GS - Earnings call transcript Q4 2018 | The Goldman Sachs Group, Inc.

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Operator

Good morning. My name is Dennis, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs Fourth Quarter 2018 Earnings Conference Call. This call is being recorded today, January 16, 2019. Thank you. Ms. your begin may you conference. Miner,

Heather Miner

use the is joined rebroadcast Good on at on Relations conference presentation. the Head presentation, [Technical www.gs.com. will and Investor Investor our Relations forward-looking our earnings without consent. information Chief David Miner, Goldman morning. the call. can our Sachs. website found release we earnings Executive No statements am Stephen This at and Chief Solomon; quarter on Welcome non-GAAP call, Today of fourth and Chairman earnings of Heather to and be on new a page reproduced by Today, which Financial measures or I Scherr. appear Officer, Difficulty] Officer, our our

the As priorities, noted financial happy on through I'll call presentation, over your our remarks performance. to on provide perspectives XMDB. pass walk questions be the after on and strategic about introductory David? Then the will agenda an of our macro David. They'll X David environment the will update now take Stephen on to that. Page

David Solomon

step to reiterating format continue call we new dialogue with this is that Thanks, us everyone and I'm broader and and as this I off active morning excited in engagement forward joining thanks I'm very presentation, here to committed I'm our initial you, for by about look our to joining to an going and stakeholders. regular more to Heather, basis. fully a ongoing call an with to shareholders I'm happy disclosure. and start which and be this enhance morning. our

core liquidity, long-term which delivering and full market corporations on executing model priority We our clients, management committed will to important of remain our drive and to diverse shareholders. and including range governments, client is services advice, a our investment is franchise, financing. sustainable value to our for creation client-centric it that includes X, Page our on to our execute Serving shown overarching mission: individuals; institutions As underscore

X-year of and review expand I are more a conducting many opportunities forward comprehensive to each and client our know, to operate or As to you identify John, including Stephen plans across efficiently. front-to-back businesses, footprint our of strengthen

We developing client and ways products new our business expand by footprint pursuing are existing to our new and platforms. relationships also deepen

let strategic business amount continue shown achieve early of businesses, spent highlight reviews some our platform our As client on of X. are market-making on a we've time, progressing, to business delivery will and focus which including FICC Starting best-in-class evaluating me right model, are in in this, our providing findings, a we automation invest with To of Page side Equities, significant execution. and all with and aspects our experience enhancements. the

particularly market are addressable our engaged corporates. services, opportunities in and pursuing We actively the by of to also products, our broadening client improving mix relationships grow

Specifically a as particularly have Conference, we to be of decade. capabilities, franchise. at market-making and institutional as people Merrill not we Clients large complacent the leading it Bank industry in FICC, risks. fully will wallet me the market in intermediation to the the But relates me cognizant And complex of reduction for Stephen let return. over be waiting We're mentioned the direct. differentiated past tell America of we have the

from revenue capital to in utilization We clear improving potential. with potential reallocating its order commensurate are of we've important on and strategically, returning higher and progress a perspective FICC made running the its grow away recent business significant with Over businesses. years, capital

continue optimize capital the We will in business. to

to while will our position expenses. of our automation reduce these investing We're shareholders. an for a opportunity in improving within All to we provider equities. many to further expect remain as to choice evolve see businesses franchise FICC also We similarly returns efforts

over returns investing a world-class have franchise, X which has strong we generated decades. alternatives Secondly,

given platforms our We have sourcing one of global most broad network. footprint of the unique

Our thereby franchise augmenting on-balance their an estate, to our Simultaneously, opportunities credit we and can alongside record, our income. with Based across on raise investments real to monetize continue equity, opportunity capital there partner invest fee track with sheet and to us to presents capital own. optimize is additional extraordinary clients third-party funds consumption.

cash on Next, management.

our As to size opportunities management and the our to we us an franchise, presents clients our breadth the improve illogical and evaluated wallet. that of services expand cash given for area relationships of corporate

is technological us In address for change this space to pace opportunity. confidence us in it of the the addition, payment appropriate gives that time

We XXXX. and cash in management into are firm a first now use X-year a build, months to X later platform our will be

In reduce product, risk. the Among all flows own launch we progresses to product expect to all assuming -- operational XXXX. doing in addition planned, our validating operational will payment clients to the costs and as

Lastly, enhance in bring further in Management Clarity plan markets business product We to closer, currently include wealth serve platform. we products Money. continue and is mass million a multitiered to and will We to markets as we Investment the evolve of multiproduct now which lending development. customers affluent through to the our savings single platform digital a from offering, X

be the to enhance are strategy these investments revenues and for other Across successful a commitment catalyst collaboration operating focus and on combined of significant growth, will the we are durability deliver time. earnings. confident a for over to our We this on efficiency, with beginning our this execution our of

communicate our market strategic plan and more review coming a priorities to the with in We to our update board comprehensive months. to the continue

we use will to year, and financial will the specific later shareholder the Additionally, we Ultimately, returns cycle. accountable. operate firm plan we to drive leading hold metrics share ourselves to over this targets

on make a discuss we the operating Before I'll few environment. observations results, our

and disconnect volatility highlighted Page macro and investor board in to outlook. banks was tighten the been many corporate in see particularly that resulted markets and optimism growth sentiment with between increase weakness X. growth which continue global market credit to in fourth sentiment The slowing respect the in into decline characterized concern a cause in assets. central of would we quarter, continue A a there Recently, to the quite on weak an rooms. by has a environment Some equity of December, are

future clients, is to also of it driving has challenges active institutional value. this our While potential opportunities add created for for investing managers many

addition debt transactions, X% transaction the remains planned across policy growth and X.X% the market our now X.X% with is advice mixed for backdrop, the hedging our intellectual fairly and X% Financial markets need management and Europe in the that macro economy over Notwithstanding for comprehensive we Latin including in need trade activity open, yield is and transparent and financing. individuals Despite solutions. and global still continue in remain U.S., removal simple the sentiment advice, this continue services actively there capital, year, acceleration in see Clients flattening, to and equity continue backlog. Banking China including Corporations reflected asset Euro and America. in are Investment of execution for need investors seek add engaged need robust, franchise. our of to in and X.X% monetary value. and Brexit, level to absolute liquidity economy next the stimulus an services, our curve both of a clients zone, to strategic wealth financial and China the in recent the CEO In U.S. broad policy, uncertainties, real global

of fund, the investigations moment I to proactively of with on take XMDB. address I'd want some questions matters our like know to your to ongoing address sovereign to I the are stakeholders. the Next, that a development minds related Malaysian

a we, own we It's that our by that of people individuals, we other like on the Malaysia review the important is for and focused naturally people. an own in timely and last clear were many this established of facts we of admission, still will process. one the by We regulators cooperating the very that more with matter investigation, would his including to now, First, but prior the are to members government. Department partner provide you. information course, at But of have are and defrauded firm, this over Leissner was and open Tim our Justice years, those deliberative a highest of X of respect was believe process.

to Malaysian apologize in fraud, role people. Leissner's the For that we

due we done back to At same to if time, would back see before anything know you as want that I you look we and looked better. As there is each the a have could have were expect, continue told they to firm control firm functions the When if the in other were no conducted. himself Tim intermediaries was asked considerable -- Leissner involved, in any no. said transaction. diligence each involved transaction transaction in were whether intermediaries

were Sachs involved that with government's written these to Leissner part in And and XMDB transactions. X detailed concealed Malaysian auditors government charging of firm issued be offering. in involved offering, government As All this the books IPIC in and assurances to audit due Low. clean and officials, intermediaries have represented proven first final the the no during as and opinions. and a time, the intermediaries both scheme Significantly, we his XMDB with Goldman to and IPIC Jho itself at access that outside the period, Also XMDB's officials, efforts sought in diligence of false. XMDB the records the from Malaysia our were again the no received from purposely documents, representations

address account how Out We well represent Low the we transactions. request not on other involvement to including to wealth. XXXX he of verify Jho unrelated Low us time, of in and addition, period viewed declined said, a Low's number because financial of his presented Jho or also private he In during between issue XMDB prudence, transactions institutions, was of XXXX during and of opportunities Jho declined we wealth a advise XXXX. the want a and same open the the to after I number us. to of That to Low's could was to known in source

Low after about but engaged to in remained financial from at on Low XMDB has I'm major and during known been time, assets, is our focused has proud our lot that acquiring investors the time. before, more other real highly fact, a and institutions visible clients. estate. and Clearly, transactions, how This a difficult media companies, today of firm In Jho with

learned of highlighted including strong. this and me Please from I'm you a let's that tried to as only questions, to priority much it are remains gears X. ensure for I've have culture performance on in Asia, as as forthcoming that more. of as improves review franchise, will say is additional that extremely comments experience. I difficult and client and switch situations, we appreciate escalation understand, but our important can't know reflective There many that are possible lessons you Page Our always With sure XMDB. be collaboration be and integrity, self-critical from on can my I on that, to our

of equity results. the delivered X of in on full highest firm XXXX and our billion, return $XX.X on firm-wide We year, tangible equity years. of reported solid return revenues XX.X%. generated For We net a XX.X%

further footing us In of urgency enhance are help to we franchise, and and and in to through the objectives John have grow who call by strategic earnings profile on Stephen, details forward. We strong turn I'll leave the of assembled cost long-term is pursue including our funded making operating an year, business to our performance. I to of will Stephen, discipline XXXX priorities, XXXX performance. a delivered over of Importantly, us to summary, revenues walk team results our beyond. sense The our have leverage significant our move the Stephen? investments our businesses. and our expand With in embedded being with the solid that, which the execute financial pleased our and firm, extremely I'm on client the increased

Stephen Scherr

Thanks, David.

and in on the the earnings billion quarter in of earnings the net $XX.X year billion Let of reported full presentation. year. X and fourth the overview an $X.X quarter, $X.X in The of quarter for me full for results our Page begin share the firm revenues $XX.XX We $XX.X $X.XX had resulting billion, financial of net with year. in resulting the full billion per for of

a I to results, the begin few our to want Before discussion adjustments financials. I detailed of cover our

results now with net provision. to present before competitive set, more consistent our we our transparency revenues increase our and First, make credit

statement, been has This income comparison. added no but reclassified a current have presentation. periods will a to give bottom line line results, credit the clear on conform the provision our prior and to have impact basis to We for

and the no result on does has consultants This This staff professional line reported but reported now line, compensation headcount had reduced transferred by year. and bottom benefits to expenses million being in approximately change between $XXX related fees. expenses in X,XXX. for Second, previously the items impact in also temporary the also are full

to X addition of in In presentation I changes out statements, our the would the financial the items. call following

million. provisions net for quarter of matters included regulatory First, litigation results our and fourth $XXX

regulatory the and litigation for matters elevated provisions in our total XXXX expense year. million. for Our $XXX obviously amounted operating This line to

true-up XX%. benefit including This information, XXXX normalizing million reflects our equates in prior The XXX approximately This operating equity tax from to by an return legislation. This true-up was materially the XX% common $X.X rate discrete percentage the includes our of in a estimate the These XXXX's projected taxes improvement $XXX impact tax year. basis X the benefit and that XX% subsequent It decrease important million performance from Treasury. XX% benefit to or items, points equity-based despite XXXX. updated of in our expenses. rate approximately on of for our higher of of tax a in compensation, to rate billion pretax after includes increase from related Second, The also points for normalized was X our rate impact litigation equity-based issued the for year-over-year. to account guidance tax the XX%. rate earnings for compensation increased $XXX approximately is highlight of

me results let the Now to overall. turn

mentioned, David be environment As to turned the mixed. in XXXX out

The quarter performance higher witnessed to across first credit increased evolving levels continued virtually clients volatility, of our global markets investing on and client forward. and drive concentrated equity demonstrated and in classes. our X The all engagement despite uncertainty. this asset strength business we negative backdrop, geopolitical Against fourth market serving quarters

from and diversified is performance our client Our revenue demonstrates overall our value XXXX strength business in in businesses This of of the the balanced our contribution model reflected franchise. the across sources of XX% XXXX Further, of the the ago. on years recurring XX% fee-based generated were Page presentation. on as by net more revenues X just pie versus shown X or chart

revenues Turning Advisory difficult $X announced pickup market quarter We reflecting Page significant X% and producing $X.X offset in transactions We third helped Investment globally. the quarter, completions a quarter, our in underwriting and in up Banking volumes global XX% revenues a outstanding up transactions. of for XXX the M&A growth in third near-record issuance were In during XXXX, full the the backdrop of X billion, both advised fourth the that and approximately business revenues to slowed to #X year. segments. the individual trillion on the had fourth quarter billion, nearly deal an produced results. the decline performance in year, completed volume. relative as closed completed $X.X ranked versus M&A net M&A representing as

nearly We which our below $X.X also $XXX $X reflecting from participated included transactions in billion announced over transactions value, totaling in deal trillion, in billion progress broadening client coverage.

issuer volatility, Moving on prices spreads to quarter and million. $XXX declining to Underwriting. equity revenues Market wider credit were as net sequentially fourth sentiment XX% down the weighed in

year, Underwriting. up increases Banking both full on from net $X.X billion, the and were in For XXXX revenues X% Financial Advisory Investment

our and #X in globally. #X reflecting multiyear commitment XXXX, position addition debt underwriting leading underwriting grade, For build high held franchise. position, equity our the in advisory to We to we were yield in in our investment #X

performance our and continues investment well remains very Our ongoing on focus and to Investment capabilities. reflects talent client positioned building grow. continued and long-term franchise relationships overall our Banking in The strong

an quarter. meaningfully higher We decline versus XXXX a with of This revenue the robust backlog comes are we than despite Investment where finished XXXX, ending production increase Banking XXXX. notwithstanding last

and the to Client billion X% Institutional That's the despite a revenues were to backdrop, higher particularly on Turning X. volatility last market Services Page up of in quarter FICC. year. fourth Net in quarter, fourth compared $X.X difficult

businesses, as execution extent, $XX.X compared with position while particularly rates. and, in of having particular in revenues, commodities. distressed up challenging reflected consistent $XXX to notably X/X healthier better businesses XXXX driven one of certain environment conditions, remaining rates performance. material roughly market would credit Lower Credit and were call last year, share FICC exacerbated for fourth full generated challenges. net in The widened. execution decline. net versus year's ICS in wallet For out and down levels Results spreads deteriorating were by lesser liquidity were revenues volumes, there improved in the other the the XXXX, billion of a the in note impacted by also to XX% of quarter, year-over-year results a effect. accounted client further lower to amid credit FICC that as million in no XX% high-yield our was the decrease a I relatively

business environment, challenging quarter While due in overall XXXX. to the fourth was the improved the market

For the $X.X full growth. revenues year, were FICC XX% net billion, year-over-year representing

Importantly, we FICC strategic continue seek initiatives. to performance improvement in through our

per First, institutional since our points client by base coalition. we our wallet basis successfully with XX increased share XXXX

relationships provided our and benefit and rankings client to share. this minimal drive Nevertheless, a top However, footprint higher so backdrop. the continue our deepen and to given product market line far broaden we market

Second, our better to relationships Banking Investment corporate we clients. best-in-class remained serve focused on leveraging

beginning important turn on to efforts client yield exchange. results yield to as a results, is but and to we Our better are our foreign are relying This in looking not market are commodities expand footprint.

continued Lastly, on further platforms and better will our expenses processes electronification. in capital. allow and focused to and of streamline serve investments enhancements clients engineering we remained us and The

enable a and pace, to Our in deliver revenues last our we business faster corporate solutions see, clients. our year. more new platforms innovate us our and businesses up To than demonstrate to FICC XX% the differentiated were client-centric institutional at scale electronic momentum

balances. Commissions to in client uptick where Security share. X% fees activity, reflecting services up a to revenues were up following one. story the continue XX% were Equities the is and XXXX, particularly touch fourth higher, in customer better Moving were execution relates of year-over-year. in Equities, net quarter, Net fourth we decreased quarter it X. increased client the a market to significantly up In net as lower performance to low challenged revenues $X.X gain significant cash. attributable better Page average versus billion, volatility, revenues slightly, with

XX% billion, year-over-year. net For XXXX, produced revenues of Equities up $X.X

ongoing industry and continued increase benefit During to from efforts to we the client consolidation connectivity. year,

of growth volumes equity share over XXX increased Our included points multiyear basis trend. a positive and across all XXXX global by market reflecting regions, versus

consolidation theme ago. providers We the scale as into that MiFID are to II XX XXXX of optimistic months can only went continue live

securities Moving private Page gains real the in which $X generated on sales. billion X. reflecting & of Equity primarily from on equity Lending strong investments. revenues revenues from were net X/X the net of in Investing equity Approximately to reflected generated estate, continued quarter, results

of For Lending generated net revenues the full year, Investing billion. equity & $X.X

and remains and different Our and of on consists over the public global seen geography private slide. portfolio equity vintage investments across diversified as X,XXX investment

a to of the performance, in also continue We including are $X.X investments long-term private portfolio X at estate. with $XX public billion, reinvest the equity investments in years. The portfolio Revenues and in last of generated the $XX CIE future billion, equity. sheet all XX% billion of drive from quarter in $XX.X made our I&L equity real billion of the to substantially ended balance

securities Moving on fourth on $XXX debt Page quarter, largely loans and to $XXX Investing & In XX. revenues net were net debt interest income of the million, from driven roughly by Lending million.

year, For accounting would of that of billion. income revenues, interest debt & net begin interest out net point growth, before I Lending of for we the approximately $X.X Investing annualized rate income net future including run generated billion full with $X.X billion. $X.X an XXXX

as Page the Investing at Our $XX shown & includes the securities. XX, Lending in quarter $XX lower billion, loans and billion billion left balance $XXX debt which ended in debt of sheet, on

to of loan as of lending portfolio conservative our adjacent XX% approximately remain is secured year-end. and continues franchise with Our

reflecting we loan growth. losses loan took $XXX quarter, million, This of provision for

XX. which were and and fees were fees Page produced million. revenues on net $X.X revenues $X.X million; Management other $XXX billion; quarter, of incentive the Management transaction fourth were flat in business sequentially. $XXX Investment The billion were to Turning

incentive up by Management XX% net other management For $X in Investment and largely the fees. and revenues year record fees a XXXX, growth were year-over-year, driven billion, full

trillion. Assets at under supervision $X.XX finished XXXX

offset For resulting products. inflows assets of net net depreciation under billion liquidity supervision billion and fixed in market the primarily into increased full $XX $XX in from billion by inflows income net assets $XX Those $XX equity. and year, billion primarily long-term of were equity of

positioned in we acquisitions offering X years, our business people The net attracted cumulative as trailing to approximately product billion. total enhance the remains of bolt-on our we long-term well and continue for to invest $XXX growth serve make to inflows better organic clients. Over

Now let me expenses. for turn to Page XX

and businesses, our a we lose continued not we expense me. for in invest on As focus discipline. priority John David, will to It remains our

operating firm-wide the Before going undertaking details, are through a businesses reviews, the to part a Relatedly, of we higher that a we of base. and expense level accountability are on reiterate efficiency. review I'll full as front-to-back with our holding of focus

For business. XX%. billion, $XX.X of expenses we ratio in investments growth approximately revenue stable Nonetheless, were funded efficiency XX% maintained as a our XXXX, operating up

This of On our points basis, take were million Compensation Goldman compensation XXX through expenses. X% which, rate as components fund. Gives, net million XX.X%, the declined the of basis in approximately year-over-year. our was you ratio a like-for-like Let XXX quarter billion, compensation donor half amounting a $X.X up to and included and benefits me of as litigation growth charitable revenues. versus well of $XXX to XXXX, revenues expenses operating of other into points a expense XXXX. as for down expense Fourth Sachs our ratio operating translated advised earlier, mentioned $XXX I donation basis

increase changes for to related activity approximately rose For relating remaining the to million expenses the of reflected XX%, activity in provisions year, proceedings, higher to related exchange from accounting and and of increase clearing investments million $XXX fees. the to the higher in of This revenue other and included drive regulatory But increase to an full $XXX all standard. and growth $XXX expenses of roughly growth. substantially investments and brokerage, recognition of due half million client operating litigation

taxes. Moving on to

compensation. to guidance between of impact our be of XXXX equity-based we tax As excluding rules to current and tax for mentioned on XXXX rate rate XX% and XX%. was interpretations our our XX%, expect date, the Based legislative earlier, the

XX Turning Capital. on to Page

basis to advanced ratio standardized and Our quarter. under Common lower due calculation. default assets the points, credit points third points respectively, default XX.X% versus firm's XX up using of ratio and the into probability XX.X% the XX the inclusion advanced The of Tier the of in X was Equity to risk reflected related approach XX experience determination approach, basis basis the weighted improvement

Our finished at supplementing X.X%. leverage ratio

repurchased XX.X of million shares For basic for a X year, shares record our stock of a reduction to $X.X million the billion, year, full reaching share the common low. count contributing worth we new in

out of $X.X over of shareholders billion XXXX. the the In capital we course to billion approximately common paid we dividends year. returned total, in $X.X addition, In of

to Turning sheet Page and balance on liquidity XX.

global assets billion core liquid Our $XXX fourth averaged quarter. the during

balance X% was Our last quarter. versus $XXX down sheet billion,

to deposits. funding our funding Raising deposits We the through continue subsidiaries. increased our billion, to In shift mix from increase have in diversification, our in over capacity bank continues costs the $XX unsecured raised lower long-term nearly we to financing business deposits billion incremental to including consumer $X benefit debt firm U.K. and business, consumer

the carrying majority Bank business, increasing GS component firm's USA in of addition example, to rates, the vast conducts out FX of an business. For lending our

expanding XXXX addressable the To broaden new growing improve technology, remain capabilities the Before market our in in serving to further client made continue engaging global volatility. taking XXXX by we in We well franchise in to disruptive committed and invest XXXX talent building We despite on and and through beyond. questions, achieve entered to thoughts. positioned our a and few market client this, activities. recent our progress our franchise, closing and

learnings initial by is our team Lastly, the management front-to-back reviews. the motivated from

indicates work but franchise. also change, need our early reinforces the and the for breadth certain Our strength of

long-term the the thanks and attractive The to for grow we'll dialing in, push deliver our returns us you line now up in for again our coming to for enable shareholders. with will more and continued We With businesses questions. open months. that, will share evolve

Operator

[Operator Instructions].

first Glenn Your Evercore. of question Schorr from is the with line

Glenn Schorr

EBITDA the your of want in real real a cash I&L. public realizations. estate from DCF piece comments the versus markets to heard half small because, in or how I were piece from of it's realizations curious about on obviously, a -- about you I your use public the a was is And heard And and remind I lot, were us growth how public can if combo talk equity, half private piece, down about you But markets comps? flow, it much work estate comments

Stephen Scherr

Glenn. Thanks, the I Sure. appreciate question.

the space, the of give you operational securities. on the when that relative the about relates to of private give on revenue events that the companies and as a is we component larger portfolio, much underlying to from comes a at private question, that progress it. basis a portfolio I would the I&L And relating in couple of side So equity whole of obviously in And particular look I'll focus your tell and public now XX% you that's valuation that the revenue in to to I'll in just sense in private you XX% just portfolio, examples business. a

saw if Hearthside the course in the names: look we of across PSAV, So you number different a XXXX over Foods, Paycor, private Ipreo, of portfolio, sales Centaur Gaming.

play revenue the P&L five goes out of context the sales, on that no in contributors names also equity that is Two where was name. other names which on were that that there that a sales the were you'll I'll out, point around doubt to Woowa, name Uber, to the in too, that the contributed there And in name. uplift as others relating a a was we investment; name, are in All of in financing which P&L than of to a incremental and results the firm. point which more other events And there which into million partial were tender a Korean into in equity SoftBank was significant of know, those that, I&L to out, overall a contributed particular which to those $XXX are situations either participated. and sales there's or an together, but partial or sales. those I'd transaction -- the there obviously, in of are rounds comes side

want per se not the of is of but to portfolio P&L convey to on. generated that I happens rather of in related what that private event, context modeling XX% point the off is and much to you event is that on the So observable goes an an

long in to there's you a that, at of terms and businesses demonstrate different on we into sometimes other history situations element And imagine, half investing convey side arrive side, performance in opportunities I deploy that this in on business. again, metrics that could equity, And deploy general is of independent is performance both unique number important for themselves. that against stability the the sourcing think the to of we portfolio. the in feeds The But as valuation. we the methodology event-driven relates growth particularly trajectory. interesting how And of private that a and

Glenn Schorr

on I&L. the and up sets big then need prime done of the importantly, are have Or the Okay. you you In X? in to last as follow-up I'm more new or other any raises in in as staff? the -- your add and is very it for words, get out hard And out opening I performance. it's my need house distribution? process? to up put That's the docs idea But Do I the order to of tell. you concept, any disclosure, Do curious simple funds it vintage the of you helpful, all a on love fund? where in build but love year

David Solomon

evolving the as the banking down also which there's been I us Sachs for called raised or a our money. been to So multiple just long to fund. in That's evolving funds, traditional last Capital $X billion businesses with have Glenn, back we And that a months, comment. there's client know and In and raise in, regulatory these I'll time. fund. Goldman business let merchant is paths XX appreciate, equity billion front all We you for an gone and pretty much private do raising VII, been an $X I'll example, Partners we an start, Obviously, we've respect certain businesses. businesses,

growth plan, an of of years. that plan, over number has a couple current course the of a and have the We a -- to significant raises our and what and compare we've for it's compared clients, plan our overly money resources What platform, targets. are we've money capability. of And and the raise look doing. other next to something of uniqueness us have capability our platforms people be identified to fundraisers That's our the platforms sourcing you some for add off that existing of the without resources magnitude ambitious the we uniqueness the in opportunity at investing given is that a the and the the growth institutional that think we real when capital given firm given broaden to and more of that is meaningful manage plan individual all opportunity over scope been business our setting you and would

in outlining fundamental added, and platforms significant it's that There of additional process hiring that a leverage some to because the and more a be the are much more resources will need but opportunity investing way. we all build exist, there's in be to that. clear not So

Operator

the from Michael is of America line Bank question next Your Lynch. Carrier with of Merrill

Michael Carrier

sense that's to any maybe base? business. on to just of one mentioned Just and the over X or quarter, indication maybe you realizations year But benefit predict. get more, some the the the when the portfolio how have like, of some I&L cost be? potentially potential, like, that could is the one maybe as you or that give next sales sales It's of drove what us obviously in versus, on color tough value these think kind Stephen, what can the the I about you the in

Stephen Scherr

Sure. for question. the Thanks

many franchise a opportunity years the I performance will, And relative that is segment, component here book off to I are and the an asked gain try David investing know side. ourselves, opportunities of ask partial of give difficult you looking the gain. progression deal is and if business quarters a that firm, and I&L of sort the produces is question is that rely to portfolio, and it's now the Difficulty] which several then adjacent prior of for it or think of sustainability several given it to investing. piece. this of where that. that the an unrealized the in one whole committed sort sort said there another. delta thread extraordinary many, is franchise the strength across me I turn a more what we of in make sort the context of [Technical continual I that has just is that on in business of carry between and major the sourcing what more Banking the to equity What at look realized good out the Investment runs have of your that growth. the strength is in of this there's times, point Part part stability put and in And is in engine the and how we into terms of of produced the question find realized it is for where distinction, And on I I of to investments. the of we and of the quite you a what wanted just you over would the I in I've sense velocity our the sense the it. answering to these for think to which you ambition sales and sales considerable light

which even X has Let I&L, side on debt and the me I predictability just greater spend durability seconds think it. to of

overall QX more think with a itself. picture about about up we where credit debt about has more exiting the this as part of the doing the structure, of I&L thrown firm, up, durable, or are quarter. set corporates or that And are that of as investments firm. high is my XX% run net visible, the And a I million more that we themselves rate the said the and We're of who income, part revenue around we've that's the $X.X in capital of others billion in in secured. adjacencies expanding it's a comments, So and is of $XXX in whether of interest portfolio recurring developed clients making

Michael Carrier

Okay. as follow-up. And then just a

on Just expense side. the

side, with think some some obviously in the the guys 'XX 'XX got into think run a the and new the the rate you of that when be going we bit So of I been growth just been recently? has moving some the about more pieces volatile more thinking making market investments initiatives the have XXXX, about should you how on -- in some legal. But technology an environment of you obviously where

Stephen Scherr

Sure.

of opening expenses on sort these one investments. generally comment make me and let So

of the know to. pace we know fact, We of changes market circumstances volatility context throttle the extent into of will we we in be are to or market, market back cadence the where We need where in investment of in we where the the market. our there the and are And of the priorities the as lie. And and on cognizant sort mindful if, levers our like. spend change, it very of the

investment So can that and we'll you whole it. remain be of will, cadence, if mindful very agile,

billion. the provisions noncomp. $X.X expenses in If in an you about look to billion to million of at 'XX, $X.X about of that About compensation, that of half related overall Again, we $XXX had spend to increase higher noncomp, related we and on of rec, litigation about higher growth sort in isolates in related driving increase for rev activity $XXX million as which BC&E. investments to and view relating that of in

corporate whether the the or that's All cash trading $XXX of platforms and David and the about, investment business, inside talking management in that I whether in different building spend million. in Marcus whether that that's been or incremental that's securities is projects the have

the look operating of to continuation that in My of as that XXXX leverage will overall. of I 'XX, will spend of expense, that while the it the the business growth rate business be saw will view rate is to we deploy that to rate existing investment. in of and going in the said, a a than less growth investment in growth source continue grow, we're be the As

Operator

Your from Bolu Christian with next line question Bernstein. is the of

Chinedu Bolu

Curious will long-term back shareholder drive returns. what stepping just maybe David, little superior bit think you a here.

firm think executed the two last I pretty over well. years, the actually has

that core the ROEs. the XMDB their even before underperformed peer into issues. put than better revenue delivered You side, has growth, and stock Despite better peer than

changes Is finally on drive So think there should some returns? to you reason are forward? shareholder for start focused other give at the just the revenue be will you credit going growth stock what there Or market to ROE? metrics

David Solomon

at that less XX% of building out It's we're market of is and recurring predict Sure, Obviously, focused we question. will you a a XX% in very we're won't we XXXX, people when And less would and and maybe $XX.X that the the put in market the a been time, a at where confident is over say, ago, to our investments can and time, expense of said, XX.X% the of the on a way. the last looking I X to slide cognizant have not our and deliver X the from put returns of for And number to where fee-based I If we've long return, been over to litigation beginning our years performance have $X more significant the hard making recognize than we'll number billion business, said durability shareholders. our I been progress, returns do over our calls the at we business for if on obviously in I'm see number in ICS that the moved focused be to job our than the would were situation working a x same company delivering forward. appropriate had for and our the me you mix, [indiscernible] expand the to to we and, do, we of reason try we And highlight point cognizant increase way, that would want stay context revenues for in also it's that's And way FICC We've today. some years, we addressable broaden revenues. that on appreciate that but stock. years, platform to we happened predict, revenues an our for digital those following these to a possible. progress happened of be balanced we've many one the moving and years very in a year up different revenues just platform we in diversifying billion, were of have wallet and of of have years time. from of made. X the to consumer

focused of forward, we efficiently, confidently returns as stated, see And very we we to on a we if which do running we're to can plan that also we higher, more committed existing developing Stephen to businesses the adjacent be to build, doing. to things continue committed the which and continue that. very firm continue can to especially feel We where in mentioned, we some be push as we're move

So where on. I in continue opportunities position that think to been a we path on have we've we're this

through you you the that we is to giving we see committed things do of do, we one we to are, it. what how job I hope call to better and to think explaining a and what do need do information I need are better, this we doing, candidly continue we

we market I will candidly, making we progress. work business expanding over we're focus have follow. diversifying business that while communicating the the in while on think to going have and ultimately, always true think But excellent the the business things that. I continue on to staying and if And been the and we're to better, hope do, core time, remain to focused our

so And do. going and to that's what stick we're to

Chinedu Bolu

about appreciate voice. optimizing candor, sense of FICC, business. your sense urgency is in the On what I you the I a talked and

will the us kind firm-wide margins what here share in What ROEs And guess material wallet of I volumes if do share to can growth, to that forward? closer ROE? then you help level or line, actually aren't you the drive revenue business what on top share growth set help ROE revenue exactly just driving get think an do growth and improving today. electronic business increasing are So FICC revenue or the to that's going material

David Solomon

Okay.

some wallet making just specifics think, that saying big, I I five by then like materially more the the market Stephen large But comments, go want bit intermediation in detail institutions for will going really Christian, fact you It's I really a important business. of has mentioned. our by available into, business. that of declined I'm FICC by confused But to So the little of that not last years. course couple the the a over start we're on start, a to and

Investment started more and diverse executed. told of for been clients. once decade, last always And I a the me thought together, over our way of they were, me array than more how decade, and way I the teams the our out years work One interesting people president time see last go that's the I'd for broader extraordinary became Banking the spending clients, two things the the always with are they

an a over thing. with say As years last of and same spend with go clients opportunity time Fixed I've two lot had the the division they to Securities clients out exactly and of Income,

people Your really are differentiated.

is capability really differentiated. Your and risk the takers

Your execution is really differentiated.

market We are today, shares were in wallet have but's a X.X% our our shares and wallet I crisis change. change shares look business around in client our and very, the wallet and fundamental at 'XX, XXXX, very before 'XX would XX%. the And our look you financial wallet X%, shares range. if it's go you been business, back a strong at there's where franchise highlight in wallet that if

shares that it's And of while and way in share we I invest aberration this thing run XXXX effective franchise. run so is allocate period cost peaked, wallet efficiently well in do that size business exists, to my from a the and our it. but to that on focused that and the job comments that share based to and build an an accept laser that continue I client of there franchise, to continued The during we where in wallet time one business the said to to over was capital wallet we've reiterate perspective, the to we're the want on just the building kind continuing

make question. will of detailed some add parts Stephen, on the of specific I the more to some And think, comments so

Stephen Scherr

to David's the comments. the share, market point couple mean, in addressable Christian, so that I for? pivot you revenue among referring TAM. I is and of what's to clients off last think are to out demonstrated it, absolutely conversion. appropriate we're identify of And just the right our I that increased David to objective years, has institutional was market mean, here playing the not,

prepared part as our direction Banking. that market that's modest point remarks, -- that corporate seen we're Investment amount we are exist the of in need risk put and take in TAM, the FICC, us and mentioned in size of my of need David And the just to for to against not of against to. front is as This and that that I coverage intermediating part the And that part the then, moving proper channels relationships to foreign something commodities back exchange. liquidity that put against of is ultimately, against that I the debt that, against clients using and in the that and context so improvement wallet and that of to expense woken expand of And it's and amount taking business, touch have that addressable to capital and we risk of exist as take corporate in up it. a to to and it we've to relates in particularly going amount U.S. on in

reallocate fact, about In expenses to on years, if reduce the last XX% by X lot about work you reduce X there in has years, by RWAs look of at a inside business over going that that several been to the Investment period, Banking the in And smaller FICC capital XX% move it businesses importantly, away or to firm. active it against from and around business a firm, period. an putting around moving in the and other engaged most

urgency which a the that institutions, the size this and headline not we right described about the other how running in of itself. of to sense it, input get activity lot much have business, and It And those in the a context an perhaps sort of view, as is begun. right put of place and the I to so with some have the allocation has greater clear purpose to along think a David evolutionary to process of we we've now as while that business

Operator

with from Research. the Your of Moszkowski line question Autonomous next Guy is

Guy Moszkowski

before just and fulsome doing very well review think serve say you're of it ask outlook. does First I question, I my this I that really strategic all, want shareholders more to new,

So I guess, of that. on very just everybody want to to thank you, see. behalf I It's for useful

David Solomon

appreciate I Guy. you, that. Thank

Stephen Scherr

Thanks for the feedback.

Guy Moszkowski

Yes, no worries.

maybe hoping that the your us for both quantify FICC. in capital to alluded you want and you questions reallocation just could reallocation Christian's I up the also prepared was to and on answering remarks in So question. I expense on his follow

Stephen Scherr

of question, give as reallocation taken Yes. the expense of I terms by really and that RWAs of mean, last XX%, is was XX% I can in responding quantification is you sort part I think which in I Christian's five of said, years, what to we've I capital. the down

then hope quite expanded the my expectation and that as that the the you that addressable other will focus about over we are course is, I clients you're the being market several allocation taking now customers an next set very with inputs you part clear is the view a be about a asking, is answer it's clear market, and question of which can and with front-to-back take to our including that whether capital of and think And to my resources. over right back than I on otherwise. and and is I'm of clear David to we what will business, that indication be specific months understand then how my that driving we'll the liquidity, to back time. And engaged not the be review expenses, in again, of hesitating to expectation lift will very

Guy Moszkowski

a about looking you much reasonably the we'll the be loss -- at this question to And quantified. Okay. that us and the possible as a direction situation on -- I bill question That's and helpful. how obviously, we'll you The you the bigger be sense be, see different just follows in reserve XMDB reasonable about point in that up guess will that. would give my can your litigation for made Follow-up or RPL that comments XX-K? is

Stephen Scherr

Sure.

of folks as clear to to So again, what just we with said. sort be

expense $XXX quarter litigation million. fourth was the So

will of I that reserves of year, my based For the the in RPL, here And billion, know $XXX of litigation we be only the the know change. for we disclosed expense you. we obviously the now about what million. the K, on and full so neighborhood on now so otherwise comment could now, off premised and RPL listed will now, sit is took what independent But as nothing on which $X in that be we more,

Operator

Your from next question of Deutsche is line O'Connor Matt Bank. the with

Matthew O'Connor

area if more you of thinking to I more area shareholder a about you're the and the we like Should free be one of could up dividends and some optimization expect maybe from bit to capital. you was firm? hoping are another wondering buybacks for about Or how kind it moving talk that? to of capital things

Stephen Scherr

terms would matter. of I a there's couple capital general that a of So variables in of the say as deployment

growth obviously look in we both deploy to overall we'll higher at opportunities that. do around initiatives, that so from that existing And to effect, promise in that capital to show those opportunities redeploying businesses, and of is, less show continue First, accretive their opportunities, and growth in terms promise. new businesses return capital

continue the And can. receive best of we CCAR. this are obviously do don't will return we for be be tell confines can by of as to year, terms I obviously, will the buyback you, in planning of virtue in limitations scenario to can and of aggressive that CCAR, have as as have Secondly, terms within share to yet we there to and in what factor of that prudently we but we the capital

speaking. so shareholders for carry in growth. to about way think capital, the which And the internal that I deployment sense, generally second, and areas want in growth invest One, reallocation returns based think to grow. and on an will we accretive our But being that's can of the

our around and just be ambition our so that. MO will And

Matthew O'Connor

the a on for maybe then David still. capital And theme question

You're clearly reviewing businesses. the

maybe be organically? You're something looking Is by -- been. for think Or done they've a continue small accomplish that questions, investors bigger But deals? can analysts I revenues supplemented make ones. some bolt-on to balance the does it'll the And help you you some you've business. than out deals, do deal it there you there more think, to annuity-like among and obviously, to need the about within be think

comment can just that. So thoughts on maybe on if your you

David Solomon

Sure.

you do, the focused to opportunities, or extremely organic look, us at both time. always So higher progress drive to actually organic options I'd I've opportunities. you over developing, the in to say said plan And be in inorganic with in We're look would expect we'll meetings individually, the drive franchise organic meaningfully the many which think an I've as look on all the here, inorganic. we're organic we'll preference can at it to would and plan, business. you grow is and of had we returns

a you a portion and particularly asset management. at for inorganic my bar for think few smaller significant continue look doing our someone a management wealth forward. be our know we shareholders, cost bar to do think returns significant And opportunities across it's operate that team to But for when job opportunity should be can the as who's on career, add-on and around of high. the high. and management we'll way move I we advance I is extremely our that that businesses, our M&A any move as to you'll well-versed see But extremely been as

Operator

Mayo the Your Wells next question comes Securities. with of Mike from Fargo the line

Michael Mayo

try question. can I a If XMDB

were securities buyers or of in securities the to or not And in like -- transaction were the U.S., XXXX is Exchange determine related to of reason help much of the the I or this the any ask Securities structure the XXXX U.S. U.S.? U.S. securities the any of of -- the whether So how is apply? any Act or the

Stephen Scherr

to S for under be the reg And sold U.S. thanks structured in all non-U.S. sold securities S. We're U.S. to buyers. Mike, not destined to securities question. buyers. the nor Reg These were we're

Michael Mayo

than other and talking customers, a on regulatory What of impact the and helpful. employees, any There's of business the articles effect many is potential customers. more question. employees or the All general That's happening realm? is been XMDB right. certainly other way the on spillover in XMDB the legal in And then morale about what's news.

David Solomon

this, question. the appreciate it think and I monitor we and about Obviously, carefully. Sure, we

the first, I'll think and XMDB. the with that's upset such said in I good And here a had remarks, regret something about business a are enormous that that the extremely about significant certainly, morale has about. I dealing the performance in firm. we I fraud. fact we situation and They think feel in employees we're First, talk employees not of And fact people firm as the and angry well. like that Employees is my about involved of firm the for partner the But have the high. performed do

is recognize of the deliberative But resolving. our clients people a through feel process the people firm, the work positioned. I something good think that firm's our this and we're going franchise, that about the with client they're way doing

moment, client of we'll our are motivations are that our say terms on of of think we the resolution franchise and a deal to basis, I as engaged across not to of from have what impact focused I for globe a the in shape regular form, press in is a of clients lot process. and through. or our to fact articles. the and for I, in has I also our way, executing the difficult clients, But minimis. not our and clients I'm the all stay we this in cognizant of that it what's a noise And at all we the where watch comes as with talking firm any de point be I clients, been on them. you say gets not, context them, In this you impact the we're them And obviously work to has the extremely would the read with a said, we aware dent And the clients would and do. on that the that have and reputational of press

Operator

from Stanley. Your the next is Morgan of line Graseck question with Betsy

Betsy Graseck

that in on and management the the technology going plant in the investment Or David. globally investing to licenses the do have that and in to banking need just local follow-up type banks? the the related about I thinking with side talked you're I that understand call, you have how you you offering. beginning want order of you're business at equipment then terms loan is the growth. this a into of Question to about much cash just partner and how how of the And

Stephen Scherr

Sure, Betsy. take It's I'll Stephen. that.

they were problems that market, paying this in in the they almost services business, to corporates our context when participate, had Investment amount corporate those most you'll Treasury a and sort a around paying management, significant management. at of in that were across remember pay And of interest So Advisory which corporate our the we and that to in view we in the given with in considerable look cash us that the in market we have and that part that of had that also was they say equal into historically I'd but namely that, Underwriting picked and that what point Banking relationships what's deposits, cash minimis. treasuries what of that look the pain and entry on it's we lending platforms conversation. our banks, banks this been for underwhelming. these, were credit the the a an was this at kind technology lending if were been point corporate we paying have they working of perceived been among gave you And more, the operational fact sort de up

substitution design which we rates being by quite pain that something say perspective, to When deposits Marcus we're strengthening certain it, been can builds we in clean our synergistic Bank look pay points. building, edge even those the of technology we've this with there's including legal from way so other of funding. And of US. paper, technology you it is where a I view, of a other the of wholesale just have attractive are context And are been paid banks which if that the undertaking, equity us with that from well can the would your element to at for that, and build what we building candidly, we including address GS and is sheet above competitive the operational point technology, a

in use necessary vendors ability to the way to in a central but management. of that's of organic So terms to those a obviously way of over in X terms the equally in vendors required XX last now. which not business organization, do the cash that hub, build has the developed example, would the just This integrate not corporate the what is in Marcus, have development this of cloud, or years the inside for we would payments make we many many, to what do context build in of

selective. this, all we think as out to box. we and things grow we're all people be And build I going to as be the this won't we of

play. will had necessarily to don't to proliferated vendor markets, as We are a and basis you years currencies tertiary banking solutions need can correspondent that X you select where build certain relationships ago. major we take secondary you interesting where currencies There among the as will on

And so way. to intend that, we that do

we just as is right point and think at doing the this, first It's I cost deposits I'd this. the out, of an bank, and fact, firm so aside, the I de-risk in the that be outside the that customer technology hand. time of And such the platform, also from execute to that will Sachs I reduce our can in operational this perspective. Goldman we own think think of be the process, can

Betsy Graseck

think of has lending. mean, you about part from when how business, in it come for you historically, industry, the And I paid get this

would that's to commentary expecting was slowing. think of if some to just back, Awhile that how how part but the consumer. growth corporate, confirm wanted I capital So there but in to Marcus about maybe paid, be book, get loan in loan also you only allocation not you're the

can touch versus towards that about balance think the towards how buybacks. So and also if sheet you loans you on utilization

Stephen Scherr

Sure.

deposits. model want of prospect context the But useful operational out significant, look the X useful return to They corporate just and look for to I corporate cash So question. back I'll lending of in more okay? the cash management, wholesale what They're get, lending is at components, to come probably returns in are your we be can One, substitute at most a there management. as When we part not of context we us. are on are basically the we clear. P&L and what funding.

corporate FX management was ties unrelated candidly terms we part that with was in of ago then But had but to sort growing securities has in not into of long risk lending referring go in smallest management a continue was that book products in is cash we've fee-for-service. been was of It to grown doing that about. the The a of an it time, of When a will That with set will is will, I three, It's to lending, been, generally. if more motivating second, a corporate management years out and back which that because plan the on. been corporates. attending is cash lending for thought item you that's issues what long, for as province broader in pointing factor. gating our captive pointing And and me all have the way adjacency the relationships and the effect, the what go lending, developing corporates. institutions and a to strategically on the exclusively plays corporate of That in to a cash our of this like. I is from generated been was out probably third, that to it context just which which had time, business, you in obviously the the the out business wasn't Over corporate reasons of P&L, ongoing.

play that of a of prolific right And for are sort have regard, lender and and and sort a so business. and in we we lender therefore, to more more compete this title think and access

Operator

with Brennan Your next question is from UBS. the line Hawken of

Brennan Hawken

we costs as few retail as us any on in here deposits how few as the that of could we how short-term at deposits. deposit the keeping commenting XXXX, even last that We've plays far could days bound end heard know in market we banks goes, you that payout let Marcus the if increasing increases. competitively adjust? Just think in you maybe Curious far should go? on about likelihood that your rate out about would a If see see you upper market position the how the would don't think

Stephen Scherr

Sure.

acceleration going, movement context been in So environment the it's rate. which lower one, the rate would from it'll I beta little think rates in where say very lower and of in than the time interest was meaning in we the remain look of was historically more platform than the moving. U.S., deposit rate acquired way GE but that you I that the where in, by we There's been have it were of if

or the we're And to rate draw paid. always Our particularly objective more the in -- we top need X, of of point kind in has on have while as the like-for-like by which in not been I brought funding at of that's be the dependent. wholesale that X to, out always motivated U.S. where I would deposits than the that to And tables been these X pay levels sort a we duration currently is on remain fund these the relative sort the we're accretive rate obviously these And positive. retail think firm us beyond paying, diversification very to well in to deposits overall even market. to has is

to of hitting our the more on us side. of think, than acceleration way. that. will a U.K., market beneficiaries paying ability the And of us the I demand in And street sort that'll In of rate. than high anticipated, that, came U.K. to give I the nerve give more would so the I the think we influx rate rate had we in maneuverability were and story where the think sort of opened were that's banks, up I But more of we much that candid say kind be deposits we on moderate the an perfectly with and

Brennan Hawken

while fourth my we've and topic appreciate here, spreads second quarter. for recover question, I the then loan back loans net CLOs a seen big the that. and Terrific. became in And levered market

third-party risks How of the warehouse? And manage you the your how how counterparty third equity? know party, risk manage you funded it us is with much if of let providers? funded maybe you is could So warehouse to with those fully

Stephen Scherr

Sure.

about of exposure CLO So $X that by in is our the go a that half ways. start small. in that of number of can saying about neighborhood is It's I'll billion, funded.

remained If on you terms it look more broadly at relative our the of terms. like, small leverage in risk exposure lending and

And the our if to single of risk, crisis terms our where at If lower where was go than you you sits digit book, certainly at underwriting skews underwriting appreciably investment look LBO look you it book financial if heavily and back it itself. toward grade. it's in

we very 'XX. flex feel the feel that I I risk at perspective as at our underwriting good we we we book, about and commitments. comfortable into a have come so would the our And others risk. from look say in that And

turn relative term. We and the in took back loan into move. sort outflows January at saw are investment-grade to seeing caps seeing of a we in We're of concessions. deals bond funds underwriting into We're funds December. seeing the We're the funds, flow that pleased

where very, than favorably So in all in overall past, are on we're in if are of very playing comfortable of and risk. the the, think you more the indicators seen we've dashboard terms will, what we I

Operator

question Your of next Research. line from the with Chubak Steven is Wolfe

Steven Chubak

wondering goals, XX%, comparable. It -- are The thinking on continue drive efficiency XX% by that XX%. to across of the I ratio the start question to with somewhere that And efficiency, give really been so you your have I from the of wanted you're individual and focus as long-term midpoint. some whether on big benchmarking about accountability you is about shook to both David, sets higher one And the So the focus commentary. from and peers how on peers to was to the for off businesses teams. things a say when from And to a across us really investors benchmark the efficiency to closer closer the already I against how driving the insight can focusing efficiency you on range you're individual yourself really Stephen efficiency encouraged teams. the some quite we interesting of that peers remarks just like you, looks in ratio efficiency how out focused that's I'm

Stephen Scherr

Sure.

notwithstanding look that operationally those turn we which increase, in so question building out you migration. the I'm equally, correct, is to what view build anything all ratio of would platform-driven mean, to and our a comment. But a and of would in about would in migration more is at the you you margin year-on-year, more businesses, number for sense on if we of number reported direction it. is and have target what hence, thanks terms but the the that growth It's efficiency which the compensation, look flat that it suggesting reserves efficiency where as the marginal So our points forward give And number a we litigation a but and just not again will direction. will of than and hard took you expenses, I sort been as less now be. expense you report that and scale if the across intensive. there that efficiency right XXX ratio in around be basis will, lower ratio, need expense that to for intensive particularly to we're out where of obviously, know we reported the sense point XX%. give I

and as front to sit was to of I we greater to you, business go. -- meet you, revenue David is of and that we will platform back. in extract business we can continue and directionally on expect that coming we hope think with the basis over as about the recurring in efficiency the skews in will that should based us as durable revenue time, that on the the you guide direction revenue the my that one speaking, more downward is this this through we where run the But trend And hope to months talking realize.

Steven Chubak

helpful. insights those are quite Stephen,

comments revenue when the marginal follow-up of side on more one your and a some the growth it $X laid Just know as those relates initially was I targets of on than year to a margin out improving, little you it ago billion.

marginal next talked about that had of incremental $X.X how margin still billion margin with some ahead But Difficulty]. [Technical You of the of about incremental that's investment. of growth the XX%. of half revenue on wondering revenue about Clearly, that think should a growth required us, frontloading we I'm

Stephen Scherr

example reserve start Difficulty] of from increase. you a when business, right is to you continue growth lending at in in you margin to to the comfortable, see And build any a are [Technical mode, state. have there, at you the that which are point steady

of targets trajectory say notwithstanding limited on that yet hit cash Marcus, growth growth are them they'll of expectation initiatives XXXX. their think set these means, management or commentary early And in all where to and marginal the be can exclusively no in They in hit overall firm limit the businesses, whether we stages. themselves. corporate stride, that were, for I the our their a the haven't targets Those each so of take the by think would of we also kind we generally. higher should efficiency terms I that margin not it's

higher this, time, think you there, margin. So drive David there's I even and realize initiative which out volumes look example. an at can means spread. we FICC, greater build an in element over to platforms, a a And incumbent that's progress for narrowing FICC we'll was those of as platform of as talking the electronification Again, about a business. bid-offer

those to So is limited side. the on commentary the growth not

Operator

the Research. of from Jim Buckingham is line question next Mitchell with Your

James Mitchell

Maybe -- digital competency a banking. with Goldman's build kind a just strategy of always the retail led starting I wealth. think your comments retail. also about thought you kind to as of wealth building and And or I to well think is through in core appreciate question your more of plans out brokerage Have throughput management, to complete platform? leverage out it in creating is platform on you of -- institutional your a gain

David Solomon

with think about as Marcus -- one with think Marcus and one as we we we So started plan about product. as about, it talked

over would has some would to and platform wealth others. come And we term, wanted lot a some Our that more and owning that it very our and a basis. very, a build clients going as from it forward we and retail, customer would distribute a have which reasons were acquire was we a plan you products strategically There's platform, acquisition always management we distribute platform that basically our business previously to originate we digital us, brokerage. that platform, always maybe the that platform, or much products, didn't go. could lack on big we've was multiple do massive been cost feed been we there for for have thought on only products into that a something more effective where because But be a at to do big that we a shied could be away digital, clients off way footprint we high now why of of fact for broadening own to making that brokerage about end. the a And the storefront another focus of always think, firm with the opportunities

our more that so out vision more And wealth is and to build business and our management into to continue products time. over connectivity platform add

Operator

Your next Securities. Ryan with the Devin from question is line JMP of

Devin Ryan

first I gave little on question bit preview, so a here, to guess, a the one review. Great. another you just ask of going front-to-back I'm

previously deserve And realized? more capital results? this? you might more we existing or come capital kind it's a reduction when do cost-cutting Or should think know, side viewed the investment businesses on that, maybe like that expect just what as look to been they first largely early net have But I this we going with you is other so of than on any quarter exercise. of specific reads

David Solomon

Sure.

and first, you and look purpose it. the want of purpose to opportunity figure to cost-cutting deliver to back back, businesses the at your and when But of looking the you real to So most with capital a businesses, way front on to then front an and effective fundamental at your obviously your is element resources the starting addressable there's understand allocation. set out market

want very I very, clear. So to be

any you your opportunities. to to of strategy, large As path opportunity down the start would and those new management at team businesses evolving really then in have company, ability in want deliver you they any a do the as look on

with the purpose high at so of a efficiency, Stephen a was then other of comments level, of you also has to both respect couple And highlight. kind detail. as the front just the to back and opportunity

Stephen Scherr

direct the In the ought ambition put out, they to Well, the base. owning revenue cascade so going front businesses they line to I back. in are their the our just the this both and costs I organization, point would meaning line, is control owning is think to pretax to down own more of that they're in of cost their the meaning effect, that

out point risk and view. at keep Now functions do I will that us would of in core, point control should as a we the you expect from certain

of elements third that in be at elements there'll to to of control of control But a how tech terms of businesses ops of second the looking efficiency business the So line costs are conduct the core. themselves. driving into sort needless and core. And say, of put to and greater and at we're held proposition remain the hand they

Operator

the of question line next comes Your RBC. from Cassidy with Gerard

Gerard Cassidy

addressed and this. with do the think you had if Obviously, had share apologize you -- the competitors. as into what of you with MiFID Can guys color? from I year-over-year business? have -- us have XX did good impact your you growth seen you Can equity some months this your changes guys But give numbers on you II? what has changes quarter, large MiFID the some large us We're it,

Stephen Scherr

Sure.

by terms market consolidation, played from at seen have level really out level share we of and one firms. then what geography So another MiFID individual II in and is it's

player. that So then move it's a major of European of U.S. the we've certain tight a are and of share share that, out needless the say, consolidated share we banks And equities. and seen of which, become of more banks terms of into consolidate, within game to kind in

that and because continue, comes platforms over that many hope in consolidation. we consequence. so And that is to high-value we're as in can so that benefit And My to that us see is play and the expectation from I to research continue consolidation. do our we developed share we out. going a think back to continue we'll share part -- content And we've years,

Operator

At questions. further this are remarks. continue any closing time, Please there with no

Stephen Scherr

Okay. any out day, additional we hesitate to first to questions Heather. the On of If reach to the arise many call. joining forward for enjoy quarter Since would everybody you senior there with in speaking the we you. management on April. look see we Thank are in hope coming no to months. and like our don't of meantime, of to please the rest thank call take more our questions, Otherwise, a behalf team, moment your in you to

Operator

this Conference Ladies Fourth does Sachs conclude for Call. Goldman XXXX Earnings and you your Thank gentlemen, the participation. Quarter

disconnect. You may now

The Goldman Sachs Group, Inc. (GS) 16 Jan 192018 Q4 Earnings call transcript