Q3 2024 The Goldman Sachs Group Inc Earnings Call

Katie: Good morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs 3rd quarter 2024 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer.

Operator: I would like to welcome everyone to the Goldman Sachs third quarter 2024 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures.

Katie: The earnings presentation can be found on the Investor Relations page of the Goldman Sachs website and contains information on forward-looking statements and non-gap measures. This audio cast is copyrighted material of the Goldman Sachs group ink and may not be duplicated, reproduced or rebroadcast without consent.

Operator: This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without consent.

Operator: This call is being recorded today, October 15, 2024.

Katie: This call is being recorded today, October 15, 2024. I will now turn the call over to the Chairman and Chief Executive Officer, David Solomon, and Chief Financial Officer, Denis Coleman. Thank you, Mr. Solomon, you may begin your conference.

Operator: I will now turn the call over to the Chairman and Chief Executive Officer, David Solomon, and Chief Financial Officer, Dennis Coleman.

David Solomon: Thank you, Mr. Solomon. You may begin your conference. Thank you, operator. Good morning, everyone. Thank you all for joining us. In the third quarter, we produce net revenues of $12.7 billion in generated earnings per share of $8.40. And ROE of 10.4% and an ROT of 11.1%.

David Solomon: Thank you, operator, good morning, everyone, thank you all for joining us. In the third quarter, we produce net revenues of $12.7 billion in generated earnings per share of $8.40.

David Solomon: and ROE of 10.4% than an ROT of 11.1%. Overall, on pleased with our performance, especially in our quarter, our results were impacted by selected items, including the narrowing of our consumer footprint, which reduced our ROE by 80 basis points.

David Solomon: Overall, I'm pleased with our performance, especially in our quarter, where our results were impacted by selected items, including the narrowing of our consumer footprint, which reduced our ROE by 80 basis points. Our performance demonstrates the strength of our world-class and interconnected franchises, where we were effectively serving clients in a complex backdrop. In the global banking and markets, we remain the pre-eminent advisor and a leading global risk intermediary. Across investment banking, corporates, and sponsors remain actively engaged, and we see significant pent-up demand from our clients. Our backlog rose again this quarter, driven by advisory, and we expect our leading investment banking franchise to benefit from the continued research and activity.

David Solomon: Our performance demonstrates the strength of our world class and interconnected franchises where we were effectively serving clients in a complex backdrop.

David Solomon: and Global Banking of Markets, we remain the pre-Moraminated Viser and a leading global risk intermediary. Across investment banking, corporates and sponsors remain actively engaged, and we see significant pent-up demand from our clients.

David Solomon: Our back wall grows again this quarter driven by advisory and we expect a leading investment thanking franchise to benefit from the continued resurgence and activity.

David Solomon: And sick, we delivered records financing revenues and facilitated our clients' risk intermediation needs, particularly as activity levels picked up towards the end of the quarter. And in equities, we reported a very strong performance across both intermediation and financing.

David Solomon: and FIC we delivered records financing revenues and facilitated our clients risk intermediation needs, particularly as activity levels picked up towards the end of the quarter. And in equities we reported a very strong performance across both intermediation and financing.

David Solomon: Overall, our global broad and deep platforms remain exceptionally well positioned to support our clients' involving needs across products and asset classes. In the asset and wealth management, our position as a leading global active asset manager, a top-fibal alternatives player, and a premier ultra-high net worth franchise, is affords a significant opportunities in secular growth areas. Our assets under supervision reached another record this quarter, surpassing $3 trillion, and representing our 27th consecutive quarter of long-term net inflows. We demonstrated further growth in more durable management, other fees, and private banking and lending revenues, which together were record $3.4 billion this quarter, and up 9% versus last year.

David Solomon: Overall, our global growth and deep platforms remain exceptionally well positioned to support our clients in the loving needs across products and asset classes.

David Solomon: In the asset and wealth management, our position as a leading global active asset manager, a top-fibal turner display, and a premier ultra-high net worth franchise affords the significant opportunities in secular growth areas.

David Solomon: Our assets under supervision reached another record this quarter, surpassing 3 trillion and representing our 27th consecutive quarter of long-term net inflows.

David Solomon: We demonstrated further growth in more durable management other fees and private banking and lending revenues, which together were record 3.4 billion this quarter and up 9% versus last year.

David Solomon: We remained confident in our ability to grow these more durable revenues at a high single-digit pace over the coming years. And alternatives fundraising remains strong. We raised over $50 billion year to date and now expect $20-24 fundraising to exceed $60 billion as we see ongoing demand across asset classes, including private credit, private equity, secondaries, and infrastructure. In wealth management, we grow our total client assets to $1.6 trillion, and our ultra-high net worth franchise is well positioned to continue to grow globally, as we expand our advisor footprint and our leading offerings and our lending offerings to clients.

David Solomon: We remain confident in our ability to grow these more durable revenues at a high single digit pace over the coming years.

David Solomon: and alternatives, fundraising remains strong.

David Solomon: We raised over $50 billion year to date, now expect $20,24 fundraising to exceed $60 billion as we see ongoing demand across asset classes including private credit, private equity, secondaries and infrastructure.

David Solomon: and Ralph Management, we grow our total client assets to 1.6 trillion and our ultra-high network franchise as well positioned to continue to grow globally as we expand our advisor footprint and our leading offerings and our lending offerings to clients.

David Solomon: A pretext margin in AWM is up meaningfully from last year in line with our mid 20s target.

David Solomon: A pre-fax margin in AWM is up meaningfully from last year in line with our mid 20s target. We remain focused on further improving the margins and returns in the business, while also investing to drive growth across wealth management, alternatives and solutions.

David Solomon: We remain focused on further improving the margins and returns in this business while also investing to drive growth across wealth management, alternatives, and solutions.

David Solomon: As I look at the operating backdrop, the U.S. Economy continues to be resilient. Inflation has been coming down, the recent unemployment data support is, and while we've seen some softness in consumer behavior, the tone of my recent conversations with clients has been quite constructive. The beginning of the rate cuts cycle has renewed optimism for a soft landing, which should spur increased economic activity. More broadly, clients remain highly focused on the trajectory of rates in jurisdictions around the world, the policy implications of global elections, particularly in the U.S. and the high levels of geopolitical instability. Against this backdrop, our leading global franchises supporting our clients as they navigate risks and position themselves to arrange outcomes.

David Solomon: As I look at the operating backdrop, the U.S. economy continues to be resilient. Inflation has been coming down. The recent unemployment data support is, and while we've seen some softness and consumer behavior that's told of my recent conversations with clients, has been quite constructed.

David Solomon: At the beginning of the rate cut cycle has renewed optimism for soft landing, which should spur increased economic activity.

David Solomon: War Broadly Clients remain highly focused on the trajectory of rates in jurisdictions around the world. The policy implications of global elections, particularly in the U.S.

David Solomon: and the high levels of geopolitical instability against this backdrop are leading global franchises supporting our clients as they navigate risks and position themselves to arrange outcomes.

David Solomon: Before I turn it over to Dan, I want to spend a moment on capital and balance with free revision. Although we have closely followed the recent remarks from regulatory officials about the upcoming reproposal, we continue to have concerns about the overall regulatory process. There remains a lack of transparency and appreciation for the interconnectedness of capital requirements across the proposed Fundamental Review of the Trading Book, C-CAR and the G-CIP buffer. We recognize this is an ongoing process that would take time. But, as we said before, we need to get this right. The final rule of its significant impact on the gross and competitiveness of the U.S.

David Solomon: Before I turn it over to Denis, I want to spend a moment on capital and balsistry revision.

David Solomon: Although we have closely followed the recent remarks from regulatory officials about the upcoming reproposal, we continue to have concerns about the overall regulatory process.

David Solomon: The Remains of lack of transparency and appreciation for the interconnecting this capital requirements across the proposed fundamental review of the trading book, C-CAR and the G-CIP buffer.

David Solomon: We recognize this is an ongoing process that we take time. But as we said before, we need to get this right.

David Solomon: The final rule of the significant impact on the gross and competitiveness of the U.S. economy, requiring too much capital and increase the cost to credit for businesses large and small, and will impact growth across the country. We look forward to receiving more clarity from our regulators once the reproposal is published, and participating in the new comic period. We remain very engaged both as an industry and as a firm.

David Solomon: economy. The acquiring too much capital will increase across the credits for businesses large and small and will impact gross across the country.

David Solomon: We look forward to receiving more clarity from our regulators once the reproposal is published and participating in the new comment period. We remain very engaged both as an industry and as a firm.

David Solomon: In closing, I feel very good about the trajectory of Goldman Sachs. We are leaning into our strength. The client franchise is stronger than ever, and we continue to harness our one-golden Sachs approach. Our world-class talent, execution capabilities, and risk management expertise, according to who we are as a firm, allow us to provide differentiated service to our clients and outperform for shareholders through the cycle.

David Solomon: and closing, I feel very good about the trajectory of Goldman Sachs.

David Solomon: We are leaning into our strength.

David Solomon: Branch I, the Stronger than Ever, and we continue to harness our one-goven sex approach. Our world class talent, execution capabilities, and risk management expertise, a court of who we are as a firm, and allow us to provide differentiated service to our clients, and outperforms for shareholders through the cycle. Let me now turn it over to Denis to cover our financial results in more detail.

Dennis Coleman: Let me now turn it over to Dennis to cover our financial results in more detail.

Dennis Coleman: Thank you, David.

Denis P. Coleman: Good morning. Let's start with our results on page one of the presentation. In the third quarter, we generated net revenues of $12.7 billion, up 7% year over year; earnings per share of $8.40, up 54% year over year. Our ROE is 10.4%, and our OTE of 11.1%.

Denis Coleman: Thank you David, good morning.

Denis Coleman: Let's start with our results on page one of the presentation. In the third quarter, we generated net revenues of $12.7 billion, up 7% year over year. Burning's per share of $8.40 up 54% year over year. Our ROE is 10.4% and ROTE of 11.1%.

Dennis Coleman: As David mentioned, our results were impacted by select items, including agreements to transition the GM card platform and the seller portfolio of seller financing norms. In aggregate, these items reduce the PS by 62 cents and our ROE by 80 basis points. Now, turning to performance by segment, starting on page four. Global banking and markets produce revenues of $8.6 billion in the third quarter. Advisory reviews of 875 million, we're up both sequentially and burst of the prior year period. We remain number one in elite tables for announced and completed M&A for the year to date. Equity underwriting revenues rose 25% year over year to 385 million.

Denis Coleman: As David mentioned, our results were impacted by select items, including agreements to transition the GM card platform, and to sell our portfolio of seller financing loans.

Denis Coleman: In aggregate, these items reduce DPS by 62 cents, and are RAU by 80 basis points.

Denis Coleman: Now turning to performance by segment, starting on page 4. Global banking and markets produce revenues of $8.6 billion in the third quarter.

Denis Coleman: Advisory Reviews of 875 million, we're up both sequentially and burst of the prior year period. We remain number one in the lead tables for announced and completed M&A for the year to date.

Denis Coleman: Equity underwriting revenues rose 25% year over year to 385 million. As equity capital markets have continued to reopen, the volumes are still well below longer-term averages.

Dennis Coleman: As equity capital markets have continued to reopen, though volumes are still well below longer-term averages. that underwriting revenues rose 46% year over year to 65 million amid higher leverage finance and investment grade activity. We are seeing increased client demand for committed acquisition financing, which we expect to continue on the back of increasing M&A activity. Overall, our investment banking backlog rose quarter-on-quarter, driven by advisory. Ficknet revenues of $3 billion in the quarter were down from a strong performance last year amid a relatively quieter summer, though we saw a meaningful pickup in activity in September. A decline in intermediation revenues was partially offset by record fixed financing revenues of $949 million, which rose 30% year over year, primarily on better results within mortgages and structured lending.

Denis Coleman: That underwriting revenues rose 46% you over year to 605 million amid higher leverage finance and investment grade activity.

Denis Coleman: We are seeing increased client demand for committed acquisition financing, which we expect to continue on the back of increasing M&A activity. Overall, our investment banking backlog rose quarter on quarter, driven by advisory.

Denis Coleman: Ficknet revenues of $3 billion in the quarter were down from a strong performance last year. I'm at a relatively quieter summer, though we saw a meaningful pickup in activity in September.

Denis Coleman: A decline in intermediation revenues was partially offset by record-fix-financing revenues of $949 million, which rose 30% year over year, primarily on better results within mortgages and structured lending.

Dennis Coleman: Equity's net revenues were $3.5 billion in the quarter, up 18% burst of the prior year. Equity's intermediation revenues were $2.2 billion, up 29% year over year, primarily driven by strong performance across derivatives and cash products. Equity's financing revenues are $1.3 billion, rose burst of the prior year amid higher average balances.

Denis Coleman: Equities net revenues were $3.5 billion in the quarter up to 18% versus a prior year.

Denis Coleman: Equity's intermediation revenues were 2.2 billion up 29% year over year, primarily driven by strong performance across derivatives and cash products.

Denis Coleman: Equity Financing Revenue is a $1.3 billion rose versus the prior year amid higher average balances.

Denis P. Coleman: Across thick and backwardies, financing revenues were a record $6.6 billion for the year to date, a direct result of the successful execution on our strategic priority to improve the durability of our revenue base.

Denis Coleman: Across thick and backwardies, financing revenues were a record, $6.6 billion for the year to date. A direct result of the successful execution on our strategic priority to improve the durability of our revenue base.

Dennis Coleman: Moving to asset and wealth management on page five. Revenue is of $3.8 billion, rupped 16% year over year. Our more durable management and other fees and private banking and lending revenues reach a new record this quarter of $3.4 billion. Management and other fees increased 3% sequentially to a record $2.6 billion for the quarter and $7.6 billion for the year to date, well on the way to achieving our $10 billion annual target for 2024. Private banking and lending revenues rose sequentially to $756 million. We are seeing positive momentum in this business, and we remain focused on increasing lending penetration and expanding our loan product offerings.

Denis Coleman: Moving to asset and wealth management on page five, reviews of $3.8 billion, rupt 16% year of year.

Denis Coleman: Our more durable management and other fees and private banking and lending revenues reach a new record this quarter of $3.4 billion. Management and other fees increase 3% sequentially to a record $2.6 billion for the quarter and $7.6 billion for the year to date, well on the way to achieving our $10 billion annual target for $20.4.

Denis Coleman: Private thanking and lending revenues rose sequentially to 756 million. We are seeing positive momentum in this business and we remain focused on increasing lending penetration and expanding our loan product offerings.

Dennis Coleman: Incentive fees for the quarter were $85 million. We continue to expect to reach our annual target of $1 billion over the medium term, supported by approximately $4 billion of unrecognized incentives as of the last quarter. Equity and debt investments revenues hold $294 million. Reflecting NI and our debt portfolio and markups in our public equity portfolio. For the year to date, we generated one and a half billion in combined equity and debt investments revenues.

Denis Coleman: Incentive fees for the quarter were 85 million. We continue to expect to reach our annual target of $1 billion over the medium term, supported by approximately $4 billion of unrecognized incentives as of the last quarter.

Denis Coleman: Equity and debt investments revenues hold $294 million. Reflecting NIIN, our debt portfolio and markups in our public equity portfolio. For the year to date, we generated one in the half billion in combined equity and debt investments revenues.

Denis P. Coleman: Now moving to page six, total assets under supervision ended the quarter at a record of $3.1 trillion. Bolstered by $37 billion of liquidity products net inflows and $29 billion of long-term net inflows across asset classes. We continue to see traction in our solutions business, where we are leveraging our SMA capabilities and outsource CIO platform to deliver customized multi-asset solutions.

Denis Coleman: Now moving to Page 6.

Denis Coleman: Total assets under supervision ended the quarter at a record of $3.1 trillion. Bolstered by $37 billion of liquidity products net inflows and $29 billion of long-term net inflows across asset classes.

Denis Coleman: We continue to see traction in our solutions business where we are leveraging our SMA capabilities and outsource CIO platform to deliver customized multi-asset solutions.

Dennis Coleman: Turn into page 7 on alternatives. Alternative AUS told 328 billion at the end of the third quarter, driving 527 million in management and other fees. Rose third party fundraising was $16 billion in the third quarter and over $50 billion for the year to date. This brings cumulative, third-party fundraising to more than $300 billion since our investor day in 2020. We further reduced our historical principle investment portfolio by $1.7 billion in the third quarter to $10.9 billion, bringing year-to-date reductions to $5.4 billion.

Denis Coleman: Turn into page 7 on alternatives. Alternative AUS told 328 billion at the end of the third quarter, driving 527 million in management and other fees. Rose third party fundraising was $16 billion in the third quarter and over $50 billion for the year to date.

Denis Coleman: This brings cumulative third party fundraising to more than $300 billion since our investor day in 2020.

Denis Coleman: We further reduced our historical principal investment portfolio by $1.7 billion in the third quarter to $10.9 billion, bringing year-to-date reductions to $5.4 billion.

Dennis Coleman: On page 9, from why that interest income was $2.6 billion in the quarter. Up first of the prior year period, reflecting an increase in interest-earning assets. Our total loan portfolio at quarter. By 70 million of net recoveries on previously impaired wholesale loans.

Denis Coleman: On page 9, from why that interest income was 2.6 billion in the quarter, up versus the prior year period, reflecting an increase in intersturning assets.

Denis Coleman: I told a long portfolio at what I was talking about.

Denis Coleman: I'm going to tell you about this.

Denis Coleman: by 70 million of net recoveries on previously impaired wholesale loans.

Dennis Coleman: Trying to expenses on page 10, total quarterly operating expenses were $8.3 billion. Our yearday compensation ratio in net approval is 33.5%. Portedly non-compensation expenses were $4.2 billion, down 14% year. We remain focused on driving efficiencies across the firm given ongoing inflationary pressures, competition for talent, and our desire to invest in our engineering and technology platforms. Our effective tax rate for the first nine months of 2024 was 22.6%. For the full year, we continued to expect the tax rate of approximately 22%.

Denis Coleman: Trying to expenses on page 10, total quarterly operating expenses were $8.3 billion. Our year-to-day compensation ratio in that of provisions is 33.5%. Quarterly non-compensation expenses were $4.2 billion, down 14% year.

Denis Coleman: We remain focused on driving efficiencies across the firm, given ongoing inflationary pressures, competition for talent, and our desire to invest in our engineering and technology platforms.

Denis Coleman: Our effective tax rate for the first nine months of 2024 was 22.6%. For the full year, we continue to expect the tax rate of approximately 22%.

Dennis Coleman: Next, Capital on slide 11. In the quarter, we returned $2 billion to common shareholders, including dividends of $978 million and stock repurchases of $1 billion. Our common equity tier one ratio was 14.6% at the end of the third quarter under the standardized approach. During the quarter, the Federal Reserve reduced RSEB requirement by 20 basis points to 6.2% following a successful appeal process. Resulting in a standardized common equity tier one ratio requirement of 13.7%, which became effective October 1st. We remain very engaged with our regulators on creating a less volatile and more transparent process. Given our 90 basis point buffer, we continued to have flexibility on capital deployment and are very well-positioned to serve our clients and return capital to shareholders.

Denis Coleman: Next capital on slide 11. In the quarter, we returned $2 billion to common shareholders, including dividends of $9708 million, and stock reports is of $1 billion.

Denis Coleman: Equity Tier 1 Ratio was 14.6% at the end of the third quarter under the standardized approach.

Denis Coleman: During the quarter, the Federal Reserve reduced RSEB requirement by 20 basis points to 6.2% following a successful appeal process.

Denis Coleman: and his standardized common equity tier 1 ratio requirement of 13.7% which became effective October 1st.

Denis Coleman: We remain very engaged with our regulators on creating a less volatile and more transparent process.

Denis Coleman: Given our 90 basis point buffer, we continue to have flexibility on capital deployment, and are very well positioned to serve our clients and return capital to shareholders.

Dennis Coleman: In conclusion, our overall performance reflected the strength of our client franchise, and the improving operating impact. We are executing on our strategy where we are maintaining and strengthening our leadership positions across global banking and markets, and leaning into secular growth opportunities in asset and wealth management. Across both businesses, we are making strong progress in growing our more durable revenue streams. Simply put, we are planning to our strength as a firm, and we remain confident in our ability to drive returns for shareholders while continuing to support our clients.

Denis Coleman: In conclusion, our overall performance reflected the strength of our client franchise.

Denis Coleman: and the improving operating environment.

Denis Coleman: We are executing on our strategy, where we are maintaining and strengthening our leadership positions across global banking and markets and leaning into secular growth opportunities in asset and wealth management.

Denis Coleman: Cross both businesses, we are making strong progress in growing our more durable revenue streams.

Denis Coleman: Simply put, we are playing to our strength as a firm, and we remain confident in our ability to drive returns for shareholders while continuing to support our clients. With that, we will now open up the line for questions.

Speaker Change: Thank you. We will take a moment to compile the Q&A roster.

Speaker Change: I'm going back to my room.

Speaker Change: Let's take our first question from Glenn Shaw with Evercore.

Glenn Shaw: Hi, thanks very much.

Glenn Shaw: So trading question, and in March of Business has been great, March has been supportive, but, but.

Glenn Shaw: I guess my question is to your comments on the regulatory perception perhaps of trading in general. And you know, all this looked like a spike in volatility, but looks like you did really well. This marks many quarters that you and others have done very well for years.

Glenn Shaw: Do you feel the business is managed better? Do you feel like your results mean anything towards the outcome on the regulatory side? I'm just curious on...

Glenn Shaw: on what is the evidence matters.

Speaker Change: I appreciate the question Glenn and I mean it's a hard question to answer.

Speaker Change: I think we've been clear on some of the advocacy we're doing around the regulatory process but I've also been clear that regulatory environments.

Speaker Change: You know Evan Flow?

Speaker Change: and the people can be policy and so over time you see shifts in all this and our job.

Speaker Change: I think we've done this effectively over a very long period of time.

Speaker Change: is, you know, to adapt and adjust and be nimble, you know, to the different regulatory environments.

Speaker Change: with respect to the business.

Speaker Change: of Market.

Speaker Change: You know, which includes second mediation and sixth financing and equity is an initiation and equity financing.

Speaker Change: I think we have an extraordinary...

Speaker Change: Leading franchise that we've invested in over a long period of time.

Speaker Change: We have deep deep client relationships, clients who rely on us.

Speaker Change: for a package of services.

Speaker Change: and that's not going away and certainly in this environment, this is an environment that's filled with uncertainty, you know, there need to constantly be engaging and you know, repositioning and reshaping.

Speaker Change: continues to make them very, very active.

Speaker Change: I'm out of broad with the scale.

Speaker Change: I think that we've done a number of things.

Speaker Change: to evolve the way we run the business over time that I think has made the business more durable. Certainly our focus and our emphasis on advancing and the way we grow and manage the financing businesses, which the level of durability into the business that's different than when the businesses will predominantly intermediation businesses, but intermediation continues to be, you know, an important service and when you really step back and you step out of quarter to quarter and you look more year to year or year over year, these are very broad franchises across numerous silos.

Speaker Change: and they tend to be more resilient and more consistent than, you know, one might see when you recorded a quarter.

Speaker Change: So if you're good about the way the franchise is positioned.

Speaker Change: Well, continue to invest in it and grow it, I think one of the things.

Speaker Change: that people forget.

Speaker Change: is that these businesses are correlated to growth in the world.

Speaker Change: They're correlated to market cap growth in the world and as long as you believe over the medium and long term

Speaker Change: and those trends will continue with our capital generation, we have the ability to invest in those franchises.

Speaker Change: and Grodo's franchise is over time.

Speaker Change: and we continue to see the practice of the turn-off attendities to do that.

Speaker Change: You know how the regulators respond to that over time. I really think is a separate question and you know we'll continue to be actively engaged as we've said to you, you know, we are to ensure that we can manage that, you know appropriate.

Speaker Change: I appreciate that. This one will be a short follow-up with HPI was weak, but you know that'll that'll happen on any given quarter. I think if you look over a long period of time you've earned good returns on your historical principle investments, but as that book shrinks, the 10.9 million of attributed to it, if I take a...

Speaker Change: Should I is it okay to take a historical ROE-ish on that capital to think about the lower revenue corresponding to the lower book going forward on HPI.

Speaker Change: Glenn Stennis, I guess what I would suggest you take a look at, we have obviously a commitment to reducing the balance of the historical principal investments, and as we continue to have success doing that, there will be less revenue associated with the positions that have now been moved off of the balance sheet, but you will still see, you know, revenue generation associated with some of the co-invest positions that we retain as a piece of driving our overall growth of our third party, fun management business.

Speaker Change: as to, you know, guidance on future projected returns on that portfolio. I don't think I have a good answer as to exactly what future returns will be relative to prior returns, but I would suggest to you that we have a very diversified portfolio of exposures and a longstanding track record of delivering good returns for our clients.

Speaker Change: Thank you, we'll take our next question from Abraham Poonowala with Bank of America.

Abraham Poonowala: Good morning.

Abraham Poonowala: I just had a follow-up first on trading and maybe David would appreciate your perspective around when we read about non-bank trading venues, getting into fixed-income markets, potentially sort of disrupting the business for the incumbents. I'll see you guys on the Regulatory Backdrop and kind of the Basel Land Game, Reproposal and the Opakness around that. Thank you.

Speaker Change: Yeah, sure around and appreciate the question and let's get a lot of attention.

Speaker Change: you know, particularly in the press.

Speaker Change: But I think there are a couple of things when you stand back that I'm important to.

Speaker Change: You know, to think about it and look, the equity's journey is relatively good journey. There's been lots of, first of all, there's lots of competition in all these businesses. There's always been competition but there are very few platforms.

Speaker Change: that offer the leading.

Speaker Change: Capital allocators and asset managers in the world, the scale and the breadth across all the services that they need in an integrated basis.

Speaker Change: and that's very, very important to those clients when you go out and you talk to those clients.

Speaker Change: There can always be competition in the Rho is will be competition. I just highlight, you know, our equity business is large and is scaled and is profitable as ever. Even though over the last 25 years there's been enormous competition in the equity business, there's been digitization, there's been changed.

Speaker Change: They're now a handful by a handful, I'd say less than a handful, they're now one or two players that are trying to compete in some of the credit states, etc. And will they compete and will they win business? Of course, they'll win business.

Speaker Change: But these are big, good markets. We offer scaled solutions that are integrated for our clients and we continue to be enormous liquidity provider, finance here of those clients, which by the way is very, very important to them for the way their overall ecosystem works. So while these businesses always will be competitive and they continue to be competitive, you know, again, we feel very good about the way our franchise is positioned to continue to be a leading player for our clients in these spaces. Thank you very much.

Speaker Change: Understood, and just a follow up on back to ROE and conversation with investors around you all have done a good job over the last year or two performances, been strong stocks reflected that as we think about the journey year from a 12-13% ROE to something that's maybe 15% plus what are the building blocks one could argue that the market backdrop not the best but not the worst what needs to happen for Goldman to get to a point where we are registered in the swing of 15% type ROE on a more recurring basis. Thank you.

Speaker Change: I appreciate the question and we've been very clear we have a mid-team target and that we believe we're on the journey of executing toward it.

Speaker Change: I think the, you know, the first thing that has to happen is we need to continue to execute, you know, over a period of time to deliver on that and again, you know, I think it's a pretty simple building block of the story. First we have a global banking and market business and you can go look at the performance over the last five years of that business and the returns of that business has delivered.

Speaker Change: I would say that I still believe we have some tailwind dynamics around the investment banking activity and I just highlight that while investment banking revenues have improved.

Speaker Change: and we've made progress. We are still not operating at 10-year averages in M&A and equity volume.

Speaker Change: M&A volumes year-to-date are 13% below 10-year averages. Now that's better than the 25% below 10-year averages that they were for the first nine months of last year, and equity volumes are 27% below 10-year averages. Now that's better than the 34-35% that they were below 10-year averages for the first nine months last year, but there's no reason why we're not going to get that to 10-year averages and that's tailwind, but you can look at the performance in banking and markets, and that's one building block in the foundation for mid-teens returns. Thank you very much.

Speaker Change: The second is our continued progress which requires more time and more execution on our part around asset and wealth management.

Speaker Change: and while we've improved the margins, we still have work to do on the margins and also the returns. And we continue to be very focused, but we are confident over the course of the next few years that we can bring the returns of our offset wealth management franchise into the mid-teams.

Speaker Change: The next building block of the last building block is we continue to narrow our consumer footprint and the drag associated with the platforms, the platform business that will get to a point where it basically becomes negligible. It's getting closer to that. And so if you put those building blocks together, global banking and markets, it's actual performance with a little bit more of a tailwind, which obviously it benefits from continued progress on asset wealth management. That is our business. And we should be able to deliver those returns or focus on it. We have more work to do, but that is the path and I think it's pretty clear. Thank you very much.

Speaker Change: Thank you, we'll take our next question from Christian Blue with Autonomous Research.

Christian Blue: Morning, can you hear me?

Christian Blue: Good morning. Thank you. Thank you. Okay, let's just have a question on the trading business and the competitive landscape. How are you thinking about the maybe border competitive landscape with the with other banks your market share seem to peak in 2022?

Christian Blue: It's been a bit choppy since Dan has a market share. It's just curious, are you seeing signs of competitors coming back? Increasing competition for many where? Are there the curious on your thoughts there? Yes, I am.

Speaker Change: When you have leading market shares, I go back to the market franchise.

Speaker Change: You bounce around at different levels based on short-term activity. But what I'd say is if you step back and you look over the last five years, we took a step function up in our market shares broadly across the plot. And so from quarter to quarter, you'll see variability. But I still think those market shares are positioned in a leading position and we're zealously focused on them. We're zealously focused on the top 150 clients, which obviously make a huge contribution to the market's business. We're obviously always focused on our overall banking footprint and the opportunities there. And obviously in a better M&A environment where there's more large-cap M&A, you do see some movement in our market shares. So that's the market share tailwind. So let's go.

Speaker Change: They've always been competitive businesses prescient. Again, we think we're very well positioned with our clients and have deep trusting long-term relationship and through our one golden facts, operating ethos, history of delivering for them through the cycle. There's always going to be competition, but we like the way our business is positioned. And I don't see anything that fundamentally changes that, but I've operated in these businesses, we've operated in these businesses for a long time, they're always going to be competitive businesses. [inaudible]

Speaker Change: Okay, thank you. On private banking, just another set of very strong results there. I think revenue growth is up 10% and if I'm doing my math correctly, organic flows are in the high single-digit range, which would put you, I think, best in class. So just remind us again, like what's driving strength there? And then maybe any key initiatives for growth over the next couple years that should help sustain this growth?

Speaker Change: I don't understand if something to add but you know what I love, this is a strategic decision.

Speaker Change: that we had this big ultra-high net worth platform, and we were underinvested in lending to those clients. And there's still a lot of historical reasons for why that's the case. You know, starting with the fact that 15 years ago we were going to want to bank.

Speaker Change: and so we really didn't look at the world that way, but lending, you know, into an ultra high network franchise is a very good business and it's a very important part of the business.

Speaker Change: and we understand that we've learned and we've seen it through investment banking.

Speaker Change: and we've seen it through a market.

Speaker Change: that when you holistically look at the integration of services that you provide to your clients, including lending, you improve your market share position.

Speaker Change: So when you look at our wealth franchise versus under other wealth franchises, we've been under penetrated to lending to those wealth clients and we put in place resources, leadership team, a focused effort to increase that activity to these clients and while we've moved the needle, we're still underweighted versus other competitors like JP Morgan, and I would expect that we have a relatively good growth trajectory to continue to invest in that capability for our clients. Dennis, I don't know if there's anything you want to add on that. The only thing I'd amplify, which I think we've mentioned before, we feel like we've run this play before. So we worked on a strategy to holistically cover clients and banking by integrating lending as part of the holistics we to services we provided them and proved our...

Denis Coleman: and our market share position. With those clients, we've implemented the same thing across the GBM public businesses of FIC and equities. We stand under penetrated relative to peers today, and we believe that by taking the same holistic approach to the clients in the wealth business that we can improve our market shares and the nature of our relationship with those clients. David said we are allocating incremental resources, more specialist capabilities, and giving our advisors the confidence to offer a competitive product to their clients to improve the overall relationship they have with their clients.

Speaker Change: Thank you, we'll go next to Mike Mayo with Wells Fargo Securities.

Speaker Change: Hi.

Mike Mayo: The first question is, why do you start platforming?

Mike Mayo: Solutions as a business line and what's happening with the Apple card and do you plan to exit that and take charges for that and kind of what's going on with that. Again, two-thirds of the firm's grow like in market one-third of the Shalps and asset management, then you have this kind of extra business or fair.

Speaker Change: Yeah, thanks Mike. I mean, you know, I know there's a lot of focus on that. I think, I think we've been pretty clear on our messaging that we are continuing to narrow our consumer footprint. You know, I don't, I don't have a lot more to say about, you know, where we are with Apple card, other than we're running it, improving it. And that's really all that I have to say, but I think the direction of travel at this point is pretty clear.

Speaker Change: Well, back to the core business then, you said M&A is still 13 percent below 10-year averages to what degree your 10-year averages less relevant because of the sponsor activity. You guys have said it seems like everyone has a different number whether it's $1 trillion or $3 trillion or the dry powder out there, my sponsors that are ready willing and able to pursue acquisitions, and I don't think you've ever had that level of dry powder before. So could this be an M&A super cycle because all that money gets pushed to work and if so, how would you change that 10-year average to adjust for that?

Speaker Change: Well, I mean, you know, one, I think there are a long-term secular trends around Demonet and market cap, which by the way are also, you know, meaningfully below trend.

Speaker Change: I think that's more driven by the current regulatory environment and the fact that there has not been a lot of large cap M&A with the market cap expansion, especially around tap.

Speaker Change: You know, that might be permanent, it might not, but my guess is, you know, that will have been slow, you know, from time to time. But your sponsor point, Mike, is a very, very good point. And, you know, the bottom line is the sponsors have been slower to turn on than I would have expected, but they will turn on. By the way, if that all I thought powder is deployed, okay, MNA volumes versus 10, the 10 year averages will go up. And, you know, the 10 year averages will go up. The 10 year averages will go up. The 10 year averages will go up.

Speaker Change: Well, by the way, if we were sitting here five years ago, the tenure average was lower five years ago than it is today, because the tenure average is definitely correlated to market cap growth and economic growth.

Speaker Change: Thank you, we'll go next to Betsy Grishick with Morgan Stanley.

Betsy Grishick: Hi, good morning.

Betsy Grishick: Can you hear me? Okay, great. Yeah, thank you. Yeah, it's okay, super. Yeah, totally agree. We've been calling for capital markets rebounds, really nice to see it coming through. Two questions. One on the expanding loan offerings that you mentioned earlier, and I know we touched on it briefly in the Q&A just a few questions ago. What I wanted to make sure I understood is when you think about the RWA impact of, you know, reducing the...

Betsy Grishick: Private Investments that you're doing, you're reducing that portfolio, and then increasing the expanded loan offerings.

Betsy Grishick: in to ask that in Walter Management. Do you see that as RWA Neutral? RWA, you know, is the density of the loan offering higher or lower than that?

Betsy Grishick: Investment, the private equity investment, see you've got.

Speaker Change: Sure, Betsy. Very good question. So, generally speaking, the density of the HPI that we have left to sell down is high, and the density of private wealth loans is low. So, migrating RWA deployment towards the lending businesses improves the durability, the predictability, the recurring nature of it. It brings forth the holistic access to the clients, you know, all of their wealth management needs, and it is more capital efficient for us. So, that is... Great. Yeah, that's... And underpinning component of the strategy as well.

Speaker Change: Okay, super. Right, because it's collateralized heavily, right? Okay, then the other question I had was just on the GM credit, I wanted to make sure I understood this. So as far as I could tell, it's signed but not closed yet. So can you give us a sense as to when you think it's going to close and are there any trailers in your P&L once it does close? For example, you know anything we should be aware of it with regard to either payments. Okay, then.

Speaker Change: on the contract of GM, or is there a loss cap that you have to be involved in? I'm just trying to make sure I understand how to model this as we go forward.

Speaker Change: i

Speaker Change: Thank you, we'll go next to Brennan Hawken with UBS.

Speaker Change: Good morning, thanks for taking my question. I wanted to follow up a little bit on the investment banking backlog commentary. I know you said that advisory drove a lot of the growth in the backlog, but we did see some sponsors recently come to the IPO market with some success. And so curious about what you're seeing on the ECM and IPO side, particularly as we see early signs of sponsors re-engaging with that distribution channel. Thanks. Thank you.

Speaker Change: So, thanks for the question, Brian, I mean, there's no question that we act to be picked up. But as I highlighted a few moments ago, volumes are still running.

Speaker Change: 25% below 10-year averages.

Speaker Change: and you know, IPO is you're all not even more significantly below.

Speaker Change: Can Your Avidges? I do think the sponsors, again, some of the sponsors monetization and because sponsors have had, you know, their portfolios marked a little bit higher, you know, they've been slow and they're kind of waiting for growth to bring up some of the values.

Speaker Change: but I do see an acceleration of activity and I expect it to continue and there's no fundamental reason why equity volumes ultimately shouldn't run at 10-year averages.

Speaker Change: and those averages will grow over time with a growth in market cap and a growth in the deployment of sponsored capital.

Speaker Change: Great. Thanks for that color David. And then we've seen several partnerships and some innovation getting announced in the private, credit world recently. And given your heritage in that business, how do you plan to approach and prosecute that opportunity?

Speaker Change: Sure, we have a, you know, we have a very...

Speaker Change: Broad and interesting credit platform that is integrated in a 1GS way to some degree on a differentiated way, then many of the people we compete with, we obviously, as a credit originator and our investment banking business.

Speaker Change: I'm one of the leading credit originators. He's got a leading position in leverage loans.

Speaker Change: and and and how you'll debt for quite some time and a leading position with sponsors and the origination of that. We obviously we originate and distribute. We also in our asset management business. We are a leading player and private credit with $140 billion of private credit assets and growing and investing in that. I think one of the things that's interesting when you look at the discussion and the integration of this around the street. There is plenty of capital that is interesting and deploying into private credit. The value of the part of the ecosystem is the origination channel. And there are obviously some private credit players that have interesting origination channels and platforms that I would say when you look across Goldman Sachs.

Speaker Change: Thank you, we'll go next to Stephen Shubak with Wolf Research.

Stephen Shubak: Good morning.

Stephen Shubak: So, I wanted to spend some time just looking at or unpacking some of the self-help levers, you know, recognizing that the business is still burdened by capital consumption from some of the non-core assets, whether it's in consumer or equity investments, Denis, I believe in your prepared remarks, you alluded to an 80-bip drag on ROA from consumer and was hoping you could maybe provide a more holistic picture, just frame the drag on returns from various non-core activities today, and are there any remaining self-help levers that could bolster returns which may still be on the come.

Denis Coleman: Sure. I think the 80 basis point drag is the simplest way to understand the impact of those items which we have identified as the selected items which we have announced we are in the process of disposing of. Obviously, if we complete, you know, if we were to completely exit all consumer related activities, there would be more associated, you know, capital relief potential. And we can obviously cross the AWM franchise, move down the vast majority of the HPI exposure. That currently has a little over four billion of attributed equity associated with it. So you have the dynamic of sort of reducing the PNL.

Denis Coleman: and then over time we will remove the capital. So removing the capital associated with HPI and ultimately removing the capital associated with the consumer businesses that will provide incremental tailwinds to us over time.

Speaker Change: It's great, and just for a follow-up on buybacks, Scott is currently trading at 1.6 times book, does suggest some expectation the market for returns to get closer to that mid-teens ROI target. Just wanted to hear your perspective on price sensitivity to buyback at current valuation levels and anticipation at least of David's response, citing prioritization of organic growth. Where do you see the most attractive opportunities to deploy capital organically today? Thank you very much.

Speaker Change: Sure, so I think our capital deployment philosophy unchanged. I think if you take some of our comments in the prepared remarks about the outlook that we have, some of the engagement we're seeing from clients, potential opportunities for the capital markets reopening to take the next step forward and see capital committed acquisition financing. That is an activity that's very core to Goldman Sachs. We have a historical leading market share position there, given knitting up our advisory franchise and our underwriting capabilities. And so that would be an attractive place for us to deploy incremental capital, continuing to drive the recurring revenue streams across wealth and the financing business and public.

Speaker Change: and Attractive Place to Deploy Capital. And that is our priority, as we sit here today with our 90 basis point, buffer heading into the fourth quarter. But we also remain very committed, as we said before, to sustainably growing our dividend. That's a core part of our philosophy. And we do believe it's important to also continue to return capital to shareholders. We do have a higher valuation. We do think about that. We are sensitive to that. But I don't believe that our current valuation is such that we shouldn't be all so returning capital to shareholders.

Speaker Change: Thank you, we'll go next to Devon Ryan with C.O.O. with Citizens at JMP.

Speaker Change: Thanks so much, good morning, David and Dennis. The question on just the alternative to management fundraising and looking at the fee rates. So, you know, the largest alt bucket corporate equity has seen a declining fee rate since the end of 2022. I know there are some legacy funds in there that are some setting, but it would just be great to get an update on the outlook for the fee rates has given all that fundraising that you've done in Alts in recent years. And just when we should think about the inflection occurring as recently raised, A.U.M. moves into fee earning, and then how we should think about kind of the right steady state, so it seemed like there's a lot of upside there.

Speaker Change: Sure, thank you. Appreciate the question. Obviously, we put that disclosure out there so you can track it and follow it over time. It's obviously very much mixed dependent in terms of the nature of the particular assets that are coming in. One thing which is a strategic initiative that is very valuable to growth of our asset management franchise and important to a lot of our investment banking and other clients are the services we provide to our OCIO offerings.

Speaker Change: But in certain of those portfolios, we do bring on board some all facets, and the effective fee associated with that is lower than quality, you know, Goldman Sachs fund generated alternative fee. So we have a multi-channel acid accumulation strategy that we're deploying to grow the overall scale and scope of that business. And for us having, having scale is an important contributor, ultimately, to driving margins, efficiencies, and returns in the business, but not each of the channels comes with the same exact effective fee. So you may see some slight variation in that over time.

Speaker Change: Okay, thanks, Dennis. And then just to follow up on the trading business, obviously, results have been incredibly resilient and the firm has gained market share. So, I want to get a little bit of a flavor if you can just around how much of trading revenue today has driven by your electronic trading capabilities and how that's evolved over the past handful of years. I know there's been a lot of investment there and you guys have some pretty differentiated offerings. So just love to get a little bit of sense of that. And then how that plays into the story of market share from here just as you become more relevant with clients. Thanks.

Speaker Change: Sure, thank you. Thanks for the question. I mean, we look at equity and, frankly, even thick trading activities, the strategy facing clients is multi-channel again. So, we have voice, we have high-touch voice, and we have electronic, and increasingly we're finding ways to integrate those activities, to optimize ultimately the way that we can make markets and deliver solutions for clients. So, we have both, call it run rate, more plain vanilla intermediation activities, and then we have the capacity to either take on board more interesting structures or complicated trades with or without deployment of risk capital in the process, and the approach is to have a distributed set of channels across the public side trading businesses.

Speaker Change: Thank you, we'll go next to Dan Fannon with Jeffries.

Speaker Change: and I think you said 4 billion of unrecognized games. You can talk about the time period you think to get to that billion dollars. And is there a seasonality with certain liquid products that are typically more recognized in the fourth quarter or is this something that you're more perlana?

Speaker Change: So the four billion is versus the stock of outstanding funds that are in process of deploying, completing harvesting, and migrating their way to the end of their investment cycle. Given a lot of the other commentary that we've been discussing about level of activities strategically open this of capital markets in particular equity capital markets.

Speaker Change: Sponsor monetization activity, et cetera, as relates to our portfolio where we own some balance, you know, vestments and we own investments and funds.

Speaker Change: We have not had as much monetization in line with where the market has been generally so as activity improves we will also see more monetization we expect that over the next several years we will move towards those medium term targets of a run rate one billion dollars worth of incentive fees but I can't tell you exactly the rate at which that comes in that will be dependent on how ultimately these funds harvest and when we're in a position to ultimately you know pay carry to investors and recognize our own incentive fees.

Speaker Change: and then just to follow up on wealth management, understanding the strategy of growing lending. But can you talk about the growth overall of the advisor base and how you're thinking about that over the next kind of one to two years in terms of net recruiting, you know, hires ultimately investment in that business beyond just diversifying the revenue streams.

Speaker Change: Sure, so I think...

Speaker Change: We have made a strategic decision that the investment in advisors needs to be a strategic and sustained investment program.

Speaker Change: So rather than having it sort of ebb and flow across different market environments or based on what the firms perceived capacity to invest may or may not have been at different years in the past.

Speaker Change: I think part of the strategy of investing in what is in really outstanding business at Goldman Sachs, where we're the premier ultra-high net worth firm, we are making a sustained commitment to invest in advisors over multiple years, and so that is sort of a foundational underpinning of how we're looking to invest in that business. When David makes comments about our ability to drive growth and returns across AWM, and that we are focused not just on margins and returns, but investing to grow, one of the places that we think is an attractive place to invest in growth is actually in the advisor footprint.

Speaker Change: i

Speaker Change: Thank you, and we'll go next to Gerard Cassidy with RBC.

Speaker Change: I don't know, I David

Gerard Cassidy: Can you guys share with us your gomons in the unique position I think to be able to hear with investors the benefits of private credit I think David you mentioned you have 140 billion in private credit assets and when you see your clients.

Gerard Cassidy: Choosing a channel to access monies from you whether it's private credit or just lending. Can you share with us the advantages that you see through private credit or the regular loan portfolio that your customers may benefit from?

Gerard Cassidy: So I appreciate the questions you're all right, you know, I think one of the things that it's interesting about this is this gets framed.

Gerard Cassidy: and very binary ways, and obviously private credits of broad term, and it refers to a lot of things. It certainly refers to a lot of investment-grade lending, a lot of which is on insurance company balance sheets. It can refer to direct lending in the below investment-grade business, which by the way is a component of our syndication activity and origination activity, particularly with sponsors. It can be direct lending for small and medium-sized enterprises, so there's a wide range of things.

Speaker Change: When I listen to your question, when I pull away as you're asking a particular about leverage for an affectivity and how our clients...

Speaker Change: Choose channels in terms of where to get capital and you know I'd say they don't go in with up through the bias they're actually looking for you know a capital structure that works for their particular solution

Speaker Change: and I think that one of the things that positions us well is we are a unique player that we have an ability to either syndicate and underwrite and distribute, we have an ability to direct the land, we have an ability to show clients alternatives that can best meet their needs and their might needs might be different in different transactional situations.

Speaker Change: So we like our positioning there. You know, I do say that I believe from a secular perspective will be continued growth in private credit, you know, particularly in the average finance space. And so we're looking to capture that. But it's it's more complicated. There are different channels, there's different origination efforts than sometimes the way this is all portrayed. But we feel like we're well positioned across the spectrum to be a significant participant in the space. We're looking to capture that. We're looking to capture that. We're looking to capture that.

Mike Mayo: and David, just a quick follow up on that, it was very thorough. Who do you find in your primary competitors? Again, you're in a unique position, I think, to be able to benefit from this. Who do you bump into the most?

David Solomon: Well, it depends what you're doing, so it goes back to exactly what I said it, it depends what you're doing.

David Solomon: If you're in the leverage for dance

David Solomon: Market, and you're looking at a syndicated capital structure in your competing for that, you're going to bump into JP Morgan for example.

David Solomon: If on the other hand, you're looking at direct lenders, then you're going to bump into a bunch of people that play a leading role in that space which can include people like HPS or Aries or other direct platforms. If you're looking at investment grade insurance company balance sheet, you might run into Apollo. I mean, it really depends on who the client is, what their need is, and what the activity is. And it's actually quite a broad and complicated space. [inaudible]

Speaker Change: I mean, and the only thing I'd add to it, Jarab, is just think about it, David has laid this out really well. If you think about where Goldman Sachs is positioned.

Speaker Change: Against this opportunity set.

Speaker Change: We have capacity to lend to alternatives, clients, for example, who are deploying into the private credit space. We have the capacity to underwrite and distribute different types of investment-graded, non-investment-grade capital structures. And we have the capacity to offer investment opportunities to clients who want to get exposure to this asset class. And while we compete with all of those different parties that David enumerated, I'm hard pressed to find many people that have the breadth of exposure to each aspect of this ecosystem relative to us. So we really like our position in terms of the secular trends there and how we can support clients in each and every aspect of the continuum.

Speaker Change: Thank you. We'll take our next question from Saul Martinez with H.S.BC.

Saul Martinez: Hi, good morning. I wanted to ask about the margin trajectory and asset wealth management. You know, year to date, you're at, you know, you had a 24% pre-tax margin. You already, you know, essentially reached the mid-20 meeting term target. I know you've talked about that margin expanding beyond the mid-20s, but how do we think about where it can ultimately land in the time horizon around? You know, obviously you're growing. You know, you're growing. You're growing.

Saul Martinez: You're all business you have.

Saul Martinez: 4 billion of unrecognized benefits that you talked about by the banking and lending class. Can you get to a pre-tax margin of above 30% like your peers? And again, how do we think about the glide path we see here in the time horizon around that?

Speaker Change: Sure, thank you, Saul. So obviously, we've just arrived at our mid-20s target. I think it's important that we consolidate our position there. We think there are plenty of opportunities to continue to drive that margin higher as we scale top line as we improve the mix of alternatives across our platform. And we look to drive other operating efficiencies across the business segment. There are plenty of competitors that have margin. So our commitment is to continue to improve the margins, but we're also thinking increasingly about opportunities that we have to scale and create value for the long term. So we are going to try.

Speaker Change: and find the balance between incremental margin improvement and making the right investment decisions that unlock long-term value in this segment. But for the time being, we think that both can be achieved.

Speaker Change: I think it's all cool and then maybe if I could follow up on

Saul Martinez: Capital, and just how you're thinking, I know you talked about, you know, your capital strategy a bit, but how are you thinking about just capital allocation?

Speaker Change: and by-backs, given the uncertainty around fossil, we have a proposal, we have a speech-outlining, a reproposal, we have, you know, an agency that seemingly, one of the agencies, you know, obviously, you know, resisting seemingly the reproposal, we have an election that could, you know, play a big role in terms of influencing whatever outcome happened. So just, I mean, how are you thinking about your capital? And why do you think a 90 basis point buffer is the right buffer given, given all that uncertainty?

Speaker Change: Thank you.

Speaker Change: I would say for the last, you know, period of quarters and years we've been we've been operating in an environment with a bunch of regulatory uncertainty and there's also been operating uncertainty as well. I think the, you know, economic trajectory outlook and client franchise is coming more into focus.

Speaker Change: Franklin that presents opportunities, so we run a buffer so that we have pent-up capacity to support incoming client opportunities, but we also run the buffer given other uncertainties in the world, which include regulatory.

Speaker Change: Thank you. At this time, there are no additional questions. Ladies and gentlemen, this concludes the Goldman Sachs 3rd quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect.