The Goldman Sachs Group Q2 2025 Earnings Report

The Goldman Sachs Group EPS Results

• Actual EPS: $10.91
• Consensus EPS: $9.82
• Beat/Miss: Beat by +$1.09
• One Year Ago EPS: $8.62

The Goldman Sachs Group Revenue Results

• Actual Revenue: $14.58 billion
• Expected Revenue: $13.53 billion
• Beat/Miss: Beat by +$1.05 billion
• YoY Revenue Growth: +14.50%

The Goldman Sachs Group Announcement Details

• Quarter: Q2 2025
• Date: 7/16/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 16, 2025
• Conference Call Time: 9:30AM ET

The Goldman Sachs Group (NYSE:GS), a financial institution, provides a range of financial services for corporations, financial institutions, governments, and individuals worldwide. It operates through Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments. The Global Banking & Markets segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs; and relationship lending, and acquisition financing, as well as secured lending, through structured credit and asset-backed lending and involved in financing under securities to resale agreements. This segment also offers client execution activities for cash and derivative instruments; credit and interest rate products; and provision of mortgages, currencies, commodities, and equities related products, as well as underwriting services. The Asset & Wealth Management segment manages assets across various classes, including equity, fixed income, hedge funds, credit funds, private equity, real estate, currencies, and commodities; and provides customized investment advisory solutions, wealth advisory services, personalized financial planning, and private banking services, as well as invests in corporate equity, credit, real estate, and infrastructure assets. The Platform Solutions segment offers credit cards and point-of-sale financing for purchase of goods or services. This segment also provides cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.

The Goldman Sachs Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We delivered net revenues of $14.6 billion, EPS of $10.91, and a 12.8% ROE in Q2, lifting first-half ROE to 14.8%.
• Positive Sentiment: Investment banking saw announced M&A volumes up 30% year-over-year and a fifth straight quarterly backlog increase, driven by both strategic and sponsor clients.
• Positive Sentiment: Markets revenue was robust, marking record equities financing revenues of $1.7 billion (+23% Y/Y) and FICC net revenues up 9% amid diversified client activity.
• Positive Sentiment: Asset & wealth management surpassed $3.3 trillion in assets under supervision, raised $18 billion in alternatives, and recorded its 30th consecutive quarter of long-term fee-based net inflows.
• Positive Sentiment: Capital flexibility strengthened with a 3.4% expected stress capital buffer, a 14.5% CET1 ratio, a 33% dividend hike to $4/share, and a $40 billion buyback authorization.

Presentation

[Operator]

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 twenty twenty five 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.

[Operator]

This audio cast is copyrighted material of The Goldman Sachs Group Inc. And may not be duplicated, reproduced or rebroadcast without consent. This call is being recorded today, 07/16/2025. 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, Chairman & CEO at Goldman Sachs]

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 $14,600,000,000 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 differentiated business across investment banking, financing, risk intermediation, and asset and wealth management.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 and 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 and 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

We've seen a pickup in momentum with both strategic and sponsor clients as exemplified by Energy Energy's $12,000,000,000 portfolio acquisition from LS Power and Salesforce's $8,000,000,000 acquisition of Informatica. 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 in the secondary market. Though 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 backlog, which rose for a fifth consecutive quarter driven by advisory.

[David Solomon, Chairman & CEO at Goldman Sachs]

Importantly, our advisory backlog was up significantly versus twenty twenty four year end levels. We have also remained active across our leading second equities businesses, which yet again produced 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 support of opportunity set. We are also benefiting from successful multiyear execution across our strategic priorities of driving growth in financing and prudently maximizing wallet share, which we have clearly added further balance 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 financing.

[David Solomon, Chairman & CEO at Goldman Sachs]

At the same time, we remain laser focused on wallet share, and we now rank in the top three with a 125 of the top 150 clients globally, up from 77 in 2019. Importantly, these hard won share gains contributed to the demonstrated resilience of these diversified businesses. In asset and wealth management, we continue to have momentum in alternatives where we raised $18,000,000,000 this quarter driven by demand for flagship funds across strategies including secondary, hybrid capital, and growth equity. Wealth management client assets rose to a record 1,700,000,000,000, and we're making solid progress on increasing lending to our ultra high net worth clients with loan balances of 42,000,000,000. All in, our assets under supervision rose to a new record of 3,300,000,000,000.0, representing our thirtieth consecutive quarter of long term fee based net inflows.

[David Solomon, Chairman & CEO at Goldman Sachs]

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. 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, which is quickly developing into an economic force that will permeate every industry. 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. In light of the formation of the Capital Solutions Group, we've never been better positioned to meet this demand.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 the scale allowing for safe, secure, and responsible access to firm approved external large language model. We recently began 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. We will be deploying these agentic AI developers for prioritized use cases, which we believe will significantly enhance velocity, transform our capabilities, and drive efficiency. As 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

Before I turn it over to Dennis, I want to emphasize the significant progress we've made on all our strategic objectives. 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 these results I'm pleased to see the results of these multiyear 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. At the same time, we are committed to returning capital to shareholders, including delivering a sustainable and growing dividend.

[David Solomon, Chairman & CEO at Goldman Sachs]

Our board approved a 33% increase in our quarterly dividend to $4 a share, which underscores our confidence in the durability of our franchise. Since 02/2018, 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 US economy.

[David Solomon, Chairman & CEO at Goldman Sachs]

We look forward to further progress, and we'll 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

With this in mind, we remain very focused on risk discipline. While 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 backdrop. 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. I'll now turn it over to Dennis to cover our financial results for the quarter.

[Denis Coleman, CFO at Goldman Sachs]

Thank you, David. Good morning.

[Denis Coleman, CFO at Goldman Sachs]

Let's start with our results on Page one of the presentation. In the second quarter, we generated net revenues of $14,600,000,000 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 $0.33 and our ROE by 40 basis points. Let's turn to performance by segment, starting on page three. Global Banking and Markets produced revenues of $10,100,000,000 in the quarter with an ROE for the first half of nearly 18%.

[Denis Coleman, CFO at Goldman Sachs]

Turning to page four. Advisory revenues of $1,200,000,000 rose 71% versus a year ago, reflecting strength in The Americas and EMEA. For the year to date, we remain number one in the lead tables for M and A with a lead of roughly $85,000,000,000 in announced volume and a $145,000,000,000 in completed volumes versus our next closest peer. Equity underwriting revenues of $428,000,000 were essentially flat year over year, while debt underwriting revenues of $589,000,000 fell 5% amid lower leverage finance activity. Year to date, we ranked second in equity and equity related underwriting and second in both high yield debt underwriting and leverage lending.

[Denis Coleman, CFO at Goldman Sachs]

Across investment banking, our backlog rose sequentially for a fifth quarter even with strong realizations and remains notably higher versus 2,024 year end levels. FICC net revenues were $3,500,000,000 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 $1,000,000,000 were driven by strong performance in mortgages and structured lending. Equities net revenues were a record $4,300,000,000 in the quarter.

[Denis Coleman, CFO at Goldman Sachs]

Equities intermediation revenues of $2,600,000,000 rose 45% year over year, driven by strong performance across cash and derivatives as clients were active in repositioning their portfolios. Record equities financing revenues of $1,700,000,000 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 relevered, though net leverage overall remains at historically moderate levels. We continue to maintain robust risk discipline around our client financing portfolios. Total financing revenues of $2,800,000,000 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 revenues.

[Denis Coleman, CFO at Goldman Sachs]

Let's turn to page five. Asset and wealth management revenues were $3,800,000,000. Management and other fees were up 11% year over year to $2,800,000,000 on higher average assets under supervision. Incentive fees were a $102,000,000. We expect to make further progress on our target of $1,000,000,000 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.

[Denis Coleman, CFO at Goldman Sachs]

Private banking and lending revenues were $789,000,000, 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 3,600,000,000 across management and other fees and private banking and lending were a record as we continue to invest in the growth of these businesses. Revenues from equity investments and debt investments totaled $82,000,000 Within equity investments, we saw modest net losses in our private portfolio driven by markdowns in relation to certain real estate positions. Positions. Given the more challenging harvesting environment, we expect results in the second half twenty twenty five to be more muted relative to our medium term run rate expectations.

[Denis Coleman, CFO at Goldman Sachs]

In the AWM segment, we generated a 22 pretax margin and roughly 9% ROE in the first half of the year. Excluding the impact of historical principal investments and its $3,800,000,000 of average attributed equity, our pretax margin and ROE would have each been approximately three percentage points higher. Now moving to Page six. Total assets under supervision ended the quarter at a record $3,300,000,000,000 up sequentially on $115,000,000,000 of market appreciation as well as $17,000,000,000 of long term net inflows in alternatives and equity, representing our thirtieth consecutive quarter of long term fee based net inflows. Turning to Page seven on alternatives.

[Denis Coleman, CFO at Goldman Sachs]

Alternative assets under supervision totaled $355,000,000,000 at the end of the second quarter, driving $589,000,000 in management and other fees. Gross third party alternatives fundraising was $18,000,000,000 in the quarter, bringing year to date fundraising to $37,000,000,000 We continue to expect fundraising to be in line with recent years. On Page nine, firm wide net interest income was $3,100,000,000 in the second quarter, up sequentially on an increase in interest earning assets. Our total loan portfolio at quarter end was $217,000,000,000 up versus the first quarter, primarily reflecting higher other collateralized lending. Our provision for credit losses of $384,000,000 primarily reflects charge offs in our credit card portfolio as well as modest levels of growth across both the card and wholesale portfolios.

[Denis Coleman, CFO at Goldman Sachs]

Turning to expenses on Page 10. Total quarterly operating expenses were $9,200,000,000 Our year to date compensation ratio net of provisions remained at 33% and is inclusive of roughly $140,000,000 in severance costs. Quarterly non compensation expenses of $4,600,000,000 included approximately $100,000,000 of CIE impairments and rose 6% year over year, driven by higher transaction based expenses. Our effective tax rate for the first half of twenty twenty five was 20.2. For the full year, we expect a tax rate of approximately 22%.

[Denis Coleman, CFO at Goldman Sachs]

Next, capital on Slide 11. In the quarter, we returned $4,000,000,000 to shareholders, including common stock dividends of $957,000,000 and common stock repurchases of $3,000,000,000 Our common equity Tier one ratio was 14.5% at the end of the second quarter under the standardized approach. While the NPR on CCAR averaging is still outstanding, Under the current regulatory framework, our new CET one requirement will be 10.9% as of October 1. Earlier this year, our board authorized a multiyear share repurchase program of up to $40,000,000,000, providing us increased capital management flexibility. As David mentioned, our Board also approved a 33% increase in our quarterly dividend of $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.

[Denis Coleman, CFO at Goldman Sachs]

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, and we are confident that we will continue to deliver for shareholders. With that, we will now open up the line for questions.

[Operator]

Thank

[Glenn Schorr, Senior MD & Senior Research Analyst at Evercore]

Hi, thank you. So you've been doing a very good job of growing your financing business 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 gonna do with all this capital if you do get reg reform? Well, here we are. You have a 10.9, and you have a lot more than that, and you're making a ton of money.

[Glenn Schorr, Senior MD & Senior Research Analyst at Evercore]

So my blunt question is, what do you do with all this excess capital now that you have it? Do you have places that you can allocate what is now large amounts of of excess capital organically?

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. Thanks for the question, Glenn. And and, you know, I'll I'll start, and and Dennis Dennis might add a, you know, might add a few things, you know, on a more granular basis. But first of all, know, our capital methodology does not change, you know, with the capital regime adjusting based on what's going on regulatorily. You know, we 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 gonna go.

[David Solomon, Chairman & CEO at Goldman Sachs]

You know, given the way things are shifting, we are seeing some opportunities for deployment. Some of that comes from from, you know, the structure of the capital stack, and some of that comes from the fact that activity is picking up, particularly in m and 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 we think there are opportunities for us to continue to deploy and grow the business. That's where our primary focus would be.

[Glenn Schorr, Senior MD & Senior Research Analyst at Evercore]

I know if Dennis wanted to add. Okay. And and then maybe we could circle the square. You you talked about a a challenging harvesting environment, yet at the same time, we have eyes and we see big booming investment banking pie pipelines and and growing m and 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 wanna monetize amidst a good banking backdrop?

[Denis Coleman, CFO at Goldman Sachs]

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.

[Denis Coleman, CFO at Goldman Sachs]

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, you know, per fit 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.

[Denis Coleman, CFO at Goldman Sachs]

It now stands at about about $8,000,000,000. 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

The only the only thing, Glenn, I just wanna add to that, we're committed. This is now a small portfolio, but, you know, you would it's 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. But at the moment, it's a small portfolio. We'll continue to chip away.

[Operator]

You. We'll take our next question from Ebrahim Poonawala with Bank of America.

[Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch]

Hey. Good morning.

[Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch]

I guess, just first question, Dennis, to follow-up on capital. I think the 10.9 versus 14 and a half CET one. 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 CET one ratio you're targeting against as we think about go forward basis? And obviously, it has implications for ROE.

[Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch]

So how are you thinking about potential for SCB moving higher because of trading losses next year? And what's sort of the right seat even target that we think about for Goldman going forward? Thanks.

[Denis Coleman, CFO at Goldman Sachs]

Sure. 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 and and when they're, 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 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.

[Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch]

Got it. And in just following up on sort of capital deployment opportunities, where does, if at all, inorganic acquisitions rank when you think about a a use of capital?

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. I mean, I I Ibrahim, I I you've asked me this question before, and we've 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, these there there aren't lots of these things.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 wanna, you know, I wanna highlight with a very, very high bar around doing significant things.

[Operator]

Thank you. We'll take our next question from Betsy Graseck with Morgan Stanley.

[Betsy Graseck, Global Head - Banks & Diversified Finance Research at Morgan Stanley]

Hi, good morning. David, I just

[David Solomon, Chairman & CEO at Goldman Sachs]

Good morning.

[Betsy Graseck, Global Head - Banks & Diversified Finance Research at Morgan Stanley]

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?

[David Solomon, Chairman & CEO at Goldman Sachs]

Sure. Sure, Betsy. And I 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 increase. 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. And we had a nominal dividend, and we've been kind of growing into it.

[David Solomon, Chairman & CEO at Goldman Sachs]

As we've been growing the firm, we've been growing into getting to the place that we want, you know, 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 yields, with respect to dividend against 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, we decided that this more significant move was appropriate.

[David Solomon, Chairman & CEO at Goldman Sachs]

I don't think you should expect a 33% increase in dividend every year. We wanna 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.

[Betsy Graseck, Global Head - Banks & Diversified Finance Research at Morgan Stanley]

Oh, okay. Great. So payout ratio could inch up from here is what I'm hearing. 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.

[Betsy Graseck, Global Head - Banks & Diversified Finance Research at Morgan Stanley]

I know it's 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?

[David Solomon, Chairman & CEO at Goldman Sachs]

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 and what we think they can generate. 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 and processes, and it's not just to take cost out, although there will be operating efficiency and cost that can come out.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 agentic capability to have our engineers guide software develop that at a much faster pace and a much larger scale. So it's both a productivity game that allows investment in growth, that's for the revenue side of your equation, but also there's enormous operating efficiency in the firm and in other businesses.

[David Solomon, Chairman & CEO at Goldman Sachs]

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.

[Operator]

Thank you. We'll go next to Mike Mayo with Wells Fargo Securities.

[Mike Mayo, MD & Head - US Large-Cap Bank Research at Wells Fargo]

Hi. You said earlier in the call you expect a lot of m and 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?

[Mike Mayo, MD & Head - US Large-Cap Bank Research at Wells Fargo]

What kind of deals? What geographies? And what gives you the extra confidence given that there's still some uncertainty out there? Thanks.

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. Well, I I mean, I'd highlight, Mike, that if you you know, I appreciate the question. I know that 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 and a activity coming through the pipe. You heard my comments, Dennis' 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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. And I just say the elevated level of of of dialogue is in a much different place than it was three to six months ago. And so we're encouraged.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 and, you know, as we enter this quarter, we're seeing a better level of accruals.

[Denis Coleman, CFO at Goldman Sachs]

Mike, what I what I would what I would add is we get this this question a lot trying to reconcile our performance and the change in our backlog with, you know, the ongoing uncertainty in the world. It is in times of of uncertainty that clients typically turn to Goldman Sachs given our long standing leadership position advising the biggest and most important companies on their most consequential transactions. And while there 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. And to see it, the last thing, Mike, not not to not to beat the horse, we said it in the script, Announced m and a is up 30% year over year. Okay? That's a significant move, and it's higher, you know, 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.

[Mike Mayo, MD & Head - US Large-Cap Bank Research at Wells Fargo]

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?

[David Solomon, Chairman & CEO at Goldman Sachs]

You know, I I I think what I said before when I I guess it was Betsy that asked the question. You know, we're we are 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. But I, you know, I don't have anything to add more specifically at this point, Mike. But, obviously, we're looking for opportunities to continue to scale and grow the positioning of that, you know, asset management platform.

[David Solomon, Chairman & CEO at Goldman Sachs]

It's a $3,300,000,000,000 platform. It's very broad and diverse in what it does, but there are certainly opportunities to accelerate our scaling in certain places, and we'll consider those things.

[Operator]

You. We'll take our next question from Steven Chubak with Wolfe Research.

[Steven Chubak, Managing Director at Wolfe Research LLC]

David, in response to Glenn's earlier question, you noted that you're still committed to reducing on balance sheet alternative investments. Following the Fed's decision this year to apply more favorable treatment in DFAST for those types of activities, it appears to have meaningfully reduced the burden for engaging in 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?

[David Solomon, Chairman & CEO at Goldman Sachs]

So on the broad strategy, you know, I you know, never is a big word, Steven, but we have no plans. We have no plans to to change our strategy. 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 coinvest 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 alternatives platform on balance sheet. We've pivoted away from that strategy.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 gonna pivot from that.

[Denis Coleman, CFO at Goldman Sachs]

But your your point remains valid, Steven, in that the strategy is driven by coinvesting 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.

[Steven Chubak, Managing Director at Wolfe Research LLC]

No. Thanks for that color. 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 physicians. I was hoping you can provide some perspective on whether you believe that the gains are durable.

[Steven Chubak, Managing Director at Wolfe Research LLC]

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 CET1, but just what you believe is durable or sustainable in terms of the gains that you realize this year.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 debts. You know, your first question was was specific to that.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 on that. We were incredibly confused last year, okay, when our SEV 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. 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 gonna 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

And so I'm hopeful that we'll have more transparency. It will 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 gonna keep the flexibility to adapt until there's more clarity on these capital rules. And I think we're gonna get more over the course of the next twelve months.

[Operator]

Thank you. We'll take our next question from Devin Ryan with with Citizens JMP.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

David, Dennis, how are you?

[David Solomon, Chairman & CEO at Goldman Sachs]

Great. Good.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

First off, not sure how I feel about having an AI named after me, but excited to see this evolve. But but but we already touched on that. So I wanna 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 and how you're covering these clients today compared to the past.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

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 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. Thanks, Devin. I appreciate the question. I think there are a handful of things that we've invested in and executed on over the course of the last years that have really driven our ability to gain these market shares. And it starts with one Goldman Sachs and really you know, a change in the overall coverage philosophy across the organization.

[David Solomon, Chairman & CEO at Goldman Sachs]

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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 gonna continue to make that kind of a fundamental pillar of our client service value and really executing against our plan.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

That's great, David. 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

Sure.

[David Solomon, Chairman & CEO at Goldman Sachs]

Sure. Obviously, the legislative agenda that's putting regulatory structure around around stablecoins 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 and the direction of travel. We think there are a handful of places where there could be interesting opportunity for us, potentially around funding.

[David Solomon, Chairman & CEO at Goldman Sachs]

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. It's early to say, you know, specifically where we're gonna 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 make sure we're well positioned to capture to capitalize on that as that evolves.

[Operator]

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

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Hi. Good morning. My first question is a follow-up. You know, you mentioned that the ideal buffer to your CET1 minuteimum is 50 to 100 basis points. But looking at your, you know, current standardized fourteen five and clearly your potential new minimum of ten nine, you know, that implies a pretty significant buffer still.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Implicit in David's earlier remark is that transparency transparency in the 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?

[Denis Coleman, CFO at Goldman Sachs]

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 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. 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 one GS 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 them more with their desire for financing. We have a very disciplined, risk sensitive, return sensitive allocation process given the historical levels of flexibility that we've had with respect to capital.

[Denis Coleman, CFO at Goldman Sachs]

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 return of capital through buybacks, etcetera, to reduce some of that buffer. So we will or 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 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah.

[David Solomon, Chairman & CEO at Goldman Sachs]

The only the only other thing, Erica, just stepping up at a much higher level that I think is important to recognize, and and 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. One is ESLR and the proposal around that, which seems to be moving forward. The second is a discussion around G SIB and the calibration of G SIB. Because when you look at the significant increase in large bank capital over the course of the last eight years, let's say, a significant portion of that has come from GSIB and the lack of GSIB calibration.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 twelve months.

[Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group]

Got it. Thank you.

[Operator]

Thank you. We'll take our next question from Dan Fannon with Jefferies.

[Dan Fannon, MD - Research Analyst at Jefferies & Company Inc]

Thanks. Good morning. If investment banking trends accelerate and we do see, you know, more M and 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 business?

[David Solomon, Chairman & CEO at Goldman Sachs]

You know, Dan, I I I, you know, I don't I don't have a great a great way to answer that or to speculate. What I would what I would say is 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 know, consistently and, I mean, you heard it in Dennis' 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

You know, next quarter, there could be strength in commodities. 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 wanna 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 it's quite constructive for our markets business quite constructive for our markets business.

[Dan Fannon, MD - Research Analyst at Jefferies & Company Inc]

Thank you. That's helpful. 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. You've got potential changes around alternative assets being added to retirement accounts. How are you positioned to capitalize on this opportunity?

[David Solomon, Chairman & CEO at Goldman Sachs]

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 run a wirehouse or a platform like that, but we have been building third party wealth distribution partnerships very actively. We have a big team here who's been very focused on it.

[David Solomon, Chairman & CEO at Goldman Sachs]

We've been in active discussions around partnerships, with others in the retirement channel, and we see this as a pretty significant opportunity. And and one of the things that's 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 firms that would benefit from this. I haven't seen Goldman Sachs mentioned the benefiting from this. Goldman Sachs will benefit from this. And so we're excited about the opportunity and extremely focused on it.

[Operator]

Thank you. We'll take our next question from Chris McGratty with KBW.

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Great. Thanks for the question. In your prepared remarks, Gabe, you talked a lot about building a sustainable revenue model, less volatility. If we kind of step back and think about the medium term ROE that you've talked about, 15% to 17%, Is that I guess, 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 two, if that is the case, what's what's gonna be the driver, numerator or denominator from here? Thank you.

[David Solomon, Chairman & CEO at Goldman Sachs]

So first, Chris, welcome to the beat. Delighted to have you. I you know, we we have been we have been talking about our ability to drive the firm to mid teens ROEs, slightly higher what you just quoted, ROTEs. What's going on from a regulatory to macro perspective gives us a higher level of confidence in our ability to deliver on that. That's where we are.

[David Solomon, Chairman & CEO at Goldman Sachs]

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, 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' ability to deliver mid teen returns through the cycle. And so it's the continued execution in asset wealth management, that's uplifting those returns.

[Denis Coleman, CFO at Goldman Sachs]

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, source of tailwind that is part of and an accelerant to the already existing strategy. The bar should. You know what?

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Thank you.

[Operator]

Thank you. We'll take our next question from Saul Martinez Okay. With I'm sorry, Chris. Did you have another question?

[Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)]

Thank you. No. I'm just saying thank you. Appreciate it.

[Operator]

Thank you. We'll take our next question from Saul Martinez with with HSBC.

[Saul Martinez, Head - US Financials Research at HSBC]

Hi. Thanks for taking my questions. I'll I'll just wanted to follow-up on maybe Betsy's question on the dividend and and ask it a slightly different way. It it obviously suggests greater confidence in how you're thinking about the durability of your of your revenue and earnings power. But is there how do we think about it, or what does it imply about how you see your own core earnings power?

[Saul Martinez, Head - US Financials Research at HSBC]

If we were to assume, for example, a a one third dividend payout ratio would imply, you know, $12 a share or $48 annualized in earnings power, and obviously then, you know, over time you grow from that. But, I mean, is that an overly simplistic way of of thinking about it? Or or does it you know, is it is is the dividend you know, can we draw conclusions about what it implies about how you're thinking about your own core earnings power today?

[David Solomon, Chairman & CEO at Goldman Sachs]

Yeah. I I I you know, I I would say the following I would say the following, Phil, to that question. We you know, the firm the firm has enormous core earnings power. You know, we we think we 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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. But but we are comfortable with with we are comfortable with where we are. Our goal, and I wanna 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

And so we're on that journey, and we're gonna continue to to move in that direction. But I'm not I'm not gonna speculate around payouts or or other things other than to amplify our core strategy of building more durable revenues and growing the overall firm and franchise.

[Saul Martinez, Head - US Financials Research at HSBC]

Okay. That that's that's fair, and that's helpful. Maybe I just quickly follow-up on on advisory. You know, I get the the the reason to be optimistic and, you know, now it's m and a up, you know, 30% and, you know, the the, you know, the the the potential for, you know, improve you know, that that translate into higher revenue. But this quarter, you know, you did I think, Dennis, you mentioned that you you widened the gap versus your peers.

[Saul Martinez, Head - US Financials Research at HSBC]

And, you know, the the revenue number and the fee number this quarter was well above, you know, what your next closest competitor reported. And I'm just curious, you know, if there's anything in it 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, you know, to your competitor?

[David Solomon, Chairman & CEO at Goldman Sachs]

I I you know, this is an extraordinary franchise that's been a leading franchise for over twenty five 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.

[David Solomon, Chairman & CEO at Goldman Sachs]

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. 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 and a environment. You know, we're gonna have leading share and continue to work hard to protect that position.

[Operator]

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

[Gerard Cassidy, Managing Director at RBC Capital Markets]

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 kinda frame out what that

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Do you look at it from a dilution of earnings or tangible book value or return on net investment? Can you frame that out for us?

[David Solomon, Chairman & CEO at Goldman Sachs]

I mean, I I we we obviously would look at all sorts of financial, metrics, Gerard, in in 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, etcetera.

[David Solomon, Chairman & CEO at Goldman Sachs]

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, that's a high quality property is a very hard thing to do.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Got it. No. Thank you. And then 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, know, geopolitical risk is at the top of the list.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

What do you worry about as you go forward 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?

[David Solomon, Chairman & CEO at Goldman Sachs]

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 to 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, you know, what if this, what if that. I would say, but a super interesting, highly uncertain, environment.

[David Solomon, Chairman & CEO at Goldman Sachs]

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 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 gonna 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 there was in this quarter, there'll be unexpected surprises in the next quarter and the quarter after that.

[David Solomon, Chairman & CEO at Goldman Sachs]

But we're gonna 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.

[Operator]

Thank you. At this time, there are no further questions. Ladies and gentlemen, this concludes the Goldman Sachs second quarter twenty twenty five earnings Conference Call. Thank you for your participation. You may now disconnect.

Participants

Executives

• David Solomon, Chairman & CEO
• Denis Coleman, CFO

Analysts

• Glenn Schorr, Senior MD & Senior Research Analyst at Evercore
• Ebrahim Poonawala, MD & Head - North American Banks Research at Bank of America Merrill Lynch
• Betsy Graseck, Global Head - Banks & Diversified Finance Research at Morgan Stanley
• Mike Mayo, MD & Head - US Large-Cap Bank Research at Wells Fargo
• Steven Chubak, Managing Director at Wolfe Research LLC
• Devin Ryan, Director of Financial Technology Research at Citizen JMP
• Erika Najarian, MD & Equity Research Analyst - Large-Cap Banks & Consumer Finance at UBS Group
• Dan Fannon, MD - Research Analyst at Jefferies & Company Inc
• Christopher Mcgratty, MD & Head of U.S. Bank Research at Keefe, Bruyette & Woods (KBW)
• Saul Martinez, Head - US Financials Research at HSBC
• Gerard Cassidy, Managing Director at RBC Capital Markets