Strategic Roadmap and Goals - Goldman Sachs 2020 Investor Day

Strategic Purpose and Core Values

• Core Purpose: To advance sustainable economic growth and financial opportunity by marshalling capital and ideas to expand organizational potential and accelerate global economies.
• Four Core Values: Distilled from 14 historical principles to guide strategy and culture:
  • Partnership: Drives ownership, stewardship, and collaboration among employees, clients, and communities.
  • Client Service: Focuses on long-term dedication, illustrated by a two-decade relationship with Disney where client value is attributed to people rather than transactions.
  • Integrity: Prioritizes an unrelenting commitment to doing the right thing, citing lessons learned from the Malaysia scandal.
  • Excellence: Cultivates a mindset of continuous improvement, attracting top talent such as co-CIO Marco Argenti (formerly of AWS).
• Competitive Advantages: Leverages five durable, self-reinforcing strengths:
  • Global Presence: International revenues grew 22-fold since 1990 and now represent 40% of firm-wide revenue.
  • Relationship Depth: Clients rate Goldman Sachs' people 20 percentage points higher than peers in a recent 10-year survey.
  • Brand Reputation: Ranked as the number one firm clients would recommend to peers.
  • Talent Ecosystem: Attracts and develops exceptional talent, evidenced by 85,000 applications for 2,600 campus positions this year.
  • Risk Management: Integrates strong analytics and a culture of direct communication to protect capital and reputation.

Strategic Shifts and "One Goldman Sachs"

• Operational Transparency: Implementing new segment reporting and modernized earnings calls to enhance accountability and visibility.
• Cultural Evolution: Shifting from reactive nimbleness to a more dynamic, long-term focused mindset that prioritizes progress over perfection.
• "One Goldman Sachs" Initiative: A firm-wide effort to simplify client engagement and deliver holistic capabilities (advisory, capital markets, investment management, consumer products) rather than siloed services.
  • Case Study: Leveraged a holistic approach with Apple over 25 years, raising $125 billion in debt and executing the largest share repurchase program, culminating in the new Apple credit card partnership.
• Three-Year Planning Horizon: Institutionalizing long-term thinking through a new planning cycle to support patience for high-growth, capital-intensive investments.

Market Environment and Growth Strategy

• Market Themes: Identifies opportunities in:
  • Digital Revolution: Transforming consumer financial services via scalable technology platforms.
  • Sustainability: Launching a $750 billion financing, investing, and advisory target across nine key growth themes, including clean energy and healthcare.
  • Corporate Governance: Implementing new IPO requirements for board diversity.
• Strategic Framework: A three-part approach to existing and new businesses:
  • Grow & Improve: Expanding leading positions in Investment Banking (No. 1), Global Markets, and Asset Management.
  • Diversify: Building new platforms for durable revenue.
  • Efficiency: Optimizing operations to drive higher returns and margins.
• Four New Business Opportunities: Adjacent to core franchises, targeting durable revenues and capital efficiency:
  • Transaction Banking: Serving corporate clients with a $3 trillion payment volume processed internally; rolling out to clients soon.
  • Third-Party Alternatives: Aiming to add $100 billion in net inflows to capitalize on secular growth themes.
  • Digital Consumer Banking: Building a scalable, disruptive bank for new client segments over the next three years.
  • High Net Worth Wealth Management: Broadening offerings to the entire high net worth space using ACO relationships and the United Capital acquisition.

Financial Targets and Commitments

• Return on Equity (ROE): Target of >13% as new initiatives scale (aspiration of mid-teens long-term).
• Return on Tangible Equity (ROTE): Target of >14% over the three-year horizon.
• Efficiency Ratio: Target of approximately 60% through holistic expense management.
• CET1 Capital Ratio: Target range of 13% to 13.5% to enable capital returns while maintaining regulatory buffers.
• Accountability: Commitment to annual updates on these targets within a normalized operating environment.

Execution Capabilities and Risks

• Talent and Diversity: Acknowledges demographic shifts in the global talent pool and prioritizes retaining diverse talent, specifically noting the need for more diverse leadership representation.
• Risk Management Evolution: Adapting credit risk culture for new consumer and financing businesses while managing emerging cyber and geopolitical risks.
• Historical Precedent: Confidence in execution is backed by a 150-year track record of entering new markets and building world-class franchises.
• Future Outlook: Management team expresses optimism regarding the ability to drive significant shareholder value through the combination of a strong core franchise and adjacent growth opportunities.