Goldman Sachs Group, Inc. (the) · NYSE:GS
Goldman Sachs Group, Inc. (the) — The Goldman Sachs Group — Investor Day (January 2020)
23 slides from Goldman Sachs Group, Inc. (the)'s investor day presentation, Jan 29, 2020
Slide 1: Financial Roadmap
Financial Roadmap Stephen Scherr Chief Financial Officer January 29, 2020 0
Slide 2: Agenda
Agenda 1 Targets 2 Drivers of Improved Profitability Revenue expansion opportunities Funding optimization Expense management Dynamic capital management 3 Key Takeaways 1
Slide 3: A Commitment to Driving Value
A Commitment to Driving Value Medium-term1 Financial Targets ROE / ROTE Efficiency Ratio CET1 Ratio >13% / >14% ~60% 13-13.5% New business growth positions Goldman Sachs to generate mid-teens or higher returns over longer-term2 2
Slide 4: Drivers of Improved Profitability
Drivers of Improved Profitability >14% ROTE ~125bps ~75bps >13% 10.6% ~50bps ROTE1 ~75bps 10.0% 2019 Litigation A Business B Funding C Expense Medium-term ROE and Tax Activity Optimization Efficiencies ROE 13.3% D CET1 Ratio 13-13.5% 68.1% Efficiency Ratio ~60% 3
Slide 5: Clear Strategic Direction Will Drive Business Growth
Clear Strategic Direction Will Drive Business Growth Grow and Strengthen Diversify Our Products Operate More Existing Businesses and Services Efficiently Expand our global footprint: Increase organizational and Investment Banking, Global Markets, Build Transaction Banking process efficiency Ultra Hi
Slide 6: Growth Initiatives to Generate Positive Returns
A Growth Initiatives to Generate Positive Returns Forward Estimates: Pre-tax Income Transaction Banking + Consumer (ex-reserve build) Transaction Banking + Consumer Year-end 2018 2019 2020 2021 2022 2023 2024 $1bn of pre-tax loss including reserve build 5
Slide 7: A Disciplined Return on Investment Framework
A Disciplined Return on Investment Framework Investment Philosophy Initiative Select Time Financial Addresses a client need Type Initiatives Horizon Evaluation1 Growth in Capitalizes on our foundational advantages Investment Banking coverage Existing Up to 3 Return on risk- Leverages adj
Slide 8: Funding Optimization to Drive Improved Returns
B Funding Optimization to Drive Improved Returns Increasing high-quality deposits to improve funding diversification and generate $1.0bn in revenues through lower interest expense Key Tenets of our Strategy Target State 180 Legend 160 Current State 1 Further diversify funding mix via deposits 140 Fu
Slide 9: Embracing the Bank Model
B Embracing the Bank Model Increase Utilization of Bank Entities Significant Asset Growth Opportunity Percent of Total Assets in Bank Entities1 Capture lower cost funding >80% ~65%+ [60-70%] Continue migration of businesses into bank entities ~25% Grow diversifying businesses with more durable
Slide 10: Optimizing our Unsecured Funding Mix via Deposit Growth
B Optimizing our Unsecured Funding Mix via Deposit Growth Interest expense savings reflected Improvement in unsecured funding mix to drive higher returns in revenue growth $100bn Growth in deposits 50% across channels 57% 69% 50% ~30bps 43% Expected improvement in cost of funds1 31% 2015 2019 Medium
Slide 11: Expense Savings Creating Capacity to Fund Future Growth
C Expense Savings Creating Capacity to Fund Future Growth 3-year Expense Plan Efficiency Ratio $1.3bn Run-rate Expense Savings 68.1% ~(600)bps ~450bps ~(350)bps ~(125)bps ~(250)bps Key Drivers ~60% Streamlined organization Investment in automation and infrastructure Centralized expense managem
Slide 12: Dynamic Expense Management Drives Earnings Stability
C Dynamic Expense Management Drives Earnings Stability Alignment of expenses with revenues through pay-for-performance discipline results in low earnings volatility Revenue Volatility1 Earnings Volatility1 81% 49% 12% 37% 10% 31% 7% 6% 2009-2019 2014-2019 2009-2019 2014-2019 GS US U.S.Peer PeerAvera
Slide 13: Proven History of Prudent Capital Management
D Proven History of Prudent Capital Management In the last 5 years, Goldman Sachs returned over $30bn of capital, 90%+ of the firm’s net income and grew BVPS more than peers Capital Management BVPS Growth vs. Peers1 Philosophy GS Prudent capital management with evolving 86% regulatory landscape 10
Slide 14: Disciplined and Dynamic Capital Management
D Disciplined and Dynamic Capital Management Key Forward Drivers CET1 Ratio1 Target: Stress Capital Buffer 13-13.5% Improvement due to capital efficiencies of 50bps across Alternatives in Asset Management Stress Capital Buffer G-SIB 5.0% Expected surcharge of 3% as we continue to grow balance sh
Slide 15: Capital Attribution and Segment Returns
D Capital Attribution and Segment Returns Capital Framework Capital Attribution and Returns 2019 Capital Attribution ($bn) Returns Governed by regulatory constraints and internal risk measures Avg. 2019 ∆ vs. 2017 ROE Investment Banking $11 +28% 18% Dynamically managed and responsive to changing
Slide 16: Capital Deployment Opportunities for Global Markets
D Capital Deployment Opportunities for Global Markets Global Markets Returns Global Markets and Investment Banking 2019 ROE1 Higher returns over the medium-term driven by: Resource optimization including funding, expense and Synergies with Investment Banking in delivering integrated capital efficien
Slide 17: Prudently Managing Risk
Prudently Managing Risk Comprehensive Risk Management Infrastructure Evolving Risk Profile Market RWAs Disciplined risk-reward approach $104bn Culture of Risk Deep bench of risk managers Management Consensus-driven decision making $65bn Independent controls and Process and governance 1 Struc
Slide 18: Evolving Risk Profile
Evolving Risk Profile Continuous investment in risk management to address evolving business mix Key Areas of Risk Mitigation Credit Robust credit underwriting framework and processes Consumer Fraud Strong talent pool augmented by select hiring Best-in-class technology infrastructure and analytics In
Slide 19: Key Takeaways
Key Takeaways Committed to Leading Businesses Optimizing Prudently Providing Investors Delivering on Our with Multiple Expenses and Managing Risk Tools to Hold us Financial Targets Opportunities Capital Accountable for Revenue Growth Across the Franchise 18
Slide 20: Financial Roadmap
Financial Roadmap Stephen Scherr Chief Financial Officer January 29, 2020 19
Slide 21: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on: Slide 2: 1. Medium-term refers to 3 year time horizon 2. Longer-term refers to 5+ year time horizon Slide 3, 14: 1. Return on average common shareholders’ equity (ROE) is calculated by dividing net earnings applic
Slide 22: End Notes
End Notes Slide 11: 1. Annual revenue volatility calculated by dividing standard deviation of reported revenues by the average revenues over the period. Annual earnings volatility calculated by dividing standard deviation of reported net income to common by the average net income to common over the
Slide 23: Cautionary Note on Forward-Looking Statements
Cautionary Note on Forward-Looking Statements Statements about the firm’s target metrics, including its target ROE, ROTE, efficiency ratio and CET1 capital ratios, and how they can be achieved, and statements about future operating expense (including future litigation expense), amount and compositio
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