Q2 2025 The 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 second quarter 2025 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following.

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 For more information visit www.goldmansachs.com This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without This call is being recorded today, July 16, 2025.

Good morning. My name is Katie and I'll be your conference facilitator. Today I would like to welcome everyone to the Goldman Sachs second quarter 2025 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.

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

I will now turn the call over to Chairman and Chief Executive Officer, David Solomon, and Chief Financial Officer, Denis Coleman. Thank you.

Mr. Solomon, you may begin your Thank you, operator. And good morning, everyone. Thank you all for joining us. We delivered a strong performance in the second quarter, generating net revenues of $14.6 billion, earnings per share of $10.91, and an ROE of 12.8%, resulting in an ROE of 14.8% for the first half of the year. Amid shifting market dynamics, we remained relentlessly focused on serving our clients with excellence. These results are a testament to our best-in-class talent, culture of collaboration, and differentiated business across investment banking, financing, risk intermediation, and investment banking. and Asset and Wealth Management.

This call is being recorded today. July 16th 2025. I will now turn the call over to Chairman and chief executive officer, David Solomon and Chief Financial Officer. Dennis Coleman. Thank you, Mr. Solomon. You may begin your conference

David Solomon: Thank you, operator. And good morning everyone. Thank you all for joining us.

We delivered a strong performance in the second quarter generating net revenues of 14.6 billion dollars earnings per share of 10.91 and an Roe of 12.8%. Resulting in an Roe of 14.8% for the first half of the Year amid shifting market dynamics, we remained relentlessly focused on serving our clients with Excellence. These results are a testament to our best-in-class. Talents culture of collaboration and differentiated business across Investment Banking, financing risk, intermediation,

Our global client franchise has never been stronger and I'm proud of how we've helped our clients navigate periods of heightened uncertainty. In investment banking, clients continue to turn to our number one M&A franchise for their most consequential transactions. The deal-making environment has been remarkably resilient. While activity was slower in the first half of the quarter, announced M&A volumes for the year-to-date are 30% higher year-over-year and 15% greater than the comparable five-year average. A narrowed range of outcomes on trade and the overall economy has helped CEO confidence and increased their willingness to transact. We've seen a pickup in momentum with both strategic and sponsor clients, as exemplified by Energy Energy's $12 billion portfolio acquisition from LS Power and Salesforce's $8 billion acquisition of Informatica.

Franchise has never been stronger and I'm proud of how we've helped our clients navigate periods of heightened uncertainty.

David Solomon: And Investment Banking clients continue to turn to our number. 1 m&a, franchise for their most consequential transactions.

David Solomon: The deal making environment has been remarkably resilient while activity was slower and the first half of the quarter announced m&a volumes for the year to date are 30% higher year-over-year and 15% greater than the comparable 5 year average.

David Solomon: A narrowed range of outcomes on trade and the overall economy has helped CEO confidence and increase their willingness to transact.

Capital markets activity has also accelerated. During the quarter, we priced 11 IPOs for clients around the globe, including Circle, Chime, eToro and HDB Financial Services, which have performed well on the secondary market. Uncertainty could persist in some pockets, particularly in industries highly sensitive to trade policy. We are optimistic on the overall investment banking outlook, and we are incredibly well positioned to assist clients in executing on their strategic ambitions. Our client engagement continues to be elevated, and we're seeing it in our back row, which rose for a fifth consecutive quarter driven by advisors. Importantly, our advisory backlog was up significantly versus 2024 year-end levels.

We've seen a pickup in momentum with both strategic and sponsor clients as exemplified by energy energy energy. 12 billion dollar portfolio, acquisition from LS power and sales force is 8 billion dollar acquisition of Informatica.

Capital markets activity is also accelerated during the quarter. We priced 11 IP for clients around the globe.

David Solomon: Including Circle chime e Toro and hdb financial services which have performed well on the secondary markets.

David Solomon: So uncertainty could persist in some Pockets particularly in Industries. Highly sensitive to trade policy.

We are optimistic on the overall Investment Banking Outlook. And we are incredibly well positioned to assist clients in executing on their strategic ambitions.

We have also remained active across our leading second equities businesses, which yet again produce very strong results in the quarter as policy uncertainty drove clients to reposition portfolios and recalibrate risks across asset classes. Our strong performance goes beyond the Supportive Opportunity Set. We are also benefiting from successful multi-year execution across our strategic priorities of driving growth in financing and prudently maximizing wallets. which we have clearly added further ballast to our performance. This quarter, both our financing businesses hit a revenue record as we continue to deploy resources to grow fixed financing and bolster our leading position in equities.

David Solomon: Our client engagement continues to be elevated and we're seeing it in our backgrounds which rose for a fifth consecutive quarter driven by advisory. Importantly, our advisory backlog was up significantly versus 2024 year end levels.

David Solomon: We have also remained active across our leading second, equities businesses, which yet again, produced very strong results in the quarter is policy. Uncertainty drove clients to reposition portfolios and recalibrate risks across asset classes.

David Solomon: Our strong performance goes beyond the support of opportunity sets. We are also benefiting from successful multi-year execution across our strategic priorities of driving growth in financing and prudently maximizing wallet share.

David Solomon: Which we have clearly added further balance to our performance.

At the same time, we remain laser-focused on wallet share, and we now rank in the top three, with 125 of the top 150 clients globally, up from 77 in 2019. Importantly, these hard-won share gains have contributed to the demonstrated resilience of these diversified businesses. Asset and Wealth Management, we continue to have momentum and alternatives. We raised $18 billion this quarter driven by demand for flagship funds across strategies including secondaries, hybrid capital, and growth equity. Wealth management client assets rose to a record $1.7 trillion, and we are making solid progress on increasing lending to our ultra-high-net-worth clients with loan balances of $42 billion.

David Solomon: This quarter, both our financing businesses, hit Revenue record. As we continue to deploy resources to grow, fix financing and bolster our leading position and Equity financing.

At the same time, we remain laser focused on wallet, share. And we now rank in the top 3 with 125 of the top 150 clients globally up from 77 and 2019, importantly, these Hard 1 share games. Have contributed to the demonstrated resilience of these Diversified businesses.

David Solomon: And asset and wealth management. We continue to have momentum and Alternatives where we raised 18 billion dollars. This quarter driven by demand for Flagship funds across strategies including secondaries hybrid capital and growth equity.

All in, our assets under supervision rose to a new record of $3.3 trillion, representing our 30th consecutive quarter of long-term fee-based net inflows. There are very few firms with this track record, and it is evident that clients continue to turn to us for our investment performance, the quality of our advice, and the breadth of our offerings. From here we see further opportunities across alternatives, wealth management, and solutions, which will fuel growth and more durable revenues across our platform. As we continue to invest in further strengthening and growing our franchise, I am encouraged by the widespread progress being made in AI.

David Solomon: Wealth management client assets, Rose to a record 1.7 trillion and we were making solid progress on. Increasing lending to our ultra high. Net worth clients with loan balances of 42 billion.

David Solomon: All in our assets under supervision Rose to a new record of 3.3 trillion representing our 30th consecutive quarter of long-term fee-based, net inflows.

so there are very few firms with this track record, and it is evident that clients continue to turn to us for our investment performance, the quality of Our advice, and the breadth of our offering

David Solomon: From here, we see further opportunities across Alternatives, wealth management and solutions, which will fuel growth in more durable revenues across our platform.

which is quickly developing into an economic force that will permeate every industry. Accelerated innovation and disruption from AI is set to create significant demand-related infrastructure and financing needs, which will drive activity across our franchise. In light of the formation of the Capital Solutions Group, we've never been better positioned to meet this demand. With regards to our own operations, we are currently investing in a number of use cases across the firm to transform the way our people work. Last month, we rolled out our natural language GS AI assistant to the entire firm, the first generative AI-powered tool to reach this scale, allowing for safe, secure, and responsible access to firm-approved external large language models.

David Solomon: As we continue to invest in further strengthening and growing our franchise. I am encouraged by the widespread progress being made in AI.

David Solomon: Which is quickly developing into an economic force, that will permeate every industry.

David Solomon: The Accelerated Innovation and disruption from AI is set to create significant demand related infrastructure and financing needs which will drive activity across our franchise.

David Solomon: In light of the formation of the capital solutions group, we've never been better positioned to meet this demand.

With regards to our own operations, we are currently investing in a number of use cases across the firm to transform the way our people work.

We recently began collaborating with Cognition Labs and are piloting the usage of Devin, an autonomous generative AI agent designed to transform the way we build, maintain, and develop software with risk oversight and supervision of our engineers. We will be deploying these agentic AI developers for prioritized use cases, which we believe will significantly enhance velocity, transform our capabilities, drive efficiency. I discussed in our strategic update in January, operating efficiently is one of our key strategic objectives, and these efforts will allow us to continue to enhance the client experience while improving productivity. Before I turn it over to Denis, I want to emphasize the significant progress we've made on all our strategic objectives.

David Solomon: Last month we rolled out our natural language. GS AI assistant to the entire firm. The first generative AI powered tool to reach the scale allowing for safe secure and responsible access to firm approved, external large language models.

We recently been and collaborating with cognition labs and are piloting. The usage of Devon, an autonomous generative, AI agent, designed to transform the way, we build maintain and develop software with risk, oversight and supervision of our engineers.

David Solomon: Drive efficiency.

David Solomon: I discussed that. I strategic update in January, operating efficiently is 1 of our key strategic objectives in. These efforts will allow us to continue to enhance the client experience while improving productivity.

The investment we've made to strengthen and grow our global client franchise, including our emphasis on scaling capital light businesses, have materially enhanced the resilience of our firm. I am pleased to see the results of these multi-year efforts reflected in this year's CCAR stress I am pleased to see the results of these multi-year efforts reflected in this year's CCAR stress which drove a significant improvement in our expected stress capital buffer to 3.4%. This increased capital flexibility will allow us to prioritize deploying resources to support our client needs and further grow our world-class business. At the same time, we are committed to returning capital to the shareholders, including delivering a sustainable and growing dividend.

Speaker Change: Before I turn it over to Dennis. I want to emphasize a significant progress. We've made on all our strategic objectives.

Speaker Change: The investment we've made to strengthen and grow our Global client franchise, including our emphasis on on on scaling Capital life. Businesses have materially enhanced the resilience of our firm.

Speaker Change: I am pleased to see these results. I'm pleased to see the results of these multi-year efforts reflected in this year's ccar stress test, which drove a significant improvement in our expected, stress, Capital buffer to 3.4%. This increased Capital flexibility will allow us to prioritize deploying resources to support our client needs. And further grow, our world-class businesses

Board Approved a 33% increase in our quarterly dividend to $4 a share, which underscores our confidence in the durability of our franchise. Since 2018, we've increased our quarterly dividend by 400%. More broadly, we are encouraged by recent statements from regulators that a holistic review of the regulatory and capital regime for the financial services industry is warranted. For example, last month's proposal on the recalibration of the enhanced SLR is a constructive step to returning the leverage requirement back to its intended purpose. as a backstop measure. A more balanced regulatory backdrop will foster a more efficient financial system that will support growth and competitiveness of the U.S.

Speaker Change: At the same time, we are committed to returning Capital to the shareholders including delivering, a sustainable and growing dividend.

Speaker Change: Our board approved a 33% increase in our quarterly dividend to 4 dollars, a share, which underscores our confidence in the durability of our franchise.

Speaker Change: Since 2018, we've increased our quarterly dividend by 400%.

More broadly, we are encouraged by recent statements from Regulators that are holistic review of the Regulatory and capital regime for the financial services. Industry is warranted.

Speaker Change: For example, last month's proposal on the recalibration of the enhanced SLR is a constructive step to returning. The leverage. Requirement back to its intended purpose as a backs stop measure.

economy. We look forward to further progress and will continue to actively engage with our regulators and government officials on this front. In closing, I want to recognize that despite the resilient global economy and market backdrop, much remains uncertain. Geopolitical concerns have intensified in many regions, most notably in the Middle East. Number of trade agreements have yet to materialize, and that the ultimate impact on growth from higher tariffs is yet unknown. At the moment, there's a sense that things are moving forward constructively, but developments rarely unfold in a straight line. With this in mind, we remain very focused on risk assessment.

Speaker Change: A more balanced regulatory backdrop of foster, a more efficient Financial system that will support growth and competitiveness of the US economy.

We look forward to further progress and will continue to actively engage with our Regulators of government officials on this front.

Speaker Change: In closing, I want to recognize that despite the resilient global economy and Market backdrops much remains uncertain.

Speaker Change: Geopolitical concerns and intensified in many regions, most notably in the Middle East.

Speaker Change: Number of trade agreements, have yet to materialize and that the ultimate impact on growth from higher tariffs is yet unknown.

At the moment, there's a sense that things are moving forward constructively, but developments rarely unfold in a straight line.

Well, we won't always get it right.

I'm pleased with how our people have harnessed the power of one Goldman Sachs to help our clients navigate the fast evolving operating I feel very confident about the forward trajectory of Goldman Sachs, and as I said at the outset, our leading franchises have never been better positioned to support our clients, and we will continue to deliver returns for our shareholders.

With this in mind, we remain very focused on risk discipline, but we won't always get it right. I'm pleased with how our people have harnessed the power of 1, golden sacks to help our clients, navigate the fast evolving operating backdrop.

We'll now turn it over to Denis to cover our financial results for the quarter. Thank you, David. Good morning. Let's start with our results on page one of the presentation. In the second quarter we generated net revenues of $14.6 billion, earnings per share of $10.91. and an ROE of 12.8%. We provide details on selected items in the bottom table, which in total reduced our EPS by 33 cents. and our Are We by Forty Pace.

I feel very confident about the forward trajectory of Goldman Sachs. And as I said at the outset, our leading franchises have never been better positioned to support our clients and we will continue to deliver returns for our shareholders.

We'll now turn it over to Dennis to cover our financial results for the quarter,

Dennis: Thank you, David. Good morning.

Let's start with our results on page, 1 of the presentation.

Dennis: In the second quarter, we generated net revenues of 14.6 billion earnings per share of $10.91.

Dennis: And then row of 12.8%.

Dennis: we provide details on selected items in the bottom table, which in total reduced our EPS, by 33 cents,

Let's turn to performance by segment, starting on page 3. Global banking and markets produced revenues of $10.1 billion in the quarter, with an ROE for the first half of nearly 18%. Turning to page four, advisory revenues of $1.2 billion rose 71% versus a year ago, reflecting strength in the Americas and EMEA. For the year to date, we remain number one in the league tables for M&A with a lead of roughly $85 billion in announced volume and $145 billion in completed volumes versus our next closest peer. Equity underwriting revenues of $428 million were essentially flat year-over-year, while debt underwriting revenues of $589 million fell 5% amid lower leveraged finance equity.

Dennis: And our Roe by 40 basis points.

Dennis: Let's turn to performance by segments starting on page 3.

Dennis: Global banking and markets produce revenues of 10.1 billion in the quarter. With an Roe, for the first half of nearly 18%.

Dennis: Turning to page 4 advisory revenues of 1.2 billion dollars. Rose 71% versus a year ago, reflecting strength in the Americas and emia

For the year to date. We remain number 1 in the league. Tables for m&a, with a lead of roughly 85 billion. In announced volume and 145 billion dollars in completed volumes versus our next closest pure

Year-to-date, we rank second in equity and equity-related underwriting, and second in both high-yield debt underwriting and leveraged lending. Across investment banking, our backlog rose sequentially for a fifth quarter, even with strong realization. and remains notably higher versus 2024 year-end level. Thicknet revenues were $3.5 billion in the quarter, up 9% year-over-year. Intermediation results were driven by higher client activity in currencies, credit, and interest rate products, partially offset by lower results in mortgages and commodities. Record fixed financing revenues of $1 billion were driven by strong performance in mortgages and structured lending. Equity's net revenues were a record $4.3 billion.

Equity underwriting revenues of 428 million were essentially flat year-over-year while. Debt underwriting revenues of 589 million fell 5% amid lower leverage Finance activity.

Dennis: Year to date. We ranked second in equity and Equity related underwriting.

Dennis: And second in both, high yield debt underwriting and leveraged Lending.

Dennis: Across Investment Banking are backlogged rows, sequentially, for a fifth quarter, even with strong realizations.

And remains notably higher versus 2024 year. End levels.

Thicknet revenues were 3 and a half billion dollars in the quarter up 9% year-over-year.

Dennis: By higher client activity and currencies credit and interest rate products partially offset by lower results in mortgages and commodities.

Dennis: Record fixed financing revenues of 1 billion dollars. Were driven by strong performance and mortgages and structured Lending.

Equities intermediation revenues of $2.6 billion rose 45% year over year, driven by strong performance across cash and derivatives, as clients were active in repositioning their portfolio. Record equities financing revenues of $1.7 billion were 23% higher year-over-year on better portfolio financing results and amid record average prime balances for the quarter. While balances declined modestly in early April, clients quickly re-levered, though net leverage overall remains at a historically moderate level. continue to maintain robust risk discipline around our client financing portfolio. Total financing revenues of $2.8 billion rose 23% versus the prior year, reaching a new record for a sixth consecutive quarter, now comprising over one-third of overall FIC and equities revenue.

Equities, net revenues were a record, 4.3 billion dollars in the quarter.

Dennis: 2.6 billion, Rose 45% year-over-year driven by strong performance across cash and derivatives as clients were active in repositioning their portfolios.

Dennis: Record Equity financing revenues of 1.7 billion were 23% higher year-over-year on better portfolio, financing results and amid record. Average Prime balances for the quarter.

Dennis: While balances decline modestly in early April science quickly revered. So net leverage, overall remains a historically moderate levels. We continue to maintain robust, risk discipline around our client financing portfolios.

Dennis: Total financing revenues of 2.8 billion rows 23% versus the prior year.

Reaching a new record for a sixth consecutive quarter. Now, comprising over 1/3 of overall Fick and equities revenues.

Let's turn to page five, asset and wealth management revenues were $3.8 billion. Management and other fees were up 11% year over year to $2.8 billion on higher average assets under supervision. The incentive fees were $102 million. We expect to make further progress on our target of $1 billion in annual incentive fees over the medium term, with fees ramping up more materially in 2026 and 2027 as we continue to deploy and harvest funds. Private banking and lending revenues were $789 million, up 12% year-over-year, on higher results from lending and deposits related to our ultra-high-net-worth clients. In aggregate, our more durable revenues of $3.6 billion across management and other fees, and private banking and lending, were a record as we continue to invest in the growth of these businesses.

Dennis: Let's turn to page 5.

Dennis: Asset and wealth management. Revenues were 3.8 billion.

Management and other fees were up 11% year-over-year to 2.8 billion dollars on higher average assets under supervision.

Incentive fees were 102 million. We expect to make further progress on our Target of 1 billion dollars. In annual incentive fees over the medium term, with fees, ramping up more materially in 2026, and 2027 as we continue to deploy and harvest funds.

Private banking and lending, revenues. Were 789 million up 12% year-over-year on higher results from lending and deposits related to our ultra high net worth clients.

Revenues from equity investments and debt investments totaled $82 million. With inequity investments, we saw modest net losses in our private portfolio driven by markdowns in relation to certain real estate. Given the more challenging harvesting environment, we expect results in the second half of 2025 to be more muted relative to our medium-term run rate expectations. In the AWM segment, we generated a 22% pre-tax margin and roughly 9% ROE in the first half of the year. Excluding the impact of historical principal investments and its $3.8 billion of average attributed equity, our pre-tax margin and ROE would have each been approximately 3 percentage points higher.

Dennis: In aggregate our more durable revenues of 3.6 billion dollars across management and other fees and private banking. And lending were a record as we continue to invest in the growth of these businesses.

Dennis: Revenues from Equity Investments and debt Investments totaled. 82 million.

Dennis: Within Equity Investments. We saw modest net losses. In our private portfolio driven by markdowns in relation to certain real estate positions.

Dennis: Given the more challenging harvesting environment, we expect results in the second half of 2025, to be more muted, relative to our medium-term, run rate, expectations in the awm segment. We generated a 22% pre-tax, margin and roughly 9% Roe in the first half of the year.

Now moving to page six. Total assets under supervision ended the quarter at a record $3.3 trillion, up sequentially on $115 billion of market appreciation, as well as $17 billion of long-term net inflows in alternatives and equity.

Excluding the impact of historical principal Investments, and it's 3.8 billion dollars of average attributed, Equity, our pre-tax margin and our Roe would have. Each been approximately 3 percentage points, higher

Dennis: Now, moving to Page 6.

representing our 30th consecutive quarter of long-term fee-based net income. Turning to page 7 on alternatives, alternative assets under supervision totaled $355 billion at the end of the second quarter, driving $589 million in management and other fees. Rose Third Party Alternatives Fundraising was $18 billion in the quarter, bringing year-to-date fundraising to $37 billion. We continue to expect fundraising to be in line with recent years.

Dennis: Total assets under supervision ended the quarter at a record. 3.3 trillion dollars up. Sequentially on 115 billion of Market appreciation, as well as 17 billion of long-term, net inflows and Alternatives and equity.

Dennis: Representing our 30th consecutive quarter of long-term fee-based, net inflows.

Earning the page 7 on alternatives.

Dennis: Alternative assets under supervision totaled. 355 billion at the end of the second quarter driving 589 million in management and other fees.

On page 9, firm-wide net interest income was $3.1 billion in the second quarter, up sequentially on an increase in interest-earning assets. The total loan portfolio at quarter end was $217 billion, up versus the first quarter primarily reflecting higher other collateralized lending. The provision for credit losses of $384 million primarily reflects charge-offs in our credit card portfolio, as well as modest levels of growth across both the card and wholesale portfolio.

Rose third party Alternatives, fundraising was 18 billion dollars in the quarter, bringing year-to-date fundraising to 37 billion. We continue to expect fundraising to be in line with recent years, on page 9 for why net interest income was 3.1 billion. In the second quarter of sequentially on an increase in interest earning assets,

Dennis: Our total loan portfolio. At quarter end was 217 billion up versus the first quarter primarily reflecting higher other collateral as Lending.

Turning to expenses on page 10. Total quarterly operating expenses were $9.2 billion. Our year-to-date compensation ratio net of provisions remained at 33% and is inclusive of roughly $140 million in severance costs.

Our provision for credit losses of 384 million, primarily reflects charge offs in our credit card portfolio, as well as modest levels of growth across both the card and wholesale portfolios.

Dennis: Turn into expenses on page 10.

Quarterly non-compensation expenses of $4.6 billion included approximately 100 million of CIE impairments and rose 6% year-over-year, driven by higher transaction-based expenses. Our effective tax rate for the first half of 2025 was 20.2%.

Dennis: Total quarterly operating expenses were 9.2 billion our year to date compensation ratio. Net of Provisions remained at, 33% and is inclusive of roughly 140 million. In Severance costs quarterly non-compensation expenses of 4.6 billion included approximately 100 million of cie impairments and Rose 6%. Year-over-year driven by higher transaction based expenses.

For the full year, we expect a tax rate of approximately 22%.

Our effective tax rate for the first half of 2025 was 20.2%.

Next, Capital on slide 11. In the quarter, we returned $4 billion to shareholders, including common stock dividends of $957 million and common stock repurchases of $3 billion. Common Equity Tier 1 ratio was 14.5% at the end of the second quarter under the standardized while the NPR on CCAR averaging is still outstanding.

Dennis: for the full year, we expect the tax rate of approximately 22%

Dennis: next capital and slide 11.

Dennis: In the quarter, we returned 4 billion dollars to shareholders, including common stock, dividends of 957 million and common stock repurchases of 3 billion dollars.

Dennis: Our common Equity Tier 1 ratio was 14.5% at the end of the second quarter under the standardized approach.

Under the current regulatory framework, our new CET-1 requirement will be 10.9% as of October 1st. Earlier this year, our board authorized a multi-year share repurchase program of up to $40 billion. providing us increased capital management flexibility.

While the NPR on car averaging is still outstanding.

Dennis: Under the current regulatory framework. Our new C1 requirement will be 10.9% as of October 1st.

Earlier this year, our board authorized a multi-year share repurchase program of up to 40 billion dollars.

As David mentioned, our board also approved a 33% increase in our quarterly dividend to $4 per share beginning in the third quarter, a reflection of our priority to pay our shareholders a sustainable growing dividend, and our confidence in the increasing durability of our firm.

Providing us increased Capital Management flexibility.

Dennis: Per share. Beginning in the third quarter.

In conclusion, this quarter has once again demonstrated the power and resilience of our leading franchises. We remain incredibly well positioned to support our clients as they navigate the complex operating backdrop. We are confident that we will continue to deliver for shareholders.

Dennis: A reflection of our priority to pay our shareholders, a sustainable growing dividend, and our confidence in the increasing durability of our firm.

Dennis: In conclusion, this quarter has once again, demonstrated the power and resilience of our leading franchises.

With that, we will now open up the line for questions. Thank you.

Dennis: We remain incredibly well positioned to support our clients as they navigate the complex operating backdrop, and we are confident that we will continue to deliver for shareholders.

With that, we will now open up the line for questions.

Please stand by as we assemble the Q&A We'll take our first question from Glenn Schorr with Evercore ISI. Hi. Thank you. So, You've been doing a very good job of growing your financing business and expanding at the IB and trading, and it hasn't consumed that much capital. So we've been asking for years, what are you going to do with all this capital if you do get reg reform? Well, here we are. 10.9.

Thank you. Please stand by as we assemble the Q&A roster.

Speaker Change: We will take our first question from Glenn Shore with evercore isi.

Hi, thank you.

a lot more than that, and you're making a ton of money, so my blunt question... What do you do with all this excess capital now that you have it? Do you have places that you can allocate? is now large amounts of excess capital.

Speaker Change: So you, so you doing very good job but of of growing your financing business um and expanding at the IB and and trading. And it hasn't consumed that much Capital. So we've been asking you for years. What are you going to do with all this Capital? If you do get Gregory form? Well, here we are. You have a 10.9

Speaker Change: And you have a lot more than that and you're making a ton of money. So the my blunt question is, what do you do with all this excess capital and that you have it? Do you have places that you can allocate? What is now large amounts of of excess Capital organically?

Yeah, thanks for the question, Glenn. And, you know, I'll start and Denis might add a few things, you know, on a more granular basis. But first of all, you know, our capital methodology does not change, you know, with the capital regime adjusting based on what's going on regulatory. You know, we start through a lens that if we've got capital available to deploy toward our client franchise, to produce accretive returns and to support client activity, that's going to be the first place that we're going to go. You know, given the way things are shifting, we are seeing some opportunities for deployment.

Speaker Change: Yeah, thanks for the question, Glenn. And you know I'll I'll start and and Dennis, Dennis, might add a, you know, my dad a few things.

Some of that comes from from, you know, the structure of the capital stack. And some of that comes from the fact that activities picking up particularly in M&A and financing in places where we haven't had to put that much capital forward. So we do see good opportunities in the business to deploy. That will be our first and primary focus.

You know, after that, we'll continue to look for ways to return capital, we've been committed to growing sustainably, and meaningfully increasing our dividend, as we've had more confidence in the durability of the business, and we'll continue to return capital. That, you know, that continues to be our mantra around this. And, you know, we think there are opportunities for us to continue to deploy and grow the business. That's where our primary focus will be.

Um, you know, on a more granular basis. But first of all, you know, it's Capital methodology does not change um you know with the capital regime adjusting based on what's going on in regulatory, you know, we we start through a lens that if we've got Capital available to deploy to our client franchise to produce a creative returns and to support client activity, that's going to be the first place that we're going to go, you know, given the way things are shifting. We are seeing some opportunities for deployment, um some of that comes from from, you know, the structure of the capital stack and some of that comes from the fact that activities picking up, particularly in m&a and financing in places where we haven't had to put that much Capital forward. So we do see good opportunities in the business to deploy. That will be our first and primary focus. You know, after that, we'll continue to look for ways to return Capital. We've been committed to growing sustainably and meaningfully increasing our dividend. As we've had more confidence in the durability of the business and we'll continue to return.

Happen. Um that you know, that continues to be our Mantra around this. Um and um, you know, we we think there are opportunities for us to continue to deploy and grow the business and that's our primary focus would be.

Unknown Speaker Okay. And then maybe we could circle the square.

You talked about a challenging harvesting environment. Yet at the same time, we have eyes and we see big booming investment banking pipelines, and growing M&A and performing IPOs performing well.

So what's holding up? What's different about the historical principal investments that we want to monetize amidst a good banking?

Speaker Change: I know it's kind of funny to add, okay. Um, and and then maybe we could Circle the square, you talked about a, a challenging harvesting environment. Um, yet at the same time, we have eyes and we see big booming, Investment, Banking, Pi pipelines and and growing m&a and and Performing, IPOs performing well. So what, what's holding up the what's different about the? The historical principal Investments that we want to monetize amidst a good banking backdrop?

Sure, Glenn, it's Denis, thanks for that question. So I think we have both of those things happening at the same time. We have elevated asset prices, we have improving credit markets, we have increased opportunity for companies to access the IPO markets. We've seen that start to accelerate in the second quarter, but it also is the case that it has not been a robust environment for the harvesting, particularly for private equity type portfolio assets. So in the case of our portfolio, we remain committed to reducing those historical principal investments over time, and we continue to make steady progress.

We reduced it by about 10% in the quarter, that now stands at about $8 billion. And as market conditions continue to persist and they open up, that should provide us with incremental opportunities, and we'll continue to reduce the other components of our historical principal investments in line with our strategy. The only the only thing, Glenn, I just want to add to that, we're committed. This is now a small portfolio. But, you know, you would it's common sense that when you get to the end of what was a very, very big portfolio, you know, you've got stickier things, we are committed to aggressively reduce that portfolio and are working very, very hard at it.

Speaker Change: Sure, Glenn. It's it's Dennis. Thanks. Thanks for that question. So I think we have both of those things happening. At the same time, we have elevated asset prices, we have improving credit markets, uh, we have increased opportunity for companies to access. Um, the IPO markets we've seen that, uh, start to accelerate in the second quarter, but it also is the case that it is not been a robust environment for the harvesting, you know, particularly for private Equity type portfolio assets. So in, in the case of our portfolio, we remain committed to reducing those historical principal Investments over time and we continue to make steady progress, we reduced it by about 10% in the quarter that now stands.

Speaker Change: About 8 billion dollars. And as, as market conditions continue to persist and they open up that should provide us with incremental opportunities and we'll continue to reduce the other components of our historical principal investments in line with our in line with our strategy.

But at the moment, you know, it's a small portfolio will continue to play.

Life.

Thank you.

We'll take our next question from Ebrahim Poonawala. Key, good morning. I guess, just first question, Denis, to follow up on capital, I think. 10.9 versus 14.5 CET1. There is a sense that maybe there could be some give back on the SCB next year. Give us a sense of like, is there a CET1 ratio you're targeting against as we think about go forward basis? And obviously it has implications for ROE. So how are you thinking about potential for SCB moving higher because of trading losses next year? And what's sort of the right CET1 target that we think about for Goldman going forward?

Thank you, we'll take our next question from Abraham poonawalla with Bank of America.

Abraham poonawalla: Hey, good morning.

Speaker Change: I guess, uh, just first question Dennis to follow up on Capitol, I think, uh,

Thanks.

The 10.9 versus 14 and a half. Ct1 uh there is a sense that maybe there could be some give back on the SCB next year. Give us a sense of like is there a ct1 ratio your targeting again? As we think about go forward bases and obviously it has implications for Roe. So how are you thinking about potential for SCB moving higher because of trading losses next year and what sort of the right ct1 target that we think about for Goldman going forward, thanks.

Thanks, Ebrahim. And obviously, we all, you know, we all recognize the environment remains fluid, and we'll have to, we'll have to understand exactly where we land on what our minimum requirements are, and when they're, when they take effect. But I think in terms of our operating philosophy, we still expect to run, you know, with approximately 50 to 100 basis point buffer, versus the new and applicable regulatory minimum. We think that, you know, gives us reasonable flexibility to have capacity and reserve to support, you know, unexpected types of client activity, as well as, you know, to adjust to, you know, any changes across, you know, regulatory outcomes over the cycles.

That's our, that's our current expectation, Ebrahim. Got it.

Speaker Change: Thanks, Ibrahim. And obviously we all, you know, we all recognize the environment, uh, remains fluid. And we'll have to, uh, we'll have to understand exactly where we land on what our minimum requirements are. And and and when they're uh when they take effect, but I think in terms of our our operating philosophy, you know, we still expect to run you know with approximately 50 to 100 basis points, uh buffer um versus the new and applicable. Uh regulatory minimum uh we think that you know, gives us reasonable flexibility to have capacity in reserve to support, you know, unexpected types of client activity as well as um, you know, to adjust to, you know, any changes across, you know, regulatory,

Speaker Change: Outcomes over the Cycles. That's our that's our current expectation, Ibrahim

And in just following up on sort of capital deployment opportunities, where does, if at all, inorganic acquisitions rank when we think about our use of capital? Yeah, I mean, I, Ebrahim, I, you've asked me this question before, and we've talked about this extensively. You know, we, we are always looking for ways that we can accelerate our franchise. And we've been particularly focused on thinking about ways we can accelerate our asset and wealth management franchise. But the bar to do anything significant will be very, very high. And as we've said, repeatedly, you know, these, there aren't lots of these things.

Got it and in.

Speaker Change: Just following up on some.

Speaker Change: Where does if at all inorganic Acquisitions rank when we think about uh, a use of capital?

They're generally not available, they're generally not for sale. But to the degree that there are opportunities, one of the things that capital flexibility gives us is the ability to think more seriously about some of that stuff.

But I want to, you know, I want to highlight with a very, very high bar around doing significant We will take our next question from Betsy Graseck with more.

Yeah, I mean, I I I I you've asked me this question before we, we've talked about this extensively, you know? We we are always looking for ways that we can accelerate our franchise. And we've been particularly focused on thinking about ways, we could accelerate our asset and wealth management franchise, but the bar to do anything, significant will be very, very high. And as we've said, repeatedly, you know, these there aren't lots of these things. Um, they're generally not available, they're generally, not for sale, but to the degree that there are opportunities 1 of the things, the capital flexibility gives us is the ability to think more seriously about some of that stuff. But I want to, you know, I want to highlight with a very, very high bar, um, around doing significant things.

Hi, good morning. David, a question for me on this topic is, how do you think about the sizing of the dividend? Very impressive increase, for sure. And I just wondered, how do you think about how high to... What drove that decisioning as to where to set it and how should we think about how high it could go going forward? Sure, sure, Betsy. And I, I think the most important thing that we're committed to, the most important thing is to be in a position to consistently raise the dividend and create, you know, a steady increase pattern of dividend Unlike a number of our competitors that you would benchmark us to, we started from a very different place five, six, or seven years ago.

Speaker Change: Thank you. We'll take our next question from Betsy. Grassick with Morgan Stanley.

Betsy Grassick: Hi, good morning.

Speaker Change: Uh, David I just um question for me on this topic. Is how do you think about the sizing of the dividend? Very impressive increase for sure. Um, and I just wondered, how do you think about how?

High to.

What drove that decisioning as to, where to set it and how should we think about?

Speaker Change: How high it could go going forward.

Speaker Change: Sure, sure Betsy and I I I think the most important.

Speaker Change: committed to

We had a nominal dividend, and we've been kind of growing into it. As we've been growing the firm, we've been growing into getting to the place that we want a dividend and metrics around that dividend that are more in line with what these institutions do. Part of that was our confidence in the durability of our revenues, the business mix, which we've grown and we've executed on and we've improved. And so we've moved it along, we've moved it along accordingly. You know, you can look at the same things we look at with respect to payout ratio, with respect to yield, with respect to dividend against our overall capital return plan.

And evaluating this year, given the growth of the firm, and the firm is having to step up in the growth of the overall firm and its overall earnings capacity, we decided that this more significant move was appropriate. I don't think you should expect a 33% increase in the dividend every year. We are committed to growing the dividend steadily. And we'll look at those metrics that you would expect around payout and yield and try to find that right balance. But I do think given what's going on with the capital stack and the capital regime, and given the way we're executing on our strategy, which is allowing the firm to grow, there is room for us to continue to drive that dividend higher.

Speaker Change: the most important thing is to be in a position to consistently raise the dividend and create, you know, a steady increase pattern of dividend increase. Unlike a number of our competitors that you would Benchmark us to. We started from a very different place, 5 6 or 7 years ago and we had a nominal dividend and we've been kind of growing into it. As we've been growing The Firm. We've been growing into getting to the place that we want, you know, a dividend, um, and metrics around that dividend that are more in line with what these institutions do. Part of that was our confidence in, uh, the durability of our Revenue, with the business mix. Which we've grown and we've executed on and we've improved and so we've moved it along. We've moved it along accordingly. You know, you can look at the same things, we look at with respect to payout ratio, um, with respect to yields, with respect to Dividend again against

Okay, great. So payout ratio could inch up from here is what I'm hearing.

Our overall Capital return plan and evaluating this year, given the growth of the firm and the firm has had a step up in the growth of the overall firm and its overall earnings capacity. Um, we decided that this more significant move was appropriate. I don't think you should expect the 33% increase in the dividend every year. We want to, we are committed to Growing the dividend steadily and we'll look at those metrics that you would expect around payout and yield and try to find that right balance. But I do think given what's going on with the capital stack and the capital regime. And given the way, we're executing on our strategy, which is allowing the firm to grow. There is room for us to continue to drive that dividend to higher.

And then separately on your expectations for how AI is going to impact your overall efficiency, I'm just thinking about drivers of revenue growth and expense saves. I know it's, you know, both sides of the equations with AI, the equation with AI. How should we think about how much efficiency this can unlock over time? How are you thinking about it? Yeah, we're spending an enormous amount of time on this, Betsy. And we haven't, you know, we haven't put public numbers out. But you should know that we've got detailed plans on things we're investing in what we think they can generate.

Speaker Change: Ratio could inch up from here, is what I'm hearing and then separately on.

Speaker Change: Your expectations for how AI is going to impact your overall efficiency? I'm just thinking about drivers of Revenue growth and expense saves. I know it's, you know, both sides of the equations with AI the equation with AI. Um,

Speaker Change: how should we think about how much efficiency this can unlock over time? How are you thinking about it?

Speaker Change: yeah, we're spending enormous amount of time on this Betsy, and we haven't

We haven't put.

And I just say, for us and for others, not unique to us, this is a big opportunity. It's a big opportunity to automate processes, create efficiency and productivity in processes. And it's not just to take costs out, although there will be operating efficiency and costs that can come out. It's also to create flexibility for us to make investments in other things that can drive more growth in our client business. And so we're excited about that. I mentioned in my opening remarks, this partnership with Cognition Labs, and this program, Devin, if you think about all the software development, you know, that we do, and how important that is to service our clients and grow our business, this allows us to accelerate our ability to do that, with this agentic capability, to have our engineers guide software development at a much faster pace and a much larger scale.

Speaker Change: Numbers out. Um but you should know that we've got detailed plans on things. We're investing in what we think they can generate. And I just say

Speaker Change: For us. And for others not unique to us. This is a big opportunity. It's a big opportunity to automate processes, create efficiency, and productivity and processes and it's not just to take cost out. Although there will be operating efficiency and costs that can come out. It's also to create flexibility for us to make investments in other things that can drive more growth in our client businesses. And so we're excited about that. I mentioned in my opening remarks, this partnership with cognition labs in this program, Devon if you think about all the software development you know that we do and how important that is to service our clients and grow our business. This allows us to accelerate our ability to do that with this.

So it's both a productivity gain that allows investment and growth, that's for the revenue side of your equation. But also, there's enormous operating efficiency in the firm, and in other businesses. I think this is one of the reasons, this is one of the tailwinds in markets overall, is there's a big belief that as AI is deployed in the enterprise broadly, you can drive earnings growth and efficiency in a meaningful way. And so I think this is something to be quite excited about.

Speaker Change: Agent the capability to have our Engineers guide software development at a much faster pace and a much larger scale. So it's both a productivity game that allows investment and growth that's for the revenue side of your equation. But also there's enormous operating efficiency in the firm and in other businesses I think this is 1 of the reasons. This is 1 of the Tailwind in markets overall is, there's a big belief that is AI, is deployed in the Enterprise broadly, you can drive earnings growth and efficiency in a meaningful way. And so, I think this is something to be quite excited about

Okay, we'll go next to Mike Mayo with Welsh Hi, you said earlier in the call, you expect a lot of M&A for the rest of the year. And I guess We've been hearing that forecast for two to three years now, and so is it really happening now? Are these big strategic deals? What kind of deals? What geographies? And what gives you the extra confidence, given that there's still some uncertainty out there? Thanks. Yeah. Well, I mean, I'd highlight, Mike, that if you, you know, appreciate the question. I know this is something people have been very focused on, but I'd start by looking at the revenue accruals for the quarter, which are definitely an indication that there's been more, you know, more M&A activity coming through the pipe.

Speaker Change: Thank you. We'll go next to Mike Mayo with Wells Fargo securities.

Mike Mayo: Hi. Um, you said earlier in the call you expect a lot of m&a for the rest of the year and, um, I guess

We've been hearing that forecast for 2 to 3 years now. And so, is it?

Really happening now or these big strategic deals, what kind of deals what geographies and what gives you the extra confidence? Given that there's still some uncertainty out there. Thanks.

You heard my comments and Denis's comments around the backlog, which was driven by advisory growth. And I just say, you know, anecdotally, the level of dialogue is significantly increased. And there are a variety of reasons for that. You know, one is, you know, I think from a regulatory perspective, there's a confidence level on the part of CEOs, that significant scaled industry consolidation is possible. And so people are very engaged in that across a range of industries. Scale continues to be incredibly important to businesses broadly. I hear this from CEOs continuously.

Speaker Change: Yeah. Well, I, I mean, I'd highlight my mic that if you, um, you know, appreciate the question. I know this is something that people have been very focused on, but I'd start by looking at the revenue of girls for the quarter, um, which are definitely an indication that there's been more, you know, more m&a activity coming through the pipe. Um, you heard my comments Dennis's, comments are on the backlog, which was driven by advisory growth, and I just say,

And I just say the elevated level of dialogue is a much different place than it was three to six months ago. And so we're encouraged. The metrics that we have that we can see, backlog, new business opportunities are up. And it feels like we're entering a period of a higher level of activity. And we're seeing that in the accruals that we saw last quarter. And, you know, as we enter this quarter, we're seeing a better level of accruals. Mike, what I would add, because we get this question a lot, trying to reconcile our performance and the change in our backlog with, you know, the ongoing uncertainty in the world.

You know, anecdotally, the level of dialogue is significantly increased and there are variety of reasons for that. You know, 1 is, you know, I think from a regulatory perspective, there's a confidence level on the part of CEOs that significant scaled industry, consolidation is possible and so people are very engaged in that across a range of Industries, scale continues to be incredibly important to businesses. Broadly, I hear this from CEOs continuously and I just say the elevated level of um, of of of dialogue is a much different place than it was 3 to 6 months ago and so we're encouraged the metrics that we have that we can see backlogs. Um, new business opportunities are up, um and it feels like we're entering a period of a higher level of activity and we're seeing that in the approvals, um, that we saw last quarter and and, you know, as we enter this quarter, we're seeing a better level of the tools like what I, what I would, what I would add. Because we get this this question a lot trying to reconcile our performance and

It is in times of uncertainty that clients typically turn to Goldman Sachs, given our longstanding leadership position, advising the biggest and most important companies on their most consequential transactions. And while there is persistent uncertainty, there is also opportunity. And what we're reflecting in our performance and our outlook is that we think that the clients that we're engaged with are seeing opportunities and we're engaged in trying to help them execute. Yeah.

Speaker Change: The change in our backlog with, you know, the ongoing uncertainty in the world.

David Solomon: It is, in times of of uncertainty that clients typically turn to Goldman Sachs, given our long-standing leadership positions, advising the biggest, and most important companies on their most consequential transactions. And while there, there is, persistence uncertainty, there is also opportunity. And what we're reflecting in our performance. And our Outlook is that we think that the clients that we're engaged with are seeing opportunity,

And just the last thing, Mike, not to beat the horse, we said it in the script. Announced M&A is up 30% year over year. Okay, that's a significant move, and it's higher, now 15% higher than the five-year average. So there has been a move in activity. That comes in in revenue later, but that also gives us confidence.

Unities and we're engaged in trying to help them execute. Yeah. And just the the last thing Mike not not to not to beat the horse. We said it in the script.

And then, coming full circle, as it relates to Goldman pursuing acquisitions, what would be the hurdle rate, what would, if you dream the dream, what would you ideally like to pursue? You know, I think what I said before, when I guess it was Betsy that asked the question, you know, What we are. We are growing our asset wealth management franchise, and there might be opportunities to accelerate that growth and the scale of what we're doing there. That's where our focus would be. But I, you know, I don't have anything to add more specifically at this point, Mike.

And then coming full circle as it relates to Goldman pursuing acquisitions.

Speaker Change: Uh what would be the hurdle rate?

Speaker Change: What would if you dream the dream? What would you ideally like to pursue?

Speaker Change: yeah, I I, I think what I said before, when I guess it was Betsy that asked the question, you know,

Speaker Change: What we are?

But obviously, we're looking for opportunities to continue to scale and grow the positioning of that, you know, asset management platform. It's a three point three trillion dollar platform. It's very broad and diverse in what it does. But there's certainly opportunities to accelerate our scaling in certain places, and we'll consider those.

Speaker Change: We are growing our asset wealth management franchise, and there might be opportunities to accelerate that growth in the scale of what we're doing there. That's where our Focus would be. Um, but I, you know, I don't have anything to add more specifically at this point Mike. Um, but obviously, we're looking for opportunities to continue to scale and grow the positioning of that, you know, Asset Management platform. It's a 3.3 trillion dollar platform. It's very Broad and diverse in what it does, uh, but there's certainly opportunities to accelerate our scaling in certain places and we'll consider those things.

We'll take our next question from Steven Chubak with Wolf. Hi, good morning, David. And good morning, Denis. Thanks for taking my questions. David, in response to Glenn's earlier question, you noted that you're still committed to reducing on balance sheet alternative investment. Following the Fed's decision this year to apply more favorable treatment in DFAS for those types of activities, it appears to have meaningfully reduced the burden for engaging in alternative investments.

Speaker Change: Thank you. We'll take our next question from Stephen chebakia.

Hi, good morning, David and good morning. Dennis, thanks for taking my questions. The uh David uh in response to Glenn's earlier question you noted that you're still committed to reducing on-balance sheet alternative Investments.

I wanted to gauge whether you would ever consider pivoting from your strategy to shrinking the investment portfolio, just as you evaluate organic growth opportunities. Are these investments potentially ROE-enhancing, just following the Fed's decision to meaningfully alter or change the capital treatment?

Following the fed's decision this year to apply more favorable treatment and dfast. For those types of activities, it appears that meaningfully reduced the burden for engaging in alternative Investments and wanted to gauge whether you would ever consider pivoting from your strategy to shrinking the Investment Portfolio. Just as you evaluate organic growth opportunities are these Investments potentially Roe enhancing just following the fed's decision to meaningfully alter or change the capital treatment.

So on the broad strategy, you know, never is a big word, Steven, but we have no plans. We have no plans to change our strategy. You know, I would remind you, and I know you're deeply aware of this, we still do use our balance sheet to seed funds in our asset management business, to co-invest in certain client situations where we think that enhances our client franchise. But that's very different than running, you know, a full-on alternatives platform on balance sheet.

We've pivoted away from that strategy. We think that as an asset manager, you know, this strategy where we use some capital alongside, you know, a broad management of other client capital is the right strategy. We're committed to that, and we're not going to pivot from there. But your point remains valid, Steven, in that the strategy is driven by co-investing with clients to drive the growth of the fund business. But based on the changes that have been made, that unbalancing co-investment capital will be more favorably treated, we would expect, on an ongoing basis and present less of a returns headwind to executing on our prioritized strategy.

Speaker Change: So on the broad strategy, you know, I, you know, never is a big word, Stephen, but we have no plans. We have no plans to uh, to change our strategies. You know, I I would remind you and I know you're you're deeply aware of this. We still do use our balance sheet to seed funds in our asset management business to co-invest. In certain client situations where where we think that enhances our client franchise, but that's very different than running, you know, a full-on alternative platform on balance sheets. We've pivoted away from that strategy. We think that as an asset manager, you know this strategy where we use some Capital alongside you know a broad management of other client capital is the right strategy. We're committed to that and we're not going to Pivot from that.

Speaker Change: Your your point remains valid Stephen in that, the strategy is driven by co-investing with clients to drive the growth of the fund business. But based on the changes that have been made that on balance sheet, co-investment Capital will be more favorably treated. We would expect on an ongoing basis and present less of a returns headwind to executing on our prioritized strategy.

No, thanks for that, Kalluray. And for my follow-up, just on the magnitude of STB improvement was quite encouraging. It appears that the bulk of it really came from more favorable treatment of atypical trading positions.

Speaker Change: No, thanks for that caller. And for my follow-up, just on the magnitude of stb improvement was quite encouraging.

I was hoping you can provide some perspective on whether you believe that the gains are durable. If you've done any additional analysis, that would inform. I know you were asked about where you're comfortable running in terms of CET1, but just what you believe is durable or sustainable in terms of the gains that you realize this year. Yeah, so I appreciate the question, Steven. And I understand the focus on this. And I'd say a couple of things. First of all, at a high level, we have been executing on a strategy for a number of years, that is, that is less RWA dense.

Speaker Change: It appears that the bulk of it really came from more favorable treatment of atypical trading positions. I was hoping you can provide some perspective on whether you believe that.

The gains are durable. Um,

if you've done any additional analysis that would inform, I know you, you were asked about where you're comfortable running in terms of C1 but just what you believe is durable or sustainable in terms of the games that you realize this year.

You know, your first question was, was specific to that we've been executing on a strategy that is less RWA dense. And we felt over the last X number of years, that we were making real progress We were incredibly confused last year when our FCD went significantly in the wrong direction. This year, we think we got meaningful benefit from the strategy we've been executing on for a long time.

Speaker Change: So I appreciate the question, Stephen, and I understand the focus on this and I'd say a couple of things. First of all, at a high level, we have been executing on a strategy for a number of years. That is that is less rwa debts. Um, you know, your first question was was specific to that we've been executing on a strategy that is less rwa debts. And we felt over the last X number of years, that we were making real process.

Speaker Change: On that, we were incredibly confused last year, okay? When our SCB went significantly in the wrong direction,

However, to your question specifically, I can't tell you why, because I don't have transparency, and I know you don't either, on exactly how the models work, why the models generated that, what the results were. In our advocacy, one of the big things that we're advocating for as the capital process is being reviewed, and there's a big meeting next week in Washington that we have, you know, somebody attending, most of the institutions have attending, where there's discussion, you know, around, you know, how the capital process should continue to evolve. Transparency is a big theme. This should be a transparent process, so we can plan, so you have transparency and understanding how we're going to allocate capital.

And so also, we have a system that's not just durable, but also can deploy capital into the system to drive economic growth. And the lack of transparency around this at the moment is something that I don't think is good for the system. And so I'm hopeful that we'll have more transparency.

It'll be a point in time we can actually answer this question and tell you, you know, tell you, you know, what impacted this. But at a high level, we know enough to know that we're running a strategy that is less RWA dense than it was, and we're going to keep the flexibility to adapt until there's more clarity on these capital rules. And I think we're going to get more over the course of the next 12 months.

So you have transparency and understanding how we're going to allocate capital and so also we have a system that's not just durable but also can deploy Capital into the system to drive economic growth and the lack of transparency around this. At the moment is something that I don't think is good for the system and so I'm hopeful that we'll have more transparency and it'll be a point in time. We can actually answer this question and tell you, you know, tell you, you know what impact of this. But at a high level, we know enough to know that we're running a strategy, that is less rwa dense than it was. And we're going to keep the flexibility to adapt until there's more clarity on these Capital rules. And I think we're going to get more over the course of the next 12 months.

We'll take our next question from Devin Ryan with Citizens... Thanks. Good morning, David. Good morning, Denis. How are you? Great. Good.

Speaker Change: Thank you, we'll take our next question from Devin. Ryan with J. With citizens jmpp.

Devin Ryan: Uh, thanks. Good morning, David. Good morning. Dennis, how are you?

First off, not sure how I feel about having an AI named after me, but excited to see this evolve. But we already touched on that. So I want to ask a question just about, you know, David, you hit on kind of ranking in the top three now with 125 of your top 150 clients, and that's up from 77 in 2019. So you're really making nice progress on kind of that strategy that you laid out years ago. So just remind us on some of the structural differences in how you're covering these clients today compared to the past.

Devin Ryan: Great good. Um,

Speaker Change: good. Uh, first off, I'm not sure how I feel about having an AI named after me, but uh, excited to see this evolve. Um, but uh, uh but but uh, we already touched on that. So um I want to ask a question just about you know David you hit on kind of ranking in the top 3 now with 125 of your top 150 clients and that's up from 77 in 2019 so you're really making nice progress on kind of that that strategy that that you laid out, you know years ago. So just remind us on some of the structural differences.

And, you know, how important is just increasing capital to those clients versus just the way you cover them? And then I know there's a focus on the top 150 clients, but just these kind of evolution in coverage and how that's resonating, the opportunity to kind of employ that more broadly just across the franchise and just take more client wallet more broadly. Yeah, thanks, Devin. I appreciate the question. I think there are a handful of things that we've invested in and executed on, you know, over the course of the last years that have really driven our ability to gain these market shares.

Speaker Change: How you're covering these clients today, compared to the past and and you know how important is just increasing Capital to those clients versus just the way you cover them. And then I I know there's a focus on the top 150 clients but just these kind of evolution and coverage uh and how that's resonating the opportunity to kind of employ that more broadly just across the franchise and just take more client wallet, more broadly.

And it starts with one Goldman Sachs and really, you know, a change in the overall coverage philosophy across the organization. This has been enhanced over the last few years by the bringing together of global banking and markets, which has enhanced, you know, activity and our ability to bring different aspects of the firm, you know, together and to deliver them seamlessly for clients. And we continue to work on doing that across the firm. It's been very effective. It's a different operating ethos. There have been significant behavior changes over the last five plus years in the firm in terms of the way people think about clients, think about servicing clients, think about meeting the needs and think about getting resources that clients need in front of them.

In addition, strategically, and I know you're aware of this, we have made a conscious effort to drive our financing businesses. And when you finance clients, you create a connectivity with them that creates a virtuous cycle of more activity in your ecosystem. And so our investment in financing our clients has also had a very, very positive impact on those market shares and those activities. And so, you know, we're positioned well. You know, we talk about the top 150 because that's a significant chunk of the business, but there's a much, much broader client footprint. You know, I know you're aware that we cover about 12,000 clients in investment banking.

Speaker Change: Yeah, thanks, Devon. I appreciate the question. I think there are a handful of things that we've, we've, um, we've invested in an executed on, you know, over the course of of the last years that have really driven our ability to gain these market shares and it starts with 1 Goldman Sachs. Um, and really, you know, a change in the overall coverage philosophy across the organization. This has been enhanced over the last few years by the bringing together of global banking and markets, which is enhanced. You know activity in our ability to bring different aspects of the firm, you know together and to deliver them seamlessly for clients and we continue to work on doing that across the firm. It's been very effective. Um, it's a different operating ethos. Um, there have been significant Behavior changes over the last 5 plus years in The Firm in terms of the way people think about clients, think about servicing clients, think about meeting the needs and think about getting resources that clients need in front of them. In addition strategically, and I know you're aware of this. We have made a conscious effort to drive our financing businesses.

We cover, you know, thousands of clients across our trading businesses. And so we're constantly thinking about ways that we can hold ourselves as an organization accountable for improving client relationships, coverage, and therefore shares. And we're going to continue to make that kind of a fundamental pillar of our client service value and really executing against our plan.

Speaker Change: Is and when you finance clients, you create a connectivity with them that creates a virtuous cycle of more activity in your ecosystem. And so our investment in financing, our clients is also at a very, very positive impact on those market shares and those activities. And so, you know, we're, we're positioned. Well, you know, we talked about the top 150 because that's a significant chunk of the business, but there's a much much broader client footprint. I, you know, I know you're aware that we cover about 12,000 clients and Investment Banking. Um, we cover, you know, thousands of clients across our trading businesses. And so we're constantly thinking about ways that we can hold ourselves as an organization accountable for improving client relationships coverage and therefore shares. And we're going to continue to make that kind of a fundamental pillar of our client service value and really executing against our clients.

That's great, David. Thank you.

And then just a quick follow-up on just the broader theme of tokenization. I know we're still waiting for some regulatory clarity here, but we'd just love to get some quick thoughts on how Goldman is thinking about this as an opportunity, how you're thinking about implications on market structure, and just even how you may look to participate once we do get the green light. Thanks.

Sure, sure. Obviously, the legislative agenda that's putting, you know, regulatory structure around stablecoins and digitization is important. We're very focused on it. You know, I think this market structure bill that is yet to come is very, very important in the context of this in the direction of travel. We think there are a handful of places where there could be interesting opportunity for us, potentially around funding. We also think that that the continued digitization of the financial system takes friction out and creates new opportunities. And so we've got a very significant group of people at the firm that are really deeply focused on watching the evolution of this.

Uh, that's great. David, thank you. And then just a quick follow-up. Um, on just the broader theme of tokenization. I know, we're, we're still waiting for some regulatory Clarity here, but we just love to get some quick thoughts on how Goldman is thinking about. This is an opportunity, you know, how you're thinking about implications on on Market structure and just even how you may look to participate. Once we do get the green light. Thanks.

Speaker Change: Sure, sure. Obviously the legislative agenda, that's putting, you know, a regulatory structure around around stable coins and digitization is important. We're very focused on it. You know, I, I think this Market structure bill that is yet to come is very, very important in the context of this in the direction of travel. Um, we think there are a handful of places where there could be addressing opportunity for us. Um, potentially around funding, we also think that

It's early to say. You know, specifically, where we're going to invest and exactly how this will play out, but we'll continue to keep you posted. And there's, you know, there's a heightened level of focus here inside the firm on how this will disrupt, change the competitive landscape and create opportunities. And we're going to make sure we're well positioned to capture to capitalize on that as that evolves.

Speaker Change: You know, specifically where we're going to invest and exactly how this will play out, but we'll continue to keep you posted and there's, you know, there's a heightened level of focus uh, here inside the firm on, how this will disrupt change the competitive landscape and create opportunities. And we're going to make sure we're well positioned to capture to capitalize on that. Is that evolved?

We'll take our next question from Erika Najarian, which.

Speaker Change: Thank you. We'll take our next question from Erika. Najarian with UBS.

Good morning. My first question is a follow-up. You know, you mentioned that the ideal buffer to your CET1 minimums is 50 to 100 basis points, but looking at your, you know, current standardized of 14.5 and clearly your potential new minimum of 10.9, you know, that implies a pretty significant buffer still. Implicit in David's earlier remark is that transparency and a stress test is needed, but I guess what do you need to see either from a regulatory construct or anything else in order to work down that buffer even more significantly? Well, so to, obviously, all the comments David makes with respect to transparency and the details that underlie the results of the annual test and all the models and exactly the inputs and outputs would be extremely helpful to calibrate the impact of each of the stresses on each component or, you know, part of our portfolio, more transparency, better.

Hi, good morning. Um, my first question is a follow-up. You know, you mentioned that the ideal buffer to your ct1 minimums is 50 to 100 basis points, but looking at your, you know, current standardized of 145 and clearly your potential new minimum of 109. You know, that implies a pretty significant buffer still implicit in David's earlier remarks is that transparency, transparency and distress test is needed. But I guess what do you need to see either from a regulatory construct or anything else in order to work down that buffer even more significantly?

In terms of working down from our current position to the ultimate implemented regulatory minimum, it is a combination of finding the accelerated opportunities for deployment. David just went through a 1GS look at how we're improving the coverage, improving our holistic coverage of clients, integrating the provision of financing to enhance the overall relationship. And that's not to say there aren't tons of professionals around the firm constantly petitioning us for more capacity to drive more progress with their clients. With this excess amount of capital, we can engage in driving the extra capacity that our clients are looking for from us and accelerate some of those business activities.

Speaker Change: Well, so to obviously all the comments David makes with respect to transparency and the details that underly, the results uh, of the annual tests and all of the models and exactly the inputs and outputs would be extremely helpful to to calibrate the impact of each of the stresses on each component or, you know, part of our portfolio more transparency better.

We can also use return of capital through buybacks, et cetera, to reduce some of that buffer. So we will, as we said at the top of the call, stay true to our strategy, deploy where we can enhance client relationships, continue to return capital to shareholders, continue to advocate for more transparency, and, you know, hopefully get to a point in time where we have a very manageable and predictable equilibrium that supports both safety and soundness as well as ongoing growth across the economy.

Speaker Change: In terms of working down from our current position to the ultimate implemented. Regulatory minimum it is a combination of finding the accelerated opportunities for deployment. David just went through a, a 1gs look at how we're improving the coverage. Improving our holistic coverage of clients integrating the provision of financing to enhance the overall relationship. We have tons of clients across multiple segments of the firm that would like us to support that more with their desire for financing. We have a very disciplined risk sensitive return, sensitive allocation process given the historical uh, levels of flexibility that we've had with respect to Capital and that's not to say there aren't tons of professionals around the firm constantly petitioning us for more capacity to drive more progress with their clients. With this excess amount of capital, we can engage in driving. The extra capacity that our clients are looking from looking for from us. And accelerate some of those business activities we can also use

Yeah. The only other thing, Erica, just stepping up at a much higher level that I think is important to recognize, and Vice Chair Bowman has talked publicly about this, there are three areas of change in the capital regime that are being discussed at the moment. And the third is stress testing SCB, the transparency around that and that overall process. More clarity on all three of those things allows us to drive toward more clarity on where our buffer is and where we're setting in. And so we're in that process, and my expectation is around those three things there will be more clarity in the coming six to 12 months.

Speaker Change: Return of capital through BuyBacks, Etc, to reduce some of that buffer. So we will sort of as we said at the top of the call, stay true to our strategy deploy where we can enhance client relationships, continue to return Capital to shareholders continue to advocate for more transparency and, you know, hopefully get to a point in time where we have a a very manageable and predictable equilibrium that supports both safety and soundness as well as ongoing growth across the economy. Yeah. The only, the only other thing Erica, just stepping up at a much higher level, but I think some

Speaker Change: Important to recognize and and and uh Vice chair. Bowman has talked publicly about this. There are 3 areas of change and the capital regime that are being discussed at the moment, 1 is eslr and the proposal around that which seems to be moving forward. The second is a discussion around Gib and the calibration of GIB. Because when you look at the significant increase in large Bank Capital over the course of the last 8 years, let's say a significant portion of that has come from Gib and the lack of GIB calibration and the third is stress testing SCB the transparency around that and that overall process more clarity on all 3. Of those things allows us to drive to a more clarity on where our buffer is and where we're setting in. And so we're in that process and my expectation is around those 3 things, there will be more clarity in the coming 6 to 12 months.

Got it.

Thanks.

Speaker Change: Got it. Thank you.

We'll take our next question from Dan Fannon. Thanks, good morning. If investment banking trends accelerate, and we do see, you know, more M&A and issuance, can trading stay as robust as it has been? Or do you anticipate some kind of moderation or slowdown within the markets? You know, Dan, I don't have a great way to answer that or to speculate. What I would say is the following. Our markets business is a very, very large, very diverse, very significant business that operates globally, that touches all aspects and all asset classes across markets. And, you know, one of the things we see, you know, consistently, and I mean, you heard it in Denis's remarks this quarter, you know, there was there was strength in a bunch of areas, but there was weakness, for example, in commodities and mortgages, you know, next quarter, there could be strength in commodities.

Speaker Change: Thank you. We'll take our next question. From Dan Fannon with Jeffries.

Dan Fannon: Thanks. Good morning. Um if you invest in banking Trends accelerate and we do see you know more m&a and issuance Contracting, stay as robust as it has been, or do you anticipate some kind of moderation or slowdown within the markets business?

Dan Fannon: You know, Dan I I I um, you know I don't I don't have a great a great way to answer that at a speculate. What I would what I would say is what I would say is the following

It's a very diverse business. And I really think what drives the size of the overall wallet is growth and activity in the world. And you would really need, you know, you would really need, if you want to talk about the overall wallet and our participation in the overall wallet, you'd need a much more significant macro change. So an environment, an environment, actually, where there's a lot of investment banking activity, I still think is quite constructive for our markets business, quite constructive for our markets. Thank you. That's helpful.

Dan Fannon: Bunch of areas, but there was weakness, for example, and commodities and mortgages, you know, next border, there could be strength in Commodities. Um, it's a very diverse business and I really think what drives the size of the overall wallet is growth and activity in the world and you would really need you know you would really need if you want to talk about the overall wallet in our participation in the overall wallet you need a much more significant macro change, so an environment, an environment actually where there's a lot of investment banking activity. I still think is quite constructive for our markets business. Play constructed for our markets business.

And just as a follow up, I'm just curious about how you're thinking about alternative fundraising within the broader wealth channel or more mainstream retail. We've got potential changes around alternative assets being added to retirement accounts. How are you positioned to tackle that? Yeah, thanks for that, Dan. So this is something we've been very strategically focused on. You know, as you know, you know, we don't, you know, we don't want a wire house or a platform like that. But we have been building third party wealth distribution partnerships very actively, we have a big team here has been very focused on it.

Thank you. That's helpful and just as a follow-up. Um, I'm just curious about how you're thinking about alternative fundraising within the broader wealth Channel or more mainstream retail. We've got potential changes around alternative assets being added to retirement accounts. How are you positioned to capitalize?

We've been active discussions around partnerships with others in the retirement channel. And we see this as a pretty significant opportunity. And one of the things that's just interesting to me, you know, following the news, but with the news around, you know, the administration weighing in on this, there have been a bunch of people mentioning firms that would benefit from this, I haven't seen Goldman Sachs mentioned benefiting from this, Goldman Sachs will benefit from this. And so we're excited about the opportunity and extremely focused.

Speaker Change: Yeah, thanks for that, Dan. So this is something we've been very strategically focused on, you know, as you know, um, you know, we don't, you know, we don't want to wirehouse or platform like that, but we at the building third party wealth, distribution Partnerships, very actively. We have a big team here in some very focused on it. Um, we've been active discussions around Partnerships um, with others in the retirement Channel and we see this as a pretty significant opportunity and and 1 of the things that's just interesting to me, you know following the news but with the news around you know the the administration weighing in on this there have been a bunch of people mentioning firm

Would benefit from this. I haven't seen Goldman Sachs mentioned in benefiting from this Goldman Sachs will benefit from this. And so, we're excited about the opportunity and extremely focused on it.

We'll take our next question from Chris McGrady with KBD. Great. Thanks for the question. In your prepared remarks, you talked a lot about building a sustainable revenue model, less volatility.

Speaker Change: Thank you. We'll take our next question from Chris McGrady with KBW

If we kind of step back and think about the medium-term ROE that you've talked about, 15 to 17 percent, is that – because first part of the question, is that still the right level, given what's going on in the environment and the regulatory environment? And two, if that is the case, what's going to be the driver, numerator or denominator from here? Thank you.

Oh great. Thanks, thanks for the question. Um, in your prepared Market, have you talked a lot about building, sustainable Revenue model, less volatility. Um, if if we kind of step back and and think about the the medium-term or are we, that you've talked about 15 to 70%, is that, because part, first part of the question, is that still the right level given what's going on in the environment and then the regulatory environment and 2. If that is the case, what's, what's going to be the driver numerator or denominator from here? Thank you.

But first, Chris, welcome to the beat. Delighted to have you. I You know, we have been talking about our ability to drive the firm to mid-teens ROEs. slightly higher, you just quoted, ROTEs, what's going on from a regulatory and a macro perspective gives us a higher level of confidence in our ability to deliver on that. You know, that's where we are, we're delivering on that. I think we feel very good that the combination of growth we're driving in our asset wealth management business, which continues to improve margins, continues to improve returns, is helping us up the firm's overall returns.

Speaker Change: The first Chris, Welcome to the

Speaker Change: delighted to have you.

Speaker Change: Um,

Speaker Change: I,

you know, we we have been, we have been talking about our ability to drive the firm to Mid teens Roes.

And our global banking and markets business is obviously performing at a very, very high level at this point in the cycle. That will move around through a cycle, but we're very confident in that business's ability to deliver mid-team returns through the cycle. And so it's the continued execution and asset wealth management that's uplifting those returns. And Chris, I mean, just to follow up on it, I'm sure you see this clearly, but the returns that we've been generating have been with the quantum of capital that we've been required to hold. Excess capital both gives us capacity to drive extra activities with clients and also gives us capacity to run with a lower denominator at the same time.

Speaker Change: Slightly higher, what you just quoted Roes? Um, what's going on from a regulatory and a macro perspective give us a higher level of confidence in our ability to deliver on that, um, you know, that's, that's where we are. We're delivering on that. I think we feel very good that the combination of growth. We're driving in our asset wealth management business, which continues to improve margins, continues to improve. Um, returns, um, is helping us help the firms over.

Speaker Change: Overall returns at our global banking and markets businesses obviously performing, you know, at a very very high level um at this point in the cycle that will move around through a cycle, that we're very confident in that business's ability to deliver mid-teen returns through the cycle. And so it's the continued execution and asset wealth management. Um, it's up with the most returns.

So that is a dual sort of beneficial source of tailwind that is part of and an accelerant to the already existing strategy.

Speaker Change: And Chris, I mean, just to follow up on it. I'm, I'm sure you see this clearly, but the returns that we've been generating have been with the Quantum of capital that we've been required. To hold excess. Capital both gives us capacity to drive extra activities with clients and also gives us capacity to run with a lower denominator at the same time. So that is a dual sort of beneficial, uh, source of Tailwind. That is part of and an accelerant to the already existing strategy.

Speaker Change: Good, you know, thank you.

Thank you, we'll take our next question from Saul Martinez. I'm sorry, Chris, did you have another? No, I'm just saying thank you. Appreciate it.

Speaker Change: Thank you, we'll take our next question from Somer. So you broke up Chris SBC.

Speaker Change: Okay.

Speaker Change: I'm sorry. Chris. Did you have another question?

We'll take our next question from Saul Martinez with a Hi, thanks for taking my question. I just wanted to follow up on maybe Betsy's question on the dividend and ask it a slightly different way. It obviously suggests greater confidence in how you're thinking about the durability of your revenue and earnings power, but how do we think about it, or what does it imply about how you see your own core earnings power? If we were to assume, for example, a one-third dividend payout ratio would imply $12 a share or $48 annualized in earnings power, and obviously then over time you grow from that.

Speaker Change: No, I'm just saying thank you. Appreciate it. Thank you. We'll take our next question. From s Martinez with, with HSBC.

Speaker Change: Hi, thanks for taking my question. I'll I'll um just wanted to follow up on, maybe Betsy's question.

But is that an overly simplistic way of thinking about it, or does it – is the dividend – can we draw conclusions about? What it implies about how you're thinking about your own core power today.

I mean, is that an overly simplistic way of thinking about it or or does it? You know? Is it is, is the dividend, you know, can we draw conclusions about

Speaker Change: What it implies um about how you're thinking about your own core and his power today.

Yeah, I, I, I am. You know, I would say the following, I would say the following, Saul, for that question. the firm has enormous core earnings power. We think we've built a more durable firm with more durable revenue. We talk a lot about our durable revenue growth across asset and wealth management, across other parts of the firm, and we continue to execute on that. As we create more durable revenue growth, and we continue to prove out the durability of our businesses, you could make arguments that the payout ratio on the dividend, given the amount of capital we generate, should be higher than it currently is.

Speaker Change: yeah, I I, I

Speaker Change: Following. I would say the following sold for that question. Um, we um,

It's obviously not near 33% at the moment. But we are comfortable with where we are.

Our goal, and I want to emphasize this, is to have a sustainable, consistently growing dividend. And that's a big reset from where we were because we had a very and so we're on that journey. And we're going to continue to move in that direction.

Speaker Change: You know, the firm The Firm has enormous core earnings power, um, you know, we we think we've built a more durable firm with more durable Revenue. We talk a lot about our durable Revenue growth, um, across asset and wealth management across other parts of the firm and we continue to execute on that as we as we create more durable Revenue growth and we continue to prove out the durability of our businesses. You could make arguments that the payout ratio on the dividend given the amount of capital we generate should be higher than it currently is, it's obviously not near, you know, 33% at the moment. Um, but um, but we are comfortable with with. We are comfortable with Where We Are.

But I'm not I'm not going to speculate around payouts, or other things other than to amplify our core strategy of building more durable revenues and growing the overall firm and franchise.

Okay, that's fair and that's helpful. Maybe I'll just quickly follow up on advisory, you know, I get the reason to be optimistic and, you know, now it's M&A up, you know, 30% and, you know, the, you know, the potential for, you know, that to translate into higher revenue, but this quarter, you know, you did, I think Denis, you mentioned that you widened the gap versus your peers and, you know, the revenue number, the fee number this quarter is well above, you know, what your next closest competitor reported. And I'm just curious, you know, if there's anything additional that you can comment on there, what drove that and, you know, what's driving, you know, the much better results and, you know, the durability of that gap relative to your, you know, to your competitors.

Speaker Change: Our goal and I want to emphasize, this is to have a sustainable consistently growing dividend and that's a big reset from where we were because we had a very nominal dividend and so we're on that journey and we're going to continue to uh to move in that direction. But I'm not, I'm not going to speculate around payouts or or other things other than the amplifier of course, strategy of building more durable revenues and growing the overall firm and franchise.

Speaker Change: Okay, that that's that's fair and that's helpful. Um, maybe I was just quickly follow up on on advisory, you know, I get the the, the reasons to be optimistic and, you know, announce them and a up, you know, 30%. And um, you know, the the, you know, the the, the, the potential for, you know, improve, you know, that that to translate into higher Revenue. But this quarter. Um, you know, you did, I think, Dennis, you mentioned that you, you, um, widened the Gap versus your peers and you know, the, the revenue number is the fee number of this quarter was well above, you know what, your next, closest, competitor reported. And I'm just curious that, you know, if there's anything, you know, additional that you can comment on there. What drove that and you know what's driving, you know, the the the much better results and and you know, the durability of of that Gap relative to to your uh you know to your competitor.

I, you know, this is an extraordinary franchise that's been a leading franchise for over 25 years. It continues to be a leading franchise. You know, our performance this quarter on a relative basis was quite strong. You shouldn't interpolate that that means every single quarter, it will be this strong. I think when you look, you know, year to year to year, we have a leadership position. And that leadership position, if we continue to execute should be sustained. That has some quarters where we way outperform, and some quarters where we just, you know, outperform, you know, by a little bit, this was a quarter where we outperform more.

I, I

But the strength of this franchise, the way we're positioned, the investment we make in this franchise, you know, we're confident in an improved M&A environment, you know, we're going to have leading share and continue to work hard to protect that position.

Speaker Change: You know, this is an extraordinary franchise that's been a leading franchise for over 25 years. It continues to be a leading franchise. Um, you know, our performance, this quarter on a relative basis was quite strong. You shouldn't interpolate, that that means every single quarter, it will be this strong. I think when you look, you know, year to year to year, we have a leadership position. Um, and that leadership position, if we continue to execute should be sustained. That has some quarters, where we weigh out the form and some quarters where we just, you know, outperform, you know, by a little bit. This was a quarter where we outperformed more, um, but the strength of this franchise, the way we're positioned the investment, we make in this franchise, you know, we're confident in an improved m&a environment, you know, we're going to have leading share and continue to work, hard to protect that position.

Thank you.

We'll take our next question from Gerard Cassidy with RBC. Identify, David. David, you mentioned in your comments about inorganic growth, and I apologize if you addressed this and I missed it, but you talk about the high bar that it would have to, you know, meet to for you guys to maybe to pursue something, if something comes up that you can look at. Can you kind of frame out what that high bar? Do you look at it from a dilution of earnings or tangible book value or return on investment? Can you frame that out for us?

Speaker Change: Thank you. We'll take our next question from Gerard Cassidy with RBC.

Speaker Change: Hi Dennis. Hi David.

David, you mentioned in your comments about inorganic growth and I apologize if you addressed this and I missed it. But you you talk about the high bar that it would have to you know meet to for you guys to maybe to pursue something. If something comes up that you can look at, can you kind of frame out what that high bar? Do you look at it from a dilution of earnings or tangible Book value or return on that investment, can you frame that out for us?

I mean, we obviously would look at all sorts of financial metrics, Gerard, and thinking about an acquisition.

But let's start with strategically, what are we trying to do in the business? And how does the business that you're acquiring advance the strategic mission? And so, you know, first and foremost, there's got to be a strategic fit in terms of things that we're prioritizing in the growth of our asset wealth management franchise. Secondarily, these are people businesses, you have to have enormous confidence in the people, knowledge in the people, the cultural issues, etc. And then of course, you know, there's financial analysis around that, which really gets to, you know, what do you pay for?

This is why the bar is high, though, to doing these things, because to get all that stuff to align on a property that's available, it's a high quality property is very hard. There are always things that concern us. Our job is to worry a lot about things that have a small probability of happening and make sure we're prepared to navigate in those environments. The firm has an extraordinary focus on risk management, and it doesn't matter how good things are, we're always focused on risk management and what if, what if this, what if that. I would say it's been a super interesting, highly uncertain environment.

David Solomon: I mean I I we we obviously would look at all sorts of financial uh metrics Gerard and and thinking about an acquisition. But let's start with strategically what are we trying to do in the business? And how does the business that you're acquiring Advanced the Strategic Mission? And so, you know, first and foremost there's got to be a strategic fit in terms of things that we're prioritizing and the growth of our asset wealth management franchise. Secondarily, these are people businesses, we have to have enormous confidence in the people knowledge and the people, the cultural issues um, Etc. And then, of course, you know, there's financial analysis around that which really gets to, you know, what do you pay for it? Um, this is why the bar is high, though. It's doing these things because to get all that stuff to align on a property that's available, that's a high quality property is a very hard thing to do.

Speaker Change: And as a follow-up question, your results speak for themselves on the strength of investment banking and trading. And in in the environment that's has a lot of uncertainty and risk. You know, geopolitical risk is at the top of the list. What do you worry about as you go forward in, in view of, you know, putting up very good results with all the risks that we're currently seeing, what, what could what concern is there? Anything that concerns you as you look forward?

And you just look at the last quarter, you know, the change in sentiment and the environment, policy positions, geopolitics, just in the last three months, have been significant. I'd also say, you know, we participate in a very large, very diverse, very resilient global economy. And, you know, we're seeing the ability of the global economy to absorb and navigate some of this policy uncertainty, you know, quite well. But we're going to stay vigilant from a risk management perspective. And it's never a straight line, never a straight line. And so, you know, I'm sure, just as it was in this quarter, there'll be unexpected surprises in the next quarter and the quarter after that.

Well, there are always things that that that concern us, our job is to worry a lot about things that have a small probability of happening and make sure we're prepared, you know, to navigate. You know in those environments. The Firm has an extraordinary focus on risk management and we we, you know, doesn't matter how good things are. We're always, you know, focused on risk management. And what if um, you know, what if this what if that I would say? It's been a super interesting, highly uncertain um environment and you just look at the last quarter, you know, the change in sentiment and the environment and policy positions. Geopolitics just in the last 3 months have been significant. I'd also say, you know, we participate in a very large, very diverse very resilient global economy and you know we're seeing the ability of the global economy to absorb and navigate some of this policy uncertainty, you know, quite well. Um, but we're going to stay vigilant for a risk management perspective and it's never a straight line, um, never a straight line. And so, you know, I'm sure

But we're going to be focused on our clients, focused on helping them navigate it. And when we do that, we take a long term view, this firm tends to perform quite well. Thank you.

Speaker Change: Just as it was in this quarter, they'll be unexpected surprises in the next quarter and the quarter after that. Um, but we're going to be focused on our clients focused on helping them navigate it. And when we do that, we take a long-term view. This firm tends to perform quite well.

At this time, there are no further questions. Ladies and gentlemen, this concludes Second Quarter 2025 Earnings Conference Call. Thank you for your participation.

Speaker Change: Thank you. At this time. There are no further questions. Ladies and gentlemen. This concludes the Goldman Sachs second quarter 2025 earnings conference call. Thank you for your participation. You may now disconnect