GOLDMAN SACHS GROUP INC Q1 FY2025 earnings call

In the first quarter, Goldman Sachs generated net revenues of $15.1 billion, EPS of $14.12, ROE of 16.9%, and ROTE of 18%. Global Banking & Markets was bolstered by FICC and equities activity, with strong performance in debt underwriting and equities. Investment banking had muted activity but maintained a leading M&A position with a growing backlog. Asset & Wealth Management saw assets under supervision reach a record $3.2 trillion, with 29 consecutive quarters of long-term fee-based net inflows. The firm is leveraging AI solutions for efficiency, including Generative AI powered tools. Macroeconomic uncertainty looms with slowing global growth and trade war concerns impacting client decision-making.

Global Banking & Markets: Generated revenues of $10.7 billion in Q1 with an ROE over 20%. Advisory revenues were $792 million (down vs prior year), equity underwriting revenues $370 million (flat y-o-y), debt underwriting revenues $752 million (up 8% driven by asset-backed and investment-grade activity). FICC net revenues were $4.4 billion, with intermediation results impacted by varying asset classes but record FICC financing revenues of $1 billion. Equities net revenues were a record $4.2 billion, with equities intermediation revenues up 28% y-o-y and record equities financing revenues of $1.6 billion. Financing revenues across FICC and equities totaled $2.7 billion, a new record for a fifth consecutive quarter. Asset & Wealth Management: Revenues were $3.7 billion. Management and other fees were up 10% y-o-y to $2.7 billion, incentive fees $129 million, private banking and lending revenues $725 million (up 6% y-o-y). Total assets under supervision ended at a record $3.2 trillion, representing the 29th consecutive quarter of long-term fee-based net inflows. Alternative assets under supervision totaled $341 billion, with gross third-party alternatives fundraising of $19 billion in the quarter.

Full-year effective tax rate expected to be approximately 21%. The Board authorized a multi-year share repurchase program of up to $40 billion. Asset & Wealth Management is expected to see high single-digit annual growth in durable revenues. The firm plans to sell down historical principal investments, targeting $2 billion by the end of 2026.

Macroeconomic uncertainty with slowing global growth and trade war effects posing risks to client decision-making. Market volatility impacting trading and financing activities. Uncertainty around regulatory changes and their impact on capital positions and business operations.

Q: Concern about deleveraging in April impacting financing A: Denis Coleman states demand for financing remains, but balances may adjust with market price changes Q: Follow-up on market activity shift in April A: David Solomon notes activity was strong before April 2nd, clients still active but uncertainty remains Q: Efficiency plan and headcount A: Denis Coleman says a $150 million severance charge is expected in Q2 related to pyramid structure actions Q: Competitive landscape in markets A: David Solomon affirms strong client feedback and position, though tougher comp vs last year Q: Buyback catalyst and sustainability A: David Solomon says capital deployment prioritized for clients, excess capital returned via buybacks Q: SLR ratio and regulatory changes A: David Solomon says SLR relief would benefit treasury markets, hopeful for regulatory progress Q: VaR and volatility A: Denis Coleman explains VaR affected by reduced exposures and elevated volatility Q: Capital freed from private investments and credit cards A: David Solomon says excess capital returned when not deployed in business Q: Sponsors and fundraising for alts A: David Solomon mentions secular growth in private assets but macro pressure on capital return Q: Debt underwriting outlook A: Denis Coleman states strong track record, well-positioned for transaction activity Q: Balance sheet optimization A: Denis Coleman says firm manages financial resources nimbly with risk management Q: Allocation of freed-up capital A: David Solomon says prioritized for client-serving activities, will watch carefully Q: Global uncertainty comparison A: David Solomon says uncertainty elevated globally, more short-term concern outside US Q: FICC outlook A: Denis Coleman says FICC is large, opportunities remain but components vary Q: RWA progression and tax rate A: Denis Coleman says focused on capital-efficient client activities, tax rate expected 21% full year Q: Fee rate mix in Asset & Wealth A: Denis Coleman says focused on building strategies in response to client demand, not average fee