Goldman Sachs
Hosting its first ever "investor day" in its New York headquarters, the 151-year-old investment bank opened its doors to shareholders, analysts and reporters for an insight presentation on the bank's five-year growth plan.
"Our goal is to clearly communicate our strategic direction, plans for execution, our financial objectives, and our paths to achieving these goals business by business," CEO David Solomon said in his opening remarks to the attendees. "All of this comes in the spirit of communicating directly with you the ways in which we believe we can drive greater shareholder value."
In the presentation, Goldman outlines board target goals for business including projections for a 60% efficiency ratio over the next three years, aims for over 13% returns of equity and over 14% return of tangible equity--all key measures of profitability. A lower efficiency ratios means that a bank is better at managing its costs relative to its revenue.
Much anticipated for the presentation was more information on the firm's online bank Marcus and its credit card business with Apple
Unveiled in 2016 as a way to for investor to supplement falling income from trading, Marcus's consumer banking earnings have flourished into $60 billion in deposits and issues $7 billion in loans and credit card balances in the company's 2019 fourth quarter.
"It's not going to take share from the big guys. They're going to continue doing great but we think it could be a nice business for us," Solomon added about Marcus.
Goldman plans to grow deposit balances with Marcus to $125 billion or more in the next five years and increase consumer loans and card balances to more than $20 billion during the same period. The firm also plans to offer consumer checking accounts by 2021.
'We aspire to be the leading digital consumer bank," Goldman Executive Eric Lane told investors. "We're starting with loans, we added savings and cards, and we're looking to build out the balance of the digital products suite, including wealth and checking." Goldman is aiming to deliver all the resources of a retail bank through the Marcus app in the coming year.
"We are planting seeds that will take time to mature and grow," Solomon remarked.
Goldman also announced ambitious goals of generating $1 billion in revenue by lowering interest expenses and targeting a $1.3 billion run rate expense savings in three years. The investment bank plans to add 30 corporate clients annually to expand wealth business.
Goldman's investor day comes in a time when big companies are coming under pressure from younger investors to focus investments on more sustainable ESG stocks, or companies that focus on environmental, social, and governance. The Wall Street giant is attempting to make a meaning entrance into areas that have been dominated by rivals like JPMorgan Chase
By setting board targets and issuing more transparency, Goldman is making an effort to address grievances of investors who have complained in the past about the banks lack of information. For now, investors just want the bank to follow through on its plans.
- https://finance.yahoo.com/news/goldman-sachs-investor-day-highlights-174133585.html
- https://www.cnbc.com/2020/01/29/reuters-america-update-2-goldman-unveils-long-term-targets-to-grow-new-businesses-revenues.html?&qsearchterm=goldman%20sachs
- https://www.reuters.com/article/goldman-sachs-investor-day/focus-at-goldmans-first-investor-day-will-be-on-its-consumer-bank-marcus-idUSL1N29X150
- https://www.reuters.com/article/us-goldman-sachs-investor-day/goldman-sachs-sets-growth-targets-but-urges-investor-patience-idUSKBN1ZS0ID
- https://www.cnbc.com/2020/01/29/goldman-sachs-to-offer-consumers-checking-accounts-next-year-through-marcus.html