Goldman Sachs gives strategy update at investor day
Chief executive says bank will consider ‘strategic alternatives’
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Goldman Sachs’ CEO David Solomon acknowledged during the firm’s investor day on Tuesday that the world's second-largest investment bank stumbled over its consumer business but has learned from its mistakes and would adapt its strategy.
"Sometimes we fall short," Solomon told investors at the company's New York headquarters. "Sometimes we don't execute. But we always learn and adapt."
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Goldman Sachs CEO David Solomon speaks during the Goldman Sachs Investor Day at Goldman Sachs Headquarters in New York City, Feb. 28, 2023. (Reuters/Brendan McDermid / Reuters Photos)
Solomon had championed the consumer business, which lost $3 billion in almost three years. Its operations are being probed by regulators. Woes by the Marcus consumer unit also weighed on fourth-quarter earnings, which fell dramatically short of analyst expectations.
Goldman has already halted unsecured lending, a portfolio that could be sold. Marcus was folded into the company's merged asset and wealth management arm last year, and its newly-formed Platform Solutions unit houses transaction banking, credit cards and a fintech platform, GreenSky.
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Woman looks at Marcus, a new savings and loans app recently launched by Goldman Sachs in New York, Jan. 10, 2020. (Reuters/Mike Segar/File Photo / Reuters Photos)
Stephanie Cohen, global head of Platform Solutions, said she expected the Platform Solutions business to break even on a pre-tax basis by 2025 after it lost $3 billion in nearly three years.
The investment bank will outline the path to profit for its Platform Solutions unit, which houses Goldman's transaction banking, credit card and financial technology businesses.
As part of the new strategy, the bank will now aim to grow fees from asset and wealth management, while also trying to make profits from a newly created financial technology unit.
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Stephanie Cohen, Global Head of Platform Solutions at Goldman Sachs, speaks during the Goldman Sachs Investor Day at Goldman Sachs Headquarters in New York City, Feb. 28, 2023. (Reuters/Brendan McDermid)
Without specifying on particulars, Solomon said Goldman Sachs would also consider "strategic alternatives" for its consumer platforms, while restating a longer-term target for return on tangible equity of 15% to 17%."
The bank also plans to slim down some alternative investments that weighed on profits last year, by identifying a $30 billion historical principal investment portfolio earmarked for sell-down and lay out a plan to reduce this portfolio to zero over the medium term.
Goldman restated a longer-term target for return on tangible equity of 15% to 17% "through the cycle" and said it had "significant" room to grow market share for wealth management in the United States and globally.
After a solid performance in recent years, Goldman's markets division could weaken in the short-to-medium term because "trading is a wildcard," Solomon said.
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Separately, the CEO also warned in an interview with CNBC that operating in China will get tougher over the next couple of years, but added that the bank would continue to serve clients in the country.
"It is a more 'cautious' time for investment in our own franchise," Solomon said.
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Goldman Sachs Group Inc
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GS | THE GOLDMAN SACHS GROUP INC. | 420.05 | -2.99 | -0.71% |
Reuters contributed to this article.