Q3 2022 Goldman Sachs Group Inc Earnings Call
Good morning, My name is Katie and I will be your conference facilitator today I would like to welcome everyone to the Goldman Sachs Third quarter 2022 earnings Conference call. This call is being recorded today October 18th 2022.
MS. <unk> you may begin your conference.
Good morning. This is Kerry Hall head of Investor Relations at Goldman Sachs. Welcome to our third quarter earnings Conference call. Today, We will reference our earnings presentation, which can be found on the Investor Relations page of our website at www Dot Dot com no information on forward looking statements and non-GAAP measures appear on the earnings release and presentation.
This audiocast is copyrighted material of the Goldman Sachs Group, Inc, and may not be duplicated reproduced or rebroadcast without our consent.
I'm joined this morning by our Chairman and Chief Executive Officer, David Solomon and our Chief Financial Officer, Dennis called then let me pass the call to David. Thank you Carrie and good morning, everybody and thank you for joining us today.
Let me start by saying a few words on the operating environment.
Global economy continues to face significant headwinds.
Well you should remains high.
Banks are raising interest rates at a pace not seen in decades.
Meanwhile, equity markets are well off their recent highs geopolitical instability and energy shocks or an ongoing concern.
GDP growth expectations are declining.
Many of these trends accelerated towards the end of the quarter.
For example, while our own financial conditions Index has.
Indicated steady tightening all year.
We sure saw a sharp increase in the index starting in mid August .
Everywhere I go macro themes dominate.
My conversations with Ceos. They tell me that they are rethinking business opportunities I would like to see more certainty before committing to longer term plans.
As we head into the fourth quarter my sense is that the outlook will remain unsettled economic.
Quick performance will vary by region.
I also expect volatility to persist as markets continue to digest these factors.
Against this backdrop I'm pleased the Goldman Sachs delivered solid results in the third quarter.
I've said before the breadth and strength of our global franchise is a key differentiator for us and client engagement remained strong.
For the quarter, we generated net revenues of $12 billion earnings per share of $8.25.
Turn on equity of 11% and our return on tangible equity of 12%.
Before handing it over to Dennis to review the quarterly results in detail I would like to spend a moment on our strategic evolution.
Turning to page two of the presentation.
Four years ago, we set out to enhance our client engagement efforts with the goal of further strengthening our world class client franchise.
Our one Goldman Sachs philosophy was born out of that endeavor, starting with a 30 client pilot evolving to what has now become the operating ethos of the firm.
One Goldman Sachs has been successful well beyond our expectations.
Proving that the strength and breadth of our global client relationships are key drivers of the execution of our strategy and continued outperformance.
These efforts have produced leading share gains, particularly in our core businesses and have resulted in a 40% book value per share growth since our investor day in 2020.
The execution of one Goldman Sachs over the last four years has amplified two foundational elements of our firm.
First the relationship and advisory mindset.
That underlies our investment banking franchise translates exceptionally well across client engagement more broadly.
Second the increasingly symbiotic nature of our businesses.
Creates a virtuous ecosystem. The result of a significant multiplier effect and drives market share.
Because of this we are making a series of organizational changes in the fourth quarter to take the next step in the evolution of our strategy.
Changes were further strengthen our core businesses accelerate our ability to scale the growth platforms and improve efficiency.
As you can see on page three we are integrating our asset and wealth management businesses as well as our investment banking and global markets businesses into two important segments of the firm.
We will also create a new segment called platform solutions that will consolidate our fintech platforms from across the firm, including transaction banking consumer partnerships and Green Sky.
This segment will enhance our focus on building platforms that deliver digital financial services capabilities to corporate and institutional clients.
We will further integrate our direct to consumer activities into wealth management, given the growing convergence of wealth and consumer banking.
We will report our full year 2022 earnings using these three segments and we'll also host an investor day on February 28, 2023, we look forward to reviewing the details of our forward strategy across the businesses. Although we will tell you now that our fundamental strategy remains the same.
And we will be maintaining our principal financial targets.
We are excited about the role that asset wealth management will play in our forward growth plans.
Asset and wealth management, we are operating a fully scaled and integrated franchise, providing advice solution and solutions and execution for institutions and individuals across both public and private markets.
Running these businesses together will allow us to holistically drive towards our $10 billion and $2 billion management fee targets.
Our investment selection and performance for our clients has supported strong momentum, particularly in alternatives and wealth management.
We also believe that reaching and serving employees in the workplace is a significant growth opportunity for Goldman Sachs.
Through our strengths and capabilities of workplace and personal wealth. We can now address all of the employees at companies we serve.
This expanded offering as a direct response to a clear push from C suite leaders for more democratized suite of advice and solutions.
Also clear that these clients prefer an integrated wealth management and banking offering.
Presents us with a tremendous opportunity to connect with millions of clients through their workplace.
Over the past few years global markets and investment banking has been increasingly operating as a unified leading world class franchise.
We are the advisor of choice supported by a number one week table positions across M&A and ECM.
We continue to bolster our leading position as a market maker and risk intermediary for our clients and markets across the globe.
As the World has gotten more complex and our clients demands have evolved we are seeing that more and more of them are partnering with both global markets and investment banking to meet their needs.
Synergies across these businesses from advice financing risk distribution on hedging.
Allows us to deliver differentiated solutions to our clients.
Creates a significant multiplier effect and has helped us drive market share gains across the franchise in recent years.
Running these businesses together will enable us to maximize our wallet share.
Turning to page four.
Platform solutions is an end to end, primarily cloud based technology platform business.
Our best in class financial products and services into our clients' ecosystems to serve them and their clients and customers.
In recent years, we saw an opportunity to leverage our preeminent corporate franchise.
Classic risk management, and innovative culture to build modern digital products and in the process diversify our revenues and funding mix.
We have built and launched a transaction banking platform.
Digital consumer banking platform, the largest piece of which is credit card.
We acquired Green Sky.
These platforms have led to partnerships with a number of our clients such as Apple General Motors stripe.
Oregon Express and fiserv.
So our relationships with Apple and General Motors, we already have the ability to access more than 100 million individuals in the U S.
Combination of our brand and Apple is unique as proven by the reaction to Apple card, which has been ranked number one in customer satisfaction for two consecutive years by J D power.
We have also extended our partnership to new products.
Just last week, we introduced a new Goldman Sachs savings account for Apple card that allows users to grow their rewards and our high yield savings account and to add funds drove linked banking account.
Our directly from Apple cash.
This embeds a high yield savings account from Goldman Sachs directly into the Apple cart experience in Apple wallet.
Goldman Sachs and Apple are committed to expanding our relationship and we have recently extended and adjusted our partnership through the end of the decade in order to continue to help consumers with healthier financial lives.
And transaction banking, we are delivering a differentiated developer centric cloud based product that allows for seamless integration into our clients' ecosystems.
Extremely encouraged by the client feedback and adoption rate of the offering.
Now of approximately 425 active clients with greater than 70 billion in deposits globally, as we leverage our corporate franchise to become the partner of choice and the payments Arena.
Our priority in platform solutions for the next few years is to continue to diversify Goldman Sachs revenue and funding while driving profitability.
Look forward to talking to you more about this segment at our Investor Day in February .
Let me now address some additional details on our consumer business.
Since 2016, we've made a significant investment and on page five you can see what we've achieved as a result.
We serve over 15 million customers and generated more than $2 $2 billion in revenues in the last 12 months.
We've learned a lot in the six years since launching the deposit business and this is shaping our execution priorities as we move forward.
Turning to page six.
Our direct to consumer strategy, we will focus on existing deposit customers and consumers that we already have access to through channels like workplace and personal wealth rather than seeking to acquire customers on a mass scale.
The purposeful change that will allow us to rationalize spend on future builds and customer acquisition costs.
And workplace and personal wealth alone, we already have the ability to reach over 9 million individuals.
Our markets deposit customers remain core to our broader efforts, we will continue to grow the deposit offering and the level of service that has generated over $110 billion of retail deposits. We believe that all of our customers across all products will benefit from this re prioritization.
Before I turn it over to Dennis to go through the results for the quarter I want to highlight the following.
Over the last four years. This leadership team has been working hard to grow diversify and strengthen Goldman Sachs.
Our experience forums this new direction, so that we can better serve our clients and amplify our strengths.
This is an important and purposeful evolution of our strategic journey.
Setting us up to deliver on our targets and unlock shareholder value.
Consistent with our strategy, we are focusing on the execution, we're focusing our execution on three key priorities as you can see on page seven.
Which are to grow management fees.
Maximize wallet share and grow financing activities and scale platform solutions to deliver pre tax profitability.
We'll talk more about this at our Investor day in February .
I will now turn it over to Dennis.
Thank you David and good morning, let's.
Let's start with our results on page eight of the presentation.
As David mentioned, we generated earnings per share for the third quarter of $8 25.
On a year to date basis, we delivered a return on common equity of 12, 2% and a return on tangible equity of 13, 1%.
Turning to performance by segment starting on page nine.
Investment banking generated revenues of $1 6 billion.
Down 57% versus a very strong quarter a year ago.
Financial Advisory revenues were $972 million down 41% versus record performance in the third quarter last year.
Spite lower volumes, we maintained our number one league table position year to date and expanded our lead.
Equity underwriting net revenues were $241 million, reflecting limited industry wide activity.
Nonetheless, we continue to rank number one year to date in equity and equity related offerings.
Debt underwriting net revenues were $328 million, given muted issuance volumes across both high yield and investment grade.
While activity remained slow this quarter, our backlog is robust, particularly in advisory and equity underwriting.
Our advisory dialogues continue to be strong so clients are focused on stability and financial conditions pushing out the timing of certain deal and financing related activity.
Corporate lending generated net revenues of $35 million, a solid performance in middle market lending and transaction banking was largely offset by headwinds on certain hedges in our portfolio and marks in leveraged lending.
Moving to global markets on page 10.
Segment net revenues were $6 $2 billion in the quarter up 11% year on year as client engagement and activity remains strong.
Financing activities continued to demonstrate stable growth comprising approximately 30% of the total revenues in this segment.
Starting now with deck on page 11.
Revenues were $3 $5 billion in the third quarter, 41% higher than the third quarter of 2021.
Pick intermediation produced net revenues of $2 $8 billion up 40% year over year.
We saw strength across our rates currencies and commodities franchises amid elevated levels of client engagement catalyzed by increased central bank activity and volatility.
In fixed financing, we generated a 41% increase in revenues driven by increased opportunities across repo and mortgage lending.
We remain focused on growing this business in support of our clients financing needs are.
Perfect lending portfolio is conservatively underwritten and well collateralized.
Moving to equities net revenues in the third quarter were $2 $7 billion.
Equities intermediation revenues fell 19% year over year due to a more challenging market, making environment and lower client activity.
In equities financing, we generated near record revenues of $1 $1 billion as we supported client financing activities, despite lower prime balances.
Moving to asset management on page 12.
Asset management net revenues were $1 8 billion.
Management and other fees totaled $1 billion, roughly flat relative to last quarter and up 42% year over year.
Collecting management fees from EDA, and IP and the roll off of fee waivers on money market funds.
Equity investments generated revenues of $527 million in the third quarter.
Specifically, our public equity portfolio produced approximately $215 million of revenues, primarily driven by gains on two investments.
Across our private portfolio, we generate approximately $310 million of net revenues, we saw event driven gains of over $350 million for various positions in our portfolio and operating revenues of roughly $150 million from our consolidated investment entities. These revenues.
These were partially offset by approximately 200 million of Mark's driven by several investments in the consumer and TMT sectors.
Given current market conditions are harvesting of on balance sheet investments was limited in the third quarter, but we remain committed to our strategy to reduce balance sheet density and migrate our alternatives business to more third party funds.
We continue to make progress on our fundraising targets securing $12 billion of alternative commitments this quarter.
We also closed West Street capital partners eight our flagship private equity fund, which at $9 $7 billion was significantly above its original target.
Net revenues from lending and debt investment activities were $231 million, primarily reflecting net interest income up $267 million.
I'll now turn to consumer and wealth management on page 14.
We produced record net revenues of $2 $4 billion in the third quarter up 18% versus a year ago, driven by significantly higher net revenues in consumer banking.
For the quarter, despite the market headwinds management and other fees of $1 $2 billion were relatively flat sequentially as net market depreciation was largely offset by strong client net inflows.
Private banking and lending that revenues reached a record of $395 million up 35% year over year due to higher lending and deposit balances.
Consumer banking revenues were 744 million in the third quarter nearly double the third quarter of 2021, reflecting higher credit card balances and improved deposit spreads.
Moving onto page 15 totaled.
Total firm wide <unk> ended the quarter at $2 four trillion.
Combined firm wide management and other fees in the third quarter rose, 15% year over year to $2 2 billion.
On page 16 total firm wide net interest income of $2 billion in the third quarter was up 18% relative to the second quarter due to higher rates and increased loan balances.
Our total loan portfolio at quarter end was $177 billion up slightly versus the second quarter as growth in credit cards and wealth management loans was offset by a decrease in real estate loans.
Our provision for credit losses was $515 million, primarily driven by growth in our consumer lending portfolio net charge offs and worsening economic indicators, particularly in Europe .
The credit quality of our wholesale lending portfolio remains resilient as reflected by minimal net impairments in the quarter.
On the consumer side, though where you are seeing some signs of credit deterioration and an increase in charge offs or credit performance remains in line with our expectations.
That said, we are closely monitoring the portfolio and actively adjusting our underwriting in light of the softening macro economic outlook.
Let's turn to expenses on page 17.
Our total quarterly operating expenses were $7 7 billion.
Our compensation ratio year to date net of provisions was 32, 5%.
Through the third quarter, our compensation and benefits expenses are down over 20% relative to 2021.
Quarterly non compensation expenses were $4 $1 billion year over year increases were driven by ongoing integration run rate expenses related to the EDA and IP and Green Sky acquisitions, 191 million and litigation reserves and higher transaction based expenses.
We remain highly focused on operating efficiency.
As we've previously discussed we are actively engaged in expense mitigation efforts and we expect that these actions will become more fully reflected in our results over time.
Turning to capital on Slide 18.
Common equity tier one ratio was 14, 3% at the end of the third quarter under the standardized approach up 10 basis points sequentially and representing a 100 basis point buffer to our current capital requirement.
In the third quarter, we returned $1 $9 billion to shareholders, including common stock repurchases of $1 billion in common stock dividends of $893 million.
As a reminder, our G. SIB surcharge will increase by 50 basis points in January 2023, bringing our CET one ratio requirement to 13, 8% we.
We will continue to target a buffer of 50 to 100 basis points above this requirement.
In conclusion, our solid third quarter results reflect the diversification and strength of our client franchise we.
We are mindful of the uncertainty and volatility in the markets and we will prudently manage our resources and maintain a risk sensitive orientation as we continue to serve our clients.
I sure Davids enthusiasm about the opportunities ahead of us the further alignment of our businesses will help us drive the organization forward.
Successful execution of our strategic priorities.
Growing management fees, maximizing wallet share and scaling platform solutions will further strengthen the firm and unlock shareholder value.
With that we'll now open up the line for questions.
Thank you please standby as we assemble the queue.
We will take our first question from Glenn Schorr with Evercore ISI.
Hello, Thanks very much.
I appreciate your macro comments.
I was wondering in private markets, specifically I feel like those markets have changed as well hopefully only temporary but great great time to be a private lender in private credit and you're big in that but not as great time to be in private equity.
Remarks or capital raising so wonder if you could talk as both manufacturer and distributor just maybe a state of the Union in General and then if you could weave that into your thoughts on your.
Gross alternative fundraising target up to $25 2 billion in management fees. Thank you.
Sure.
So thanks, thanks for the thanks for the question, Glenn and look at a high level.
The targets the targets remain in place and our confidence in the targets.
And then our ability to deliver those targets is high and we're very focused on them. We've continued to make progress in the fund raising and we highlighted it.
In the context of the script.
And we have a series.
Of offerings that are coming over the course of the next 18 months and while certainly I'd say the private equity fund raising environment is more constrained and the alternatives fund raising environment is broadly more constrained I would highlight just the fact that we have a very very broad franchise, a very very diverse sets of offering at sets of offerings.
And that there is there is a lot of opportunity that comes out of an environment like this and I actually think from a vintage perspective, the opportunity to put money to work in this environment. When we look forward and then when we look back is probably something that will be very very attractive. We're obviously shifting the macro environment as we've talked about.
That's going to create headwinds around valuations and there has been a big reset on the other hand, if you have dry powder are you have interesting strategies.
Highlighted some I think lending strategies could be quite attractive in this environment I think there's good institutional capital and candidly good capital out of the wealth channel is still available to support these strategies. So we're taking a long term approach to growing these businesses. The businesses are growing nicely. We've set targets that will continue to be and I know that if we.
We have a good broad offering for our clients.
That will continue to have success in this and candidly. This is one of the reasons why we're integrating asset and wealth management is what it is we believe by putting these platforms together, we have the best I have the best grasp to really understand where the opportunities are to serve our clients and also where the opportunities are for good performance.
I'm glad I can add from an alternatives perspective, we mentioned growth of 12 billion in new commitments in the quarter that brings year to date to 57 billion just shy of $60 billion. We now sit at 164 billion towards our increased 225 billion target. We continue to migrate our alternatives into a U S.
That sits now at 256 billion of alternatives a U S. So despite the environment, we continue to make progress towards our fundraising goals, particularly in alternatives.
Thanks for that Dennis and David maybe a related follow up on <unk>.
Down a little bit in the quarter I. Appreciate you took share and less about Kelly. So that has a bunch of moving parts, but curious your just overall approach towards optimizing <unk> and then maybe a specific question related to.
Fixed financing and is up 41%, it's great making good money does that come at same better or worse return on risk weighted assets is intermediation.
Glenn. Thank you. Thank you for the question on <unk> as you know.
<unk> were down.
Slightly on a quarter over quarter basis, we have been focused on managing our RW a footprint tightly.
Within that number youll see reductions.
In terms of market based <unk> and increases in credit our ws.
And we're being very thoughtful about the way in which we allocate and deploy our W. A capacity to drive efficiencies as well as scale franchise growth activities and fixed financing happens to represent an attractive opportunity in terms of our R. W. A deployment and so that's one of the reasons why you see the ongoing focus in the growth of effect financing line.
Thank you we'll take our next question from Stephen <unk> with Wolfe Research.
Hi, good morning.
Good morning, Joe.
I wanted to start with a question on expenses you spoke to a minute expense mitigation efforts as part of the broader realignment strategy, what's the level of non comp inflation, we should be contemplating recognizing.
We're still dealing with inflationary headwinds you alluded to more proactive measures to mitigate expense growth just wanted to get a sense. If the goal is to actually slow non comp growth or to deliver absolute reductions in expense.
Thanks for the question, Steve and I'll start with just a high level and then Dennis will go through some details with you in terms of how we're thinking about it but I.
I do think there are different factors that are leading to the expense growth, but one is there is definitely an inflationary pressure.
Thats affecting certain aspects of the business. We're obviously looking at that and thinking about that carefully I do think we're making investments across the platform, particularly in certain technology infrastructure.
And that's having an impact that will be more medium term. We think those are important investments that we need to make at the same point, though given the environment. We're extremely focused on trying to mitigate any expense growth to the degree we can now theyre going to be headwinds given the natural inflation et cetera, but why don't I have Dennis kind of walk through and break down some.
The different components that we've been focused on.
Sure. So I mean, if we take a step back we look at our overall level of operating expenses.
Year to date, they're down 6% compared to the prior year to date period.
We're up 1%.
Sequentially.
And drivers obviously across both comp and non comp if you look at the non compensation growth over the course of the last year.
Roughly half of that is attributable to expenses associated with the integration and run rate of a N N IP and green Sky together with change in litigation.
So that is a that is representing about half.
The balance as David indicated we do see some impact from inflation, we do see the impact of higher levels of transaction based expenses, but we are also taking actions to reduce expenses within the overall non compensation category, where we can you may note that on a quarter over quarter basis, we reduced our professional fees something that we.
<unk> in our previous earnings release, and we're going to continue to think very very disciplined about the way in which we deploy non compensation expenditures striking the balance of driving towards our efficiency ratio, but as well as making the investments that we think are appropriate to continue to strengthen and grow the firm.
That's great and maybe just a question for my follow up on the equity investment portfolio.
Given the challenging equity market backdrop, certainly the revenues came in better than expected and Theres also been some increased scrutiny of more favorable marks on some of these private equity portfolios and just given the better revenue outcome and a pretty heavy concentration in areas like TMT and real estate, which have come under pressure.
Was hoping you could speak to what drove some of the better results this quarter anything idiosyncratic worth flagging.
Sure. Thank you Steven.
Let me cover that in a bit of detail for you. So obviously on the 527 million equity line Theres a number of components. As we mentioned previously we are a public equity portfolio and that contributed positively north of 200 million for the for the third quarter and then also within the private portfolio.
So you have a number of things that are going on within our private equity portfolio. We are roughly half a billion dollars of event driven gains that came through over the course of the third quarter, whether those be capital raising activities strategic transactions.
Or the operating expenses from our Cie's those positive gains were offset by markdowns in our private equity portfolio, particularly in TMT and consumer.
Thank you we'll take our next question from Ebrahim <unk> with Bank of America.
Good morning.
I guess, maybe just going back David you mentioned in your prepared remarks about rationalize spend.
The segment realignment makes a ton of sense, just give us a sense from the outside as we think about the.
The rationalization of the spin does this lead to you achieving your strategic targets around costs rose.
At a faster pace or do you have a high degree of confidence that you'll get there.
Relative to the previous plan and understanding the core tenants are the same but just give us a sense of just your confidence in achieving those targets. Despite the market backdrop as we look forward and how does the alignment and supports that.
Sure.
So first thing I, just want to amplify it I said in the script, we continue to be committed to our forward targets.
And Theres nothing Theres, nothing about the environment or the way we're running the firm.
It doesn't lead us to believe that we can deliver on the targets that we've set over the course of the coming years, whether the return target. We're also the efficiency target.
That we've said and we're tracking a number of kpis in and continue to be very focused on that.
The realignment of the firm is really driven by our ability to serve clients.
That is the most important thing that's coming out of this and we've been very very focused on wallet share and client share broadly.
Made real improvements over the last few years and we think this further aligns those goals and that capability now in this realignment, we are making a purposeful shift.
As we think about our direct to consumer business and I just highlight that one of the things that changes by our aligning our direct to consumer business with our wealth business and people that are on our wealth platform is that the forward spend.
For customer acquisition is meaningfully lower.
So of course as you look at that.
Helpful. The overall returns of the firm, but I would highlight that just the numbers either way we were looking at it are small in the context of businesses, our core businesses banking and markets asset and wealth management and I don't I don't think any of this was having a big impact on our ability to meet our targets.
Or the pace at which we'll meet our targets. We do think and this is why we're doing this that this is a better way for us to align the business to move the business forward.
And so that's why we've made this purposeful shift, but again I'll just amplify these are not big numbers in the context of our meeting our targets. When you look at the overall performance of the firm.
That's helpful and I guess, just one follow up in terms of.
You talked about organic growth opportunities and favorite lending given market dislocations. There are a lot of asset values that have been hit.
Find us in terms of M&A, where you're focused on and just appetite to execute M&A.
Well.
At the moment, we continue to be extremely focused on our.
On our on our businesses and the growth and the things that we have on our plate in front of US as you know we made a couple of acquisitions. We're in the process of integrating those acquisitions in and at the moment, that's where our focus lies.
We go forward in the future if there are opportunities to accelerate the growth, particularly in asset wealth management will consider them, but at the moment, we remain very focused on integrating these acquisitions and executing on the things that we have in front of us.
Thank you we'll take our next question from Christian Ballou with autonomous.
Good morning, David and Dennis.
Just trying to better understand the point of the reorganization of the businesses.
What does this really mean practically for the businesses what can they do today that it couldn't do before the New York I guess kind of when I listen to you audit and scaling back on cost of consumer acquisition.
I'm just trying to understand what the broader point of the Rio really is.
Christian we've been it's interesting because I know you follow us closely and we've been we've been talking about a variety of things and if you go back to our investor update at the beginning of the year, we highlighted a lot of the synergies between banking and markets and how we were working to get those those those client activity is more closely aligned we also highlight.
In our update at the beginning of the year the synergies between asset and wealth and then when John spoke at the Bernstein Conference.
In May we put a big spotlight on the synergies, we thought bringing asset management wealth management closer together. So it's not that by by doing this that we're doing something dramatically different we've been driving the firm in this direction.
With respect to client service and one <unk> for a number of years and we think as we've done that and we've looked at that we've learned we think by organizing the firm. This way it makes it easier for investors to understand and see how we look at our client set and how we're operating against that client set and so we view it as a natural progression that strength.
Our ability to deliver for clients and so that's why we've moved in this direction, that's what the big businesses banking and markets and and asset and wealth management platform.
Platform solutions, we have a bunch of these platforms, where we're making investments we think they're very interesting.
They are growing they require more focus this alignment of them allows us to shine a brighter more transparent light on them and we're very committed to driving them to profitability at a meaningful contribution over time, and we think by organizing this way.
It allows us to maintain that focus on what is a small piece of the business, but one that I think in the future allows us a differentiated opportunity to serve our corporate and institutional clients.
Gotcha, Okay, maybe switching on to consumer.
I'm just looking back over time, what lessons have you guys learned in terms of trying to execute in this business if I think about the thesis.
You know Goldman outlined as far back as 2016 in terms of building a full scale digital bank that that's that was a great thesis right. It's actually played out you've seen a bunch of smaller than your banks like square chime really really do a good job of building that.
One could argue that there's been some execution challenges.
And then in consumer you've.
We've had multiple leadership changes feels like what sort of breaking out some of the businesses and put them in different parts of the organization. So just stepping back a little bit here kind of what lessons have you learned.
In terms of trying to execute on consumer and what does that how do you think that going forward to.
Build that business.
Well I think Christian but the steps that we've taken today are reflective of the learnings and.
Whenever you innovate.
And you build new platforms. The new things you are always going to be constantly looking and examining what youre doing and saying what have we learned how can we do this better.
I am very proud of the team and our consumer business the markets broadly when I look at the deposit platform, that's been built and the growth from zero to over $110 billion of deposits over the last six years, we have 15 million customers on the platform I think we have a very unique credit card technology that is differentiated we have a couple of extraordinary.
Harry partnerships.
I think that when you when you look at at all of that together, we have some very good things, but one of the things I think we've learned is that the ability to scale that and attract customers in the direct to consumer business.
It needs to be focused.
In a more directed way and so we're focusing that by aligning it with our wealth business, we have access to millions of people and so I still see a terrific opportunity to take what are really really interesting digital products.
And it being aligned with our wealth business provide those products and services to clients and customers that Goldman Sachs. In addition, I think the partnerships that we've built also provide good opportunities for us to serve corporate clients with very very interesting digital capabilities and allow them to ultimately serve their end customers are.
Clients and so yes, there have been there have been bumps not everything's been perfect I think that always happens when you're innovating but.
But I also think we've built meaningful things that create meaningful opportunities for the firm as we go forward and in particular, our ability to have a more diversified funding base and a big deposit platform that we can grow from here and the ability to offer wealth customers on our platform a broader array of services I think positions us well as we move forward.
We will take our next question from Betsy <unk> with Morgan Stanley .
Hi, good morning.
Good morning can you hear me okay. Okay great.
Alright, great. So two questions first a follow up on the conversation just now is there anything that you're going to be fading. As a result of this is there any part of the consumer business that you are not going to do any more and I know you did the renegotiation with Apple card I guess, it's through 2029.
If I got it right.
And how is that restructured in a way too.
Enhance your.
<unk> ability to generate revenues from that because I know you mentioned on CNBC. This morning, David that the balances arent being carried.
Much as had been expected.
So theres no to the first part of your first part of your your question Betsy There's no. There's no there's no aspect of the services that we're offering.
Consumers that we don't continue to offer.
The Big thing, though is this alignment that we are aligned with.
Our wealth, our wealth business and that gives us an audience of millions of people that we can focus on with lower customer acquisition costs in there lower forward spend.
As we grow our add those services to people with respect to the Apple card I made a statement this morning.
We extended and amended the.
The partnership with Apple I, just highlight that it's very unusual for two partners to change one of these partnerships in the middle of a partnership like this but I think it goes to the fact that it's a very very strong partnership where theres a lot of opportunity, but because we were doing something innovative with the technology and embedding the technology and apples platform.
There were different results than we had expected I mean, one of the positive result is very very good for consumers as consumers have an ability and therefore are more actively paying down their credit card balances more quickly that led to different modeled results in terms of what kind of balances you would have with a certain population on the platform.
So in looking at the Florida arrangement that the platform has to work for both us and Apple App I believe that we believe that and so we made changes to make sure that this is attractive for both of us as we move forward.
And continue to try to deliver really valuable digital financial wellness and access to consumers that are on the platform.
And then just on a separate topic. The question is on the G. SIB surcharge and I think over the past couple of quarters, you've highlighted how you've been looking to take action to bring your G. SIB score down such that you don't trip into that next 50, Bip bucket and Jan 24 could you give us a sense as to.
To.
The progress there that this quarter and if that if that goes still on the table for yearend.
Betsy it's Dennis Thanks, Thanks for that question.
Our position as we remain focused on targeting the 3% G. SIB same message we gave at the end of the second quarter, we're one quarter closer to the end of the year we are on track.
To achieve the 3% G SIB level as we indicated in the second quarter I would reiterate now that you should the opportunity set with clients of the market generally change we could pivot away from that but from where we sit right now today looking into year end, we remain focused on the 3% G SIB.
Thank you we'll take our next question from Mike Mayo with Wells Fargo Securities.
Hi, I have two easy questions that I'll re queue for it but I'll ask my harder questions now if I'm able to re queue.
On slide five you say that consumer revenues for $2 2 billion for the last 12 months, what would the earnings for the consumer and the reason I asked that it is there's all sorts of news articles that I'm not sure. If it's ever been confirmed by you guys, but that you've been losing a lot of money and I just don't know if that's the case or not.
Or to what degree and that makes sense and any startup that you'd be investing along the J curve and you lose money at first and you make money down the road. So how is consumer from a financial standpoint from an earnings standpoint.
Handing out in relation to your original expectations.
So Mike.
Mike.
Not giving complete transparency on our four walls look at the consumer business. It doesn't it doesn't make money at the moment I'm not going to go further than that but what I will say the deposits are hugely valuable and we do believe as the platform scales and you stopped the pace of growth that we've had so youre not Frontloading reserve.
<unk> the same way that what we're doing will deliver accretive returns to the firm.
So we continue to feel very very confident with that.
Not everything that's that's that's reported is accurate and reflects the journey of innovating and building something like this but we continue to feel very good about what we've built we're making some shifts that we think play to our strength and strengthen our ability to accelerate the pace of these tools. This act.
<unk> contributing to the firm.
Highlight that the overall performance and the firm the firm's overall performance in our targets remain the same and so again I know this gets a lot of attention I understand why it gets a lot of attention and that's all okay, but we've set targets, we're going to deliver on those targets and we're going to make investments in things that we think strengthen the firm and this is one of them.
Alright, I guess the reason I asked the question I mean look for the last 510 20 150 years right. Your strength has been serving Corp. Your corporate relationships investment banking and look.
That's your legacy too that the strength there and so what I'm looking at this third division platform solutions.
First two divisions are based on how you address the clients based on distribution one Goldman Sachs, whereas the third division platform solution seems to be based on how you manufacture solution. So that just seems like a little disconnect. So just a little bit more color I know you'll talk about it at your.
Newly announced at Investor Day.
<unk>.
Distribution distribution and this is based on how your manufacturer clients I'm, just trying to reconcile that with the Goldman Sachs history, and what you're doing elsewhere.
Well I.
I appreciate that Mike.
You know look it's it's very generous of you to account 150 years of history, but I'd just highlight the firm look very different.
And the 18 sixties that it looked in the 19 twenties than it looked in the $19 60 as the firm continues to grow and change I joined Goldman Sachs at $19 99, and it was 23 years ago as a partner and it was a fraction of what Goldman Sachs's. Today. So we're we're big business, we have very big businesses and of course our.
Investment banking and markets business is core to who we are it will continue to be core to who we are it drives our earnings and performance that drives the what were associated with we've built over a number of decades of very very powerful asset and wealth management business, we're bringing together today, we're the fifth largest active asset.
Manager in the World and we think we've got a real opportunity to grow that I understand now that people accept that as being quarter Goldman Sachs. When we started back in the eighties I don't think people viewed it as core but we also have 11000 engineers here and we're doing some very very interesting things as the world is changing and the world is evolving with technology.
After the financial crisis, the regulatory structure team and we became a bank and it was clear we needed deposits and we needed to diversify our funding and so what platform solutions represents is a handful of smaller business opportunities relative to the scale of Goldman Sachs that we're investing in where we think we have a capability.
To serve our clients.
I think that's very interesting things in transaction banking as we've outlined I think this card partnership is very very interesting in terms of what it's allowing us to do and so we think it's an opportunity it's still small relative to Goldman Sachs, it's less than 5%, but we think it's an opportunity worth investing into as we continue to be.
Broaden the scope and scale of what Goldman Sachs can do for our clients and Thats kind of the way we're thinking about it.
We'll take our next question from Brennan Hawken with UBS.
Good morning, Thank you for taking my questions.
Got two questions and one on the consumer pivot, but I feel like we need to break so.
The other one first.
You guys said how are we should we be thinking about the efficiency ratio. This year. The last six months have been tougher revenue wise and so you know the medium we've been above your medium term target of 50, 60% sorry, non comp expenses is a little sticky you guys laid out some of the things that you are trying to do there, but do you think.
That do.
Do you fully expect that you'll be hitting your 60% ratio target this year on the efficiency front.
Brian I'll take that for you. Thanks, Thanks for the question.
As David indicated earlier, we remain very committed to our firm wide targets.
We're going to look to achieve them over the medium term the efficiency ratio is one of those.
We will not necessarily hit that target each and every year. This is probably one of those years has not been a top quartile environment for performance.
But that being said we are pulling the levers that we can pull.
I'll note that our compensation and benefits on a year to date basis is down 21%.
And we're going to make sure that we size that to.
To account for our performance in line with our pay per performance orientation, but.
But also with respect to our targets.
And finally remaining remaining mindful that labor markets remain tight and our talent is important to our franchise, but you can see the movement, we're making in our compensation our year to date as a component of the overall efficiency ratio and then on the non compensation side that remains very much a focus and we will look to continue to make progress.
On non comp with a goal of driving towards the efficiency target, but Brennan just to just to amplify we're committed to our efficiency target. It was never meant to be a target that would be hit.
Absolutely. It every single year exactly the same way and so this obviously has been a tougher operating environment and it is having an impact but we remain committed to the target and are operating the firm to deliver on that target.
Great. Thanks, Thanks for that color.
And then for.
The next one just to come back to the pivot to consumer.
And apologies for hitting on it again, but I think it's important because you want to understand strategically you you you all laid out in early 2020.
David you laid out a lot of the goals and aspirations around consumer and building. This consumer business. It seems like this shift is a toning down of some of those aspirations.
Previously we had heard that you were looking to launch some general consumer banking to complement the deposit business and it's well what you said before that you're not changing the current offering but not completely clear if you're continuing to go forward with the rollout and all of the original.
<unk> aspirations that you were targeting.
And and.
Just to be honest when I speak with a lot of investors on Goldman Sachs. Very few were excited about the consumer business. So I wouldn't necessarily say that are pulling back in and the aspirations would necessarily be negative I just wanted to try and understand strategically what the new direction is.
Yes, Brendan I appreciate that there is no clear there's no question.
That the aspiration is probably.
Probably gotten were communicated in a way that they were broader than where we are now choosing to go and we are we are making it clear that we're pulling back on some of that now we have built some things we have a checking platform. We haven't investing platform and if you are aligning us with wells that you have wealth customers wealth customers can use those things, but it's very very.
Different to have those capabilities and be able to use them on a broad wealth platform versus directly marketing them to independent consumers on math.
Think one of the big learnings over the last few years is that we're better to play to our strength and now our focus is I think the technology with bold is very very good and we can now connected to millions of people that are on our platform and that is a narrowing of the focus for sure. It is a purposeful shift tried to make that clear in the in the script and I think it plays to strength.
That we have but we are back we need deposits, we our wealth platform people around our wealth platform wanted ability to leave money here actually if you look at other wealth platforms. They have banking capabilities attached to them and so I think we are strengthening our ability as a broad wealth platform and you know I want to amplify this workplace wealth.
Channel, where we have access to millions of people is a very very interesting place for us to attach some of the stuff that we've now built but I think we've made a significant investment we are narrowing our focus very clearly, but I still think there are opportunities for us and again.
Want to amplify our other businesses are performing they drive. The overall result, this is still small you know in the <unk>.
Overall scheme of Goldman Sachs, but we think that it's additive and that's why we're trying to focus it and drive it forward and the best way I. Appreciate the comment that shareholders haven't been excited about it and that certainly affects some of our decision making.
Yeah.
We'll take our next question from Devin Ryan with JMP Securities.
Thanks, Good morning.
Wanted to ask a question just on investment banking M&A financing markets have obviously become more complicated recently and we've seen some negative marks on recent deals I'm just curious whether you feel like some of that friction. This is transitory or whether financing markets are really starting to maybe become more concerning a crack a bit and then.
Kind of in a related just how much that's weighing on your outlook for M&A advisory business, where it sounds like backlogs are solid, but you need a functioning financing as well.
Yes.
I'd say you know Devin at a high level, we're tightening economic conditions very very quickly and when you tighten economic condition. It has an impact on these things I think the I think the impact lagged a little bit.
I do think theres been a big reset in the capital markets.
For Ipos for debt financing people have to get their minds around the valuations the cost of capital I think that resets occurring history would tell you the capital markets generally don't stay closed no matter what the environment. They don't stay closed for years at a time because people have to move forward. They have to operate their businesses they have to raise capital and so they adjust to the new.
New environment.
It said.
The prospects for economic growth are uncertain in 2023, and so I think theyre going to be headwinds so.
I expect.
A a more cautious or a bumpier capital markets and M&A environment as we head into 2023, I think we need more clarity on the trajectory of the economy and the trajectory of inflation to really see all that stuff accelerate from levels. It's operating at today.
Yes, okay great.
Quick follow up here, just on deposits and deposit rate in markets right now I think to three 5% Delta versus many of your bank peers is widening.
So I'm just curious what you've seen over the last couple of months here, especially as customer cash sorting has been accelerating in the industry and then whether you can just share some expectations from here around.
What you expect.
<unk> kind of Marcus deposit gathering just as rates potentially move higher from here.
Sure. Thank you. Thank you for that question. So maybe just some observations across deposit flows across the firm given.
Given the changing changing environment.
On the on the consumer side of the equation.
Continuing to perform and outperform our expectations.
Our focus is on continuing to attract deposits, we are deliberately positioning ourselves within the competitive envelope in so in such a fashion that we can attract deposits, we do not intend to be the price leader, but we do intend to remain competitive it's obviously an entirely digital <unk>.
Offering we're not burdened with a lot of other cost and infrastructure and so we have some flexibility to position our pricing in such a manner that we can attract deposits to continue to grow the firm.
Obviously this is something that will.
It will change over the entirety of the cycle, but thus far it's outperforming our own expectations on the other hand, you know.
Institutional activity through transaction banking, we're observing that that is more competitive.
There is a there are more deposits that people are seeking to raise through those channels being more disciplined and so we do see more competition for raising deposits through that channel relative to the consumer channel.
We'll take our next question from Dan Fannon with Jefferies.
Thanks, Good morning wanted to ask about wealth management, you had a strong quarter for inflows versus I think what we saw the industry. It's a bit of a slowdown sequentially looked to be a record inflow quarter for Oleds for you can you just talk about the momentum in that business and how to think about maybe growth from here.
Yeah.
So thank you for thank you for acknowledging that obviously are on top of that our overall growth in management and other fees at up 15% year over year.
In the last quarter, you know it almost two and a quarter $1 billion, we're well on our way to both our 10 billion in total and $2 billion alternative.
<unk> targets and the reality of attracting these types of flows over this period of time a lot of that has to do with work and performance and track record that has been done previously.
Some of these particular flows have longer lead times other shorter lead times, but I'm looking at both the alternative commitments that we were able to secure in the quarter looking at the change to all to our alternatives a U S. On the quarter, which was very strong and then looking at our inflows across the more traditional channels.
We were very pleased with the activity that we saw in that regard over the course of the third quarter and we're very focused on continuing to drive that going forward.
Got it and then just in the consumer business, both the consumer banking as well as the private banking and letting you know accelerated quarter over quarter and you gave us a handful of reasons, but just thinking about the trajectory for those businesses. Even in addition, with the realignment just trying to think about momentum.
On more of the shorter term basis.
The step up quarter over quarter were quite strong. So just some color a little additional color there would be helpful.
Sure. Thank you obviously for the firm overall loan.
Loan growth was just about 1 billion quarter over quarter, but we do continue to see good opportunities, particularly across the wealth management segment, you saw better growth in that segments of high quality lending opportunity for us and we're leveraging an existing set of relationships in existing franchise, that's very much in.
Place, we've obviously been recognized for our advice and solution oriented weigh in in serving those clients, but we are finding that increasingly they are looking for us also to provide financing to them and so we're making sure that we're very focused on supporting them as holistically as possible when we see good opportunities on the forward to.
To grow.
Types of financing activities.
Thank you we'll take our next question from Matt O'connor with Deutsche Bank.
Oh, good morning, Manny keep calling for the normalization of fixed income trading and I think it was last quarter you guys try to frame what might be a good kind of medium longer term.
Level.
But obviously it continues to be and I am wondering hasnt reset higher.
Parnell is there true likely higher in place and higher rates and usually that does bring higher volatility even if things settle down from here or are we just looking at structurally bigger and maybe materially bigger wallet than we thought not too long ago.
Look I think it's it's it's always hard to predict but I think if you want to go back to the period.
Before before the pandemic.
I do think the level of client activity and a shifting macroeconomic environment has created a larger wallet I think one of the things that we benefited from and we continue to try to amplify. This as we brought on more wallet share by over 300 basis points. Since 2019. So we're benefiting from the fact that the available wallet is larger than it has been larger than the <unk>.
Last couple of years, but in addition, with 300 basis points of wallet share growth. That's also improved our our position. So you know I do think clients are I do think clients are active we have a truly global franchise. It's broad it's deep we're very very focused on our market share position with the <unk>.
Leading clients.
I can't I can't tell you what the future will bring but I just think that our franchise is extremely well positioned whatever that opportunity is our relative positioning against that opportunity to serve our clients is strong.
And in terms of the share gain how much of it. So obviously it sounds it is you're reading into the business with some investments including in financing, but how much of it is maybe mix has been favorable to you and there's also been some pull.
Pull back by some global peers that they've been building capital and you obviously have enough to lean into it.
Well, it's hard it's hard to pull it apart.
Level peers are pulling back capital and resources that they allocate the people who are committed to it the big U S players are going to benefit.
But I actually think the big thing that has driven our share gains as a fundamental shift in the client philosophy of the firm the investment and the one Goldman Sachs ethos, I think it's had a material impact on our global markets business and I think it's affected our shares I think the team in that division is executed.
Very very strong way against that it's improved our client relationships include improved our positioning materially with the top 100 clients. I know you know that we set out a few years ago and said we were 40, we had 44 of the top 100 that we were in the top three with we're now in the top three with over 75% that's been a very coherent vary.
Very focused effort to improve our client positioning I think that's had the biggest impact on our market shares.
Thank you we'll take our next question from Gerard Cassidy with RBC.
Thank you good morning, David you talked about the need for deposits and if I recall back on your Investor day, one of the advantages for growing deposits was the improvement in your funding costs from wholesale funds with the rise in rates.
<unk> listened at all and second I think you had a goal of getting to 50 50 in terms of funding for the business with deposits and then wholesale funds and where do you stand on that.
So thank you Gerard it's Dennis So I think as indicated in some of the previous comments and outlined at that original Investor Day. We are very focused on diversifying the funding mix also benefiting from.
From the pricing and the stickiness of that channel. We've developed since that period of time multiple deposit funding channels digital markets platform is one of them transaction banking is another in terms of that original goal of changing the mix. We have achieved that we continue to be very very focused on.
Moving that mix, you will see on a quarter over quarter basis that we have improved our deposits.
<unk> other unsecured funding. So we remain we remain focused on that it's an attractive source of funding for us. It also fits within the overall strategic.
Alignment that we've been discussing.
Very good.
As a follow up on your outlook, David what's going on in the capital markets business. Obviously, the tightening that we're all seeing is it as straightforward in terms of.
The improvement of the fed finishing with its monetary tightening in the market to rebound quickly after that or do you see other factors that have to play and aside from what's going on and of course with you.
Ukraine, and Russia, and the European situation.
I don't think it's I don't think it's simple for sure Gerard I think it's I think it's still pretty uncertain.
On.
I do think we have to.
We have to get to a point, where we better understand the trajectory of inflation and therefore understand the trajectory of economic growth going forward. The fed is executing and have set some very very clear goals as to where theyre going to the tightening cycle in the near term, but I think there is uncertainty whether or not you know.
That will get inflation to a place where.
The policy will shift going forward and so I think we are in uncertain period.
Hi.
I think that this warrants that were operating the firm this way with a sense of caution as we look forward.
But we'll have to watch closely but I don't I don't have a clear answer for you.
As to whether or not if we get to the fed's current trajectory, we'll be in a place where economic growth prospects will improve as we look ahead for 2023 into 2024, I think thats still relatively uncertain.
Thank you we will take our next question from Jeremy Siggi with BNP Paribas.
Thank you you've covered a lot of ground. So I just got a couple of specific follow ups. Please the first one because that's a cost topic and the head count increase in this quarter I was just wondering if thats mainly season, though with new join us.
I think the acquisition impacts rural already in the prior quarter. So I just wondered if it is just seasonality really thats driving that head count increase and just how you think about that relative to the cost focus that you've been talking about for a couple of quarters now.
Sure. Thanks, Thank you for that.
In terms of the quarter change a lot of that change is attributable to campus hires based on time of year, our new classes of Upstarting professionals occurs during the third quarter.
As we mentioned an intention to slow our hiring velocity, we have indeed, followed through on that topic.
And references to strategic growth initiatives, that's to say that slowing.
Slowing down the velocity of hires does not mean that we're not still making hires in the market. We have a lot of attractive opportunities to grow the firm and Theres a lot of talent inside of Goldman Sachs. Theres also talent outside of Goldman Sachs that we can add to our team to continue to strengthen our ability to deliver for clients. So.
We are focused on overall levels of head count growth looking to slow it but also remaining nimble and strategic with respect to strategic.
<unk> hires.
Thank you.
Great and then a second follow up just on the wealth management, the workplace wealth management, which I feel is a sort of it's a new thing for you to talk about in such a high profile away do you have all the building blocks that you need to be successful and to grow that space or the bits that you're going to have to build to make a success of that.
So I appreciate I appreciate the question Jeremy I mean, this is actually something that we started building.
Decades ago, It started with the acquisition of <unk>.
I'm going to get the date wrong, but it was in the early two thousands I think it was approximately 18 to 20 years ago, which would allow which allowed us to basically affiliate with corporate partners to.
To provide wealth management services and financial counseling to executives and spread.
Into the organization.
More broadly than just senior executives, but that business has grown nicely and that was the building block under which we built this in today.
I think we deal with more than half of the Fortune 100.
And hundreds of companies in the Fortune 1000.
Through that platform and then with the addition of United Capital, which was an investment we obviously made a few years ago.
That gave us a broader high net worth footprint, that's allowed us to do more to service more of the clients in the corporations. We were partnered with and then we've added digital solutions that we've been building over the last few years that allow us to reach.
Any member of the team. So we have we have certain companies that were partnered with we're offering financial wellness to hundreds of thousands of employees, which ultimately can become wealth clients are depositors or come onto our platform more broadly. So the building blocks are in place they have been put in.
Place over a long period of time.
Over the last couple of years, we've started to execute much more directly across that and you're right. Now we're amplifying what we've invested in there and trying to highlight that and make sure that some of the other pieces that we've built are aligned with that so we can strengthen it and grow it but we think it's a big opportunity for the firm.
We'll take our next question from Mike Mayo with Wells Fargo Securities.
Hi, Thanks for my follow up.
I guess the word for the quarter as resiliency, if I'm hearing you correctly.
And it's really remarkable that you haven't had a big blow up that.
Come back to hit your or your peers, so far but.
How are you protecting yourself against.
I guess, the likelihood it's going to be some.
Third party problem that could ricochet back on you I'm talking about outside of let's say the largest U S banks, which have reported now and then the other thing is the resiliency of the backlog is quite amazing in the face of all this volatility in stock and debt market. The clients how long does that last.
So semi look I appreciate the question and it's a good question and I'd just start.
Bye.
By the fact that this firm has a very very strong risk management culture and has always focused on on risk management risk mitigation and trying to look around corners, and think about what's coming and so on.
And a number of the questions today to highlight that I think things are uncertain that we're being cautious I think we've taken a number of actions.
Inside the firm as we think about our risk lines in a variety of places and we think about our RW application.
As we think about things that we're doing.
To try to you know to operate.
Let's be prepared for a more difficult environment now obviously, we have exposure to that because we're a large financial firm. So you can't 100%.
Protect yourself from that.
But there is there is there is.
There's no question that we're trying to take actions to make sure. We're well positioned I think you saw during the quarter that we grew our capital buffer during the quarter I think that's reflective of a conscious decision in this environment to run a little bit more cautiously a little bit more conservatively, we've been watching what's been going on in markets across the U K and when we.
Things like that we reflect back and spend a lot of time digging in and thinking about other places where those things can be amplified in so we're extremely focused on issues like that and I would just say that I think the world is fragile at the moment and it's uncertain and we're operating through that lens.
We're big financial institutions. So we have exposure. If there were if there was bigger volatility bigger problems, we could potentially have exposure to them, but on the other hand, I think that we've got a very broad global deep franchise.
And.
We're well capitalized and we're very focused on this and we're going to continue to be zealous in our risk management practices to make sure on a relative basis, whatever the world throws at us.
<unk> served our clients well and operate well for our self and our shareholders.
Thank you at this time there are no further questions. Please continue with any closing remarks.
Yeah, Thanks, everybody for joining us today and thank you for all the questions. If you. If you have any additional questions that come up please don't hesitate to reach out to me either.
Thanks, so much.
Ladies and gentlemen, this concludes the Goldman Sachs third quarter 2022 earnings call. Thank you for your participation you may now disconnect.
Hum.
[music].
Okay.