Goldman Sachs at Bernstein Conference: Navigating Slowflation and Strategic Growth

On Thursday, 29 May 2025, Goldman Sachs (NYSE:GS) presented its strategic outlook at the Bernstein 41st Annual Strategic Decisions Conference. The company underscored its resilience amid economic slowdowns and rising inflation, while maintaining a focus on growth and operational efficiencies. President and COO John Waldron highlighted the firm’s robust risk management and strategic initiatives, even as it faces challenges such as volatile trade policies and rising interest rates.

Key Takeaways

• Goldman Sachs anticipates "slowflation" as a baseline economic scenario, with slower growth and higher inflation.
• The firm emphasizes "One Goldman Sachs" to enhance wallet share and operational efficiencies.
• Investment banking and asset management sectors are key growth drivers, with significant increases in M&A volumes and assets under supervision.
• AI and automation are pivotal to improving productivity and operational efficiency.
• The firm remains confident in achieving mid-teens return targets through the economic cycle.

Financial Results

Goldman Sachs is navigating a complex macroeconomic landscape with a strategy centered on resilience and growth. The firm expects "slowflation," characterized by slower growth and higher inflation, as a baseline scenario. Despite these challenges, the US consumer continues to demonstrate resilience.

• Investment banking has seen a 30% increase in M&A volumes for deals above $500 million year-to-date.
• Markets activities constitute over 30% of the business, with a 15% compound annual growth rate in financing.
• Asset and Wealth Management supervises $3.2 trillion in assets, with $1.6 trillion in client assets in wealth management.
• Private banking and lending revenues have grown at a 13% CAGR over the past five years.
• Goldman Sachs aims to expand its private credit platform from $140 billion to $300 billion.

Operational Updates

The "One Goldman Sachs" strategy is pivotal in enhancing the firm’s wallet share, which has increased by over 350 basis points since 2019. The firm is focused on maintaining its top-three ranking with its top 100-150 institutional clients.

• Risk management remains a core competency, with a defensive posture in certain areas due to market uncertainties.
• The Capital Solutions Group integrates origination, structuring, and distribution capabilities, with a focus on AI, power/energy, and infrastructure.
• Goldman Sachs is actively managing expenses through a three-year efficiency plan, targeting organizational structure, spend management, and automation.

Future Outlook

Goldman Sachs remains optimistic about its growth prospects, with a strong pipeline in investment banking and opportunities for market share gains in various sectors.

• The asset and wealth management division is expected to drive significant growth, aiming for high single-digit revenue increases and margin expansion.
• The firm sees a substantial runway for scaling its private credit platform to $300 billion.
• AI and automation are anticipated to become significant tailwinds, enhancing productivity and efficiency.

Conclusion

For a detailed understanding of Goldman Sachs’ strategic insights and financial outlook, please refer to the full transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Unidentified speaker, Interviewer, Goldman Sachs: Alright. I think we’ll get started here. So, good morning, everyone, and, thanks for joining this session with Goldman Sachs. I’m very pleased to welcome back again, John Waldron, Goldman Sachs president and chief operation officer and also newly recently appointed member of the Goldman Sachs board. Congrats on that, and, thanks very much for coming back to the conference.

John Waldron, President and Chief Operation Officer, Goldman Sachs: Thank you for having me. It’s always great to be here. Congratulations on another great year, great attendance, and and, I look forward to the conversation. Fantastic.

Unidentified speaker, Interviewer, Goldman Sachs: Maybe, John, we’ll just start big picture on the macro. The operating environment, to, to to put it mildly, is is is is evolving. What is the current view of the current outlook? Kind of what are the key areas of focus for your clients?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Okay. So, I mean, I think that we’re seeing a pretty disruptive change in US policy. You know, the Trump administration is definitely disrupting a lot of what would be the conventional wisdom of how US policy making, you know, traditionally goes. The trade policy obviously has gotten the most attention, for good reason. I would characterize their trade policy position at the start, you know, let’s say, around Liberation Day as a maximalist approach.

I think we’re now shifting to a framework that appears more manageable for global economies to adapt and adjust to. Still higher tariff levels, but more manageable. I don’t think this is gonna be a straight line from the maximalist approach to the more manageable. I think there’s gonna be a fair bit of volatility along the way. You’ll see individual tweets on tariffs.

We saw overnight, you know, court challenge. That won’t be the last of that. I’m sure that’ll ultimately get to the supreme court, and there’ll be an adjudication. So we’re gonna learn a lot more, and it’s gonna be volatile. And I think we’re just gonna have to live with that volatility, you know, for some time.

I think we’re gonna go towards a 10% universal baseline tariff with individualized targeted tariffs on top with individual countries, and we’re about to see a series of those, those trade deals. We’ll see how the the court ruling, you know, kinda impacts those discussions. Our economic research would suggest that effective tariff rates are somewhere between ten and fifteen percent, which is up from 2%, you know, before the Trump administration began. So we’re obviously living with higher tariff levels. I think that means we’re gonna have short to intermediate term slower growth, higher inflation.

You know, we we kind of term that slowflation. That’s kind of the scenario that we we think is the baseline scenario. But I would have to say The US economy and The US consumer are showing tremendous resilience. Somewhat surprising to me, but I think you have to say the resilience in the economy is is pretty pronounced. We still have a significant fiscal impulse.

Unidentified speaker, Interviewer, Goldman Sachs: Right.

John Waldron, President and Chief Operation Officer, Goldman Sachs: We still have very strong employment. We’re moving, as we said, towards more manageable tariff levels. I think that all likely leads to economic growth. I think we’re likely to avoid a recession with this baseline set of facts, but the volatility remains, and so it’s still a little bit uncertain. And I would say, in parallel, we now have a big US budget debate.

And so while all the attention was on tariffs, I think the attention rightly is shifting, certainly in the bond market, to The US budget debate and the fiscal picture, which I would characterize as somewhat concerning. I think that we’re gonna run larger deficits pretty clearly as far as the eye can see. And we’re gonna have more US treasury borrowing, which you can see in the bond market is starting to, you know, have some implications for how people feel they wanna price the treasury rate, particularly on the longer end. So I think the big risk on the macro right now is actually not so much tariffs. I think we now better understand the the the kinda guide guideposts where we are where we’re gonna land on tariffs.

But I think the big risk is longer end rates continuing to back up and the cost of capital in the economy rising and, fundamentally, that becoming more of a break on economic growth as opposed to an accelerative economic growth.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. So slow inflation, deficits, higher rates, sounds like a a tough tough backdrop. So how are we thinking about your strategy at Goldman Sachs, and any changes in light of the, operating environment?

John Waldron, President and Chief Operation Officer, Goldman Sachs: So we’ve had a strategy that I would say has been very consistent for a number of years now, and it really has three key pillars. First is to harness what we call one Goldman Sachs, which I hope we’ll spend some more time talking about later, to serve our clients with excellence, really to drive continued improvement in our wallet shares. That’s kind of fundamental pillar number one. Pillar number two is to run world class differentiated and durable businesses. We have two large businesses, global banking and markets and asset and wealth management.

And we believe that they are both differentiated. They’re both becoming more and more durable, And we’re increasingly gonna demonstrate the synergy between them, which will be an important element of our strategy going forward. And third, and equally important, is to invest to operate at scale. And what that really means is driving automation and operational efficiencies through the firm to drive higher margins, higher returns, and better financial outcomes. We’re clearly in a dynamic and highly uncertain environment, but our strategy remains very clear and consistent, which is important.

We don’t really wanna deviate our strategy. We think we can run this strategy through the volatility and the challenges and dynamism that are that’s going on around the world. We’re laser focused on execution and feel very good about the progress we’ve made over the last couple of years and see a fair bit of growth and opportunity in the forward. And I would say our strategy is really set up to drive higher share of wallet with our client franchise, more durability in our earnings, and higher returns. Okay.

And I would just say as a compliment, just last comment because, you know, we talk a lot about strategy in a more tactical sense. So just at a higher level in terms of, obviously executing on that strategy that I just outlined, just a few things that I always think about that are important to remind everybody about Goldman Sachs. Goldman Sachs is really one of the premier brands of any business on a global scale. We have an extraordinary talent factory. We have a unique culture.

We have a premium client franchise, and we have over a hundred and fifty six year history of proven track record of delivering through cycles no matter what the weather environment is, we will deliver. And I think that’s important to just keep that in mind in the context of our firm.

Unidentified speaker, Interviewer, Goldman Sachs: Good stuff. Yeah. I I I do wanna dig into, one Goldman Sachs and automation, later. But just before that, how are thinking about risk management in this environment? Are you seeing any pockets of stress worth noting?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. I I would say again, we’re as I just said, we’re a 56 years old. Risk management is core to our firm. It’s a core competency. It’s a core part of our heritage.

We have a deep rooted risk management culture in our firm, and I think a demonstrated history of doing really well managing risk through some pretty difficult periods. To us, risk management is what happens before the unexpected risk event unfolds. So it’s a lot about people, processes, and preparation. We spend a lot of time before the risk event happens making sure that we have our our our act in order. We have extraordinary experience in our firm.

Our senior risk managers, for the most part, have been doing this for twenty to thirty years, some of us longer. And so we benefit from a lot of experience, which means we’ve seen a lot of cycles. We kinda know what patterns to look for. And importantly, we empower our risk and control functions as equal to the businesses. That’s a really important element of the firm as there’s a real balance between those that are on the risk and control side and those that are more on the commercial side.

We have a very well organized risk infrastructure in the firm. We do extensive modeling. We have clear risk limits across different elements of the of the risk components of the firm. We do broad based stress testing. We have a mark to market culture.

So we like to know kinda what we think at any moment in time a a position or a set of positions are really worth in the marketplace if you had to liquefy them. And we have many eyes across the firm wide risk positioning, you know, from different elements so that we’re not reliant on one set of eyes or one, you know, set of biases. I would say at the moment, we’re relatively defensively positioned. We’ve got heavy liquidity. We’ve got significant capital buffers, and we’re running more muted risk in certain and important pockets in the firm given the uncertainty and the and the elevated volatility we talked about a moment ago.

And I would say our experience tells us that the full impact of this disruptive policy change that we think is going on more broadly takes time to materialize. You see first order impacts right in front of you. The second and third order impacts take take longer to work their way through markets. And so we’re watching carefully for those second and third order impacts, which is another reason why we run, you know, a little bit higher buffer and a little bit more cautiously in an environment like this. And in terms of areas to watch, there are many.

I would say if I had to pick one, it would be leverage in the public sector. And then coming out of COVID, the public sector stimulus from governments around the world to to rejuvenate the economy was really, really important. That’s led to an enormous amount of leverage in governments in many countries around the world. And we’re starting to see some elements of that public sector leverage play through. There’s a lot less fiscal headroom in the world today than there was, you know, back when we were coming through COVID in a pretty peaceful environment, relatively peaceful environment.

And so we’ve got, I think, some risk of dislocation in bond markets, particularly as you go out in duration, which I think bears more, you know, more watching.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. How do we think about that in terms of near term activity, given your defensive positioning? Any comments on quarter to date activity in investment banking and markets?

John Waldron, President and Chief Operation Officer, Goldman Sachs: So our franchise is performing very well. Not surprisingly, the second quarter is not quite as strong from an activity level as the first quarter given, you know, the macro environment we talked about at the beginning of this conversation. But in investment banking, our engagement levels are actually still very good, you know, despite the uncertainty and the and the volatility. Our pipelines remain quite strong. But elevated volatility in investment banking terms really creates uncertainty on the timing of execution of transactions.

So when you have this kind of volatility, you just fundamentally have a harder time prosecuting transactions that may be in your pipeline, but they don’t happen as quickly as you might otherwise expect. I’d say the m and a market is showing strong resilience. There’s a lot of pent up demand for m and a, you know, in the world, and so there is more resilience than you might guess given the the the backdrop. In the capital markets arena and equity capital markets and high yield capital markets, activity levels much slower in April than they were in the first quarter. But I’d say we’ve seen in recent weeks a real pickup, you know, in both equity capital markets and high yield capital markets, which is a good, you know, sign that things are starting to heal.

In thick and equities, our client activity has remained robust really pretty much throughout the year. I’d say particularly in equities. In FICC, we’re seeing slightly softer levels of activity versus our strong results last year at this time, but we’ll see how the rest of the quarter plays out. We still have, you know, a fair bit of a quarter to go. In asset and wealth management and equity and debt investments, given this elevated volatility, as we discussed, it’s a much tougher harvesting backdrop.

And so similar to last quarter, same kind of basic dynamic. I expect results this quarter to also be more muted.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. Very helpful. Let’s just dig into the client franchise and One GS. I think it’s six, seven years ago at this conference. You, debuted some of that stuff to to the public and something that you’ve you’ve backed heavily.

So just give us an exact give us some examples of how OneGS is helping drive, you know, wallet share gains across the business, how it’s a differentiating factor for Goldman Sachs, in terms of commercial outcomes. And then looking forward, where do you see where do

John Waldron, President and Chief Operation Officer, Goldman Sachs: you go from here? Okay. So one Goldman Sachs is pretty fundamentally important to our strategy and our execution. And so just just a quick explanation, maybe a touch of history, just to put it in a little bit of a frame. When we started leading the firm over six years ago, we wrote a memo to the firm that outlined one Goldman Sachs, and it had three basic priorities.

These are pretty simple, but they’re important. First was client centricity. We felt that the balance of the firm between clients and our own worrying about ourselves was off, and we want to put clients back at the center of everything that we that we do. The second key priority was holistic service, integrated approach to clients, meaning we cover clients as a firm. You get all of Goldman Sachs.

You don’t get a desk, a product, an individual. You get the entirety of the firm, which sounds easy and and obvious, but it’s much harder for banks of our size often to deliver. And the third was to have a long term focus. We felt that the lens of our focus on our clients was too short term. We were too focused on short term transactional activity and not enough focus on the long term relationship and building partnerships with our clients.

So those were three important priorities. We’ve laid those out as priorities. And we knew that we had two major areas of focus that we had to deliver to execute upon this. One was to desilo the firm. We had tall walls between businesses.

We didn’t really have as much horizontal working across platforms in the firm to serve our clients. And our incentives were probably not perfectly aligned to deliver upon those three, you know, key priorities. So to to start, we built a program that had 30 clients, and the 30 clients was really a pilot program. These were large, multidimensional clients that would touch the firm in many different areas. And we prosecuted that pilot program to prove to ourselves and to our clients that we could actually deliver more value.

And that pilot went well. So we subsequently expanded that pilot to over a hundred clients, which is kinda where it is now. And again, these are large scale global clients that touch us in multidimensional fashion. This now, I would say, has really become the operating ethos of the firm. So even though we have this program with these hundred or so clients, really in every client interaction, this is the fundamental way we try to serve our client base.

And it has really really worked consequentially in terms of our share of wallet. So our wallet share gains are now over 350 basis points from the time we started this in 02/2019 through the end of twenty twenty four in a hotly competitive, you know, intense environment. So it’s not as if we’re we’ve got weak competitors. We’re running a couple programs that are focused on particularly our large institutional clients, the top 100 clients, the top one fifty clients. And the essence of those programs is to make sure that we’re really ranked in the top three with those large, most important clients that do the most business, you know, kind of on the street.

We started that program in 02/2019. We were running in the top 100 with 44 ranked 44 with top three ranking and with 44 of the top 100 clients that went to 77 or so. When we expanded it to the top one fifty, we were at 75 or so. We’re now at close to a 20. So we’ve really improved our ranking from not in the top three with too many of those clients to in the top three with most of them.

So it’s clear that it’s working. I would say now One Goldman Sachs is really about proving the synergies between banking and markets and asset and wealth management. So in the strategy question, I outlined, you know, how we wanna try to drive that synergy. That’s the two dot o strategy of One Goldman Sachs. And there’s a couple key elements.

One is to source more deal flow, particularly from our investment banking business, but increasingly from across the firm for our private asset franchise and asset management. So we run a large private equity, private credit, real estate infrastructure, growth equity investing franchise. We can source more deal flow from our investment banking business and otherwise to drive more alpha generation in that business. We can drive more referrals between wealth management and investment banking, and we’re measuring those referrals both ways where we’ve got relationships that help, you know, and and we help our clients be able to do more with the firm, and we deliver more value for our clients. We think we can do a better job raising capital from our limited partners by virtue of a much broader set of holistic relationships where we’re serving them in a number of different ways.

We’re sharing risk management capabilities between the two businesses, which is increasingly important to think about risk more broadly across those two important businesses in the firm, and we’re sharing talent. A lot more talent mobility moving between the two businesses, which which is increasingly important. So I I see very good early signs of success and progress in the two dot o part of One Goldman Sachs. I think One Goldman Sachs has been definitional to our success thus far, and I think will be an accelerant to our future growth given that synergy between the two businesses.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. Let let’s go back to the competitive landscape and and talk about each business. So an investment banking business, obviously, it’s been a great franchise for Goldman Sachs, a very global one. In a world where you have geopolitical tensions, tariff questions. How are you seeing the competitive landscape, particularly in areas like Europe?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. I I would say our investment banking business is very strong, and I think the outlook remains quite good. I I’ve been traveling a lot this year, kinda all over the world, seen a lot of corporate clients, larger clients, more mid market clients. The pipeline is strong all over the world. There’s a lot of bias for action and activity.

But as we’ve already said, the elevated volatility makes it hard when you think about its spot to feel great about what’s gonna happen this week or next week. But if you take a slightly longer term lens, you can see the strong pipelines and the need for companies to raise capital, to deal with some of the dynamism, to do m and a transactions. There’s a fair bit of a positive bias to to to transactional activity. It just may take a little longer to materialize. As we said, the m and a market is more resilient.

Much gets said about the volumes in m and a market. Just to level set, in reality, in the sector above 500,000,000, which is the m and a market we tend to focus on, so transactions above $500,000,000, volumes are still up 30% year to date. Obviously, in the second quarter, it’s been much slower than in the first quarter, so that’s biased by a stronger first quarter. But nonetheless, even post Liberation Day, we’ve worked on a number of very sizable important m and a transactions, Worldpay, NRG, Sonoco, and more recently Informatica, which are sizable transactions that have gone very, very well, and the market has absorbed them quite well. So I still think there’s a pretty strong resilient m and a market.

And if we get a little bit more certainty in the backdrop, you know, you could see a pretty good sized lift in volumes. Private equity activity, which is an important component, probably 30 plus percent of the m and a market today, is still very good. Activity is picking up. We’re seeing steady flow. There’s a lot to do.

There’s over $3,000,000,000,000 of enterprise value sitting in private equity and venture capital portfolio hands. Those those entities have to get transacted upon. There’s an enormous forward pipeline that is there. Obviously, more certainty, better economic backdrop will allow us to prosecute more of that sooner. Large cap consolidating transactions, are also an important feature in the in the m and a market, are harder to do right now for a variety of reasons.

But many of these industries will consolidate further. It’s pretty clear to me that scale is becoming an even bigger element and factor in many of these industries, and we see in our dialogues a bias for more consolidation. It’s really just a question of timing. And so I wouldn’t be overly bullish bullish spot about large cap consolidation, but I would be very bullish in the intermediate to longer term. Capital markets, as we said, started more muted in the second quarter than the first quarter.

And as I said, we’ve seen signs of improvement. We priced eight IPOs last week. So that’s a pretty good sign that things are starting to thaw. And our pipeline remains very strong. So again, I think just a matter of time on the capital market side as it is on the m and a side.

And most importantly, what we measure, we tend not to get too hung up in the short term gyrations around activity. We tend to focus on our pipeline. We tend to focus on the the strength of our relationships. And I feel exceptionally good, particularly as I’ve been traveling around this year about the strong client franchise that we have in investment banking, which I think is really in tremendous shape.

Unidentified speaker, Interviewer, Goldman Sachs: Good stuff. Moving to the markets business, probably where we’ve seen the most significant share gains and probably where I had the most skepticism about sustainability long term. So, you know, what gives you confidence in the resilience of this business over time, particularly in a very uncertain macro backdrop?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yep. So I I grew up as an investment banker, and so I I had more comfort with the dynamics in investment banking. But I have to say now having spent close to seven years, you know, really living inside those markets businesses, They are much more resilient, much better equipped to be more predictable than the marketplace give them credit for. And I think if you look at our results, particularly over the last five years, we’ve really delivered almost every quarter very strong results in extremely different market environments, a lot of different weather environments that we’ve been through over the last five plus years, and still we’re delivering quarter over quarter, which I think and I’ve learned is really because of the strength of having breadth across all businesses all over the world. So you have to be big and strong in all different elements in these markets, in these markets businesses because you never know in any quarter which part of those businesses will be more in favor and which part of those businesses will be more important to clients who need to who need to prosecute their activities.

So having that strength really clarifies that you are more important to your clients, back to the one Goldman Sachs ethos, and you can deliver and execute for for them across anything they wanna do anywhere in the world at any time. That’s a really important thing which only a few firms really have that capability, and we’re certainly one of them. We’ve also grown our financing footprint in in, in our markets business considerably. We’ve seen over a 15% compound annual growth rate in our financing activities in our markets business, which used to be very heavy at risk intermediation business. And today, over 30% of our business is now prosecuted through financing activity, which really is business that it’s more durable, it’s stickier, and it really strengthens our client relationships meaningfully.

And so with one Goldman Sachs, we’ve seen tremendous wallet share gains as we talked about. And so I think the floor of that business is just idling at a much higher rate. With 300 plus basis points of share, you’re just running at a higher level of of share of wallet and and and a higher level of activity. And with all this skepticism about the industry wall, the industry wall has grown a lot over the last So the industry wallet over the last five years is kind of an average of a hundred and $35,000,000,000.

The prior five years before that, it was more at a hundred billion dollars. So you’ve seen pretty good sized growth in the wallet. Our shares are a lot higher, so our positioning in this business is materially stronger. And I’d say our our risk intermediation activities, which historically have gotten a lot of attention as more volatile, have become much more consistent. I think that has a lot to do with one Goldman Sachs, better client relationships, more financing, and I think having this breadth and strength across all the different elements of the business.

So when we look at our risk intermediation business, we do a standard deviation of our results over the last five years. That standard deviation is 6%. If you went back to prior ten years, it’s 24%. So you’re talking about a business that is much more banded with higher share of wallet and and actually growth in the industry wallet. So we feel we feel quite quite good about what we’ve seen over the last five years.

When we look forward, we see significant opportunity for Ameri. Even though we’ve grown our wallet shares considerably, there is opportunity, which gives me optimism we can really keep going. There are many areas and segments of the business, insurance, where we really have had suboptimal share and we’re starting to see real improvements in share. Active ETFs, where I’d say hand on heart, were a little slow to get going there, and we’re really starting to build and see significant growth in that in that business. Retail wealth, which has not historically been a hallmark and a strength of Goldman Sachs, we’re doing much more to serve the retail and wealth clients.

Corporate derivatives, where we continue to build bigger businesses and are doing really well. And then Asia Pacific, more broadly. I just came back from Tokyo and and Korea, and I was in China the the month prior. And I see our business in Asia Pacific continuing to grow and take share, and we have a lot more running room there than we than we certainly do in The United States and Europe. And so there’s a lot of opportunity ahead.

So I think we’ll you’ll continue to see us grow share, grow our financing business, and this this platform, I think, has plenty of running room in front of it.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. Let’s switch to the asset and wealth management business. Spent a lot of time on that last year. Has anything changed in how you’re positioning that business, particularly, again, given the sort of macro market backdrop?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. So as you said, when you and I were together last year at this conference, we spent most of the time, you know, trying to feature this business. And I would say our strategy hasn’t changed at all from that conversation and and isn’t likely to change in the near future. We’ve got just as a reminder, we’ve got a large scaled franchise with about $3,200,000,000,000 in assets under supervision on the platform. What’s unique about our platform is we’re very sizable and liquid active asset management, and we’re also sizable in private assets and alternatives.

Most firms are big in one, not in the other. We have scale in both. So we have a full suite of solutions that we can offer our clients, whether they’re institutional clients or wealth clients, in either public markets active or private markets, which we think is a pretty unique position. We also have a super attractive wealth management platform focusing on the ultra high net worth wealth management clients with about $1,600,000,000,000 in client assets on that platform. And that’s the integrated asset and wealth management business that we’re running today.

We’re really working hard to have an integrated platform. This was an amalgamation of three different businesses in the firm that over the last three or four years we’ve put together and pulled into this unified business. So we’re really trying to serve institutional and wealth clients on an integrated platform that is more of a chassis that can really run, you know, a scalable franchise on top. And we’re focused on capturing secular growth opportunities in what I would say are three care three key areas that we we think are really interesting. One is obvious, which is alternatives in private markets.

Many people talk about that. We’re not alone. We have over $2,000,000,000 in management and other fees in in private markets alternatives, growing double digits. That’s up from about a billion dollars 5 or so years ago. So that business continues to grow.

We see a lot of running room there. Wealth management, really two components. We have our own, as I said, ultra high net worth business, which is a tremendous business growing double digits. It’s really a jewel of a business focused again on the wealthiest people and family offices in the world, benefiting from a lot of secular growth as wealth continues to grow in the world, and we’re gaining share. We’ve got we think the best business in ultra high net worth.

Many people can, you know, suggest they can compete for that, but we see we’re underpenetrated still. So there’s a lot of share gain that we see there. And then away from our own ultra high net worth platform, we’ve got a big opportunity in third party wealth. We’re increasingly we’re putting Goldman Sachs solutions on other people’s wealth platforms. So I often joke or or say that our our single biggest strategic partner in wealth is Morgan Stanley Right.

Which, you know, some people kinda say how could that possibly be, but they’ve been a fabulous partner. We have a lot of Goldman Sachs solutions on their platform and increasingly on many other wealth platforms, and that’s going really quite well. And we see a lot of, secular opportunity there. So that’s another double digit growth opportunity that we see in front of us. And then the third area would be what we call solutions more broadly, which really speaks to more customization in important areas like direct indexing or tax loss selling where we’ve got a very strong product offering, active ETFs where we continue to grow our capabilities, and multi asset solutions, whether it’s OCIO or other multi asset capabilities that, again, offer double digit growth opportunities across our asset management platform.

So this is a this asset of wealth management is gonna be a significant growth driver for the firm. Have management fees now in excess of $10,000,000,000 against the firm that had about $54,000,000,000 of revenues. Our private banking and lending revenues are now about $3,000,000,000, growing at about a 13% compound annual growth rate over the last five years. So between management fees and private banking and lending revenues, we’re at over $13,000,000,000 of revenues. We characterize those as more durable revenues, and we’re really managing towards growing those more durable revenues at an accelerated pace.

We’ve grown that durable revenue category at a 12 CAGR over the last five years, and we think we can continue to grow it at a high single digit to 10% rate for the foreseeable future. So we’re pretty bullish about our ability to continue to grow that durable revenue base, which adds to a lot of durability and stability in the firm. And we think that asset and wealth management is a pretty unique opportunity. You look at a lot of businesses. This is a business that can grow revenues high single digits.

It can expand margins and drive much higher ROEs in that business and obviously throughout the firm. So our margins are now roughly at our initial target rate of mid twenties, but our ambition is much higher than that, and the margins should be higher than that. We’re still in the process of integrating these businesses and growing these businesses and getting to scale economies. And so we’ve gotta drive to higher margins. Last year, asset and wealth management represented about 25% of our firm’s profitability.

We will continue to drive that higher. Our job is to continue to drive that to be a high a significant portion of the firm, much larger than 25% over time, which strengthens the durability and predictability of our earnings and will continue to drive our firm wide returns higher.

Unidentified speaker, Interviewer, Goldman Sachs: K. Let’s let’s talk about a couple of initiatives, that the firm has announced. I think one is the Capital Solutions Group that you announced earlier this year. Remind us again, the rationale behind creating that and, ultimately, any progress so far, and how should we measure, progress going forward?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. So this is, to me, the best current example of one Goldman Sachs in action. We pulled together all of our wholesale financing businesses across the firm, which we were prosecuting in various parts of the firm into one unified platform. We called it the Capital Solutions Group. This is really the combined power of all of our origination and sourcing capabilities, plus our risk management and structuring capabilities, plus our distribution capabilities in one place.

We have an integrated team now that are advising our clients, corporate clients, institutional clients, etcetera, across a range of alternatives for their financing. They can look at public capital markets. They can look at structured private markets. We can do that all in one meeting. We can show them the full panoply of of alternatives that suit them most, you know, most importantly.

We have a broad base of relationships with a number of asset allocators all over the world. And so our job here is to partner with those asset allocators as we continue to source and originate interesting opportunities. We will partner with our clients all over the world and create interesting opportunities for them based on our sourcing. We see enormous financing needs globally. I mentioned earlier that the public sector is more levered, has much less fiscal headroom.

The world needs enormous capital. There are kind of three themes I would highlight. There are many other places where capital need, but to me, three big super themes. One is obviously AI and the need around investment to drive this generative AI explosion that we’re seeing. Two, which is a corollary of that, is power and energy.

So power and energy more broadly, there’s a big large amount of growth. A bunch of that will go to fuel the AI the AI boom. And three is just raw physical infrastructure, including in places like The United States where we have a lot to do from a raw physical infrastructure standpoint. Certainly, in a bunch of emerging markets around the world, there’s enormous needs. We think origination is the scarce resource and the driver of value.

So there’s tons of capital out there. Origination is what’s in short supply. Goldman Sachs benefits from powerful sourcing. We have, we think, humbly, the best origination sourcing capability in the world. Now we have it housed in one place.

And so our job here is to turn that sourcing into opportunities that serve our clients as well as serve our asset management franchise, sometimes catalyzed by our own balance sheet to make these transactions go. We will drive more client business through the sourcing. We will accelerate our the growth of our asset management franchise at the same time, which really is a clear example of one Goldman Sachs two dot o, helping our clients and driving our asset management business and doing that in a symbiotic fashion. But you have to have the sourcing and the origination in order to execute upon that. And I would say we’re probably two months in or so to, you know, to to the Capital Solutions Group platform.

And in that short period of time, we’re seeing a number of quite interesting and I would say very sizable opportunities that are inside our firm right now reflecting the power of this effort. And I think over the course of the summer and the fall, we’re gonna have some very interesting transactions to talk about which kinda demonstrate the power of what we’re trying to put together and how we can serve our clients as well as our own asset management ambitions symbiotically.

Unidentified speaker, Interviewer, Goldman Sachs: Sticking with the financing theme, fake financing has been another source of real strength for the business. Remind us again the sort of macro dynamics that are driving growth in fixed financing, how you think about growth going forward, and whenever investors hear financing growth, people worry about risk. So talk about that as well.

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. So fixed financing, really, I would characterize as collateralized lending, really providing financing to our clients secured by assets of some type. I and the way we think about it, there are really five sleeves that we that we really look at as the drivers of of fixed financing and that collateralized lending. First is capital calls and net asset value lines for private alternative asset managers, which is an explosive growth opportunity. Second is commercial real estate.

Third is residential real estate. Fourth is private credit more broadly as a narrowly defined opportunity set. And fifth is consumer finance. We’ve seen multifaceted growth actually across all five of those sleeves as we see tremendous financing needs across the economy. The largest area of growth undoubtedly in those five sleeves comes from the AUM growth of alternative asset managers.

Global private capital AUM is now upwards of $13,000,000,000,000 at the end of twenty twenty four, growing at about a 13% rate over the last five years. That is expected to grow to $23,000,000,000,000 over the next five years. So that’s an extraordinary amount of growth in private capital hands. All of that growth needs to be financed. None of that growth comes without any leverage.

The leverage attachment points can be different depending upon what those alternative asset managers are trying to achieve, but it all needs to get financed. So there’s enormous underlying backdrop of financing that that we see as a super attractive opportunity. This will feed our financing of private credit, which is one of the sleeves. It’ll feed our financing of capital call facilities. It’ll feed our financing of of nav loans, GP financings, etcetera, etcetera.

So there’s a lot to do in and around financing that growth in AUM. We also think there’ll be continued growth in consumer finance as the economy continues to expand. There’s obviously tremendous growth in residential real estate all over the world, and we’re starting to see some signs of recovery in commercial real estate, which has obviously been a tougher area, but we’re starting to see some signs of growth there. And there’s enormous leverage in there that needs to get recapitalized. There’ll be some interesting opportunities to finance the recapitalization in in CRE.

You mentioned risk. We talked about risk earlier. We are laser focused on risk managing this book. Most of what we do here is investment grade credit. It’s important to say that, essentially, we are financing investment grade rated structures, And most of this is highly structured and highly risk managed.

We manage our leverage attachment point carefully. So we’re constantly looking at what is our loan to value and we’re constantly scrutinizing value. One place people get in trouble is they fail to scrutinize value. They think about loan to value, but they fail to scrutinize the value part. We have very strict underwriting criteria.

So we’re highly focused on what are we really doing and what are we not doing. We benefit, as I said, from a lot of origination. One value of that origination is you don’t have to do everything you see. So we see a lot. We do very little.

And so we’re really picking and choosing the things that we think are most interesting, most attractive, most helpful to our clients that we’re willing to risk manage and absorb. That’s important. We spend a lot of time on constant concentration risk, so we don’t like having overly concentrated risk. We’re hugely focused on diversification, and we do an enormous amount of tail risk modeling. So what could go wrong from a macro that would start to impact any of these themes that we’ve talked about?

I would say we feel very good about the complexion of this risk profile. We stare at it a lot. I certainly spend a lot of my own time on it. We’ll risk manage this appropriately over time. I think you’ll see us continue to grow this business, but it will grow more prudently.

It will not grow likely at the rate that it’s grown over the last five years. And I think you’ll probably see us migrate more of that growth into funds. So more of this activity can live in asset and wealth management over time, which is a capital lighter, more efficient way to attack the what I think will be continued growth in the overall opportunity set, and we’ll probably approach it, you know, a little bit differently over time.

Unidentified speaker, Interviewer, Goldman Sachs: Interesting. Sticking with the financing theme, clearly, private credit, direct lending has been a key trend. I think Apollo was was presented just before you. Can you talk through your positioning, on private credit and growth opportunities going forward?

John Waldron, President and Chief Operation Officer, Goldman Sachs: So we have this doesn’t get as much attention. Certainly, firm like Apollo, you know, would run assets at 700,000,000,000 or or so in private credit. We are a large player, not that large, but a large player. We’re one of the larger players. We’ve got about a 40,000,000,000 of of assets on our private credit platform.

So we’re scaled. We’ve got, importantly, over thirty years of experience of doing this. So people think about private credit like it was, you know, started last week. This has been around a long time. It wasn’t called private credit back in the day, but we’ve been doing this for a quite quite a long time.

And we’ve got a very strong track record navigating through credit cycles. We haven’t seen a credit cycle in a while. I’m sure we will see one at some point, but we’ve seen them and we’ve met we’ve risk managed through them. We’ve got a very broad set of offering. So we we do a lot of senior lending.

We do a lot of hybrid lending. We’ve got a big mezzanine business. So we kinda run the gamut from senior all the way through to mezz. It’s to me quite strategically important, particularly in this day and age as we’ve talked about all the growth in private credit, to have the capability to go to a client and offer them a capital markets public solution alongside a private credit solution and to have all that in house. We don’t have to outsource it.

We don’t have to JV with anybody. We don’t have to partner. We have all those capabilities in house. Strategically, valuable for us and increasingly valuable for our clients. This private credit platform will be a big beneficiary of the Capital Solutions Group.

So you asked me about the Capital Solutions platform. Private credit will be a big big beneficiary of the origination that comes from that that capability. We have a stated ambition to grow our private credit from a hundred and 40,000,000,000 to 300,000,000,000. Certainly gonna see enough market growth for us to get there. It’ll be incumbent upon us to execute effectively.

You know, I think that the the opportunities are really centered around kind of three broad areas. One is asset based finance, which often gets termed private IG or private investment grade. There are a range of estimates out there. This is a 10 to $30,000,000,000,000 marketplace. You think about all of the liquid fixed income that sits on the balance sheets of insurance companies, pension funds, and other asset allocators.

That is the addressable market where you could offer a private investment grade opportunity that might have a higher yield, a higher level of alpha, well structured, as a component of your liquid fixed income or your broad fixed income bucket. This is an area of particular unique sourcing for Goldman Sachs, so I think we will do well here. The second area is what I would call hybrid capital, where, as we talked about, there’s all this enterprise value in private asset owners’ hands. All that enterprise value has got levered balance sheets. Those levered balance sheets have to be adjudicated.

They’re either gonna be adjudicated through an m and a transaction. They’re gonna have to get recapitalized or resorted in some way. There’s enormous opportunity for fresh capital to come in and to be a new player in in that capital structure, we will be really well positioned to do that based on our platform, our origination, and our capability in in hybrid capital. And then third party wealth, which we talked about earlier. Third party wealth is the untapped enormous growth opportunity for private credit.

A conservative estimate of US Adviser managed assets would be $35,000,000,000,000. 2 to 3% of those assets are managed in alternative form, so there’s an enormous opportunity for that two to 3% to grow. Every 1%, if you take that 35,000,000,000,000, it’s $350,000,000,000 of asset growth. So there’s significant runway in the marketplace to scale in private credit more broadly. We think plenty of runway for us to get to $300,000,000,000.

We’re obviously always analyzing risk and mindful of credit cycles. And I said we have a demonstrated track record of navigating through those cycles, and I think you should expect if there is a credit cycle that Goldman Sachs will perform exceptionally well relative to that cycle.

Unidentified speaker, Interviewer, Goldman Sachs: Great. Let’s switch to, talent. Goldman obviously is known for its its its talent bench, bought at the top and, through the organization. How does Goldman stay competitive, from a talent acquisition perspective making sure that remains a differentiator for the firm?

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. I I appreciate this question because I think we spend a lot of time talking about financials, and we don’t spend enough time talking about what what makes the place go. I think talent is an enormous important different differentiator for Goldman Sachs. People and culture really defined our success over our hundred and fifty six years. We are consistently investing and attracting, retaining, and developing great talent globally.

We ex we attract extraordinary talent all over the world. The the numbers are almost hard to believe. We have 875,000 applicants for experienced higher positions in the firm. We hire less than 1% of those people. Similarly, at the more junior level, we have 300,000 applicants for our summer internship programs.

We hire less than 1%. So we are very choosy in terms of who we wanna bring into the firm. I spend a lot of time as a number of our senior leaders do on campuses. I have to say when I look at campuses and I look at our young people that are in the firm already, the quality of the young professionals we have in our organization has never been better in my thirty plus years in the business. Maybe maybe it was before, but it isn’t, at least in my experience.

And our brand is exceptionally strong on campuses right now. I’m really pleased when I go to a campus and I see the the outpouring of interest and and and focus on Goldman Sachs, which I think is important for us to continue to have that talent generation at the at the, you know, at the front end. We make a significant investment in leadership and development. So we obviously wanna attract the talent, but then you’ve gotta do something really effective We have something called the Pine Street Leadership Academy, which we’ve had for a number of years, and we make a big investment there.

We have a concerted effort to invest in culture. COVID was hard for us because we were not physically connected, and this firm really operates best when we’re physically connected, which is why we were so ambitious in trying to bring people back to the office. We ran something called the Cultural Stewards Program, which started with the partnership with the firm at the most senior level to really define and narrate what is the culture of Goldman Sachs in the modern era. What do we want it to be for the next five, ten, fifteen, twenty years? And we started with the partners, and we’re now working our way through the firm to make sure that that cultural stewards concept and narration really drives throughout the entirety of the firm.

We do an enormous amount of succession planning. We now succession plan for about 300 of the top roles in the firm. We just made a series of promotions onto our management committee reflective of really a next generation of succession planning and the next generation of leadership coming through the Pine Street Academy as well as our leadership succession planning process. This is an extraordinarily impressive group of professionals coming from all walks inside the firm that I think will be really instrumental to the growth of the firm in the next five to ten years. And we’re obviously focused on compensation and wealth creation over time, and it’s important to think about it as wealth creation over time.

We’re living in a very competitive talent market. Goldman Sachs talent is hugely attractive to outside parties. We’re investing to ensure that we remain at the top of that pyramid from a wealth creation standpoint so we can obviously retain and and grow and develop that talent if we want to. Good stuff.

Unidentified speaker, Interviewer, Goldman Sachs: Expenses, maybe not as sexy a topic.

John Waldron, President and Chief Operation Officer, Goldman Sachs: How you imagine expenses in in this environment? Not a sexy a topic, but a very important topic. I I feel certainly, in my job, I feel like we’re always navigating short term focus on expenses to drive better financial performance with a clear need to make long term investments to make the firm stronger over time. And that balance and that tension is a healthy balance, and we’re always navigating. And I think we’ve proven over the last handful of years to be pretty adept at balancing that tension.

We are driving better ROE performance in the short term, which is important. We’re also making, I think, really important strategic long term investments in the firm to make the firm better, you know, three, five, ten years from now, which is important as stewards of the firm and also important for our shareholders over time. Currently, we’re working on a three year efficiency plan. So there’s really three areas of focus there. One is what I’ll call organizational structure, which is kinda your traditional spans and layers and pyramid work, which we always are looking at, and we’re doing a refresh of that right now.

Second is spend management. We’re doing a lot of work around vendor managing, purchasing. We actually hired a chief purchasing officer for the first time in the firm’s history, and so we’re doing some work around our spend. And then automation, which is elusive. Certainly, as a chief operating officer, I always find it more elusive than I would like.

But I think probably the most important long term productivity enhancement in the firm, and I think really important that we get it right. So this this kind of three tiered approach to operating efficiency will definitely result in some short term cost savings and should improve our, you know, our returns in the short term. But I think even more importantly, it will create, if we do it properly, consequential gross efficiencies over time. And that gives us the flexibility. And we’re using gross efficiencies as an important term.

It’s it’s it’s purposeful because it gives you the flexibility to either bank those efficiencies as savings or invest them back into the firm to drive better returns and better keep you know, better outcomes over time. And so this to me is a really good example of us investing to operate at scale, which was the third pillar of our strategy. This really is driving scale economies, driving margin improvement, and getting higher returns on capital. And so this is, while not sexy, I think incredibly important for us.

Unidentified speaker, Interviewer, Goldman Sachs: Right. Speaking of automation that’s elusive, maybe AI might might help solve that. Yeah. So curious what you’re seeing so far in terms of sort of practical

John Waldron, President and Chief Operation Officer, Goldman Sachs: Yeah. I I would say, we have a very clear investment plan, across a large number of use cases. We started with an enormous number of use cases, and we whittled it down to the use cases that we wanna spend money on. And so we’ve built our own platform, which we call the GSAi platform, that enables us to run the latest models securely and responsibly and to drive business specific AI solutions with tooling, you know, on top of them. We think having a human in the loop is really important.

We would characterize it as a critical safety control and also an important way to make sure that that tooling is being utilized properly. We’ve kinda got a two pronged approach. So we’re scaling that GSAI platform quickly, but we’re also utilizing important strategic partnerships with with some of the obvious players out there, which gives us access to the best external capabilities and the latest, most important, and impressive model so that we can use our data, use those models with our data, and actually get the best possible outcomes and continue to be on the front edge of what’s what’s happening quite quickly. The earliest signs of progress we see are in software development. So we’re driving over 20% productivity gains with our coders who are developing and coding with this copilot tooling.

So they’re seeing, you know, quite robust gains in productivity. I think we’ll start seeing some real progress this year in areas that include knowledge worker productivity. We generate a lot of content in the firm, so you can imagine the knowledge workers and the content creation that we do, research, analytics, quantitative investing. You know, those would be some areas that I would highlight where I think this year in our plan, we’ll start seeing some of those efficiencies coming through. It’ll be better in ’26 and ’27, but this year will be the first the first year of progress.

And I’d say, importantly, we’re beginning to experiment with this agentic tooling, which really you know, it’s early, and you don’t wanna be overly optimistic too soon. But we’re seeing, you know, some pretty early signs of enablement of this tooling to give you the ability to do multidimensional processes across the firm with many fewer people and have a much more automated, you know, kind of series of processes. So I’d say overall, we’re gaining a lot of confidence. We expect AI will continue to become a significant tailwind in the firm. We’re gonna invest to automate, and we’re gonna drive efficiencies and productivity gains.

And, really, the incumbent the the the question will be how do we reinvest those productivity gains back into the firm over time.

Unidentified speaker, Interviewer, Goldman Sachs: Okay. Given we’re, nearly out of time, I’ll try and squeeze one last one in here. We’re just bringing everything together here. How do you think about some of the targets that you’ve already put out, in terms of reevaluation, higher, lower? So

John Waldron, President and Chief Operation Officer, Goldman Sachs: we put out targets quite a while ago now that are really mid teens return targets through the cycle. We still feel very confident we can execute to that level. We have, as I said, these two large businesses, Global Banking and Markets and Asset and Wealth Management. They’re both performing very well. Global Banking and Markets now delivering demonstrably through different weather environments mid to high teens.

I think that’s important to just kinda restate. Those businesses are delivering mid to high teens through some pretty interesting and challenging market environments. We talked about asset and wealth management, which is progressing towards mid teens. We’re not there yet. We still had significant balance sheet that we were working down.

We’re trying to create those scale economies. We’re driving durable revenues, and that business will progress towards mid teens. That’s an important component of getting to our mid teens returns targets. We’re making investments to continue to raise the floor of our returns, and we’re improving the durability of returns, both of which are important. We want high returns, higher returns, but we also want durability of returns.

So I think we’re making really good progress. Those targets are still very much in our frame. We’re highly focused and, I would say, highly incented to drive value creation for our shareholders over the medium to long term, and we appreciate those of you that are shareholders. And and, we will continue to perform well. And thank you for the time.

Unidentified speaker, Interviewer, Goldman Sachs: Fantastic. So that will end it. Thank you.

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