GS - Earnings call transcript Q1 2020 | 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 First Quarter 2020 Earnings Conference Call. This call is being recorded today, April 15, 2020. Thank you. Ms. your begin may you conference. Miner,

Heather Kennedy Miner

may the Stephen the will to is the will business Good support is Sachs the joined at appear firm’s Chief market on Then on the and Scherr. COVID-XX resilience Investor volatility context Today, recent with and earnings world. earnings pandemic, our our the be Miner, and over will presentation, David and Stephen and David. www.gs.com. current we execution of your environment. discuss copyrighted Group, Investor and quarter Solomon the operating position Relations our first in priorities results to including their remarks. happy information of measures Kennedy in at organizational morning. to to following our presentation. conference then broader efforts around continuity questions pass can our consent. audiocast response Goldman website found of Officer, Today, Chief start release the communities Stephen speak the including quarter No financial This Executive call or and Relations strong David? in now our detail, non-GAAP first the Sachs. will and the environment. Head firm’s our take David results he on be earnings statements This will our to by will I of reproduced Heather Financial Goldman material The Inc. our and rebroadcast Welcome be Officer, not duplicated, our and reference David our our without page call. Chairman am which to forward-looking I

David Solomon

joining and you thank Thanks, for this Heather morning. everyone

of healthy. hope all at foremost, and loved your you that ones and are safe Sachs and Goldman First us

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resources, help and network can. our are We harnessing to where we experience

our partner new economic and We on and serving focus on initiatives community support with are assistance businesses a working customers. with clients sector and public for to clients and private

For COVID-XX we $XXX steps, number our to part, a have a important including efforts. million of taken making commitment relief

in $XX of for We million business track communities $XXX to will and grants small who to financial long underserved institutions record this reaching million owners help loans businesses. small have weather business and development challenging community time a

of We small have business for mission-driven worked XX,XXX with these lenders years our many through programs.

Sachs commitment including grant $XX a workers, relief program special employee most fund vulnerable help families addition, populations. Goldman and In a Gives, launched through we to COVID-XX the healthcare with million matching

equipment SARS donate to NXX epidemics million number XXX,XXX for part well-publicized Lastly, over Across frontline professionals, which risk need the X.X a workers Europe, our efforts. of in donated operational and acquired health years to like response masks we continued we the have a masks, management most. prior as surgical following to supplies and shortage of we the who U.S. of

supporting tangible us Sachs, discuss we technologies on Goldman we interacting. this to clients, to to the and quarter defining commitment succeed always our context, earnings new response presentation are forward. broadly, in ago. have compels billion for our As per Page of More and communities. Adversity flat to will earnings the of and leverage In the these equity thinking of roughly system, to for times billion, financial earnings as to ourselves doing $X.X broader At organizations. the move our innovate, and rapidly $X.X execute and of first find With that return evolves, a I financial results. people that net were versus we on year of new and situation of $X.XX continue turn X.X% resulting the our our prided ways were clients on our X%. X continue adapt help Net will to quarter, a share revenues we ROE to

balance levels in contexts, proved investment stress. to a as banking in our and period In growth solid March. a client our on very well. followed clients volatile perspective, we equities by extended clients businesses in our to of position challenging two different strategic most sheet the liquidity engagement The solid during backdrop a maintained periods to volatile both high a in as with be first quarter of March. client January leading From delivered advisor February We operating and franchise we and FICC markets performed

in mark-to-market sheet our from falling saw as management, advise our material to continue dislocation banking and prices. losses investments our debt equity direct business. We management consumer clients asset growth on-balance accelerated from and experienced market asset digital deposit wealth In impact we

We also minimum and notwithstanding our Challenges liquid robust above maintained recognized strong highly levels sheet reserves. with higher capital bolstered and we a of our and liquidity. ratios credit balance losses

to Importantly, client and we risk every strong remains best-in-class franchise feel and engagement. execution advice, well-positioned deliver to expertise our

footing Turning growth to and strong continued consumer environment on the markets financial by the year operating the solid fueled Page X, started sentiment. economic on

and markets business financial of global March and backdrop to February highs and deteriorated in and across and globe dramatic most the to severe COVID-XX however activity. VIX markets. driven risks it. XXX from with The financial declined the across new contain Our performed in brisance This of [ph] client assets February measures witnessed highs in by the hit in January all-time as well began We S&P early as spikes unprecedented the spread highs. from sharply new both volatility confidence speed notched the markets needed

both also of grade significant high across We and spreads de-risking credit all asset from and witnessed clients investment classes. in widening yield

very The able our support strong investors commit of levels franchise and activity important behalf risk clients strength financial our to to as serve strong reduce risk across our we Given exposure. our as our volumes of market franchise to scope position, high intermediary. were on and clients sheet balance global of the ability an and demonstrate sought

we expect it given and about that by remain critically fourth Looking when in of agile and decline during a we X% an near-term projections quarters none get U.S. clients. a lose economists very the XX% year. More wide us is a few ago. the excess quarter rebound output in that growth this they expectations duration our financial to in a the compares forward, period to the first decline range of two is significant flexible of to in why year This about the months forecasted a of obviously just the growth second health in strong for GDP X% the is resulting is XX% followed is in second in know that decline unknown of in contraction to of annualized around us third reality sure. profile half before in recovering This uncertainty difficult There crisis. expect of the economic The quarters. of important our specifically, back of service forward and our the maintain over

Lastly, I’ll share a Day commitments. Investor on our few comments

We out laid remains than expanding more or the these circumstances to ever operating new our the businesses, so the targets direction no still and weeks with passed, we medium Yet under operating strategic firm. circumstances, ten that distant in contemplated opportunities operating seems which environment. the under and core goals, our areas. certain distant these environment normal our clearly, for long-term January strategic that this Interestingly, is this Strengthening plans important have less adjacent greater has to. a to efficiency, compelling. normal And us not businesses, in created for represent firm aspire environment. targets we While and remain in established accelerate

in meaningful growth take corporate track Our clients remains has banking and accelerated deposits fundraising our of schedule Goldman our transaction strong In completed a importance exceeded attractive we and solution investment our advantage financial of on in fund size the high to on In personal of we business, in strategic business. rollout alternatives help our expectations. strategic Capital, business, opportunities. Sachs’ that to March, our continues of consumer net deposits re-branding worth United growth underscore management on have the

expect us franchise. with and our serving the environment dynamically manage of of the long-term should clients current our You protecting to through value priorities

will We appropriate, tactical place. goals of That size the cadence in adjust impact our investments. as timing, remain the may response strategic which says certain our of

that, Stephen. As updating you we progress. look execute, we it you our will – on updating on With to forward over to I turn

Stephen Scherr

to David. Good all. morning you, Thank you

me with summary begin results Let page X. our on

activity business by offset losses value our excess XX% four three in produced significant strength level our management of of the the business of franchise versus revenue in loans. investments and securities, the due in of asset the long-term reflecting of equity, period growth These March. debt quarter, and first fair the During results the to elevated decline our segments ago were year our in in

versus We in diversification backdrop, difficult credit flat our for the also the Despite a took our levels businesses. remained overall the quarter. material reflecting provision revenue of year losses ago, a relatively

insight want and on want turning the volatility, capital, financial a U.S. strength on this of provide market also over for decade into stands this I to firm terms Before into approximately period system doubled the as coming to of capital to where position, in those reflect our I financial levels to large banking trillion. specifically liquidity results, Sachs industry of risk. the and we $X banks, moment as the second The came dislocation quarter. with metrics enter a into robust more past the for than Goldman the

of during CETX balance reflection sheet above with ratio our the capital very our clients. quarter, minimums, the on Our a stands reduction a of in behalf of deployment purposeful

that As strong, David the very a $XXX than remains over and is now. billion at during noted, averaging our liquidity higher quarter level

balanced, risk exposure. Our and sector both of positions in provisioned controlled, remain terms counterparty for, risk and adequately

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and of our scenarios. we As metrics the capital decade, testing a undertaken past the severely the function over to adverse industry are that regular and liquidity withstand sized have stress

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our year on quarter to Page X a versus produced XX% with net of turn $X.X and Investment performance beginning billion, quarter Investment Let’s Banking. ago fourth versus Banking up revenues first the X% quarter. up business

and sequentially last lower down with amid advisory revenues down deal volumes. year closings, fewer consistent of XX% financial $XXX were X% quarter million First versus industry

our volume. completed transactions deals position in quarter, league closed table deal the both nearly We During billion announced for one nearly and $XXX XX in M&A rankings. of billion participated we $XXX announced number maintained of and

business. the clients in and environment about the with engage economic for the M&A significant implications to continue changes We

Given industries, assistance, evolve opportunities. of financial the variety challenges strategic to we demand risks, a and new expect balance market of as they client seek facing hedging our set bolstering capturing sheets, and

While of crisis with impacts as are elevated that others, this there levels dialogs impacted clients and clearly are all are more than industries verticals, in some clients types regions. directly all across all at

underwriting, quarter of year. first slow the up underwriting revenues for a the versus net last period $XXX in of XX% were Moving equity fourth quarter million versus IPOs to and flat

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Twitter. a of market Additionally, and public pullback, raise the of through high-profile-type transactions. following in Wayfair number market the we of convertible we Notably, number a including clients helped capital for issuances private and led companies, variety a

the reflected were debt asset-backed X% and Activity this quarter million, down Turning versus and to XX% finance $XXX up underwriting, in quarter revenues from net year activity. growth leverage a fourth ago.

Number positioned investment X to clients even our markets, as league by remains access in debt environment March. ranking grade table evidenced provide well investment global grade and the our below ability Our to through challenging franchise underwriting the and

our client last financing in as bridge XX% commitments, the $XXX Helping two access. we public other evidencing enabled raise Of to us billion double full financing were to out saw of mentioned, $XX in share, Goldman U.S. for roughly financings grade March, record David weeks manage commitment taken year, also markets. market billion clients helped capital clients, issuance As in market of over that, investment in of engagement last finance versus dollar access over nearly Sachs the our capturing of activity. certain better permanent portfolio windows acquisition facilities risk and with

decreased Our versus the investment versus ago. fourth rose quarter banking a year but backlog

the $XXX over dialogs our market transactions environment, and quarter. our fourth quarter to quickly. during credit evolve said, We in larger credit prudent timelines relationship to a corporate Revenues that as up we the book maintain franchise larger That we on gains double expect hedges $XXX from our risk relating know delayed. ago, lending announcement quarters three-fold should certain with can The by course, across million, gains in approximately active maintain global spreads year conditions Given hedge spreads million hedge backlog several be on tighten. nearly and were the tool. reverse a could, single-name lending driven of on management versus wider future commitments of clients

the lending our lending, income a relationship commitments. as In acquisition net than on reminder, offset includes marks middle-market corporate and well As value more hedges single-name lending on and on financing gains as interest index acquisition financing. quarter, fair the portfolio

our approximately relationship quarter, the we supported corporate we liquidity clients’ this in during lending saw During billion commitment needs as difficult $XX of time. draw-downs

we given of our grade draw-downs roughly from book, below While between pool. our was the grade non-investment size pre-funded investment percentage $XX on clients, were liquidity the of investment split stress within a our and scenario and were notional a our expectations grade These draws larger evenly amount higher non-investment basis saw the billion for a in grade.

clients, we inflows benefits accounts period, in banking reflecting now platform. this we’re the $X early business During also balances and transaction to saw strategy. over tied deposit deposit XX new These serving our growth commercial new totaled billion significant of our diversification

Moving Page were to significantly amid wider Markets billion solid market. up higher sequentially bid-ask and by XX% quarter, Global activity XX% revenues year. in up in versus client risk management on challenging the driven was Growth $X.X X, last first net a spreads and

at Day, global Investor markets, segments, noted allocated fully costs. like all we results our include As in our

approximately million burdened again, we businesses, quarter out elevated financing first XX% lines five a results franchise. spreads. of saw last related Growth reflecting performance strong with to by client sequentially four our markets the revenue significantly increase versus of commitment quarterly year-over-year. in very billion, of $X XX% FICC to net saw XX% our FICC revenues year and flows net client reported business in a standing revenues Americas the value and improvement volume higher meaningful revenues. and credit as FICC In growth our Within last higher XX% with driven of associated posting all funding we year; across such, and were active drove in intermediation intermediation, by up diversified currencies, higher was were widening volatility quarter on and in Asia. versus an with As derivatives $XXX charge valuation adjustments a global of up

stress. record our our investments years, our to the during and significant We platforms on-board new clients changing continued to during client results reflecting in and eFX liquidity business, produced market Marquee this and provide recent in workflows, to quarter, willingness

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past measures Importantly, several our years. by cushioned risk was performance and the executed reduction we the over capital

saw FICC markets, as funding recent weeks. our navigate begun Lastly which in repo financing, helped considerable have strength normalize clients to in we we a business dislocated in

versus average Equities a balances. the making aided Page volumes. and market equity fourth by more of year-over-year, rose difficult $XXX partially volatility financing on unexpected was billion up rose in and Europe, net by versus by XX% X% versus up intermediation dividend offset ago. quarterly, net higher prime X, a revenues equities, higher client year cuts. market million significantly revenues client year a Equities This higher driven $X.X billion, to given quarter for backdrop first the given revenues XX% were of quarter derivatives XX% $X.X Turning ago

including first harvesting, closing Moving asset at portfolio. given $XXX $XX million first year Page on increased key X% fees to up by driven Company this by collectively, net produced to investment $XXX primarily in SPAC in Special million asset management on reflect on-balance under the Losses assets a negative or declines our the a Acquisition incentive more and quarter, accounted fees and was client totaled assets offset driven management asset marks activities supervision. Purpose here versus for sharp segment management in higher other ago, management market Growth our fees X, quarter than revenues Incentive fair of the by sheet majority are our transaction. quarter, value. during the of million,

billion the dispositions equity material on or investment certain as the $XXX January securities in debt produced from to Net on fair markdowns equity public a driven and portfolio. portfolio, and net public equity the million specifically Asset private and More quarter loss on equity activities were our lending billion offset generated market our $XX by mark gains the to on including $XXX Gains our broader in AirTrunk, gains in we a roughly in of sale smaller in losses sell broader of portfolio investment and agreements of $X performance event approximately investments $XXX revenues businesses reflecting million of of from our and losses positions, March. datacenter our our Avantor investment portfolio on in value than million UK million the in Australia. million from negative pending student operating of housing February loans. marks including $XX investments and $XXX Management offset were private generated these Our holdings attributable first items significantly close by marks on more equity underlying $XXX approximately private on a million and debt losses across were to

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first we portion the assurance quarter’s if is the We the retrace, quarter, part no of But of losses. could recoup of they outcome. as a in second there also of would spreads that have first note that course,

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the under year prior supervision rose X% to $XXX Assets billion. versus

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Page Now, turn to expenses on let’s XX.

year higher $X.X XX% significantly impairments. expenses in of brokerage consolidated estate provisions expenses and fees driven to increase higher versus billion operating exchange quarterly attributable related to Higher last and investments, increased an litigation total clearing including by real for activity. Our client

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effect in our continue we the to we pursue target. the year. expect non-compensation to Importantly, medium-term efficiency more realize the of that end, half planned significantly through To reductions expenses of back

our tax for was taxes, quarter. the rate on XX% Finally reported first

the impact lower or permanent Our impact on lower – compensation rate pre-tax and and of earnings share-based of lower reflected awards benefits. the impact the

As tax next noted over years approximately few expect our we be to XX%. rate previously, the

me with on XX, to let select sheet balance capital. begin Turning Slide data,

by X was sheet sequentially under our equity the the XX.X% down first quarter. at XX driven Our the Tier the in and points balance meaningful RWA light growth of common ratio engagement end basis client of during standardized approach, quarter

approach due incremental decline the basis ratio by points higher with to standardized decreased to Our XXX under versus XX.X%, volatility. spread the credit advanced

also X.X%, was XX on points to SLR clients. Our down sheet balance deployment basis sequentially

through to of capital returned and This notably billion at of dividends. quarter, repurchases we stock the quarter $X.X beginning a of share common the total shareholders

count of XXX share the million record quarter low shares. at Our basic another ended

our to pause recall, Goldman of resources the members the allocating returning capital to second allows buybacks when XXXX. to opportunities us quarter continue deploy voluntarily to support suspend will Services and excess context not temporarily and you current in decided our operating the This Sachs to high the Forum through of Financial clients committed return to environment. to accretive remain shareholders. deployed We of As

assets generation our solid given maintaining the dividend, XX% trillion, maintained sheet, quarter liquidity strong continued position, quarter. we Further We dividend. earnings relates at it up $X.X versus balance levels. our capital ended comfortable feel and our As total last the to to

$X fourth quarter. core versus global $XXX up billion a our record earlier, liquid averaged the referenced billion, As assets

strong total and with deposits to Marcus increased liability billion flows versus through side, On quarter last the $XXX billion, up our our channels. banking $XX transaction

to to execute our remix liabilities deposits. we long-term on strategy our our As to continue

clients. volatile $XXX quarter our environment unsecured of markets ourselves part results we debt navigate quarter accelerated conclusion, and in this first total vanilla reflected from better the billion our issuance during billion turbulent support our Our client the service driven as borrowings back position the long-term to to quarter were $XX.X by first and franchise. issuance operating the of intended ability year be In into what the to for our was of

position, toward of and we financial look the including strength capital from liquidity. we As the take our year, robust balance

of firm with client the now dedication resources you for our the line and franchise Sachs, during this Goldman full questions. professionals the the ongoing we time. marshal to that, of the talented in will dialing we unprecedented thank clients Our will open With again strong and of remains serve for

Operator

is [Operator Instructions] Evercore ahead. first Schorr of ISI. Glenn Please with your line the question And from go

Glenn Schorr

Hi, out a start thanks guess how I the event? forward that I is taken that’s macro under or about getting recovery? a shift half about taken economic changes like with the of worse about thinking talk Could more if we on $XXX of to recovery delayed. the you quarter that laid little out you provision second if reserves a talk linearity just XXXX million shift the a you pushing one – hard the backdrop as as the you the of it. meaning that Could instead know world tough one. roll we have we you to how event reserves out a a meaning talk if you Appreciate very quarter, is possible, reserves much. relative

Stephen Scherr

Thank Glenn. Sure, you.

variety COVID So as to answering circumstances a obviously, weigh if the to provisions overall scenarios, reflect In the of look. sat forward we about that growth with and I weighted what you were $XXX one we portfolio. million, rely a what know, on the scenario played did that that out really the million doesn’t at relating because case quarter. quarter in and relationship took and provision to by in the continue that’s guided million in exclusively it of related was in $XXX book of the that And takes loss downside quarter, for in don’t credit this and a balance $XXX will we we a will crisis point your question, loan think will heavily in I we our the we holds broad base macroeconomic economist, look but that’s optimistic, we a is which downside which a process one know about

the play may scenario that and didn’t the plays in that I provisions have potential same. a continued fiscal pointing will, downside the weight a U.S. of hone and would process we as to notably to that one think out It’s same recovery. of what will which a counterbalance, that you range that at that enough don’t to we to very And on more of is at we where more number would in stimulus fact we variety place reserves what accelerates monitoring a GDP scenarios look the a matter, is. reflect place to have the intended and every put have marginally We is for scenarios, that or optimistic. has case, take countries I in to of base these could if looking a at expectation holds reflect it efficacy the are there look downside losses the some serve treasuries programs that the expect but central and so extent unemployment, did, if on the otherwise I putting that one worth or a imagine that’s this and a contraction ignore banks across that

predict And so we will in and modeling to you of hard I quarters think robust quarter front that subsequent that that or on should exercise the will circumstances what hold, reflect know rely rely again to next pretty but see us. a will

Glenn Schorr

have and follow-up within Part on help one Maybe one appreciate publics the in are that. the on the and portfolio and cash equity differentiated and flow what percent you why appreciate it were. a mark. management about the equity, question side only debt debt all widening, with A public one on side you. about of diversity B investment if asset side, would lesser marks composition so detail robust to obviously Thank The curious just private on April? the the one I the side, And talk few pretty the the warrant and down on lending and was the could gave. far the different could of were is Part that nothing debt, and mark-to-market were if you sold you spread spreads and improved because what given I on Maybe line portfolios there a so in markets

Stephen Scherr

problem. a not No,

me let kind quick I decomposition will and start So, you give of with equity.

say that in you billion that space. the it, So $XX I a in $XX private, look billion of is $X that public around is we would equity have of the P&L billion on of AirTrunk being When portfolio, as being harvesting the platform in I and housing the generated UK of the assets the positive the side principally Australia. we realized asset one about $XXX other mentioned around million gain at

was context that the Also $XXX in positive generated revenue of that CIEs this the independent keep equity a revenues in we $XXX So of pickup portfolio. embedded million. million of

think That So portfolio so. public by of mark. private and generating offset $X was both that positive billion or

So a that in of $XXX the within about down loss of most we public realm, took million notable million Avantor. $XXX was

On the in portfolio of the that losses spread of about balance private $XXX million XXX across the names. was

the well perform there. harvesting the would in of say was impacted that the was XX% and marks number what’s context of operating a of then portfolio of look taken important public and portfolio, private of was comparables, in private don’t that on you And you it’s in portfolio XX% performance that the of of considerable to performance also just was XX% would private hone continued into the about COVID that, at the a I insight I portfolio, at of say market source give when that so just dispersion. of you the underlying by little to it of businesses. that you gains look exclusively positive And to those bit business, understand to kind

the Just portfolio. at of to give events that not on reliance the analog a in of and you looking a sort underlying public private and/or performance exclusive terms reliance breakdown on and

your the to question now side. debt answer Let me on turn

it’s So billion is fair a $XX of $XX billion there portfolio, about value. that

the about billion $XX an about basis. $X accrual securities loans are billion, debt So of billion, balance on loans $XX

gap points. experienced in as so influenced And the out Europe by about yield spreads saw you in the about can by U.S. points, the largely mark-to-market was by dramatic fair basis was gapped the XXX that on basis quarter. out value We same widening in spread imagine, high the XXX

as we doesn’t of Now in the taken as markets some of that quarter a any beginning seen of the began you retrenchment that in noted, part it anybody to as good have retrenchment do just related sense second give we first marks I the quarter, early. the but to

both the we see acuity a of sense quarter the the the of just you rest and balance credit what Now holds, of context portfolio. will but that gives in the

Operator

of with line sir. Please the from ahead is go Autonomous. question next Bolu Your Christian

Christian Bolu

banks probably and far. morning, is reported up on quarter so Good best David sequential of of XX% Stephen. strength, that Maybe of I think a all the performance first FICC sustainability

seeing does your business? And and you the just feel it payoff to FICC business, share about over given think change countercyclical gains performance from finally you in are allocating this actual of the capital growth of strength and then how more time? So the initiatives importantly nature

David Solomon

start Thanks, jump I in. Christian. Stephen and might Sure. will

been environment ability long We period point my management harder. a XX was a very committed, business we the a – low time of to that question diversified last over parts in at this fixed two We running of have the the for mind, time. part to where in business in very have intermediation of is volatility your team the first the months, differentiate income been were in

but businesses really us organization, as for to some cycles, the believe service seen focus years payoff a business, poorly, full have in we committed stay we through platform the well, where we have some a client do of some would, do You reoriented us. that businesses diverse

think you benefit it other investments that an and I and having from higher we people all think going that and elevated on our We clients, risk continues am to on getting have from the the our of last changes franchise to subjective volatility borne also forward operate more because data a more saw basis feedback benefit. the the to intermediation way servicing client-oriented. for over of from invested and our about on clients from we COVID year a last that progress spent clients quarter, with perspective based and environment are We the more less are activity. banks connect the environment of time reporting year, and have we the way with continues lot way in over make continue are. of from transaction-oriented in businesses and patterns an thinking that we we have are How the as well-positioned. trying objective course the will the depend we have this both we will meaningfully have really share feedback In volatility more watching brings. and market do business client I we all business environment to benefited clients. have In a the Those the what you that nothing and

business at when terms in In returns the right capital leverage that the amount how that operating now. business that the we on of capital operating but of we think based business, have I allocation, look got are you in saw in look, you

thought through have we So the again, cycle. about always

change we business accommodate focused we no we assets grew have than now stayed think this the given capital. this that the at of have the the cycle. able to business. through which I will got but attracts in other continue I to zealously businesses very, the array we stay the risk to have moment, environment am on in capital well be to as only whether we performed we are judge glad run clients right team allocation weighted we to obviously the But try plans you broad our in, and very in capital

do to continue supports our will We clients. it and that if it’s attractive

Stephen Scherr

as this that to I good of of Christian, in this needed ability took I’d an FICC down his And to I and things earnings deploy a heard report in and preceding by where hadn’t flows discussed which ROE the capital, terms the point the of point that our you risk the of Couple balance at Investor talk capital of generally we capital the agility And and produced add XX.X%. ways allocation, this out calls first allocation. one and required it’s also benefited two note bearing us capital firm answer, or the within would speaking and think over clients. Day topic way David’s on nimbleness that’s it’s before in we we now to about around was our business. where is business the sheet within morning. reflection firm

are context point markets a misspoken, And of but in so we FICC out performance. crisis clients have more into obviously XX.X%, with a may came as as risk a I and in the as manage of overall I thoroughly. service but ROE a more we this flows segment our able consequence, should manageable intermediating to profile and big to be it the growth of producing contributor

David Solomon

our in paid we our this platforms. we on saw The add connectivity Christian real in a also significant is I investments making that with have business that especially And we off. to other remote our platforms would benefit investment clients that’s only an working technology technology and serve thing has and been think everybody better

Christian Bolu

been thinking for the think and doubled how years into growth last the of firm. both customer revenue terms Maybe growth X you recession? than loan real the in you Thank and of forward for I over demand more are global source just appetite I loan lend risk color. looking loan switching a to has book am your about to the book Great. the has

Stephen Scherr

quarter offensively liquidity will So credit of across three equally for appropriate proposition Christian, will aggressively risk interest kind in by stands book our But of important in I $XXX firm to equally corporate obviously needs to draw-downs a is the context billion. There so risk be to and management occasioned have by of mindful and growth I clients capital expectation obviously us businesses obviously billion. the continue I $XX both and drawn every being loan our abiding book client other abiding about or The meaningful the and the Look in take governor. meet relationship as itself. and an the extend the liquidity maintain of is client at taking range that question. of of those was the needs the that governors. think

be book an book loan volatility governor market that to this just this and passes and will how to that needs the would I so committed that moment, out in point cautious but context be And growing will an this overall. as quite this we terms business, of of return in of risk sort the in once and grow as extension book managing circumstance context of wherever example credit just and environment consumer to the example the the book in at of profile

Operator

line the Bank America. Carrier is with question Michael next go from Your ahead. of of Please

Michael Carrier

Good thanks taking morning and for questions. the

on thanks First question the far. just a business asset management all the so and for follow-up color

what to basis private public be portfolio, up the could much tend historically, continuing? backdrop public how On we ends versus the a the equity markets expect the fairly close of to equity valuations lag portfolio the versus if on challenging

Stephen Scherr

Sure.

private into against the play or at portfolio events look companies another always accounting a reference what it all we our and not at frankly in in performance this did quarter has historically. as in there that the or underlying we market investment has which in which we marking changed just this where look philosophy names described there event, that we at it has to been way brought context, the name that the I an event So either relative the out way. is an brought been Meaning, to point a we we business rigor that sale in

– to of underlying those underlying the in true that having is so the look north mark businesses portfolio. which way And performance in we the

different multiple and look performance quarters, companies, be quarter profitability we underlying that as use loss which the is just that weigh or then that marks the layout and forward of point the other of would we lag. the we book. the come and no portfolio underlying that I of therefore could and are want that how further company on or which in the extent occasion market methodology set ultimately context obviously into you in out we in that quarter be any a by to we equally But to Now way than a mark this

Michael Carrier

provide predict just some in sense. that context have to us as falloff or elevated the makes past That’s have activity then continuing pockets well color Okay, over see clarity, that just held can some too you and And up and normalization the of out or to the a trading are it’s to expect where or we helpful. much banking but I follow-up, we months? realized where versus areas could X you results given or on impossible help seen some

David Solomon

take mean, a little I that. I Michael. Sure, stab bit about at will talking a

is banking investment the lag. the business a business, always in First advisory

been where go continue you environment been struck will very, obviously into very last backlog the an activity earlier. as there But bring has the have of new M&A quarter. is longer in revenue be low confidence of That initiated. and we that deals there to a very weeks, little few continue will So that’s we over M&A witnessed second them to were Many as some close. we

continue. I of confidence, would time the expect to During that low

of grade investment until a So banking obviously another seen you over debt of so week accrual of and slow investment financing last the financing weeks revenue will get one of With issuance, after the confidence. been very time, higher in to to period respect have few side we on levels side record business, the velocity has strong. M&A the record the

equity through that well and of economic investing ride I activity to think financing to continues have sheet, to There part the have because clients continue providing in benefit heightened to maybe go our capture more we early support. level liquidity quarter, and in actually is that the seen the markets You have issuance we liquidity as very quarter, be the equity contraction. part part of In in the themselves but our and obviously of quarter. we seen of or that active. early of balance the the in companies accrue of share we what seen no businesses in the trying early our quarter, guarantee their trading very, out business, bolster certainly position positioned with their are longer That a stability are period to should some fair bolster

period we think through period I going of going significant a – are were March we de-risking. through

We have been period repositioning. now going through a of

clients our been So active. have

X, it’s going the point that’s I that’s but you moment. view to hard months to the out, As say from like what X very at give now, look you

Operator

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

Steven Chubak

morning. good Hi,

David Solomon

morning. Good

Steven Chubak

you a optimization to closely. the out off on with at pretty question laid of funding, billion benefit funding deposit of biggest $X wanted Investor drivers one start build the Day from So costs was ROTCE the and retracted

help how quarter. deposit I you a certainly cuts, you competitive very if lot Fed seen deposit competitors have strong the contribute maintained rate this hoping just aggressively to growth match your still could but is payouts, on We yield was the the rate you of billion cited deposit curve out that us payouts flat update and benefit funding could strategy elevated deposit in and low evolving whether your $X impact yesterday? environment

Stephen Scherr

Sure. Thank Steve. you,

We me had start rate. yesterday our where let U.S. relative around down of So the rate took with actually to it been. sort strategy in

is eye in deposits, on an and for to deposit the aim top and that regard, with inflows category continue certainly the the towards less that X we against building on we with rate not payer, least remains or greater but unchanged product of somewhere which drawing in we will rate such be Our strategy do depositors a that out to that but saw and at maintaining both more context record the us it’s rely strategy side. formidable attributes that we X in relationship

we an of simply the medium-term funding the $X into set the billion mix, of will was point in no target our less market us I then. terms by that pull volatility that’s out imperative And of than which now Day out it achieving some would of the savings for In measurement. occasioned Investor migration

this again, we that medium-term will So is target a achieve.

We is obviously a of if one I you trajectory have over take really to wholesale the much good be most us, was as closer both that funding deposits, and of I funding then in amount watch relates ability about it to will, will think in delta medium and source for talked harvest the of March, to a achieve. itself. forward And savings, the and the XX% as in both this move to our where adhere to closer notably term stable but as rates are we will equally and as where deposit going of our or kind funding a and takes particularly savings of to function think this market very we that we the strategy continue and

Steven Chubak

you disruption that maintaining And the for with informed XXXX? comments bit calling of was the guidance non-comps, long-term the the target relating your my about COVID, reduce And but from outlook, just or are around $X.X just you of in savings in of management, recent on that. helping unpack year, in strategy the comfortable some executing savings some your changed for a back half just has given of to believe ex-litigation still whether talked I terms follow-up flat Thanks for expense I of this non-comps initiatives wanted near-term more, to billion?

Stephen Scherr

our billion. no medium-term to target there achieving $X.X relating So change is of

open pace to obviously, the flat minded expense much reduction. am think that come view during obviously but experience be sort expense variable I this that we point were, can or I variables. period where relative harvest One of near-term the context can will as of of of let X-year leaving slower, and the Now expense out be obviously pandemic In will and we where early to achieve this we activity. market is is changes a made term of to very and in non-comp BC&E this me clearer a medium where the but be just this to plays is target

it. of have seen more We

a so year-over-year. us market seen non-comp leaving my on but we relative of that the regard. just shed that that sort so focused really the those expenses happen more have to flat are preference harvest the the and it live whether to volumes for honing I aside, a BC&E and balance it. will have we in to it extent would have of permits we to to Obviously be was see. of consolidated non-comp exited Otherwise, about consolidated the two of some a investments, flat variables year candid just been And of On common trying have CIEs to investments expense as expense ex-litigation quite to market in more am we are those to can over consequence, to ourselves

Operator

Your is from line next question Please Mike Wells Mayo go of with Securities. ahead. the Fargo

Mike Mayo

as your and financing which I monetary far there, the how you fiscal corporations be and give what are goes on Hi, the you additional and should for as are should advice said important, have as considered much your because proceed? biggest your to your pace provision to advisor provisioning for test of them level just of telling that conviction we to I conviction mean, out part your clients, a I to you the the actions for your clients frankly economy to wanted counterbalance, it they that the how mean and had seems you of

David Solomon

asking will but I start, Stephen might Mike. multi-layered join thanks, are a So, you in, question.

in of of that’s question, first there economic and So have there predict. safe on it, is to the economic very no virus. part the question all but and out of is impact so come is no can this shape the or we going rebuild a come safety am it, we the we people about thing the effect and some have When and exist. it scenario versus people’s but consequence answer confidence form. confident We constantly, with in will question. when making this, monetary will feel have will talk can continue around That having way, of the come a to a it and a and a we forecast I that the and question clients where out around on simulative unless very, economic we of security is have it response, to effect, my the in The fiscal prediction when out didn’t of hard hard secured conversations stimulative virus, to not all response

to matter I to talked we for worst. hope the better, for the but that to and have companies So individuals tried encourage that plan for

And to with that recovery view a something of I steep environment, a output to out very even you only quarter predicting think And trying XX% still you an slower in scenario was the prepare is are sharp you are and the come for decline this. Sachs that a the as increase economic second economic so if certainly was Goldman third if look at a lost. have you look recovery they of

be a assumption you this who will benefit or the will are of what So, third, through going look anyone be and because but XXXX still Will and they behavior fiscal planning policy virus anybody to plan for the in and XXXX course they the I it will will monetary that, the have think looks I the trajectory are anybody that business it sure uncertain take are into very in around policy very is that operating half how will like telling the and quarter Yes, quantify what sure. it’s year? to you think don’t the of first to sure affect be, look we positive and that a that is hard accordingly. be that on to to like human you that recession it is an uncertainty have a into operating fourth next

have this so And we can on based to forward a ensure are as will provisioning with we as we a mindset. to is be we gradual the in where more we evaluate. looking organization think risk trying appropriately be will information do able our And managing information What better kind of that and can path. that I

Mike Mayo

in might this the other when the part given pursuing financing not? are others aggressively is stepping of time you to gain share how at Well, by question that

David Solomon

are our actively organization. – we helping the focused we Look, on are across clients

last of grade, weeks. obvious and take very transparent. has investment look four significant investment picked We an up very, you which course the at share If grade you been the over

think are we so well-positioned capture we share. And to

prudent We a with do our are client going of it long-term to and view franchise.

on good going an have allocates We There investors institution that this. nimble. at we We to capital does our are that. are course, choices we time are we relationships certain have long-term been. we how client so lean to always at into it a are isn’t not around and franchise And take view. our we make think client long-term like think of But its a

Stephen Scherr

grade in a as been will impacted of itself. would so by taking certain yet uncertainty roster and also look have the that the that are investment that’s both investment issued of weather I saw markets have are if the industries the utility in storm say market corporations companies market that meaningfully virus in grade that Mike, the the can the access they better at advice, you and into that what of the by-product you below find

issuing of a giving comport moment I advice their of and way. to impacted that You extent, take but to the too been think certainly And have utility this carry to of and looking are the clients. to side they the business same also tapping themselves volatility of that’s and sort the themselves saw of issuers and market not saw who we reflection other others

Operator

Abouhossein with is of question JPMorgan. Please from ahead. Kian next line Your go the

Kian Abouhossein

taking for Thanks my question.

in The related context in first And dislocation on your quantify give your it impact is if results? you your had to that I and market equities, wondering the dividends hear I that have positions. impact been on negative was comments your the question on or global context, mentioned could you its material clearly hoping we if was as having that if that you results gamma well? banks In also of if that could lot was positive indicate on a a equities investment

Stephen Scherr

Sure.

the and we dividends, facilitate virus consequence the it Europe and relative certain this suspension as in in and to its so but as experienced a callout mostly a companies business, dividends, industries of elsewhere we there in context the being nothing not geographies. subject quarter what dividends, to the it in overall impact the declare that an it’s of had tilt consequence of that So of certain of that other others the there material. the negative were in to circumstances was convene were impact, by over European being equities Obviously, to I I a but flows trade outright call precision kind suspensions AGMs out dividend. a revenue am that call material. wouldn’t position to were would of say that I out that as we could negative client than not of consequence the of and are those business bigger Europe I suspension a unable would was to in

Kian Abouhossein

the and And half but trying basically extremely we volumes look of to seen. clearly at generally, at up the to impacted up the excellent, trading in that the you are revenues really dry first is what were volumes And through downturn understand trading volumes see the in we second the holding half the respect looking how when was the trends dislocated, clearly a which and is a little beginning haven’t we well. mentioned you quarter at was sales bit, and franchise

think dislocation from or markets? generally the And through about when of and fixed that just we material a sales on a experience on can should quarter comment historic where think we how trends trading that for we the decline how saw if in should you all your to compare levels, really line we see income about first trend So the equities? post secondly, dry up we industry the both

Stephen Scherr

Go Sure. ahead.

David Solomon

You go ahead.

Stephen Scherr

point portfolio that bid on of were was and volumes sustains not those in and from February useful, I March. the clients David then also very no, work and to on it’s trading to I posture, and platforms But some electronic second we the are particularly while were. one the platforms extent were home comment quarter out just comment because speak and And that businesses behalf that In high hand can David I we clients. and what and in and large we that, of just were using but in rightly other to the on busy a think took electronic that itself. pointed the out are we was sales equally that of I No, beginning quarter further going seeing we offer the March, hand saw the very can January saw at trades of engaging at through our marquee would offer spreads. our particularly of some advantage wider who trend

business overall could quite of one be to certainly these extent so trading. geographies project. to same useful that the the P&L and to phenomenon, and a that’s but the proved digital across it proved very to difficult the And platforms sales see To would play continues you to assume obviously be to and forward positive consequence

David Solomon

I don’t have to anything really add.

of think covered have I kind we this.

first things going The first March of activity seen well were trading to the in business X quarter, and higher have we as it’s would has trading as remain accelerated average the of than of just business weeks continued in level part before the what on activity customer an the crisis. the the

Operator

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

Brennan Hawken

you you not own recession I not provision you it Sachs was as taking into I wanted Hi, referenced because economists XXXX, just to bit was clarity clients good whether And am necessarily securities assumptions recession whether you that’s a David input the assumptions, both that and securities, not you. a given the $XX the am Goldman advising on assumptions? have maybe like I of it at I add and we about should we think of little when laid into circle that in those input you the little X% though I you as advice it think out – that seemed what questions. Steven mark almost loans clients might not that billion am to was it’s the the know took for I so spoken the looks what provisioning? confusing couple on that an into you look quasi on but three think, when like referenced a are? give debt or times, debt more you sure mark the think about And or back holistically? Thank your you how could suggested we have have sort go provision morning. sorry a And me a I provision about Thanks but which what to referenced but then a like scenarios,

David Solomon

Okay.

start certain to will I Brennan, economic decline. specific So, I mixing and about talk a recession more a asked are am then going to I stuff, and little was pass to in to We am bit Steven that provision I things. we the a words. understand about all first, question quarters row clients in is to my be a going two advice but of

and looked economic then the recession. say in scenario recession in second the that be wouldn’t Okay, quarter, be there fourth that if would technically we but a and a we at Sachs the first would third quarter growth would Goldman have and

XX% and during you that you of only the and model recovered first advising lost second However, and decline the Sachs output you quarter. in economic the are that said took Goldman if you output that the clients

to the would early even so about have that not recovered output as the if are wouldn’t technically you you in to decline. someone XXXX, the in an had of position how the advice though business we recession got be And giving end we year a

operating you it’s And so still certainly are if like in you are these feel operating a going lot businesses, to of recession.

And takes get is do little advice. all was or think provisioning. clients so That’s client more. our advice and a the that to time. when where think at business to I how has about That with nothing obviously back your you we And longer talk Stephen go will let that bit about to to a model it about

Stephen Scherr

Sure.

question let me we your on me just through. go – of directly kind and process what let Brennan, address So

we have portfolio. the equity with an group that controllers and influences and by serves as scenario through independent the an that they assigns the look direction name works backdrop a economic they So obviously that credit name risk take to as both

an reviewed It’s in out it you the is whole. input an sort but uses that’s an is not not a the as group a name done The a that, their formula exclusive. determination. macroeconomic Group risk percentage if group goes backdrop not Research that independent risk And no that portfolio. will to by input assemble. risk applied Sachs but and bleeds is independent Each as is is it an so that sole backdrop perspective, that to they out the an establishing Goldman There is input independent group input, that what question puts the with their of about

upon And approach you fair an asked reserve question And it. against every environment or that’s draw portfolio, book very so entire to that be debt gives against value And very big also a versus appropriate the position in the regime the I distinction that because about between to the marks portfolio that the we process gamut. meaning rise duration the would to that obviously which on mark the of ascribe different just a obviously, book on reluctant and accounting mark very percentage runs very our and would I lending try is controllers provisions, ascribe depending the to itself. it an our nature taken book on different single take.

need you careful the to in market. quite be you context so And of how

you offer just I detail just about so be And that super to run. we process clear the

Brennan Hawken

I business. and the the hedge funds, to but now of being so on quarter, I all can your given equity Stephen, might was follow-up – flagged run in you with financing, in you side for guys that think you and and that’s de-grossing just large Quick you given share business number in equities color average helpful. what happened skewed. it we average balance of that growth clarification. Thank discussion balances strength my Great. been Yes, sustained it you counter, picking the that believe seeing the Are PB up hear guys be the from have in might seemed some some balance

proceeding So XQ? Thank to how in understand here just hoping you. it’s

Stephen Scherr

Sure.

less be of was whether was category is we say challenged base I issue be to think it’s other, that period prime and in than imagine so this look would like, quants, as remains were we to any one, base say, client as hedge and lower was observation that that’s was continue in, I So, is as them than other. one that of out de-leveraging the when again confusion it important called particular to there funds right performing looking anymore up, go significant that. observation the all out client a from no particular over called the but or to to without forward. particular which general was I kind client the of one any a all the end might of among out issue just strategically any and perhaps meaning would business the nothing were your against avoid outside balances average that is than us

Operator

comes Securities. go Your next question Ryan the Please JMP from Devin of line with ahead.

Devin Ryan

morning, Thank Good you. David and Stephen.

David Solomon

Good morning.

Stephen Scherr

Good morning.

Devin Ryan

with just back and puts some first the just move guess the obviously of be just be you like it on across any maybe going in in to going move of the other help whether we banks, benefits, debt us might derivatives, can be I the thinking about quarter, but else question issuance if sounds some of the dramatic anything on and interest in the funding of should think movements area the Goldman revenues curve or of about? but levered takes to half the here shift model rate be the interest of the of less and forward implications large some rates one the on is then second

Stephen Scherr

Sure.

income XX% question, I that some it’s own interest so past for and is of I’ve and near as larger firm’s the is the not from the in overall said your banks. revenues the of sense big net So it driver commercial roughly

greater deposits And that come, will in as bigger we context it broader build, us retail down plays proportionality become in more that our to that to rate will and the gave point will out continue consumer to probably I a at business of have again answer and mix the it are where moves deposits come where apropos shift on reliance. think to the I funding. question less if favorably with rates you I regard. interest Rates funding would look rate that given

the big our a to view so revenue. funding of it is but is not this composition anything overall else, that play favorably firm-wide more And will from us driver expectation a point in of than

Devin Ryan

the on equity suggest snapback IPOs is with Sure. I heard of just just clients track appreciate I time on up? the debt could curious backlog engagement that banking the are have then that. expectation obviously seeing does more slower and commentary not maybe And back opens you signs going here the for same issuance am outlook, as recovery the investment lead or or could obviously economic matter. be if that are that to economy which one the M&A the and issuance recovery, you material a as M&A

David Solomon

Yes.

couple So, sudden the it’s first with uncertain the we clients that and in it it kind of is that quite operating well exactly Devin extremely really and on turns what I on level off would We organization. high different that high, unprecedented a also were things path turned across and kind with that’s extremely that is. of a engagement economy how is this recession. with say demand And back of in operating functionally in it’s a or and fine the of unprecedented shock was

in just variety the chugging will whole probably virus understanding wouldn’t industries And or going along. of a of to the so the there the scenarios for opportunity economy affect there kind trajectory be the is how as is activity anticipated kept across clear economy I had see and more a consolidation reengagement a an businesses can that of of economically have virus of that of lot been the some

not the and seemed confidence potentially level engagement quickly. virus to high that. we a am and I I I say that if would where pickup I control quite think going is to of So that building, could place under see But certainly predict was got could engagement

Operator

Your Gerard with next Cassidy of RBC. ahead. question is the go from line Please

Gerard Cassidy

with the investment can Good that forward? companies side, told I on those don’t going we guys move share at reflect I metrics a private the in, private coming the us you we a from will outside going morning. take you. that, the have what’s may you they with question can marks the equity think to from to public of Thank some fundamentally that to look back equity had shouldn’t look necessarily impairment look those direction on markets us on we really how

Stephen Scherr

continued Well, do of shy made well. that handing their evaluation to I It every the performance had of mean and just it billion you is to I industry. of the which two-thirds would commentary be $XX equity a positions, private sheet hard before, to operating get, be back to perform in our will every look of of portfolio context company and hard come which I would that.

well. Now saw. it We necessarily that that virus. in come has or harvested operations impacted the and the to that XX% in they directly down, quarter, saw roughly of that then the doesn’t balance continue the producing gains the that doesn’t lead performed we obviously conclusion About been but number them the business will XX% by were they of

portfolio names. is so direction and price companies performance individual action that those of on really EBITDA guides to it’s allocated And the the that lays

the variety we so have the capability reflect whether from performance think marks macroeconomic environments. investment to but different in not that think portfolio any obviously is intended of will the the sort a companies of circumstances to of I And we as in quarters. that the I think it’s uncertain sort And broader immune going as economic invested have we that hold means move and assessment of up through way, that well by thesis

Operator

Please line the Paribas. go Exane of Sigee ahead. Your with is next BNP from Jeremy question

Jeremy Sigee

you. Thank morning. Good

You to quarters for talked just when about deploy sheet about see total in balance opportunities. you expanding could more if risk wondered the more of sheets what your you expectations talk and weighted your I am assets. willingness also next assets further couple balance are

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Stephen Scherr

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Stephen Scherr

further and environment. I We the moment with please look hesitate the would on of to reach the – stay quarter July. behalf we a any there speaking questions, weeks take no this call you months. in look well wish out that the to for speaking and just you are to Since questions to additional meantime, Okay. call. joining coming thank you we forward team, of with forward to there our in all senior Heather. please obviously safe management many in arise of don’t in second we everybody like Otherwise, to are On If our context

Operator

earnings quarter conference participation. Ladies and XXXX Sachs your call. first conclude for Thank the gentlemen, does this you Goldman

You disconnect. may now

The Goldman Sachs Group, Inc. (GS) 15 Apr 202020 Q1 Earnings call transcript