“I I know Everyone wants to know the answer to that question,” said Goldman Sachs boss David Solomon, as he was visibly angered by yet another question about the bank’s plans for its “platform solutions business,” one of its Home of the consumer lending unit, which loses $1.7 billion in 2022. “But I can’t answer that. ’ The investor then tried to flatter: “Goldman Sachs is world-class in risk management … when you make bad trades, you get out,” he began, before asking what else the bank could do to reduce Loss of platform solutions. “Thank you for the compliment,” Mr. Solomon replied, before turning away to move on to the next question. On February 28, shareholders, analysts and media attending the investor day event at the company headquarters packed the auditorium, became stiff.
The tense exchange reflected frustration within Goldman Sachs. Mr. Solomon can point to some successes. Since he took over in 2018, the firm has posted an annualized total shareholder return of 13% — outperforming the overall market and nearly all rivals, with the exception of its main rival, Morgan Stanley, which returned rate of 21% period.
Mr Solomon attributed the success to the firm’s commitment to deliver on promises it made at its first investor day three years ago, such as increasing market share in investment banking and strengthening assets under management. Viewed in this light, critics’ obsession with the loss of platform solutions, which remain a small part of the company, is not justified.
However, the clash also showed investor frustration. Although Goldman Sachs’ core business is doing well, these are very strange times for capital markets, and it is difficult to say how much success can be replicated. The company has struggled to devalue the investments it makes using its own balance sheet, which has resulted in wild swings in earnings. Platform solutions may represent a small portion of the business, but the cost is constantly increasing. Losses double from 2021 to 2022, shaving two percentage points off last year’s return on equity.
At its investor day, Goldman tried to reassure shareholders. That included a guilty plea by Mr Solomon, who said Goldman had “done things too fast, too fast” and entered areas where it had “no competitive advantage”. New commitments were also made. Stephanie Cohen, head of platform solutions, said the scale would help the business become profitable by 2025. Mr Solomon scoffed at the sale, saying Goldman was exploring “strategic options”. Bloomberg later reported that the company may be selling GreenSky, a home improvement lender it acquired only a year ago. The mixed messages — vows to grow the business and shed parts of it — seemed to confuse investors. Shares fell.during the day Second&p The Large U.S. Companies 500 index fell just 0.3 percent, while Goldman Sachs shares fell nearly 4 percent.
Behind Mr. Solomon, a screen displays the company’s slogan of the day, the syntactically awkward “focus on moving forward,” as he answers investors’ questions. Message from investors: Not yet. ■
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