Goldman Sachs Group Inc. kicked off its investor day by providing a report card of Chief Executive Officer David Solomon’s performance so far.
(Bloomberg) — Goldman Sachs Group Inc. kicked off its investor day by providing a report card of Chief Executive Officer David Solomon’s performance so far.
The bank gave a detailed breakdown of how it has performed against previously established targets, trying to reassure investors that over a period of multiple years it can meet its targets even as it fell short on them in last year’s profit plunge.
In one critical update, the bank said it would take another two years to just break even on its new division dubbed Platform Solutions — an assembly of its credit card, installment lending and transaction banking business, which has already piled up nearly $4 billion of losses in three years. Goldman is considering strategic alternatives for that business, Solomon said in his opening remarks on Tuesday, indicating that even a sale of the installment-lending or credit-card business is possible.
The bank’s shares fell as much as 2.2% and traded down 1.6% to $359.58 at 10:29 a.m. in New York.
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One of the biggest sources of volatility in the bank’s earnings has been driven by using its own capital to make wagers — an issue the bank has been vowing to address since Solomon took over. In one of the few new targets being outlined by the bank, it said it would reduce on-balance-sheet investments from $59 billion to less than $45 billion next year.
The bank offered investors a more forceful case for its asset and wealth management business, calling it the area with the most significant growth opportunity for the bank. It outlined plans for organic revenue growth in high single digit percentages over the next three to five years in the $2.5 trillion division.
The “real story of growth is around asset management and wealth management,” Solomon said in an earlier interview with CNBC.
Goldman’s leaders are taking to the stage to lay out new reasons for investors to rally around the stock after a year when profits dropped by half and losses piled up in its retail-banking foray faster than expected, prompting it to dismantle that plan.
In a bid to tame costs, the bank in January began implementing a plan to cut about 3,200 positions, or 6.5% of the bank’s headcount, in one of the firm’s largest rounds of job reductions ever. Goldman, like its rivals across Wall Street, has been grappling with falling revenue and profit, amid slumps in deal activity and asset prices.
(Updates with shares in fourth paragraph.)
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