capital markets business?
A: David Solomon noted that while it's hard to speculate, there could be constructive discussions about improving transparency and consistency around capital regulations, which would be very good for the system and capital markets. He mentioned the industry's belief that CCAR isn't working appropriately, and changes in administration might lead to a different approach to Basel III. , -
Path to Mid-Teens ROE
Q: What's the plan to reach 15% ROE?
A: David Solomon explained that focusing on Global Banking & Markets and Asset & Wealth Management will drive mid-teens returns. Improving Asset & Wealth Management returns through scaling and freeing up capital from legacy investments, and reducing the 75 to 100 basis point ROE drag from Platform Solutions will help achieve mid-teens ROE. -
Platform Solutions Drag on ROE
Q: How will Platform Solutions' ROE drag improve?
A: The primary focus is on the Apple partnership within Platform Solutions. The Apple Card continues to improve performance, driving toward profitability. This improvement will reduce the ROE drag in 2025 and 2026. Ultimately, Platform Solutions will not be a long-term business for the firm, allowing them to exit and return capital. -
Capital Return and Investment Balance
Q: How will you balance capital returns with investment opportunities?
A: Denis Coleman stated they have 130 basis points of capital cushion and see opportunities to deploy capital to support clients and invest in the business. They are committed to sustainably growing the dividend and returning excess capital to shareholders. In 2024, they returned record levels of capital while growing the firm. -
Operating Efficiencies and Margins
Q: How will expenses and efficiencies affect margins in 2025?
A: Denis Coleman said they aim to scale the firm and deliver incremental operating leverage. In 2024, the efficiency ratio improved by 1200 basis points to about 63%, moving closer to their 60% target. They plan to fund investments by driving efficiencies across the firm, focusing on spend processes and accountability. -
Alternative Asset Management Growth
Q: What's the outlook for alts fundraising and performance fees?
A: Denis Coleman mentioned they've had success in fundraising across various asset classes, surpassing targets. They expect to continue raising funds with similar fee structures. As the environment improves, deployment will increase, leading to growth in AUS and performance fees. They aim to make progress toward their $1 billion annual incentive fee target in 2025. , -
Sponsor Activity and Market Share
Q: How will you increase market share with sponsor clients?
A: David Solomon said they have leading share with sponsors and expect a more constructive environment for sponsor activity in the next 24 months. Organizational changes, such as forming the Capital Solutions group, will strengthen their position to capture more than their fair share of activity. , -
Lending Growth in Wealth Management
Q: What's the plan for lending growth in wealth management?
A: Denis Coleman noted they are relatively underpenetrated in lending within wealth management. They grew private wealth lending balances by $5 billion in 2024 and are committed to increasing penetration over multiple years, seeing significant room for improvement. -
Strategic Acquisitions in Alts and Wealth
Q: Any thoughts on acquisitions to accelerate growth?
A: David Solomon acknowledged they consider opportunities, especially in Asset & Wealth Management. However, the bar for doing deals is high, and they are focused on organic execution. He noted that these businesses are sold, not bought, and market valuations are high. -
Risks to Positive Outlook
Q: What risks could derail the optimistic outlook?
A: David Solomon emphasized that while the current environment is constructive, uncertainties exist such as policy changes, geopolitical events, and potential shifts in market sentiment. The firm is focused on risk management and prepared for unexpected changes. , -
Use of AI and Operational Efficiency
Q: When will AI impact earnings?
A: David Solomon stated they are having early success with AI and are focused on making the firm more productive. While not specifying an exact impact on earnings, they continue to use technology to improve efficiency and serve clients better. -
Platform Solutions Strategy
Q: Why is Platform Solutions still around?
A: David Solomon reiterated they have a journey around consumer platforms. The firm continues to improve the Apple Card's performance, working towards reducing the drag. Ultimately, Platform Solutions will not be a long-term business for the firm. ,
-
Given the ongoing regulatory uncertainty around Basel III proposals and potential impacts from upcoming elections, can you elaborate on why you believe a 90 basis point capital buffer is appropriate and how you plan to navigate potential changes in capital requirements?
-
With the sale of the GM credit card business not expected to close until Q3 2025 and continued operating losses of $50–$60 million per quarter until then, how will you address the ongoing drag on earnings, and are there any additional financial obligations or impacts we should anticipate post-closing?
-
While you've made progress in expanding lending within your Private Banking and Wealth Management segments, how will you sustain this growth amid competitive pressures, and what investments are you making to ensure your adviser base can support long-term expansion?
-
Your stock is trading at 1.6 times book value, reflecting market expectations for mid-teens ROE, yet current returns are around 12–13%; what concrete steps are you taking to consistently achieve mid-teens returns, and what are the main challenges you foresee in reaching this target?
-
In the trading business, with market share having peaked in 2022 and signs of increasing competition, how do you plan to maintain or grow your market share, and are specific competitors making significant inroads into your core areas?
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: Q3 2025
- Guidance:
- Earnings Per Share (EPS): $8.40, up 54% year-over-year .
- Return on Equity (ROE): 10.4% .
- Return on Tangible Equity (RoTE): 11.1% .
- Asset & Wealth Management Revenues: $3.4 billion, up 9% versus last year, with expected high single-digit growth .
- Fundraising in Alternatives: Over $50 billion year-to-date, expecting to exceed $60 billion in 2024 .
- Assets Under Supervision: $3.1 trillion .
- Management and Other Fees: $10 billion annual target for 2024 .
- Incentive Fees: $1 billion annual target over the medium term .
- Effective Tax Rate: Approximately 22% for the full year .
- Common Equity Tier 1 Ratio: 14.6% with a requirement of 13.7% effective October 1 .
- Capital Return: $2 billion returned to shareholders .
- Pretax Margin in Asset & Wealth Management: Mid-20s target .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: FY 2024
- Guidance:
- Tax Rate: 21.6% for the first half, approximately 22% for the full year .
- Dividend: 9% increase to $3 per share starting Q3 .
- Capital Return: Moderated stock buybacks due to higher SCB requirement .
- Efficiency Ratio: 63.8% year-to-date, target of 60% .
- Asset & Wealth Management: Continued momentum expected .
- Alternative Fundraising: Expected to exceed $50 billion for the year .
- On-Balance Sheet Investments: Target to sell down $12.6 billion by end of next year .
- Basel III and CET1: Maintaining cushion for Basel III endgame .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Asset & Wealth Management: $1 billion in annual incentive fees over the medium term .
- Platform Solutions: Pretax breakeven expected in 2025 .
- Tax Rate: Approximately 22% for the full year .
- Capital Deployment: 170 basis point buffer above capital requirements .
- Fundraising in Alternatives: $40 billion to $50 billion expected in 2024 .
- Historical Principal Investments: Reduce by $1.5 billion per quarter .
- Equity and Debt Investments: $2 billion annually, $500 million per quarter .
- Transaction Banking: Breakeven or profitability in 2025 .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: FY 2024
- Guidance:
- Tax Rate: 22% to 23% .
- Asset & Wealth Management Margin: Improvement expected .
- Capital Management: Flexible capital return strategy .
- Platform Solutions Drag: Significant reduction expected .
- Alternatives Fundraising: $40 billion to $50 billion expected in 2024 .
- ROE Improvement: Mid-teens returns over 3 to 5 years .
Competitors mentioned in the company's latest 10K filing.
- Brokers and dealers
- Investment banking firms
- Commercial banks
- Credit card issuers
- Insurance companies
- Investment advisers
- Mutual funds
- Hedge funds
- Private equity funds
- Merchant banks
- Consumer finance companies
- Financial technology and other internet-based companies
- Smaller institutions offering targeted services, such as independent advisory firms
Recent developments and announcements about GS.
Financial Reporting
- Q4 2024 Results: Net revenues of $13.9 billion, earnings per share (EPS) of $11.95, return on equity (ROE) of 14.6%, and return on tangible equity (RoTE) of 15.5%.
- Full-Year 2024 Results: Revenues increased by 16% year-over-year to $53.5 billion, EPS grew by 77% to $40.54, and ROE improved by over 500 basis points to 12.7%.
- Segment Highlights:
- Global Banking & Markets: Revenues of $35 billion for the year, up 16%. Investment banking fees rose 24% year-over-year in Q4, with strong performance in advisory and equity underwriting.
- Asset & Wealth Management (AWM): Revenues of $16.1 billion for 2024, up 16% year-over-year. Management and other fees reached a record $10 billion, surpassing the 2024 target.
- Alternatives: Assets under supervision totaled $336 billion, with $72 billion in gross third-party fundraising for the year.
- 2025 Outlook:
- Optimism for increased M&A and IPO activity, supported by a more favorable regulatory environment and renewed CEO confidence.
- Continued growth in AWM management fees, with expectations of high single-digit annual growth over the next several years.
- Targeting $1 billion in annual incentive fees in AWM, with progress expected in 2025.
- Capital Solutions Group: A new initiative to centralize financing, origination, and structuring capabilities, aimed at capturing growth in both public and private markets.
- Efficiency Measures:
- Focus on automation, AI, and spend management to improve operating leverage and client experience.
- Targeting a compensation ratio of 32% and an effective tax rate of approximately 20% for 2025.
- Market Sentiment: Analysts noted a positive shift in market conditions, with expectations for a more robust capital markets environment in 2025.
- Risks: Management highlighted potential risks, including geopolitical uncertainties, policy shifts, and market sentiment changes.
- Platform Solutions: The Apple partnership remains a key focus, with the card business expected to improve profitability in 2025 and 2026.
- AI and Technology: Goldman Sachs is leveraging AI to drive productivity and operational efficiency, though specific financial impacts are not yet quantifiable.
- AWM Lending Penetration: Analysts inquired about the underpenetration of lending within the wealth management business, with management noting progress and significant room for growth.
- Alternatives Deployment: Questions were raised about the pace of deploying raised capital in alternatives and the timeline for realizing performance fees.
- Capital Markets Share: Analysts discussed Goldman Sachs' leading market share in M&A and its positioning to capture growth in sponsor activity.
- Net Revenues: $53.51 billion, a 16% increase compared to 2023, driven by higher revenues in Global Banking & Markets and Asset & Wealth Management.
- Net Earnings: $14.28 billion, a 68% increase year-over-year.
- Diluted EPS: $40.54, up 77% from $22.87 in 2023.
- Return on Equity (ROE): 12.7%, and Return on Tangible Equity (ROTE): 13.5%.
- Book Value Per Share: $336.77, reflecting a 7.4% growth during the year.
- Assets Under Supervision (AUS): Reached a record $3.14 trillion, a 12% increase year-over-year.
- Net Revenues: $13.87 billion, a 23% increase compared to Q4 2023 and a 9% increase from Q3 2024.
- Net Earnings: $4.11 billion, up 105% year-over-year.
- Diluted EPS: $11.95, a 118% increase compared to Q4 2023.
- ROE: 14.6%, and ROTE: 15.5% for the quarter.
- Full Year Revenues: $34.94 billion, a 16% increase year-over-year.
- Investment Banking Fees: $7.73 billion, up 24%, driven by strong performance in debt and equity underwriting.
- FICC (Fixed Income, Currency, and Commodities): $13.20 billion, up 9%, with significant growth in financing revenues.
- Equities: $13.43 billion, up 16%, reflecting higher revenues in intermediation and financing.
- Q4 Revenues: $8.48 billion, a 33% increase year-over-year.
- Full Year Revenues: $16.14 billion, a 16% increase year-over-year.
- Record Management and Other Fees: $10.43 billion, up 10%.
- Private Banking and Lending Revenues: $2.88 billion, up 12%.
- Q4 Revenues: $4.72 billion, up 8% year-over-year and 26% quarter-over-quarter.
- Full Year Revenues: $2.43 billion, a 2% increase year-over-year.
- Q4 Revenues: $669 million, up 16% year-over-year.
- Full Year Operating Expenses: $33.77 billion, a 2% decrease compared to 2023, reflecting lower impairments and special expenses.
- Efficiency Ratio: Improved to 63.1% from 74.6% in 2023.
- Capital Returned to Shareholders: $11.80 billion in 2024, including $8.00 billion in share repurchases and $3.80 billion in dividends.
- Quarterly Dividend: Declared at $3.00 per share, payable on March 28, 2025.
- Durable Revenue Growth: Approximately 70% of 2024 revenues were derived from more stable and durable sources, such as management fees and financing revenues.
- Record Achievements: The firm achieved record revenues in Equities financing, FICC financing, and Management and other fees.
- Strategic Execution: Goldman Sachs continued to focus on scaling its Asset & Wealth Management business and narrowing its strategic focus in Platform Solutions.
Earnings Call
Goldman Sachs (GS) has released its fourth-quarter 2024 earnings call transcript, providing key insights into its financial performance, forward guidance, and strategic initiatives. Below is a summary of the main points:
Financial Performance
Forward Guidance and Strategic Initiatives
Market Conditions and Analyst Questions
Key Analyst Topics
Conclusion
Goldman Sachs demonstrated strong financial performance in 2024 and is optimistic about 2025, driven by favorable market conditions, strategic initiatives, and efficiency improvements. The firm remains focused on delivering value to clients and shareholders while navigating potential risks in a dynamic environment.
Earnings Report
Goldman Sachs (GS) Full Year and Fourth Quarter 2024 Earnings Results
Goldman Sachs has released its earnings results for the fiscal year and fourth quarter of 2024, showcasing significant growth and strong financial performance across its business segments. Below are the key highlights:
Full Year 2024 Highlights
Fourth Quarter 2024 Highlights
Segment Performance
Global Banking & Markets
Asset & Wealth Management
Platform Solutions
Operating Expenses and Efficiency
Capital Return and Dividend
Key Trends and Strategic Focus
Goldman Sachs' strong performance in 2024 reflects its ability to capitalize on market opportunities, execute strategic priorities, and deliver value to shareholders. The firm remains well-positioned for continued growth in 2025.
Sources: , , , , , , , , ,