The Goldman Sachs Group, Inc. (GS) 2024 Q2 Earnings Call Summary

Optimistic Highlights

Strong Year-on-Year Growth: Goldman Sachs reported solid growth in global banking and markets and asset wealth management, with a 10.9% ROE for Q2 and 12.8% for the first half of the year.
Leadership in M&A and Equity Underwriting: Maintained the number one rank in announcement completed M&A and ranked number two in equity underwriting.
Record Assets Under Supervision: Assets Under Supervision reached a record $2.9 trillion, with total wealth management client assets rising to approximately $1.5 trillion.
Significant Fundraising in Alternatives: Raised $36 billion year-to-date, with expectations to exceed $50 billion in alternatives fundraising for the year.
Optimism in AI and Technology: The board's visit to Silicon Valley highlighted the potential for AI and technology to drive future growth and demand for Goldman Sachs' services.

Geopolitical Instability and Inflation Concerns: Acknowledged the high level of geopolitical instability and the stickiness of inflation as potential challenges.
Stress Test Results and Capital Buffer Increase: Expressed concerns over the Federal Reserve's stress test results and the increase in the stress capital buffer, which did not align with the firm's view of its strategic evolution and risk reduction efforts.

Continued Focus on Strategy and Client Service: Confident in the state of the client franchise and the firm's strategy to serve clients effectively in a complex operating environment.
Moderation in Share Repurchases: Plans to moderate buybacks compared to the levels in the second quarter due to higher than expected SCB requirements.
Expectation of M&A Activity Pickup: Anticipates a reacceleration of sponsor activity and a return to more normalized levels of M&A activity.

Q: Can you discuss the outlook for private equity related M&A and the firm's position in private credit? (Glenn Schorr, Evercore)
A: Momentum in M&A is picking up, though still below 10-year averages. Sponsor activity is accelerating, and Goldman Sachs is well-positioned with its leading leverage finance and private credit platforms.
Q: How does the increase in the SCB affect the firm's financing business and buyback plans? (Ebrahim Poonawala, Bank of America)
A: The firm has the capacity to support its client franchise and return capital to shareholders, planning to moderate buybacks but maintain flexibility.
Q: Can you provide insights into the competitive landscape in banking and markets? (Matt O'Connor, Deutsche Bank)
A: Despite increased competition, Goldman Sachs' integrated approach and global scale position it well. The firm is focused on serving clients and leveraging its strengths.
Q: How is artificial intelligence being implemented within Goldman Sachs? (Gerard Cassidy, RBC)
A: AI is used to increase productivity, enhance client service, and improve decision-making. The firm sees significant opportunities for AI to drive business growth.
Q: What drove the reduction in credit RWA this quarter, and is there room for further optimization? (Saul Martinez, HSBC)
A: Reductions in derivative exposure and equity investment exposure contributed to lower credit RWA. The firm continues to focus on capital and RWA optimization.