Goldman Sachs Aktie

Great. Very pleased to have concluding our 24th Annual Global Financial Services Conference, it's Goldman Sachs. From the company, David Solomon, Chairman and CEO. David, thank you for being here.

Thank you for having me. We only get 2 minutes?

No, that's 2:00.

Oh, it's 2:00, okay.

We got 3 hours.

I don't think we've got that.

Well, thanks for joining us. I've covered Goldman for a long time now, and we've seen a significant shift since you became CEO and set out to strengthen the kind of the core client franchise, make Goldman a more integrated firm, improve returns and just build a more durable earnings base. Several years into that strategy, what has changed most fundamentally at Goldman?

Well, I mean, I think, Jason, you summed it up well. I mean we're executing very well against the plan we developed back in late 2018 and 2019 to really focus on the growth of the firm and to get the client centricity and the client focus of the firm really aligned as true north. Set out a bunch of objectives to grow the businesses, figure out how to operate the firm overall more effectively and really kind of create a coordination ethos, which we call One Goldman Sachs to execute against that in as competent way as possible.

And the results of it -- we're now in the ninth year, the results of it are that we've significantly grown the firm. We've taken the revenue base from mid-30s, the expectations, we're in the 70s this year. We've created some leverage to grow the earnings more than that. And I think most importantly, we've made the overall mix of the business much more durable. And so we have a much broader, more diversified, more durable business.

That doesn't mean in different environments, there aren't certain parts of the business that can ebb and flow. But we're also, given the nature of our franchises, the strength of our franchises, when there are opportunities like the current environment where there's more going on, we actually kind of grow share and expand our share and capture more of the upside. And I think one of the things that investors are going to see when we go through the inevitable cycles that we go through is that the base is much higher and much more durable and much broader than it was 10, 15 years ago, and it's a much more durable firm.

And the whole -- from a leadership perspective, as we're executing now, our focus is on growing the earnings of the firm. That is our focus. And I know that if we can continue to grow the revenues, you pick the base, okay? I go into investor meetings and everybody wants to debate, are we over-earning this? Are we over-earning that? We're earning because there's an environment. Could there be an environment where you earn a little bit less? Of course.

But you pick the base. I think if you look back over the last 8 years, I think we've grown the revenues based on what analyst estimates are for 2026. We've grown the revenues just less than 10% over that period. And if we can grow the revenues 6%, I think we can deliver better than 10% earnings growth, and you can have no debate whatsoever about the multiple. Shareholders are going to be very happy.

So this is a leadership team that's focused on continuing to expand the breadth of the business and grow the earnings, continue to make the overall business more durable, and we see room to continue to do that. And one of the reasons I'm so excited about the next 3 to 5 years is when you look at what's going on with technology, it's giving us an ability to reimagine operating processes and automate in ways that both give us better efficiency and therefore, more margin in certain parts of the business and better returns.

And in addition, give us more capacity to invest in growth where we've actually been constrained to invest in growth over the course of the last 7 or 8 years. And so I can't pick the environment. I have no idea what's going to happen environmentally 3 months from now, 6 months from now or a year from now. But I bet a lot that with a 5- to 10-year view, we can continue to grow the earnings of the firm meaningfully. And I also think we're in an environment based on this technology super cycle that we're going to see real productivity gains in the economy over the next 5 to 10 years, and Goldman Sachs is very correlated to that.

Okay. So I guess you said I get to pick the base. So pick 2Q '26 as the base and record results based on everything you talked about. I mean, over the next 3 to 5 years, I guess, where do you see kind of the biggest drivers for that continued growth?

So I think, look, we've got 2 big businesses, and I think we have opportunities to drive growth in both businesses. I think one of the things that surprised people is the ability for us to continue to grow our platform and our franchise in Banking & Markets, and we still see opportunities to do that. And we also see opportunities in Banking & Markets to operate the business differently and get more out of it even at the same activity levels, given what technology is allowing us to do. And so we're excited about that.

And then we've said publicly that we can grow our Asset & Wealth Management business high single digits. We're doing better than that. We're now in a place where we've talked about our ability to drive 30% margins in that business and high teens returns. And the organic growth in that business is excellent. I mean I know you're going to ask a little bit about Asset & Wealth. We can save it for some of those questions. But you look at the scale of our platform, our fundraising capability, our flows, and we're performing very, very well in that business.

And we've also done a few interesting things inorganically that fill in gaps and accelerate some of that growth trajectory. So these are 2 world-class businesses, Global Banking & Markets, Asset & Wealth Management. We, I think, are the leader in Global Banking & Markets. We are a top 5 player in Asset & Wealth Management, the way it's structured, but we have a right to win in both businesses. We're a leader in both businesses.

We have very, very effective scale platforms in both businesses. And I think that just positions the firm very well, especially when you get out of quarter-to-quarter and kind of say, okay, what can they do in the next 3 to 5 years, okay? You got to get out of quarter-to-quarter. We're focused on growing the franchise over the next 3 to 5 years.

Let me -- let's double-click on a few of those items. Starting -- we could start with Asset & Wealth Management because that's certainly been an contributor to kind of this increased durability that you've talked about. Maybe just talk through kind of what differentiates this business and the go-forward trajectory.

In terms of Banking & Markets?

Asset & Wealth.

Oh, Asset & Wealth. Let's start with Asset & Wealth. Sure. So we had an interesting collection of businesses, but they weren't coordinated on a platform. And I think one of the most important things we've done as a leadership, and this was hard and it created a bunch of noise was we took a firm where people ran their individual businesses and we said, "If you bring these all together as a scaled platform, there's enormous scale advantage to it."

So we took a merchant bank. We took a public side asset management business. We took a money market liquidity platform. We took a -- we took a -- for lack of a better term, a fund-to-funds kind of platform business. And then we took a wealth business and we put them all together. And so you wind up with a business now that is growing nicely, very nicely. Is supervising $4 trillion of Assets, has $2 trillion of wealth assets, I think is incredibly well positioned for the strong secular growth trends that we're going to see or we are seeing in ultra-high net worth wealth.

The acceleration of the amount of wealth in the world, and particularly kind of ultra-wealthy people, and we are as well positioned as anybody to capture that space. And so the business has very, very good growth characteristics. But I think what our clients like is the scale of the platform and what we can offer is very holistic.

Nobody can offer across the spectrum, top 3 liquidity firm, top 5 fixed income, top 10 public equities player, top 5 alternatives player, nobody can offer that. And so we have an incredible manufacturing facility in asset management that's very broad, very scaled and global. And then we've got a very, very strong client base that really appreciates the breadth of the platform.

One thing you've kept us busy with recently is just acquisition announcements for that segment. Maybe just kind of talk us through the rationale of recent acquisitions and maybe kind of early experiences with Industry Ventures and Innovator.

Yes. So we've done 5 things strategically in Asset & Wealth Management, 4 acquisitions and a partnership with T. Rowe Price. All of these things are meaningful, meaning they're having positive impact on the business, I would say none of these are individually significant. But we have gaps. I talked about the scaled platform. We have gaps. And we've been looking very, very carefully for places where there are things that can fill the gaps. And all these things fit that.

The partnership with T. Rowe Price was designed to give us distribution access into retirement because I think retirement is going to be increasingly important. And especially over time, I do think there'll be more retirement participation in alts. And we have a very, very good manufacturing capability in alts. And so having a partnership with that retirement distribution channel was important.

With Industry Ventures, we serve the venture community and our banking business enormously. But here was a leading player that was seeding this early round venture stuff in a very, very meaningful way, had an incredible network, and it was a spot that we weren't playing, but the synergies of seeing all this stuff earlier inside Goldman Sachs is really terrific. And the early read on having Hans Swildens and his team at the firm has been fantastic, both by the clients and also the product offerings that we're having for our clients.

And so that feels very good. And I'd highlight something on that, that I think is important with all of these. One of the things that happens with these kinds of acquisitions is the talent acquisitions for Goldman Sachs. So all of these are small entrepreneurial businesses where the principal that started the business has grown their business, and they're basically making the decision that they want to do what they're doing on our platform because they think by doing it on our platform, they have more room to run than they would if they did it independently. And so this has brought some really interesting talent into the firm.

With respect to Innovator and NEOS, if you look back, we weren't top 50 in ETFs. We were late, in my opinion, in getting going in active ETFs. And so now we've got, depending on how you look at it, top 6, 7, 8 position in active ETFs, which is where obviously our firm wants to focus. The early results in terms of fundraising have been excellent. Here, again, we got some very, very good talent in both those businesses that we're really excited about doing what they do on our platform.

And so we became a scaled player in active ETFs with 2 relatively small acquisitions and have very, very good growth trajectory on those platforms based on the early returns. And then we've said that real estate and infrastructure are 2 places on the alternative side where we feel like there's more opportunity for us to scale. And so the last acquisition, triple net lease acquisition was an opportunity to further broaden or accelerate some of what we want to do in real estate because that's a place that we don't feel that we're scaled. And this is a little piece, but it's -- we're still not scaled in real estate.

So all of them, they add to places where we're not scaled and they can accelerate some of that growth. They bring talent. We're not going to do it if we don't really like the talent and the talent doesn't really want to be a part of Goldman Sachs. And these are not complicated things to integrate because you're buying small teams of people that have very, very specific talents that are additive to the firm. And that's -- it's a good strategy. Are we going to do some more? Probably. There are some other obvious gaps we have, where if we can find the right things, we do them. But this is kind of a low-risk strategy to accelerate the pace of growth.

Got it. Maybe talk a little bit about wealth management. You mentioned $2 trillion in total client assets across ultra-high net worth franchise. We're also expanding GSAM's capabilities through third-party wealth channels. Just what's underpinning the growth you're seeing across wealth?

I mean the growth -- there is just so much wealth expanding and the opportunity to provide a full-service offering to people. People want a very high-touch full-service offering, and we offer that. And our brand, our capabilities. Now, the issue with this business is it scales with people. This is not a business that scales with technology. And one of the reasons I'm excited with some of the flexibility we have given the process reimagining is it's allowing us to accelerate the footprint of wealth advisers we have around the world in a very, very focused way.

And that we know how to grow the footprint of wealth advisers and add to the business. Third-party wealth is a great, great opportunity for us. We've never had privity with retail clients broadly, but we have a great breadth of platform that the third-party distributors find very, very attractive. And so we found our ability to build partnerships with those third-party distributors has been powerful, and that creates a very broad distribution channel for us given our manufacturing capabilities.

And then maybe on alternatives, obviously, a key growth driver for AWM, a leading player of $700 billion in total alternative assets. Just what differentiates Goldman platform, especially in this market?

Well, with all these things we're talking about, one of the things that I don't think should be lost is performance, performance, performance, performance. You are managing money for people and they want performance. And we've got a very good performance track record over long periods of time across everything that we're talking about. In alternatives, we have a really extraordinary offering.

And we also have incredible relationships, and we have the ability when you get to the big institutional capital allocators to customize offerings for them. And so one of the things that I think is making us very, very effective with a large capital allocators, we're just not out pitching a fund. We're basically trying to understand how they want to put capital to work over a significant period of time, creating partnerships and customizing what they need, which I think is very powerful.

Look, if you look at our fundraising, we've thrown out there on a fundraising perspective, $75 billion to $100 billion of alts fundraising a year. This year, we're going to do better than $125 billion. And as you know, through the 2 quarters, we were awfully close to $100 billion. So that's very, very powerful.

It's also powerful because I think this year, we're kind of running third when you look at that landscape in terms of our fundraising capability. And that's in the broadest definition. If you actually look at pure alts, we're doing better than that. So the firm is very well positioned in this space. I still believe in the long-term secular growth of these private capital products. There have been some bumps and some noise around it.

But one of the things that's been interesting, look at the credit, the institutional credit, private credit fundraising we did last quarter. Institutions with all the noise kind of look and say, "Okay, this is actually an attractive time to be deploying." And so where they go, they go to platforms that are broad with experience over a long period of time they trust. And so we're obviously doing very well in that context with the institutions.

Just out of curiosity, record fundraising, where are you seeing the most interest?

There's a lot of interest in credit. I mean there's a lot of interest in credit, institutional credit. We've seen a lot of interest in a variety of the kind of structured products we have in XIG. But credit is really the place where I thought there was differentiation last quarter.

I guess maybe sticking with the durability theme, financing is another area that's seen strong growth. I think 2Q was a record for both equities and FICC financing revenues. Where do we go from here?

Well, I think you've got to think about these financing revenues. And I certainly would be emphatic. It's not, the growth is not going to be a straight line because it's just correlated to market activity and market cap. And so if you had a drawdown in the market for a period of time, you would see a softening in that activity for a period of time. But if you believe over the next 10 years, the market cap of the U.S. and the market cap of the world is going to compound at some rate, you're going to see the availability for us to finance our clients is going to compound at some rate.

And so we're very focused on risk management. We're very focused on how we package and deliver this. But these are very attractive durable businesses for someone that's got a scaled platform and is a leader. And I actually think there's going to be more and more pricing power over time because at the end of the day, there are only a handful of firms that actually have the capacity to serve clients at the scale they need to be served.

I guess one thing we're trying to get our arms around is just this impact of AI driving significant capital formation, areas like compute, data center infrastructure. Maybe just talk us through the opportunity set and how you help your clients finance growth while obviously maintaining discipline with risk structure, distribution?

Sure. I mean everything -- there are limits to everything. And you also -- when you step back and you look at the firm, firm is doing a lot of financing on a lot of things. And while all the attention would be toward AI financing, and I'm not going to say that AI financing is not creating tailwinds in certain parts of our business. AI financing is not driving all the financing activity we're doing.

There's a lot of financing going on in a lot of different things all over the world. But with respect to AI financing, if everyone is right and the build-out of the compute capability in the next 5 years is going to take $8 trillion, there's going to be a lot of financing to do that. Now I'm not sure it's going to be a straight line. I'm not sure everybody is estimating at the end of the day, the right capital needs that they've got the right pricing models. But I do think there's going to be a lot of demand and there's going to be a lot of needs.

And this is something we're really good at. And we also sit in a very, very unique position because we're not just a capital provider as an asset manager, the way somebody like Apollo or BlackRock would be. We are that the same way they are. But in addition, we're an adviser, we're a distributor, we're an underwriter. And so we've got a capacity to see these things and get in the middle of these things. And that's what our CSG effort is all about.

It really puts us in the center of sourcing for these things in a way where we can be very selective, very, very focused, always with a view toward risk management. Very, very focused, things I'm focused on. We all know when you're looking at where the underlying credit risk is, we know what a real investment-grade offtake agreement looks like. And then we also know when people are doing structured things that are getting investment-grade ratings, where fundamentally the risk is not the same as true investment-grade risk. That's something we've seen before in history.

And so we're watching that stuff very carefully. It's not at a scale at the moment that I'm overly concerned. But those -- whenever you have a cycle like this excess has developed and one of our jobs be very smart, to look around corners, be very prudent in how we set limits and create risks and how we distribute what we hold. I think we're good at it. I'm sure we'll have bumps like everybody else when there's a recalibration. But at the moment, there's certainly a lot of opportunity.

I guess as you kind of capture this opportunity, just how do you ensure that it remains consistent with the kind of risk appetite and at the same time, you can support clients that have usually come to you?

It's a dialogue. I mean it's a dialogue. There are things that people want us to do that we won't do. There are things where we think we understand them and understand the collateral and understand the structure better and we lean in. I mean that's fundamentally, Jason, what our business is. It's trying to pick the winners. It's trying to avoid more of the losers. It's trying to get your clients the best product that you can, but that's what we do.

Got it. And maybe shifting gears to the Investment Bank. I think every year, you're almost -- or #1 in M&A, the gap to #2 is consistently fairly wide and I think it's widening.

I think it's the widest it's ever been in my recollection at the moment.

Impressive. I guess that gives you unique insights in terms of what's happening. Obviously, we have -- it feels like almost a record year. But just what are you hearing from clients? And what's your outlook from here?

Sure. I don't think -- our leadership position, I don't think gives us unique insights. If you're in the M&A business, it's quite apparent that after being in an environment where whatever the question was the regulatory answer was no. We're now in an environment whatever the question is, the regulatory answer is maybe.

And so if you're running a platform, finding a business where scale advantage doesn't matter. Scale advantage matters so much in all businesses. People that have leadership positions in businesses are looking for consolidation and an ability to extend their scale advantages, and we're in a regulatory environment where they can. The result of that is CEOs are very, very front-footed about trying to take advantage of scale advantages, and that's, therefore, leading to much, much more strategic M&A. Sponsor business has actually been very, very quiet.

And I do think at some point, that will turn on. And so that's upside potentially when we get to that point. I still think you have an imbalance in kind of where the market is and a lot of the marks that a bunch of these 2020, 2021 vintage funds have. That will sort itself out at some time. But this is being driven by strategic activity by corporates. And the other thing I'm hearing from corporates, which is true and I think is interesting is corporate CEO confidence is pretty high.

And I think one of the things that it's important to kind of step back and reflect on is why is that? Okay. Interest rates are kind of 100 basis points higher than they were at the beginning of the year. Inflation is higher than it was at the beginning of the year. Oil is higher than it was at the beginning of the year. I told you at the beginning of the year, we're going to have those 3 characteristics. You wouldn't have said, "Well, that we'd expect higher CEO confidence."

But what I think is underpinning that, look at earnings growth. Look at earnings growth in the S&P. Look at earnings growth -- if you go back to 2025 and look at 2026 earnings growth, okay, I think earnings growth now predicted for 2026 in the S&P is 30% higher than people expected it to be in 2026 at the beginning of 2025. And 2027 earnings growth now for 2027, the market is expecting 15%.

So CEOs feel that. CEOs feel like they can really drive earnings at the moment. They've got tailwinds towards that. That creates a level of confidence in the context of what they want to do. So what I'm hearing from clients I feel pretty good. I see opportunities to continue to drive earnings in my business. Now is the time to be aggressive, and you're seeing that in M&A activity and capital markets activity.

You mentioned sponsors inevitably coming back. I feel like it's something we've been waiting for a while.

Yes, we've been waiting. I think I sat on the stage a few years ago and said, "I think it's coming." Not that wrong.

Any particular catalyst? Or what's the holdup?

It's just time. And it's what the incentive -- what the holdup is the incentive system doesn't incentivize it to move. The sponsors have an enormous option on waiting. And -- and so I think it will take some time. Unfortunately, that slows down the fundraising process for a lot of those firms. And so ultimately, it will push through. I'm hearing more and more sponsors talking about the fact they want to accelerate stuff. They want to get stuff to market.

They want to move because they understand the capital velocity for their businesses is a little bit stalled for most of them, not all their exceptions, for most if they don't create velocity. But it's been slower than I expected. I've been wrong. I would have thought it would have been just forced to come back at this point. But I'd also tell you the LPs are probably a little bit complicit and that the LPs publicly say we want to see more velocity, but I think privately, they're like, we'll wait. And so I think it's a complicated cocktail.

Got it. We've had a bunch of your peers present at this conference this week, got some guidance points in the third quarter. Anything you'd like investors to keep in mind when they think about your near-term performance?

Yes, sure. I mean the first thing I'd just say is that the activity levels have been very high and the firm has been very active. I saw the range of comments people made. And what I'd say is our equity business continues -- our equities business continues to be very strong. On a relative basis, FICC has been a little bit softer on a relative basis, but there's still a few weeks left in September. And so we'll see where that balances out. But the overall level of activities have been very, very high.

There are 3 things that I guess I would point investors to that are more idiosyncratic. One is, I would tell investors that on our investments line to expect a much more muted third quarter after there was significant activity in the second quarter. Next, I would point to non-comp operating expenses because of the nature of activity and the fact that there's been very good activity, our transaction expenses are, therefore, running higher.

In addition, we've accelerated some tech investments. And then the third thing is, we had an opportunity to pull forward in a very, very tax-efficient way, a significant number of years of charitable giving, and we're choosing to do that. And so the combination of those 3 things, I think investors should expect our non-comp expenses to run more than $500 million higher sequentially. And then lastly, our loan portfolio is in good shape. It's performing well, but we had a couple of idiosyncratic things that would lead provisions to be slightly higher this quarter than they were in the same quarter last year. Those are 3 things I would point to.

Okay. So equity is very strong. FICC, when you say relative softness, relative to?

Relative to equities.

Relative to equities.

And also relative to FICC in some other quarters, but still good activity.

Any particular areas that you'd want to call out as being?

No, I don't want to call out anything more than I just called out. By the way, I think that's probably more than I've ever called out before an earnings call ever in the history of the world. So we're trying something new with you, Jason. We'll see whether it's effective or not.

Maybe I shouldn't push you any further.

I don't think you should. I mean you can push me as much as you want, but I'm a pretty disciplined guy. I don't say much that I don't intend to say.

I'll try one more. You mentioned a few idiosyncratic credits. Anything you should watch?

Don't overread that. The reason I'm just trying to provide guidance so we can help analysts with our provisions. Our provisions are going slightly higher than they ran in this quarter last year. But there's nothing -- there's nothing that's going on. The overall performance of the loan portfolio continues to be very good.

Fair enough. Maybe shift gears and talk about One GS 3.0, something you launched last year. A multiyear effort to drive the new operating model. Just what's the purpose of that? And how is it driving future productivity and scale?

So, One GS, and you know this, we've talked a lot about this, Jason. I mean, it started as an attempt to get us really focused on our largest clients, kind of became an operating ethos for really making the client experience really seamless and unique. We then expanded it to what we call One GS 2.0, where we said "Okay, let's get that really going across the firm instead of just in Banking & Markets," and really thinking about how Asset & Wealth Management and Global Banking & Markets can really do better collectively, and that was 2.0.

And then 3.0 is how do we really think about the operating processes in a firm that deliver better results for clients and also lever our people. And this is a little bit about using technology to remake certain operating capabilities. All these things -- we continue to focus on all these things. I just had a management offsite that I know you're aware of where we talked about 1.0, 2.0, 3.0. What kind of the KPIs are? Are we on track on all the KPIs?

And when we focus on this, it's part of the operating ethos of really making sure the client experience with the firm and our ability to serve clients just gets better and better and better. And I think the lens we use is this gives us a way to talk to the firm about things that we can do to just keep raising the bar, just keep raising the bar. How do we do a little bit better? How do we keep doing a little bit better? And if you do that, I think your relative performance over time is good. And so we're very, very focused on that.

I guess we started out the discussion about just increasing just earning capacity of the firm. We talked about increasing the durability of those earnings. And as a result, right, you're just throwing off more and more capital. Just how do you think about allocating that capital between organic investments, acquisitions, returning capital to shareholders? And in this evolving regulatory landscape, how do we just think about overall capital?

Yes. Well, I mean, you make a very, very good point, which is something we've wrestled with. We generate an enormous amount of capital every year. First and foremost, if there are opportunities to deploy that capital into the business to serve our clients and produce accretive returns, that is what we'd like to do. That's what we want to do. That is our first priority. If we can't find ways to do that, we're going to get that capital back to shareholders.

Now with respect to inorganic activity, we -- if you think about our capital generation in any 1 year, we have the ability in any 1 year to generate enough capital if we decide to do something inorganic, even if we decided to do something that was more significant than the kinds of things we're doing, we have the capital capacity to do that. And so we feel, first and foremost, are there opportunities to serve clients, get the capital deployed in the business at accretive returns, grow earnings of the firm, that's what we want to do.

But if we don't see opportunities immediately, we're going to be very nimble and get capital back. You know we've taken our dividend from $0.80 a quarter to $5. We've been very committed to growing the dividend. And in addition, we've been returning a reasonable amount of capital. And my point is you can have all sorts of debates about what the stock price is and what you're doing, but if you don't see opportunities, you're better to get it back. It helps returns the next year and you generate more capital. And if you see the opportunities, you'll put it in the business. And so we're pretty disciplined about that. And we're not smart enough to pick the ups and downs of the otherwise. We're going to get that capital back to shareholders.

And I guess maybe as a follow-up to that. We talked about the business mix becoming more durable, less balance sheet intensive. Is the ability to kind of maybe move returns structurally higher? I know you talked about this 14% to 16% ROE at your Investor Day a couple of years back. You've been obviously running well above that. Is that something you revisit? How do you think about that?

Well, I think it's very important to remember the journey. The firm's returns are structurally meaningfully higher than anybody thought they would be. When you go back, I remember just 2 years ago on earnings calls, investors asking, and we were very, very confident, "Can you get to your returns targets?" And I was very, very confident we could. I've always felt that we had a business structurally that we were evolving that through the cycle could produce mid-teens returns. And I just remind everybody, we're talking about ROE because that's just the way we look at it, not ROTE.

But we've obviously, and I said this a couple of earnings calls ago, we're in an environment where I think we're going to earn ahead of our targets. I think we're continuing to grow the earnings and make structural changes to the firm that are quite attractive and quite accretive for shareholders. If over time, we have confidence that the through-the-cycle returns are going to be consistently higher, we'll address it. But we're not at that point now. At this point, we're in an environment where we're earning higher than the target. But we've significantly uplifted the base returns of the firm.

Fair. Maybe to close this out, what do you think the market still underappreciates about Goldman Sachs story? And what should investors feel excited about as we look forward?

Well, I think investors -- I mean, I've said it, and I'll say it again. I think investors should be excited the same way I am about the fact that when I get out of the quarter-to-quarter and I look at the next 5 years, given what's going on in the world, given the way Goldman Sachs is positioned, given the nature of our businesses, our ability to grow the firm and grow the earnings of the firm and continue to make the firm more durable, I'm hugely confident in our ability to do that. And that won't be a straight line, and things are going to happen that none of us expect.

But if you stop thinking about the moment and start thinking about the next 5 years, next 10 years, really, really exciting. Then you add on with technology, the ability to remake processes and create more operating leverage in the business, I've never seen anything like this in my whole career. And so I'm super excited about that, too. So I can't predict the environment. The environment will ebb and flow, but there are significant structural tailwinds that should allow us with a 5- to 10-year view to continue to meaningfully grow the earnings of Goldman Sachs as we have over the last 8 years.

Great. On that note, please join me in thanking David for his time today.

Thank you, Jason. September 13, 14 and 15, 2027, right back here.

Okay.

Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs Second Quarter 2026 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. 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, July 14, 2026. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Thank you, operator. Good morning, everyone. I know it's a busy morning with all the reports, and so we appreciate you being on our call. Thank you for joining us. We delivered record results for the second quarter and year-to-date. In the quarter, we generated record revenues of $20.3 billion, record earnings per share of $20.98 and an ROE of 23.5% and an ROTE of 25.5%. Our performance reflects the strength of our global franchise, the depth of our relationships and our ability to harness the power of One Goldman Sachs in a very strong operating environment.

Momentum across our franchise has accelerated as clients continue to pursue greater scale to invest and compete more effectively. This desire for scale has driven a significant increase in strategic deal-making activity with large-cap corporate M&A volumes up 90% through the first half of 2026. At the same time, the AI investment cycle is expanding capital needs beyond core technology into infrastructure, energy and data centers generated a ripple effect across industries. This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management and capital markets execution across both public and private markets.

Beyond the infrastructure build-out, companies large and small are working to integrate AI into their operations, increasing demand for advice and execution capabilities as they adapt to a rapidly evolving competitive landscape. Against this backdrop, the trust we have built with clients over decades continues to position Goldman Sachs at the center of their most strategic and consequential transactions. This includes acting as a lead left bookrunner on the record-breaking IPO for SpaceX and equity raise for Alphabet, as well as advising Dominion Energy's sale to NextEra Energy, and Comcast's spin-off of NBCUniversal.

We have further expanded our lead as the #1 M&A adviser and earlier this year became the first bank to cross the $1 trillion in announced volumes over a 6-month period. This long-standing leadership, combined with our One Goldman Sachs operating ethos creates a real multiplier effect. Our advisory relationships are often the genesis of client activity across the franchise, which starts as an advisory mandate in the boardroom, increasingly extends into opportunities for our Capital Solutions Group, including financing, risk management, capital markets execution and distribution as well as investment opportunities for asset wealth management clients.

And while we have made considerable progress strengthening connectivity across the firm, we continue to see opportunities to further collaborate across our Global Banking & Markets and Asset Wealth Management franchise. We believe there is substantial runway to deepen the connectivity between advisory financing and capital markets, investing in wealth management in ways that will enhance value for our clients and drive long-term growth.

Given our progress and what we see in our pipeline, we expect this flywheel of activity to continue. Even with very strong investment banking revenues this quarter, our backlog increased to its highest level in 5 years and its second highest level on record, underpinned by a record advisory backlog and reflecting the strength and breadth of our client engagement.

Beyond investment banking, momentum also accelerated across our equities and FICC businesses. Equities produced record revenue amid shifting market dynamics and elevated activity levels as single stock volatility and dispersion remained high. Client activity was particularly strong in Asia, driven in part by robust AI capital formation and investment. This strength also extended into financing where we generated another quarter of record revenues as we deployed our balance sheet to support clients with average prime balances rising to another record.

We also delivered a very strong performance in FICC with broad-based strength across both intermediation and financing as we supported clients globally. In intermediation, performance was driven by robust activity as clients turn to us for principal liquidity and risk management amid ongoing volatility in rates and commodities. In financing, we generated record revenues, reflecting the continued strong demand for asset secured financing solutions.

Across Asset & Wealth Management, we are relentlessly driving our growth strategy forward with quarterly management and other fees up 20% year-over-year. We delivered our 34th consecutive quarter of long-term net inflows, including $19 billion in Wealth Management. Our wealth management client assets reached a record of roughly $2 trillion and our total assets under supervision surpassed a record $4 trillion. In this cycle of elevated capital formation and strategic activity, the opportunity set for our ultra-high net worth franchise is also expanding. Our high-touch Wealth Management business has never been better positioned to help founders and executives realize and manage newly created wealth with unique capabilities and solutions, combining trusted advice with access to differentiated investment opportunities across our platform. Since the start of 2025, we've seen nearly 900 referrals to wealth management from investment banking, demonstrating the benefits of our One Goldman Sachs operating approach.

Within alternatives, despite some pressure in segments of the industry, investor interest across our platform remained incredibly strong, driving a record $59 billion of fundraising in the second quarter and $85 billion of fundraising year-to-date. We raised $31 billion in private credit this quarter alone, a testament to our strong track record of performance and our clients' continued desire to partner with experienced investors like Goldman Sachs. More broadly, demand for private markets remains robust as clients deploy capital across credit, equity and real assets and our ability to originate and structure opportunities continues to differentiate our offering.

We continue to scale our solutions platform, and last week, we were appointed to manage both Verizon and Lockheed Martin's retirement plans, which collectively represents $70 billion in assets under supervision. These mandates from large, sophisticated corporate pension sponsors underscore the growing demand for comprehensive integrated OCIO solution capable of managing complex portfolios across public and private markets. As a leading provider of OCIO services globally, we are well positioned to capture this attractive secular growth opportunity.

We are also further accelerating growth across Asset & Wealth Management through targeted acquisitions that are enhancing and scaling our capabilities. Our recent acquisitions, Industry Ventures and Innovator are both showing solid momentum in the first few months of integration. We will continue to evaluate opportunities to expand our client offering, strengthen our franchise and accelerate growth.

Let me touch on capital and regulation more broadly. We remain very engaged with our regulators to ensure better alignment of regulatory outcomes with underlying risk and look forward to swift progress towards a more balanced framework. As we again demonstrated this quarter, our robust capital position and disciplined dynamic resource management enable us to support clients across market conditions and drive accretive returns. This also allows us to return meaningful capital to shareholders. In line with our priority to sustainably grow our dividend, we recently announced an increase in our quarterly dividend to $5 a share, representing a 25% increase versus a year ago and a 150% increase over the last 5 years. We also repurchased $4 billion of common stock in the quarter.

Looking forward, we know that things rarely move in a straight line. While we continue to see a largely resilient economic backdrop in the U.S., risks can emerge quickly and drive periods of disruption and volatility across markets. A keen focus on risk management remains paramount as we support clients across a range of market conditions. But it's also clear that we are seeing broad-based momentum across the franchise and a very strong environment for client activity.

The build-out of AI infrastructure remains in its early stages, and we believe this multiyear investment cycle will continue to drive elevated levels of strategic activity, financing and capital formation across markets. The more expansive and complex this opportunity becomes, the more it plays to our firm's strength. Very few firms have the global breadth of relationships, the depth of talent, the engineering capabilities, differentiated data, market insights and financial resources to serve clients and capitalize on this opportunity set.

These have been foundational strengths of Goldman Sachs for decades. And just as we are helping clients navigate this period of change, we are also implementing learnings within our own firm. There has been much debate around the broader implications of AI on the workforce. While it will change how work is done, it will not replace what matters most in driving our business, our extraordinary people. We see AI as a transformational technology that expands the capabilities of our best-in-class talent and our capacity to drive commercial impact for our clients.

Reflecting on the record results, I'm proud of our people and our performance. There is no question that a confluence of market tailwinds supporting client activity, and we will remain disciplined in how we invest and manage risk. I feel very confident about the forward trajectory of Goldman Sachs as a result of years of strategic execution to strengthen our businesses, enhance connectivity across the firm. We are exceptionally well positioned to serve our clients and deliver for our shareholders.

With that, I'll turn it over to Denis to walk through our financial results in more detail.

Thank you, David. Good morning, everyone. Let's start with our results on Page 1 of the presentation. In the second quarter, we generated our highest net revenues of $20.3 billion as well as our highest earnings per share of $20.98, which drove a quarterly ROE of 23.5% and ROTE of 25.5%.

Turning to segment performance, starting on Page 3. Global Banking & Markets revenues were a record $15.5 billion in the second quarter, contributing to a segment ROE of 25% for the first half of the year.

Moving to Page 4. Advisory revenues of $1.4 billion rose 17% year-over-year primarily driven by higher completed volumes. For the year-to-date, we extended our #1 league table position for announced and completed M&A volumes. Through the first half of the year, we advised on $1.2 trillion in announced deal volumes with a lead of approximately $425 billion ahead of our closest peer.

In equity underwriting, revenues were $985 million, up 130% year-over-year, supported by robust deal volumes across a broad range of transactions, including the marquee mandates for Alphabet and SpaceX, helping to drive our #1 league table position through the first half of the year.

And debt underwriting revenues were $1 billion, up 75% year-over-year, representing our best quarter on record, driven by stronger performance in leveraged finance and asset-backed activity. Year-to-date, we ranked first in leverage lending and second in high-yield debt underwriting. As David noted, our investment banking backlog increased to its highest level in 5 years, even with the very strong revenue production this quarter. We remain optimistic on the investment banking outlook as strategic dialogue remains robust. While sponsor volumes are still subdued versus historical averages, this represents a meaningful source of potential upside as activity picks up.

FICC net revenues were $4.6 billion, up 32% from the prior year. Intermediation revenues were up 39% on stronger performance across interest rate products, commodities and mortgages. Financing revenues increased 14% to a new record and included strong performance in mortgages and structured lending. Equities net revenues were a record $7.4 billion for the second quarter. Record equities intermediation revenues of $4.2 billion increased 60% year-over-year, reflecting stronger activity across derivatives and cash products. Equity financing was also a record, up 91% year-over-year, driven by continued strength in Asia and another record for average prime balances. Across FICC and equities, financing revenues of $4.5 billion rose 62% versus the prior year and comprised 37% of total FICC and equity revenues.

Let's turn to Page 5. Asset & Wealth Management revenues were up 20% year-over-year to $4.6 billion. Year-to-date pretax margin was 24%, and the ROE was 13.5%. Management and other fees were up 20% year-over-year to a record $3.4 billion, primarily on higher average assets under supervision. Incentive fees were $112 million. We expect these fees to increase materially for the remainder of the year. Private banking and lending revenues were $689 million, and we continue to see strong loan growth, with balances rising to $48 billion. Investment revenues of $441 million were up significantly year-over-year from substantially higher net gains on investments in private equity.

Now moving to Page 6. Total assets under supervision ended the quarter at a record $4 trillion, supported by $91 billion of long-term net inflows across asset classes, particularly in equity assets. This marks our 34th consecutive quarter of long-term fee-based net inflows.

Turning to Page 7 on alternatives. Alternative AUS totaled $459 billion at the end of the second quarter, driving $725 million in management and other fees. Gross third-party alternatives fundraising was a record $59 billion for the quarter and $85 billion for the first half of the year. Given the strength we've seen year-to-date, we now expect full year fundraising to exceed $125 billion.

On Page 8, Platform Solutions revenues were $221 million in the quarter. We expect quarterly revenues for the remainder of the year to be broadly consistent with the second quarter.

On Page 9, firm-wide net interest income was $4 billion in the second quarter. Our total loan portfolio increased 3% sequentially to $261 billion, primarily reflecting growth in other collateralized and residential real estate loans. Our provision for credit losses of $102 million primarily reflected impairments related to wholesale loans.

Turning to expenses on Page 10. Total operating expenses were $11.7 billion for the quarter and $22.1 billion for the year-to-date. Through the first half of the year, we generated material operating leverage with an efficiency ratio of 58.8%, improving 320 basis points from the prior year period, helped by a decline in our compensation ratio net of provisions to 31%.

Quarterly noncompensation expenses increased from the prior year to $5.6 billion with the increase driven by transaction-based expenses tied to robust activity levels, particularly in equities. Even in a stronger revenue backdrop, we remain focused on disciplined expense management and driving efficiencies over time. Our effective tax rate for the year-to-date was 18.5%. For the full year, we continue to expect an effective tax rate of approximately 20%.

Now on to Slide 11. Common equity Tier 1 ratio was 12.9% at the end of the second quarter under the standardized approach, 150 basis points above our current capital requirement of 11.4%. We were pleased with our results in the recent CCAR test, which demonstrated the strength of our balance sheet under a severely adverse economic scenario. Our stress capital buffer of 3.4% remains unchanged and is effective through September 2027. We are encouraged by the direction of the proposed changes to the regulatory framework, including continued efforts to enhance transparency and improve stress test calibration, and we look forward to swift progress towards Basel III finalization. A more balanced and risk-sensitive regulatory approach will be supportive of bank lending and capital formation and ultimately constructive for the broader economy.

Our capital management priorities remain unchanged, starting with investing in our business at attractive returns, sustainably grow our dividend and return excess capital to shareholders through buybacks. Our capital actions this quarter reflect our continued disciplined approach across each of these priorities to support clients and also enhance shareholder value. We recently announced an increase to our quarterly common stock dividend to $5 per share, and we repurchased $4 billion of our common stock this past quarter.

In conclusion, our record results reflect the strength, scale and diversification of our world-class interconnected client franchises. As we look ahead, the opportunity set remains compelling across the firm, supported by sustained client engagement and a backdrop of elevated capital formation and deal-making activity. Importantly, the progress we have made on our strategic priorities has strengthened our platform, enhanced our risk management capabilities and improved our ability to capture this opportunity. With a strong operating environment driving a robust flywheel of activity across our franchise, we're confident in our ability to continue to deliver for clients and generate more durable returns for shareholders.

With that, we'll open it up for questions.

[Operator Instructions] We will take our first question from Glenn Schorr with Evercore.

All right. So many good things in there. I'm going to try to pick on one here in equities. So I know it's hard to comment on sustainability. The environment is good. A lot went right this quarter. So maybe we could talk about wallet share gains and any concentration we should think about? Because I saw overall market volumes up 9%, but margin was up 50%, and your revenue was up like 86% or whatever, yet somehow arguably, it's down. So those are all great trends, but maybe you could talk about wallet share gains and what you're seeing in that backdrop?

Sure, Glenn. Thank you for the question. I appreciate that. Obviously, the performance of our equities business in the last quarter is the result of a number of multiyear investments. So we obviously identified a long time ago, particularly on the equity financing piece of the equation, a commitment to grow that as a component of our GBM public business, and we've been putting in place the talent, the risk management capabilities and making multiple years of technological investments to underpin our capabilities, particularly in international jurisdictions, such as Asia.

We, on the heels of some of the regulatory capital relief that we received at the turn of the year, identified the people that we were going to deploy more by way of financial resources and try and capture what we viewed as a competitive shortcoming in Asia, where we wanted to, in particular, improve our market share and capture more share in that part of the world, but it required the investment across the board in terms of people and technology and resources. We've made those investments. We've sustained our commitment to those activities. And over the balance of the first half of this year, we've had a very favorable operating environment that's enabled us to capture that.

So we remain very focused around the world for the equities business, frankly, for all of our activities across the firm, trying to identify pockets where we have bigger opportunities to grow our share with clients, improve our performance, and we'll try to strategically invest in and feed those areas so we can improve our overall leadership positions.

Could -- instead of a different follow-up. Can I just drill down on that and ask, can you talk a little bit about the client composition parts? And I asked because parts of the business have had burst of growth across Asia and then things cool down. And so maybe you could talk about what kind of clients we're talking about? And then if we should be thinking about any concentration risk because at times, there's a handful of big clients that drive that. So I appreciate all that color.

Sure. Thank you. I appreciate that. So the business has different characteristics globally and has different client subcomponents. There are many types of clients that sit within the equities franchise. You can, among other forms of characterization, include long and short investors, more plan-oriented investors and their performance and their consequence to the overall wallet and activity changes over time.

We have been undertaking an effort to expand our overall share across the client base deploying, as I said, the human capital technology and financial resources to do that and being thoughtful about the overall portfolio composition as we grow. And we make choices across a number of different areas where we allocate resources to try and optimize portfolio concentration.

We have very big clients in a lot of our businesses, and they are very influential. But this is a highly diversified suite of clients across the world. We are intermediating equity, asset flows and cash derivative format, financing format or a multitude of clients all over the world.

Yes. I think -- I just think, the only thing I'd add, Glenn, that I just think is an important thing to recognize, we really have global scale advantages and that we really have scale in leadership positions across every region of the world in this context. And I think we're in an environment where that's really providing a benefit. The real strength of our global footprint and our ability to really connect our activities globally and manage our activities globally is an advantage that we're feeling more directly at this moment.

We will take our next question from Ebrahim Poonawala with Bank of America.

I guess maybe just sticking with that, David, around the global strength. Just if you take a step back, talk to us in terms of this capital allocation when you're looking through the businesses and through markets, like what are the best opportunities? Yes, it's competitive. But in terms of how you're thinking about capital allocation across your markets business in Asia versus Europe versus the United States, market financing versus all the CapEx, AI activity that's going on. And then how you think about all of that relative to the buybacks that we did this quarter?

Yes. I mean I'm happy to comment on it, Ebrahim, but I'd start by pointing you back to what Denis said and articulated, I think, very clearly in his prepared remarks. It is always our desire. We think about our client franchise. It is always our desire to take our capital and allocate it towards supporting our clients and their activities when we can do so in a way that produces benefit for our clients and accretive returns for our shareholders. That would always be our preference. In fact, if we could do that and have no excess capital, we would, obviously, with a buffer, but no FX capital for buybacks if it's generating accretive returns. First and foremost, we'd like to get the capital into the business to support our client franchise.

We also generate a lot of capital. And so we are extremely disciplined about looking for places where we can invest in the client franchise. I think Denis highlighted one where over the last 6 to 12 months, we saw a real opportunity, and that was around our business in Asia and Asian equities, and we benefited from that. But if we don't see opportunities or we're generating capital and we don't see opportunities to deploy it, we're going to nimbly get it back to shareholders as quickly as possible. And I think we've been quite disciplined about that.

And so this was a quarter given the performance where we actually created more cushion and more buffer, we deliver a bunch of capital back to shareholders. But you also saw, we deployed more into client resources at accretive returns. And so we always start where the opportunities, we're always looking broadly. We have good disciplined processes, nimble processes to look at that change directions quickly. And if we don't see ways to deploy it, we're going to consistently work to get it back to you.

Got it. Very clear. And I guess, I just wanted to focus on the durability benefit, so there's durability for your shareholder returns. But then talk to us about the durability of the AI CapEx cycle. I'm sure you spend a lot of time thinking through that. I think, David, you were quoted in the press during the quarter about there's more who believe than fear in the market.

So as investors think about the risk of maybe an investment bubble around AI, you all have used AI at Goldman Sachs, you have your own experiences. When you look at that, when you look at kind of what the investment outlay is for the next few years, just maybe give us a sense of comfort that you have around how durable the cycle could be when we think about the financing business and what that means for Goldman and Goldman's earnings outlook?

Sure. I think we've tried to -- in a balanced way, if you listen to the prepared remarks, we've talked about the fact that the environment at the moment remains extremely active with our clients. And our expectation, Ebrahim, is certainly that's going to continue. All the indicators we have is that we are in the relative early innings of a very, very significant when you're talking about the AI build-out cycle of an AI build-out cycle.

Now we all know because we've all been around for a long time that these things don't go in a straight line and they can ebb and flow. And I'm not smart enough to tell you whether or not there could be recalibrations in the short term, sometime in the next 6 months, the next 18 months. But I will tell you that when you look over a 3-year period or a 5-year period, we're investing in long-term growth to support this, and we're going to continue to be very consistent about that.

We see lots of opportunities to deploy capital to our clients to finance this infrastructure build-out. We're very disciplined about the returns we expect for deploying that capital. It feels like that will continue. But I know that it won't be a straight line and there will be bumps and there'll be recalibrations because there's a lot of uncertainty around how not only is the infrastructure going to be built, but once the infrastructure is built, how enterprises will buy that infrastructure, how it will be priced, how greater efficiencies will come from chips and in the pricing ultimately of the technology. There's a lot of talk about token spend and the cost of the technology.

And so I think we're early in the cycle to build out, but it won't be without bumps and recalibrations as people can understand just what the ultimate demand is for this technology and enterprises. And so we're excited about it. We see lots of opportunities, and those opportunities are very correlated to Goldman Sachs. That cycle is contributing to our earnings momentum, but also just highlight the breadth, depth and diversity of the firm, its franchise, the scale of our management fees across the firm of our more durable revenues, those are all things we've been investing in over the 7 or 8 years that have made the firm broadly much more diverse. And this management team is not focused so much on next quarter, we're focused on how we're going to grow earnings from here over the next 3 to 5 years, and we have a high level of confidence that we can deliver on that.

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

I wanted to just unpack the equities number more. It was such a big number. I think there was a collective like chuckle across the street given the outperformance here. So 2-part question. Number one, how much is the Asia hyperscale trade driving the equities revenues at Goldman? And does the sort of recent correction, is that any cause for concern?

And secondarily, you've also heard it given the balance sheet demand in Asia that prime capacity has been more limited. And I'm wondering, given your financing number sort of how that played out for Goldman Sachs and whether or not sort of in prime, you're starting to see a little bit of pricing power given the global demand for balance sheet?

Sure. Erika, thank you. So the activity for our equities business has been very broad-based. It's across intermediation and financing. In intermediation, it's across cash activities and derivative activities. And there's a dynamic in the marketplace right now that where we're seeing single name equity dispersion relative to index, and we're seeing that dispersion relative to index while the market is going up. And that sort of concoction is very supportive for the activity that clients are undertaking to manage their own portfolios and their own returns, and it is causing them to come to us to assist them in managing that dynamic.

On the prime side of the equation, it is always the case that we try to grow that in a strategic, disciplined fashion and think about where the best opportunities are to support our most important clients and also grow our franchise. We identified Asia. We identified it a while ago. We made the decision to start ramping that up in the first quarter, gave rise to questions as to could we sustain that investment. You obviously see we're at the end of the second quarter, and we have revenues that are resulting from those investments that we made, and we're entering the second half with a capital cushion that's even larger. So we feel like we're on plan to support clients and help them take advantage of that.

We do see opportunities for pricing leverage. There are some participants in the market that are also, I'll say, being more disciplined, and there's a lot of desire from our clients to engage. So we're going to remain selective and careful about how we grow the business, but there's a big demand from clients. There's a secular growth opportunity that given the multiyear set of investments we've made, it's something that we can capture.

We'll take our next question from Christian Bolu with Autonomous Research.

Just on capital ratios, and it probably ties into the financing question earlier on. I hear you on the CET1 rising, but SLR did fall 40 bps at 4.3%. So clearly, there's a lot of growth in sort of low RWA leverage-intensive financing like Prime. Your SLR ratio is now the lowest among peers. So how much does SLR govern constraints on growing the financing business? And then maybe give us a sense of how low you're willing to run that ratio.

So as you've heard us say multiple times before, we have a number of different often oscillating binding constraints as a firm. We manage to all of them. We're managing the CET1. We're managing the SLR. You're right that we have facilitated some balance sheet expansion to facilitate client activity. Ultimately, there will be a limit to our appetite to expand that. And I think as we've proven over time, we have the word David use is nimble, which I think is appropriate. We will look at the opportunity set that our clients are presenting to us and then make choices about the relative resource allocation to try to continue to drive sustained franchise and performance for the firm. But we'll look at all of those various constraints on a very dynamic basis.

Okay. On expenses, pretty impressive. Your, I think, efficiency ratio for the first half was under your 60% target. And I think you're still investing in kind of cloud and AI on the GS 3.0 -- One GS 3.0. So just curious about kind of how much of the expense or efficiency gains you've had so far is a function of just the strength in the markets business versus kind of what you've already taken out from a structural cost perspective.

Sure. I appreciate that question, and we'll continue to have this discussion over the ensuing number of quarters. So obviously, we've just developed a tremendous amount of operating leverage given the performance of the firm. We've been able to grow our revs at about 40%, PCL is slightly higher. And comp expense is only growing at 30% and noncomp at 22%. So there's been disciplined growth on the expense side relative to top line.

We expect that we will have the capacity to continue to invest and fuel productivity opportunities that arise from AI and from general firm process rewiring. I think one of the greatest benefits from our launching our 3.0 initiative is that we have galvanized the entire firm to understand that making efforts to scale our company and build more resilient, more automated platforms that can help us capture the significant growth in client activity that we've seen, that has been an enormous benefit.

So we're developing marginal levels of revenue production and not -- sort of not growing our human capital footprint quite the same way, but recognizing instead that we need to have sort of the quality of capabilities and technology to scale. And that's been a learning that I think is one of the big pieces of the driver to our efficiency ratio. I would not say that there's been any structural change in our expense base at this point.

We'll take our next question from Mike Mayo with Wells Fargo Securities.

One simple question. I guess you said your merger lead advising and announced deals is 50% higher than the next largest and that you have record advisory backlog. So what is the multiplier effect? For every dollar of merger fee that you generate, how much more do you get in all those other activities from financing and risk management and execution and all those other things that you say, what's the multiplier effect? Is it like 10% elsewhere, 20%, 50%?

So I appreciate the question, Mike, and it's something we think a lot about. I'm not going to give you a specific percentage. And to be honest, I don't know if I could give you an exact percentage that I could underwrite on a public call.

But let me try to give you a framework for how to think about it because I do think this is one of the most powerful things about our franchise. And it starts with the fact that the adviser relationships, the position of the advisory franchise is really rooted in an extraordinary number of senior people that have deep, deep, trusted relationships with CEOs and Boards across the corporate infrastructure. And when you get an environment like this where there's a lot of strategic activity, you obviously get benefit in the advisory line, and you see our market share performance in the advisory line. But you get it, it's going through and so many other things because that advice and that trust leads them when they think about financing, they think about hedging, they think about how it all integrates.

We're finding ourselves in these discussions earlier and alone and without other banks, and that allows us to command more of the wallet structurally. I think it also spills over given our One GS approach into Asset & Wealth Management, and we get it by giving the management and our clients in asset management the opportunity to invest in a lot of this stuff, and we get earlier looks. And then in addition, as people trust the firm, they more and more want to leave their wealth to the firm. And there's a lot of wealth being created.

So the multiplier effect is across the firm, it's significant, and it's a very, very virtuous flywheel. When we stepped back as a leadership team and we look strategically at some of the things we've been focused on for a number of years and we continue to focus on, the amplification of this coordination over the firm, taking these trusted relationships and really levering different ways we can serve these clients, kind of core to what we're doing, it's something I think we're getting right. And so it's leading to benefits. That flywheel is powerful. I can't give you a percentage, but it's a meaningful part of the integrated performance of the firm and our One GS operating ethos.

Your Prime finance is up a gargantuan amount year-over-year. What's your capacity versus the demand?

So in the case of Prime, also in the case of FICC financing as has been the case, there continues to be far more demand across the client segment than we're willing to engage when we sort of balance our objectives of serving our clients, driving market share but also being balanced, diversified and focusing on risk management.

So we're at a moment in time where the demands for the provision of financing are outstripping what we think is the appropriate quantum. That should come as no surprise. We are in the middle of an AI CapEx super cycle, where there are demands on financing into every single financing instrument in every region of the world and across every single industry. So it's a function of deploying our resources as efficiently as we can to serve our clients as best we can. But we're at a moment in time where there's more demand right now.

We'll take our next question from Manan Gosalia with Morgan Stanley.

Maybe just on a related question. Can you just talk about the strength in loan growth in the Global Banking & Markets business. I guess how much of that is from the FICC financing side that you're calling out? How much of that is from just general deal-related financing. And I guess, what is the outlook for how much balance sheet you can allocate there just given the strength we've seen on the M&A side in the second quarter?

Sure. Thanks, Manan. Yes. So there's a couple of areas across GBM that we have been fueling. One area that we called out in the first quarter as we called out, deploying capital into our deals book. And so that obviously dovetails with some of the advisory comments that David was talking about. In addition to, call it, regular way financing of investing client activities and provision of clients to our wealth franchise, there's event-driven demand for financing, M&A linked demand for financing. That's an activity we've historically been one of the leaders in. So we are prioritizing deployment of capital into our deals book.

And then as you talk about the growth that you're recognizing in terms of loans on a sequential basis, that -- the other collateralize largely relates to what we report as FICC financing, which connects to the prior question where we're growing that, but we continue to be disciplined in terms of how we grow that. And increasingly, with the formation of our Capital Solutions Group, again, to this point that there's sort of more demand than necessarily availability, we are using our origination capabilities where we can originate and structure very high-quality investments in fixed income space, and we're routing it to our Asset & Wealth Management business because the clients that we have in Asset & Wealth management that are very interested in getting exposure and investing in the same kinds of products that we used to invest only for ourselves on our balance sheet.

And so we're harnessing the same origination capabilities, face off against all the clients around the world and helping source opportunities and serve clients, some of which will go to the balance sheet and show up in FICC financing, some will now get routed to AWM and help drive some of the growth in that business. And then some of it will underwrite and distribute to institutional clients. We're also interested in the exposure. So we have a different sourcing origination and distribution strategy for different types of instruments and different client bases.

Got it. Very helpful. And then as my second question, can you talk about some of the puts and takes in the CET1 ratio this quarter? I mean VaR was up in the quarter, not a surprise given the environment. But RWAs were actually down quarter-on-quarter. And I guess the question is, what drove that? And how should we think about the range in which you can manage your CET1 ratio over the next year or so?

Sure. So I appreciate that. I think the punchline, we remain committed to an operating model that's sort of, call it, plus 50 to 100 basis points. We're obviously in excess of that. There were elements of our market risk RWAs that relate to VaR that actually came down about 20 basis points of the increase is attributable to that. And then we improved some of our credit risk RWAs around certain funding and lending activities, which contributed to some of the gain. And then the balance of the delta is really just the earnings generation relative to the dividend and the buyback.

We feel good that we were able to deploy as aggressively did in the first quarter on behalf of clients, generate the results that we have now in the second quarter. And as we move forward, we have 150 basis points of cushion that we can use for more of the client base deployment that David was referencing. And as we see opportunities, we'll fill that. And in the extent we don't, we'll return capital. We returned a record amount of capital by share buybacks in the first half. So that continues to be something that we're focused on. So you should expect that cushion to be deployed for the client franchise and then some return of capital that we'll land ourselves with the appropriate cushion to manage the firm.

We'll take our next question from Brennan Hawken with BMO.

Despite really robust revenue growth, head count was down 2% quarter-over-quarter. Denis, I know you spoke to the fact that you didn't see the expense base as structurally changing. But is this decline in head count a function of some of the efficiency efforts you've been focused on, whether it's via AI or One Goldman Sachs 3.0? And how should we think about head count going forward?

So I think those numbers are an output of the efforts that we're undertaking, and it's not the result of some specific target. And by the way, you're getting second quarter numbers. We have a whole bunch of people that join the firm every single year in the third quarter. So you're looking at an interesting point in time where head count is up year-over-year, but it's down slightly over the course of this calendar year.

I think what's interesting and exciting, and I would dovetail with David's comment on the power of AI, some of the technology is letting our people do more and be more productive, and that's the way we're thinking about investing. We want our world-class people to be more productive and do more for clients. As they become more productive, they may feel less need to replace people that in the ordinary course flow through the system. But right now, it's not a moment for a structural rework of our human capital footprint. It's a moment to invest and utilize this new technology and learn how to deploy it in the best possible way for our people and our clients.

Great. And then for my follow-up, backlogs up both quarter-over-quarter and year-over-year, certainly encouraging given how robust revenue growth was this quarter. Could you speak to maybe some trends in the backlogs, whether you're seeing early signs of sponsor reengaging? You guys also flagged leverage finance as a contributor in DCM. So is that an indicator of activity levels improving? Or is that still heavily skewed to refinancing?

Yes. I mean I'll start, Brennan, and Denis can add. I think the most important thing that's driving the backlog activity is really strategic M&A. And we're just in an environment where if you think about what's going on with technology change and scale broadly, if you're running a big business, you have to be focused strategically on scale advantage. And that means you have to be open to thinking about how you enhance your competitive position. And we're now also in a regulatory environment where when the question is asked, could I inorganically enhance my competitive position? The answer is maybe after a period of time where the answer would have been absolutely no way, whatever the question was.

And so we're finding, and obviously and directly in a lot of the dialogue I'm having with CEOs, CEOs are dreaming and thinking about really large, structurally scale enhancing opportunities, and that's leading to just a lot more strategic activity. I'd say while there is more sponsored dialogue, the sponsored stuff still has not accelerated. And candidly, it's going to come at some point, and that's still a big upside in these flows if the strategic dialogue takes hold. The leveraged finance activity, to some degree, is around some of the AI infrastructure build, and it's also around kind of recapitalization and refinancing because one of the ways that the sponsor clients can advance or get capital out of businesses is to recap them, and we're seeing a little bit more of that. But the big driver is this is an environment where people want scale advantage and CEOs are dreaming more kind of large-scale opportunity because I think that they've got a multiyear window here where they can potentially execute on it.

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

So lots of momentum within your alternatives business given the fundraising this quarter. But as you look at the first quarter levels and then the addition to this quarter, you have fee paying AUM or I should say, non-fee-paying AUM that's well north of $100 billion. I was curious about how to think about the pace of when we should see that kind of flow into management fees over a reasonable time period?

So thank you for the question. And look, you're right to point out that there's a time period, there's a time frame between which we raise the capital and then ultimately deploy it, and we're only recognizing the revenues when it's deployed. But this is also -- it's like a laddered portfolio. I mean this is continuous over time. So while we may have just raised a substantial amount of money and it may take some time for our investors to find the right way to deploy it, they're working with the money that have been raised in prior periods and deploying that into the processes that would have started before this version of capital raising.

So I think the way we think about it, look at it over a multiyear period of time, is we think about -- we have a target of $75 billion to $100 billion of annual fundraising, and we want our teams set up to sustain that growth on the fundraising side so that then they can pick their spots to deploy it. Sometimes that will be quickly, sometimes that will be more slowly. They'll make the right decisions based on the investment opportunities to present to them. So there is there is a lag. It's not a -- you can't formulaically predict it.

Understood. And then as my follow-up, Denis, you mentioned incentive income to increase materially for the remainder of the year. So hoping maybe you get a little bit of quantification around that or some numbers? And then is this based upon deals that have already been announced or movement in values or things that are already kind of transacted on?

Sure. So I'd say 2 things on that. First, on a multiyear basis, we're not sort of readjusting what we think is the medium-term run rate contribution from incentive fees. But because we do expect it to be unusually higher, we thought it was appropriate to call that out to all of you. So we do expect in the third and fourth quarter to have materially higher incentive fees. It is related to specific transactions that are known and out there. And based on a schedule and some events, we know that there are incentive fees that we expect to earn as a firm.

We'll take our next question from Devin Ryan with Citizens Bank.

David and Denis, another one on the alts, just the strong fundraising in the quarter, obviously, huge momentum. So I just want to dig in a little bit on the demand drivers there. Just getting a sense, is this just kind of continuation of long-term consolidating share? Or how much is LPs becoming actually more discerning in this backdrop or even just kind of opportunistic in areas like private credit, where I know you've had some momentum with institutions? Just be good to get some sense of the strength there and kind of the ability to continue that.

Sure, Devin. I mean I think candidly, in this case, it's both. First, you know this is a core part of our long-term strategy to set the firm up to use our breadth, our scale and our capabilities to broaden these platforms, and we're successfully doing that. And because of the nature of our asset management platform and the extraordinary, for the lack of better term, manufacturing facility we have across the broad asset management landscape, big institutions find us a very, very attractive partner because we have an ability to put scaled solutions together for them that really are customized for what they want, what they want to invest in. And I think we're getting better and better at that. We're seeing the benefit of that in our fundraising.

Secondarily, I think there are areas where our level of expertise and our experience and our differentiation, and there are others like us where LPs are really saying, we're going to differentiate and go to people where the performance and the capabilities are better. I think private credit is an example of that. We've benefited from that. And so I think both are factors. There is going to be some lumpiness in fundraising where quarters will -- because it has to do with as you go out and present the different funds to the market, there's a lumpiness as to what you see. And so we kind of gave you some direction of travel for the year, and we're obviously way ahead of that. But I think both of those things are contributing to our ability to continue to perform. And they're correlated, we set out growth ambitions for that business, and we're delivering on those growth ambitions. And you can expect us to continue to deliver on those growth ambitions.

Yes. That's great, David. And then just a follow-up on just the AI build out inside of Goldman and you touched One GS. But as you think about just how fast this technology is evolving, you think about agentic as well and maybe opportunities. I'm assuming that you guys will be probably on the forefront as you've been with other technologies in the past.

So how much of an opportunity do you see forming and maybe how far out is it to do more with agentic is just one example? And do you see things that could be really interesting even from a client-facing perspective to be innovating with where you could be early and could be meaningful?

So Devin, look, the space is moving very, very quickly. And with the passage of time, I think we get more excited and more confident about what some of the capabilities are. It started with productivity and a more narrow component of the firm called engineering. But based on leveraging the firm's relationships with a number of different sort of large language model providers and investing in sort of very high-quality engineering talent, frankly, hiring a bunch of engineers from the outside to complement our already excellent team, we are finding very effective ways to deploy it inside of the firm. I frankly think it's still early.

So there are some of the easiest places to generate benefits are what I would refer to as table stakes. The sort of necessary responsible process improvements that are leading international corporate should integrate into their firm. And then the question becomes, how do you harness the combined capability of your natural talent that you have in your organization, your engineering talent. The data that you have as an organization in Goldman Sachs has an enormous amount of highly differentiated data that we have collected and curated over many, many, many years. And we put that all together with the extraction and analytic capabilities of these new technologies and put that in the hands of our world-class talent, and they should be able to continue to offer clients better, faster, more insightful pieces of advice and analysis to continue to make Goldman Sachs the kind of place that clients want to call first when thinking about their most important transactions.

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

Can you guys share with us your thoughts on -- obviously, today's numbers are very, very strong and the market conditions are very positive, particularly when it comes to the AI-related financings and such. Can you compare this period and the influence that AI is having on the business in terms of capital raises, DCM, ECM, et cetera, trading to prior periods similar to maybe the dot-com era, or even during the 2021 period, which we had such a strong investment banking period there during the pandemic. Can you frame it out where you could give us how big is this tech/AI contributing to the success versus those prior periods when we had dot-com and obviously, in the pandemic era?

I appreciate the question, Gerard. And it's not surprising that we get a lot of questions that kind of look back in history and people want to draw direct comparisons. I think it's really important to look at history and think about history and think about other waves of technology investment, et cetera. But I think the frame I reframe it to you is I'm not sure that I can do that in a way where I give you a good answer. Certainly in terms of the size and the scale of the capital that's being put forward, it's very, very significant in terms of absolute dollars. But one of the things I just highlight that's interesting when you think about the IPO market, this was obviously a very robust quarter for IPO activity. IPO volumes in this quarter were kind of at or below the 10-year average, okay? So it's not like when you look in a historical context, there aren't other periods of activity that are very, very significant for all different reasons.

The thing that I think is important, though, when you think about it, you frame that question around the impact of the AI technology, the firm is so much bigger, so much more diverse, has so many more earnings engines and so much more durable revenue than it had the last time we saw a significant investment cycle like this. And so the investment cycle is, of course, and we said this, it was one of the things I said in my remarks, the investment cycle is having an impact on the environment and therefore, our earnings. But the firm and the earnings are more diverse, more sustainable.

Could this ebb and flow? Absolutely. And it will, as it has in any other cycle. I think that's one of the lessons that we can take when you have these accelerations. Ultimately, you will have a recalibration, a reset, a drawdown and then a further acceleration. That's what the path generally looks like. But we're doing it off a much more diverse, much more significant base. And as we manage the firm, that's something we're thinking carefully about.

And then as a follow-up, and this might be a difficult question to answer as well. But obviously, you've been very articulate about One Goldman Sachs. You talked about the wealth management referrals this quarter. I think it was 900 folks. When you look at your trading numbers, is there any way of quantifying how much of the success in those numbers have -- has come from One Goldman Sachs versus the market conditions just being so volatile, for example, obviously, the Middle East conflict breaking out in February contributed to volatility, which the firms like yours and others benefited from increased volatility in trading. Is there any way of parsing out how much success is coming from that One Goldman Sachs approach and the success you've had in building up those numbers with your best customers?

Yes. What I could say to you, I can't say it in terms of a quarter, but I think you'll remember, Gerard, if you go back to our first Investor Day in January 2020, we said that we had meaningful wallet share opportunity with the top 100 accounts. And I think if I remember correctly, and don't hold me exactly to this because I'm remembering and I'm now very old. So I'm remembering 6 years ago. But I think we said we were top 3 with 44 of the top 100. And we set out to do better. I think today, we're top 3 with close to 80 of the top 100, but we are top 3 with 127 of the top 150.

So we have in a concentrated, focused way worked hard to improve our market share with our FICC and equities clients, and we've materially improved it over the course of the last 6.5 years, and that is the #1 thing that's driven our relative wallet performance. That focus, and we continue to do it. Denis in his comments made a reference to our constantly looking at places where there are gaps or opportunities. We run detailed processes in the firm. We are -- when you look at a lot of businesses, we're #1. But that doesn't mean that we're #1 in every little mix and every little corner of that business. In fact, when you actually take any of these businesses, we have very strong wallet share and you pull them apart. And so you start looking at advisory revenues, we're clearly #1. But that doesn't mean that we're #1 in biotech even if we're #1 in health care.

And so we take a focused and we constantly are looking and saying, where are we falling short? Where can we do better? Why are we falling short? How can we improve those client relationships? And that's a pretty disciplined process that we do across investment banking, across FICC and equities, broadly, and we'll stay disciplined with that. If you do that over time, and that is kind of One GS, you advance your overall relative wallet position. There are ceilings to that in some places, but we'll continue to remain focused. And so I think that ethos, that kind of market share discipline has been very, very constructive for our performance over an extended period of time. And we're going to continue to be disciplined and kind of always being self-critical and saying, where can we be better.

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

Just a big quick picture question. AWM is about 1/4 of the revenues. I guess the question is this about where you'd like it to be, understanding the puts and takes of trading normalizing over time? And then secondarily, any potential opportunities to round it out, the franchise, either domestically or internationally and maybe inorganic considerations?

So I appreciate the question. And I guess, if I could paint an ideal business mix between Global Banking & Markets and Asset & Wealth Management, the percentage would be slightly different. But these things are working pretty well because we've been able to grow Global Banking & Markets, I think, better then when we kind of laid out the road map 6, 7 years ago, we thought we'd be able to grow it. Now I wouldn't trade away that growth at all. And I think there's a lot of durability in the scale of that franchise.

But of course, we see a lot of opportunity to grow Asset & Wealth Management. We said clearly in the prepared remarks that we feel good about the acquisitions that have filled gaps that have been able -- that have allowed us to accelerate growth and that we continue to look at addressing things that will allow us to do that. And so we're going to continue to find ways to fill in that franchise and accelerate the growth. We're always going to be disciplined. The bar is always high to do anything inorganic. But when you look at the scale of Global Banking & Markets, it would take very significant things to materially move the business mix. And so we're just going to continue to try to grow this business the way we've outlined. We will find inorganic opportunities, we'll add them when we can. And I think we've got a pretty good run.

And my follow-up, appreciating the strength across the board this quarter. I guess if I were to ask, what's not at your high expectations, whether nuances within a business strategy, geography, anything that as a management team you're looking at and say, "Hey, we're not quite where we should be."

There are lots of opportunities. There are lots of places where we can do more. When you say it's not in our expectation, that frames a little bit in a negative. What I would say is there are places where I think we could have invested more sooner, and we're investing more now where we think we can accelerate. And one of the most obvious ones is wealth. There's just an enormous, we have a very strong, ultra-high net worth, high touch wealth business. And the growth in very, very wealthy people that have investable assets is expanding at an even faster pace. It's a very, very fragmented business where people have fragmented share. There's no big leader that has more. And I think that our opportunity -- this business scales with people, by the way, and we're investing in those people. We've accelerated our investment. I think the ability for us to hold ourselves to a bigger client footprint and ultra-high net worth is something that we've been very focused on in the last 2 years and are accelerating that focus.

So I'd point to that as an example, but what I'd like you to take away, again, is this. We try to run the firm with a discipline of always looking at where can we invest? Where can we do more? How do we look at things over 3, 5, 7 years, not quarter-to-quarter. And we continue to see a lot of opportunities to grow the firm and grow the earnings of the firm, and that's what the leadership is focused on. We can debate what the right through-the-cycle base is at the moment. And there's no question, as we said, we're benefiting from the current environment, but we see lots of opportunity. You pick the base to continue to grow the firm, grow the franchise and grow the earnings over the next 3, 5, 7 years.

At this time, there are no further questions. Ladies and gentlemen, this concludes the Goldman Sachs Second Quarter 2026 Earnings Conference Call. Thank you for your participation. You may now disconnect.

All right. I think we'll get started here. So good morning, everyone, and welcome to this session with Goldman Sachs. I'm very pleased to have once again at the conference, John Waldron, Goldman Sachs' President and Chief Operating Officer. Welcome, John. I think this is your eighth time here. So we really appreciate the effort to make it down to the conference.

Maybe, John, a good place to start is the company's strategy. Obviously, the stock has done very, very well, a function of both the operating environment, but really good multiyear execution on your strategy that has improved both the resiliency and durability of the return profile of Goldman Sachs. For those newer to the story, can you just talk through the key tenets of your strategy?

Okay. First of all, thank you for having me back. I love coming here. I love the conversation with you. Congratulations on another great conference. I would say our strategic priorities really remain unchanged. We've been pursuing this strategy for quite some time now, as you and I have been talking about. We aspire to be the most exceptional financial institution. We have 2 interconnected client franchises. We'll talk about those, I'm sure, a bit more today as we get into the question, Global Banking & Markets, Asset & Wealth Management. And as you referenced, we're trying to build more durable earnings power through the cycles. That's been our mantra, more durable earnings power through the cycles. We haven't really had a lot of cycles of late. We've had one positive cycle. Invariably, we'll have a cycle that's maybe a little bit less positive. Our job is to continue to be durable and continue to generate earnings power through whatever cycle the environment throws at us. We have a Global Banking & Markets business that is over $40 billion of revenue. It's the leading scale business in Banking & Markets. We've been #1 in the M&A business for 23 years in a row based on revenues. That's, by the way, hard to do in any business on Wall Street. It's a highly competitive market. So that shows you the power and durability of that franchise. We're the #1 equity player. We're a leading FICC franchise. And we're really -- if I look at the business across the piece, we're top 3 in essentially all the major verticals that you would care about in a banking and markets franchise. So we've got breadth, scale. That business is growing nicely. It's a phenomenal franchise. We'll talk some more about it.

And then we have an Asset & Wealth Management business that is about $17 billion or so of revenue. That is $3.7 trillion of assets under supervision. It's a top 5 active asset manager. It's got a very sizable and scalable alternatives -- private markets alternative asset platform and a premier ultra-high net worth Wealth franchise. So it's -- it covers the gamut of those 3 aspects, and is also a phenomenal business, I'm sure we'll talk some more about. We have, I'd say, a 3-pronged execution strategy -- execution of our strategy. First is to harness what we call One Goldman Sachs, which we started talking about 8 years ago here to serve our clients with excellence, which is really focusing on driving our wallet shares with our clients. We give clients better value proposition, we get better share of wallet. Pretty simple concept, but there's a lot of execution behind that.

Second major element is to run world-class differentiated businesses and demonstrate the synergy between them. We're increasingly focused on proving to our clients that having these businesses together are -- is better for them. We deliver more value, and therefore, that's better for us in that order.

And the third, which is going to -- which obviously garners a lot more focus and attention now in the age of AI is to invest to operate at scale, which is really about automation, efficiencies, productivity, scalability, resiliency. We see significant opportunity here, obviously, in the age of AI. I'm sure we'll talk some more about that. We made a lot of progress in the context of that execution and feel exceptionally good about our positioning in the world today. And we obviously, as I'm sure we'll get into, have some cyclical and secular tailwinds that are helping us in the execution of the strategy. So we have to be aware of that and clear about that. But we have a very differentiated franchise. We think we have phenomenal talent, and we work extremely hard on culture. You can have a lot of talent, but if you don't have a culture that binds that talent together, then you don't get as much out of it. And so we work very hard on that. We think that's a comparative advantage in our firm. And we have a lot of confidence in our ability to continue serving our clients with excellence and at the same time, delivering for our shareholders.

Let's drill into the culture and the client side. So One Goldman Sachs strategy that you talked about 8 years ago, which is attempt to have a more integrated, comprehensive approach to serving your biggest clients. Just talk through the evolution of that model over the last couple of years and how that's helped differentiate Goldman Sachs franchise.

Yes. I appreciate the question. I would characterize One Goldman Sachs now as the operating system of our firm. When we started 8 years ago, it was a concept of how we wanted to try to run the firm. Today, I would characterize it as the fundamental operating system of the firm. Critically important to our strategy and the execution of all the things we're trying to do. We started 2019 in a pilot where we essentially worked with about 30 clients to try to prove that we could cover them holistically. What does that mean in plain English? It means that we actually break down the silos in the firm, and we try to have one unified team, regardless of where you sit in the firm, regardless of what your P&L is, regardless of what your day-to-day incentives are, and we try to get you focused on covering the firm -- that client over the long term and doing what is right regardless of where the revenue shows up and regardless of what you think your day-to-day incentives are. There's a lot of work under the covers to do that. We started with that pilot. We've now expanded that to 100 clients, more than 100 clients across the firm. You need kind of global, multidimensional complex clients for that to really work. So that's off and running, and we've done very, very well there. A few years ago, we worked on what I'll call One Goldman Sachs 2.0, which is really focused on back to this question of synergy between the businesses. We have these 2 big businesses. We want to prove the theory that because we have those 2 big businesses that we are doing a better job, better value proposition to our clients, we can deliver more capability by virtue of having an Asset & Wealth Management capability alongside of Banking & Markets capability. We evidenced the gains here by seeing now a little less than 400 basis points of share gain in our Banking & Markets franchise over this period of time, which, again, is not easy to do. These are -- we've got tremendous competitors. Many of them have been here on the stage. They're all excellent in what they do. It's not so easy to gain that share. We've been able to do so. We are continuing on the path of gaining more share. We measure our top 3 relationships with the top clients in the world, meaning are we ranked in the top 3 with the most important largest scale multidimensional clients in the world. We started on that journey in 2019, where we were measured at 77 of the top 150. We're now at 127 of the top 150, where we're one of the top 3 providers of services to them, Banking & Markets. So that's a significant improvement in our position. We have more to go, but we've done very well. And now we're focused on can we generate more deal sourcing out of banking to help asset management. Can Wealth Management and Banking work together to better serve family offices, any number of things that connect the 2 franchises where we're delivering more value to our clients. We're very focused on that. And that kind of all is encapsulated in One Goldman Sachs 2.0. We'll talk about the Capital Solutions Group and the financing opportunity in the world. That's very much an evidence of One Goldman Sachs in action. And we become, we think, better risk managers by sharing risk management practices across the firm and not having those silos and actually being much more adept at thinking how assets are trading in various parts of the firm and across the markets.

One Goldman Sachs 3.0 is our current iteration focused really back on the scalability and infrastructure and the firm and automation of the firm. So we've used our One Goldman Sachs capabilities and architecture to now drive our AI strategy. And that's really -- that includes optimizing our data strategy, that includes our migration to the cloud. That includes building tech-enabled solutions, AI-enabled solutions for clients, driving more productivity, driving scalability, giving better client solutions. And obviously, if we do all that effectively, we will have faster revenue growth, better margins, more shareholder value over time.

Okay. Let's talk about the macro backdrop. Every year, I ask you this question. I say it's dynamic. And once again, we're in a dynamic environment for the macro. What do you hear from clients?

Look, I think we're in a world of very strong nominal growth. People tend to talk in real growth for obvious reasons. But if you just look at the nominal growth in the economy, particularly in the United States, it's exceptionally strong. We've obviously got a business investment and capital spending cycle that is extraordinary. We were just talking before we went on stage, and how long will that last? We can all have our views, but it is an extraordinary cycle, and I think it has a fair bit of running room in front of it. You can see in the first quarter, S&P 500 earnings grew 26%. That's against a typical quarterly growth rate of 8% or 9%. So we're growing kind of 3x the typical rate. I would say the consumer is extraordinarily resilient. We're all sitting there here on pins and needles trying to figure out what's going to happen in the forward. But right now, I don't see any reason to believe the consumer isn't continuing to spend. And the labor market is actually quite resilient. With all the potential risks and concerns about labor, which I think are reasonable risk to be worried about, the labor market data is quite strong. And so I think you have a backdrop that is generally very, very good. There are plenty of risk elements that we all can sit here and enumerate and worry about, and we pay extremely close attention daily, hourly to these risk elements. Inflation, I would say, is probably the single biggest risk element. It's the one that worries me the most personally. It has impact on back-end rates. So if you get the long end of the rate curve around the world, which is obviously starting to trade differently than we've seen for most of the cycle we've been living in, you get those rates to start living in the higher zones that can have impact on cost of capital across the economy. Consumer behavior, as I referenced, I think we're all worried about it, but there's no reason to at this moment to see any real signs of concern. Geopolitics supply shocks, they're right in front of us. That could get worse. I'd say fiscal imbalances continues to be a major problem. I think that is alongside inflation, a major concern over time if that doesn't get fixed and dealt with. And then cyber, which doesn't -- I mean, I think it's getting more attention now with Mythos and so forth. But cyber, I think, is a deep tail risk in the marketplace that we need to be worried about. And so clients are all worried about these risks, too. Having said that, they are powering through because there's real underlying nominal growth opportunities, and they need to run their businesses. And I think clients have become accustomed to dealing with uncertainty. And so we see extraordinary client activity right now. Why is that? Obviously, the CapEx cycle. So this kind of generational business investment spend that's going on in the economy with AI at the core. It's not just AI, but AI is definitely at the core. That creates a lot of activity. I would say there's a real bias and need for scale. So we'll talk some more about that, but I think that drives a lot of activity. Clients all over the world, whether you're a corporate or institutional client or family office, you're thinking about how do I have scale in my environment. And then the absolute growth in the size and scale of the capital markets creates a lot of opportunity for firms like ours. So that combination is a very virtuous combination. We see huge drivers of capital, obviously, in AI and infra. We see huge drivers in data, digitization. We see huge drivers in energy and power. We see huge drivers in logistics, supply chains, physical infrastructure. There are plenty of drivers of activity. And our clients, I would observe, I've been doing this 30-some years. I don't think I've seen an environment where clients need our advice more and need our capital more than they do at this moment. And so that's a virtuous environment to see how long that last. And we feel very well positioned to support our clients. And so we're seeing good activity. And I think our client relationships are getting stronger, and our job is to continue to execute.

Okay. Whether by luck or by foresight, you guys formed the Capital Solutions Group. which seems like very well positioned to support what looks like an investment super cycle to your point earlier on. So just talk about that group, think about it last year, you formed it. Talk about what's happened so far, how you think it helps support the broader investment cycle.

Yes. So we're a year and change into this and feel very good about how it's going, but also the forward. We essentially created through various parts of the firm, an integrated comprehensive suite of origination and sourcing capabilities, structuring and risk management capabilities and distribution capabilities, core capabilities of our firm, but we put them in one unified platform and business with one unified set of incentives, very important. And importantly, this operates across public and private markets. And obviously, both public and private markets have shown enormous growth in the last handful of years. To give you a sense of the scale, last year, and bigger this year so far, we worked on $2.7 trillion of league table volume in the capital markets coming out of the Capital Solutions Group and about $200 billion of non-league table financing. So an enormous scale in the context of capital provisioning in the world. We believe that there's a lot of capital in the world, but the aspect that's in short of supply is origination. So ideas, sourcing of opportunities, particularly attractive opportunities. And we believe that Goldman Sachs should be the most powerful engine of that deal flow. Now we can say that, but we actually have to go do that. And we got to get ourselves organized to make sure that we're doing that to the best of our ability. We feel like we sit right in the center of this investment super cycle right now. And so we've got to make sure that we're doing everything we can to get that provisioned out to the world, to our clients. And obviously, we can be part of that provisioning as we get into it. So our job when we meet with clients is to offer multipronged solutions. We want to have a holistic approach. We can talk about public markets, private markets. We can talk about any number of structures, lots of risk management capabilities. We can show lots of transactions out to our clients. We can participate alongside them. But through the advisory aspect, including structuring, distribution, allocation to clients, co-investing with Goldman Sachs, there's a lot here that I think is very virtuous for us and for our clients. We'll become a much bigger co-investor through Asset & Wealth Management as we source more of this product. And I would just say that demand is quite strong. I mean as you've heard, I know you heard a bunch of this yesterday, the demand for financing in the world right now is extraordinary. And we're exceptionally well positioned to do that. We have -- not yet public, quite a large number of sizable infrastructure financings, a bunch related to AI, not all, that are some of the largest transactions we've had the opportunity to work on. And I think that will continue for some time. As you think about $700 billion, $800 billion of capital just in the AI infrastructure alone, that all has to get financed. And so we sit at the center of that. I think that's a pretty attractive place to be at the moment.

Okay. How do you think about risk management as it relates to financing, particularly as we see market backdrop, a lot of banks are getting aggressive in deploying capital towards these activities.

Yes. So Goldman Sachs is 156, almost 157 years old. And I think risk management has been a core part of the firm all the way through. It is really essential to our DNA. It's partially how you survive, maybe not partially, it's kind of largely how you survive for that long and thrive for that long. We focus a lot on people. We focus a lot on process, and we focus a lot on preparation. And then we have a pretty well-organized infrastructure to work on those 3 aspects. We do a lot of stress testing as do a lot of other people, but we're pretty intense about our stress testing. And we use that to govern how we set risk limits across the firm. So we think about what could happen, how could it happen, what are the correlated effects that could happen as you think about different scenarios and you tend to set your risk limits in any aspect narrowly and then more broadly as you think through those stress testing scenarios. And we like having many eyes across positioning. So one thing that I think we do well, nobody is perfect, is we have a very socialized view of a lot of people are looking at risk all over the firm, people at the front end, people in the middle, people on the back end, first line, second line. There's a lot of eyes on this. We like that. And I would say we have a mark-to-market culture. So we mark our books kind of all the time. We like that because it gives you clarity on kind of where real market prices are with liquidity. You can sometimes [ pull ] yourself if you think you've got an asset that you got marked in a certain place. But if you really want to move it, all of it or a big chunk of it, you really can't. So we like to have the notion of where could we actually -- where is the price discovery where we could actually sell this, particular security or asset that sits on the balance sheet. And we have an obsessive focus on liquidity as any bank should. And right now, I would say it wouldn't be surprising, we're running with elevated levels of liquidity. Our balance sheet has grown quite a lot as we support our client franchise. Our clients have a lot of risk appetite. And so we want to support that, but we elevate our liquidity levels accordingly. So as a measure of that, if you looked at our financial statements, you would see in the first quarter, what we call GCLA or global core liquid access, which is kind of measure of liquidity, it's a measure, was around $500 billion on average through the quarter. That's about 12% higher than the prior -- the first quarter of 2025 and about 65% higher than what would have been in the first quarter of 2021. So our balance sheet has grown. Our liquidity has grown. We will continue to provision liquidity accordingly. We carry higher buffers. This is just an environment where there is a lot of risk appetite. As we've talked about, there is a lot of buoyancy. Good time to carry more buffer, good time to be a little bit more careful vis-a-vis your liquidity as you're trying to grow with your clients and support your clients. We spent a lot of time on credit underwriting standards. We spent a lot of time on counterparty credit risk, all the things that you would expect us to spend time on. And you're going to see us continue to grow, but we're going to grow in a disciplined fashion. We're going to grow looking at attractive risk-adjusted returns, risk-adjusted returns, not just returns and making sure that we're navigating with our clients we're doing in a way that's safe and sound for our firm.

Okay. Let's go back to the M&A business. I think you mentioned earlier, John, about the bias for scale. You are sort of the #1 M&A adviser been that way for, I think, over 20 years. Kind of what are you hearing from clients around the M&A cycle or the sort of bias for scale?

Yes. I think that right now, we're in more of a winner-take-most environment, which is reinforced in the public equity markets. We all talk about the lack of breadth and how sizable some of these companies have become and the gap in the multiples for the larger players and the smaller or midsized players. CEOs see that. And so they, obviously, from a capital market standpoint, see that the economics are better for the larger winners than they are for the middle and smaller sized players in the industry. And so that obviously drives a lot of their own thinking about scale. I would say, generally speaking, CEOs are confident in their businesses. They're uncertain and worried about all the risks that we just talked about. So they're not ignorant of that and ignoring and not focusing on it. But they're generally looking at their business and saying, my business is pretty good. And so when your business is good, you have the mindset of doing more strategic activity. It's pretty highly correlated to CEO confidence. We see that. So -- and they power through some of the uncertainty because they see the underlying data is strong, and they project their businesses to be strong. I would say it's not a scale for scale's sake world, though. We have seen M&A cycles where it's been kind of -- it's conglomerate approach, right? We want to be the large conglomerate and have all these different businesses. This is, to me, scale alongside fit and focus. So you want to be in a winner-take-most environment, you want to be really big and really predominant, particularly in areas where the market is rewarding you for growth. And if you're in a business where you don't have that scale and you don't have that growth, you're probably getting out of it. So you may be doing a spin or a split or a carve-out of sorts. And so we see that quite clearly. I think that the margin picture and the growth picture is much better for the larger companies. And so that is coming through loud and clear. AI is clearly an accelerant to this. It drives, I think, the bias for scale, and announced M&A volumes this year are going to be right now, $2 trillion. We're on track to be near the record, if not breaching the record of 2021. So -- and I think that our backlog is still good. We're a pretty good barometer of that. I think activity is remaining strong. Conversations are happening. There's more bias for consolidation in these industries. Interestingly, it's really a corporate-led market. So I think corporate M&A is up like 62% year-over-year. Private equity is down 4%. That's the reverse of what we've seen for the last 5 or 10 years where it's been much more of a private equity-led environment. I think that corporate activity continues for all the reasons I just said. And I actually could paint a picture where it could accelerate from here on what's already a pretty good run rate. The private equity piece is harder to call. I think we need to season a little bit more as we get into some of the valuations that the private equity firms have on some of these businesses, but that's a big source of upside. You've got $1 trillion of dry powder and $4 trillion of embedded portfolio company valuation owned by private equity and venture capital firms. So if that engine turns on, we're going to get another step function uplift. And at Goldman Sachs, we feel really good about our position. We have an almost $300 billion lead in the lead table at this point in the year, which is our largest lead ever at this point in the year. I hope I didn't just jinx that. But I just have to say this is a very special franchise. I'm having dinner tonight with a group of our senior M&A banker. This is an incredibly special franchise that I think will continue to flourish in this environment.

I guess you are seeing the M&A business, the whole winner take most for Goldman as well. Maybe just talk through how the M&A business impacts the broader franchise. Is there a multiply effect as you win all these deals and it benefits other businesses at Goldman?

Yes. I appreciate you asking me that question. I think this is an underappreciated part of our story and our firm. And I think a really good example of One Goldman Sachs. We are doing a better job in the last 5 or 10 years of bringing the whole firm to our clients. And that includes in our M&A business, where we've been really good, as I said, for over 20, 30 years, but we're actually doing a better job coming to our clients and saying, we can do a lot of things for you in addition to the advice we're giving you in the boardroom on how to put this transaction together. And so we're a much bigger financier. We deliver more risk management solutions in a holistic integrated fashion where clients are really valuing that, particularly if you think about confidentiality and speed. If you don't have to go talk to 8 or 10 or 12 providers of financing and risk management when you're trying to do a significant merger and you can do it with 1 or maybe 2 parties and then you can open up later once it becomes public, you gain a real advantage. And I think that we're seeing more and more of that, and we're benefiting from it as our clients. So with the advent of the Capital Solutions Group, we see a real multiplier effect to your question, where in the deals where we are an adviser and we have the opportunity to bring financing and risk management solutions, we see our revenues in totality in those transactions at about 140% of the adviser revenue. So we're seeing a real -- a clear pickup in the provisioning of our services and capabilities to our clients and then the attendant revenue that comes on the back of that. And we think we're uniquely positioned to continue to do that. It has to be where it's serving the clients' interest, and it has to be where we're providing real value to the client. The client has to want us to be doing that, but we're very good at doing it, and it obviously has a significant multiplier effect across our franchise.

Let's talk about the IPO market. Obviously, very topical just now with some major IPOs coming down the pike. Just given your position here as another leader, kind of what's your outlook for the IPO backdrop, particularly if we get into sort of market volatility?

Well, if you put the IPO market in context, we've had a relatively tempered environment actually for quite some time. 2021, we had $610 billion of IPO volume. lot of SPACs, a lot of other activity. So it was an extraordinary year. But if you look at '22 to '25, the average volumes were about $150 billion versus that $610 billion. And if you go back to '17 and '19, it was around $200 billion. So that's kind of been the run rate of [indiscernible] other than that one extraordinary year, call it, $150 billion to $200 billion of value -- of volume. Year-to-date, we're at about $85 billion, which is actually up like 80% year-over-year. So we're climbing from what I would say has been a relatively more depressed volume level. And I would say we're pretty constructive about the environment right now. Market has been healthy, really all the way through the second quarter. We've actually seen in the last few weeks, some very successful and well-supported IPOs, which is a good sign. I think we have to keep an eye on the risk premium in the market. We talked about in your macro question, what are the elements that could derail us. Any number of those elements, whether it's inflation, rates running away from us, geopolitics, supply shocks, there's any elements that can impact the IPO market because the IPO market is a risk market. It's the risk premium, it has a real impact on how people think about allocating into new companies in the IPO market. There's obviously plenty of speculation about the mega IPOs that are coming. My comment on that would be these are exceptional companies. They're right in the eye of that CapEx cycle. So there's an enormous amount of opportunity for many of these companies. And if they choose to come public, I think the demand will be very, very healthy. Plenty of concerns and questions about how much demand will there be. These could be quite sizable transactions. we tend to see an enormous amount of liquidity and capital in the world that wants to allocate into growth, into this theme, particularly when you get into some pretty exceptional companies. So we're pretty constructive about it. We'll see how it goes. I think the IPO market is a momentum market. So the likelihood of success in some of these mega transactions, if they happen, will unlock further activity and will have, I think, a beneficial impact across the markets. It will certainly -- there'll be an impact on the way equity markets trade and people will be swapping in and out of different securities, but I generally would take a pretty constructive view.

Okay. Let's switch over to your Asset & Wealth Management business. It's about 1/4 of the business, the firm. And we've actually enjoyed pretty durable and strong growth, double-digit top line growth. Remind us again what -- how your platform is differentiated relative to peers?

Yes. So as you point out, this is a really important growth engine for Goldman Sachs. We see a real secular opportunity across this platform. As I said, it's $3.7 trillion of AUS, and it's really 3 large businesses, liquid active asset management, alternatives and private markets and ultra-high net worth wealth. It's scaled. All 3 of those businesses are scaled. We think it benefits a lot -- this business benefits a lot from being attached to our sourcing engine and our investment banking and other kind of origination capabilities. We have very broad investment solution capability, public and private markets. We continue to work on that and develop that further. Our wealth platform is extraordinarily powerful. And as we're talking about whether it's mega IPOs or continued growth in the economy, wealth in the economy is growing at a very rapid clip, particularly at the high end. And we have world-class risk management that permeates those businesses. So we like the setup of this platform. And we're increasingly, as I said, focused on One Goldman Sachs as a value proposition to prove the synergy of having this business alongside the other businesses in the firm. And we're building strong partnerships with the largest asset allocators in the world. So when I look at the strength of our partnerships with who you all would think of as the largest allocators of capital in the world, I feel really good about the momentum that we have as we're proving the theory that we have more to offer these clients in terms of partnership. We are trying to grow our more durable management fees on our private banking and lending revenues double digits. We manage and move the firm towards having a consistent double-digit growth rate across those more durable revenues. To that end, we're also increasing our targets, right? So we recently advanced our longer-term targets for growth, taking our pretax margin target, which was at 25% to 30% and our return target, which was a mid-teens target to high teens, evidencing our confidence and also evidencing our stated objective to position the business to grow faster and at higher margins and deliver higher returns. That -- back to the point about scale, that requires more scale, that requires more investment. It requires some generative AI capabilities. This is a $17 billion business. It's got a lot of organic growth. It also has a lot of inorganic growth potential. We completed 3 inorganic transactions last year -- over the last year. Two of them were acquisitions, one is a partnership. In each of the 3, we added investment capabilities and solutions. We added distribution power. We added some talent. We added some technology. All of it buttressing this double-digit growth trajectory of the platform. And so we feel very good about this opportunity set.

Okay. Let's talk about your Private Wealth business, your ultra-high net worth business. You laid out some targets in January to grow organically around 5%. Actually, 1Q was much stronger than that, well above sort of trends that your peers put up. So maybe talk through what's driving flow strength in that business.

Yes. Well, I would start with, as I said earlier, the enormous growth in wealth globally. We see -- again, we serve the ultra-high net worth market, which we characterize as over $30 million of investable assets. So this is kind of the wealthiest people in the world. It obviously runs much higher than that. The number of ultra-high net worth individuals that we have the opportunity to serve, we think, has grown at a 12% CAGR over the last 5 years. That's just a number of people. Financial wealth for Global ultra-high net worth projects to grow at an 8% CAGR to $82 trillion by 2028. So those are pretty significant numbers. That's the TAM, if you will, for us in the segment of the world that we focus on. We've been doing this for 50 years. So we have a track record of serving this client base for a long time. It's really a crown jewel in the firm. We have to talk more about it and explain it more to you all as shareholders and prospective shareholders. It's a quite special part of the firm, and there's a lot of secular growth in front of us. It's a very scaled platform. It's about [ $1.8 trillion ] of client assets, little over $10 billion of revenues, growing double digits. And as I said, a lot of secular growth in front of us. We're quite well positioned to attach ourselves to that secular growth. And so as you pointed out, we introduced a new target, which we call long-term fee-based asset growth of about 5% annual long-term fee-based asset growth, which is our commitment to capturing a significant portion of these flows that are coming in the marketplace. The business has actually grown at 11% CAGR since 2021. So we have been growing at double digits. As you pointed out, in Q1, we grew our long-term fee-based assets at a 7% growth factor versus our 5% target. That was $22 billion in net flows. Our year-over-year growth in long-term AUS was 18%. So we're seeing quite strong growth in this platform. We see it as a double-digit grower for quite some time to come. There's really no reason why it should not be as long as we execute. And obviously, these mega IPOs that you asked about create another large wealth opportunity in the world for our clients. We like our positioning there. And so I think that will be -- that could be another big accelerant. This business, however, to make it grow this way, you can't just sit back and let it happen. You have to invest. And so we have a very clear objective to keep investing for growth here. We want to grow our client footprint. We have about 1,000 advisers. We will grow that adviser footprint to serve more clients. And as you grow advisers, you grow the ecosystem around those advisers to leverage them to be able to serve more clients. And so we'll have more content capabilities. There'll be AI infused into that capability set, but that's a big client footprint opportunity. We will become a bigger lender. If you think about Goldman Sachs and Private Wealth, we've really been driven by advisory, not unlike the way we built our investment bank as an advisory firm that became a much bigger financier. This will be a very similar phenomenon where you'll see us start to become a much bigger lender. We already have become a much bigger lender, but the trajectory there is quite clear. We've grown our lending business at about a 9% CAGR over the last 3 years. We'd like to continue to do that and better. That's a big focus, have to keep investing in that platform to do so. Third area would be around private markets and alternatives, where we fortunately have a very long record of serving these clients. We're going to build more customized solutions, more products, more capabilities. And then obviously, the fourth major is technology, which has a lot to do with digital and generative AI, which will be a big driver of our growth going forward.

Okay. Lastly, you talked about growing the third-party wealth business. Remind us again the key areas of focus here and how you can drive growth from here?

Yes. I think the same comment applies. So now we're talking about everybody else's wealth channels that we have the opportunity to put our products and solutions on to. Extraordinary growth. So while there's been extraordinary growth in the ultra-high net worth category, there's likewise been extraordinary growth in the high net worth and mass affluent categories. This is an area unlike an ultra-high net worth where we're well penetrated with a big opportunity to keep penetrating further, we're very underpenetrated in third-party wealth platforms. We didn't build a big capability there over a long period of time. And so we are catching up, which I think is another double-digit growth opportunity for Goldman Sachs. In fact, we grew our long-term AUS in this channel at a 25% growth rate in the first quarter of 2026, showing you that we have a lot of momentum, obviously, off a smaller base in our own wealth channel, but there's a lot of runway here. We see global retail AUM growing at about a 9% 5-year CAGR historically. If you look in the RIA community, just take a snapshot of the RIA community in the United States, that's growing, we think, at a 12% CAGR. Assets now $10-or-so trillion, expected to add another 300 basis points of share of the overall wallet by 2029, extraordinary powerful growth channel in the United States. We've been investing heavily into the RIA community. We just recently hosted our third annual conference where we bring together some of the larger RIAs in the United States together. I've spoken at all 3 of those events, including recently a couple of weeks ago. Interestingly, in the recent event that we just hosted, the cohort that we brought together has seen their assets grow 60% since 2024. So just that cohort, which represents a larger size and scale of the RIA community. So the growth continues to be extraordinary. And our job here, again, with the One Goldman Sachs lens is to serve them holistically. We have a lot of things we can do to help RIAs run their businesses and serve their clients. We have a digital custody platform, which we think is a pretty interesting and unique platform. We can do a lot of lending, banking services, obviously, a big investing solution capability, product suite, models and so forth. We can execute very well for them in the markets. We give them advice from an M&A perspective. A lot of these firms are doing roll-ups and the like. And then there's a lot of investor and adviser education that we're doing to try to educate on private markets, private credit, any number of aspects that would be worthy of education, we provide a lot of that as well. So there's a holistic bundle, if you will, that we're really provisioning in a partnership mindset with the RIA. So our strategy here is quite clear. We want to leverage our scale and our breadth, our capabilities. We're expanding our product suite. and we're partnering. We're a really good partner for the RIAs. And I think that momentum is starting to become clear and apparent. And I would highlight, we just did a partnership as one of those 3 transactions I referred to with T. Rowe Price, which is, again, a good opportunity for us to expand our capabilities into U.S. retirement. We didn't build the U.S. retirement distribution capability. T. Rowe Price has an extraordinary capability. And so that's a good partnership for us to allow for our products and solutions to be running through that channel.

Okay. Let's switch to the alternatives business. You set annual fundraising targets for 2030, a goal of $750 billion of fee-paying AUS. I believe private credit was a substantial part of that strategy. Clearly, we've seen some disruption in that market. how are you thinking about achieving those targets?

Yes. So as I said, we have a scaled private assets alternative platform. It's about $645 billion of total assets. It's close to $430 billion of fee-paying assets. So it's a sizable player. And we've been about 35 or so years doing this. So we started as kind of a merchant bank. And with our Private Wealth clients, we didn't start as a big institutional fundraiser. But we've been doing this every bit as long as the other major players that you all would know well. We have this incredible origination funnel in our investment bank largely, which is a great alpha generator of products and solutions. And we're very global. So our alternative asset management franchise is very global attached to our broad Goldman Sachs global franchise. We're largely an institutional player. We grew up as an institutional player. We started with our own capital. We invited in Private Wealth clients, some other institutional clients. So we're largely an institutional player. We're not really a retail player at scale. And we have raised $464 billion of funds into our private markets capabilities since 2019. So we have been one of the most prominent, largest fundraisers in the marketplace over the last 5 or 6 years. We're now running about $2.4 billion of management fees in alternative asset management products on a year-over-year basis through the first quarter. That obviously is growing at a very nice clip. We see right now very strong demand for our products and solutions, particularly in the institutional marketplace. I think you're seeing institutional asset allocators now assume there's going to be more dispersion in performance, and they're consolidating more of their provisioning to those they think will do better through whatever cycle we may be heading into. That's been beneficial for us. We see it in our fundraising. You pointed out our first quarter fundraising number was about $26 billion. $10 billion of that was private credit. So with all the how and press narrative on private credit, we actually had a very good first quarter fundraising, largely institutionally, where we see institutions allocating more into what they think is kind of a disruptive market and seeing Goldman Sachs as a strong player with a lot of track record investing through these cycles.

And even in the third-party wealth channel, back to your earlier question, where we do have these evergreen structures, our BDC actually has been outperforming. So while there's been a lot of outflows in that arena, our BDC had -- our primary BDC had 7% net inflows, again, evidencing pretty strong underlying credit performance and a lot of confidence in Goldman Sachs as a purveyor of private credit capabilities. So in that another business, we think we can grow double digits. We set, to your point, a new fee-paying target of $750 billion by 2030. So we're now at $429 billion. Our target is $750 billion. We see enormous opportunity here, and we should continue to be very much a beneficiary of this, I'd say, consolidation of the fund allocations.

Okay. Good stuff. Obviously, a very strong backdrop for the top line. A lot to dig into operational efficiency. You touched on One Goldman Sachs 3.0, which I think looks a lot about -- looks a lot in terms of transforming your -- how you operate. Just provide more details on where you are in that journey. What are the key goals? How AI is helping you drive better efficiency across the firm?

So this is our large-scale transformation effort across the company. One of, if not the most important things we're working on in the firm right now. I would characterize it as 4 primary elements. One is literacy and adoption. So I think we all need to struggle with our own literacy and our own adoption of these tools. So we are really pushing hard to increase the literacy level and the adoption rate inside our company. And there's a whole series of aspects of that. That's the first thing. The second thing is what I'll characterize as software development life cycle, which is essentially the coding and the aspects around coding of building software in a company like our large enterprise, how we do that. The third area is broad process reengineering. How do we do things in the firm? How do we process onboarding of clients? How do we process lending? How do we process operational settlements or transactions? How do we process investment banking pitch books, et cetera, et cetera. And then the fourth, and I think probably the single biggest unlock at the end of the day, when we look back on how we all did here is the client value proposition. What do we do with our data and our tooling and how do we get it to our clients more effectively, deliver more insights faster with more analytical rigor to make those relationships more valuable and to give the clients more of an ability to use all of these tools. So our goals relate really to scalability. We kind of said to ourselves, if we want to grow our firm double digits, we want to be this earnings grower that we talk about. We need a better infrastructure to do that. We need that scalability. So we're working hard to ensure we can actually do that to deliver that kind of growth rate. Obviously, productivity, efficiency, there's margin improvement embedded in all that. But there's also client experience, employee experience and risk management, all super important. We want our employees to feel good about the tools. We want them to be more productive, more confident. We want our clients to use the tools, and we want to become better risk managers. Those are super important aspects. So we've built what we call a GS AI Assistant platform, which is our platform where we get the adoption where people use it. We have the latest cutting-edge models on there. We're partnered with all the leading tech players you would expect us to be partnered with, and we are encouraging and helping people to figure out how to use that inside our firm. we measure the adoption rate quite carefully. We now have 40,000 users on the platform, which is darn near all of our employees. And there were about 2 million prompts last month on that platform. So we're measuring that just to try to see how much prompting is going on. And we're doing a lot of work teaching people and including myself, how to be a better prompter. We see -- on the software side, on the software development side, we see significant productivity gains. That's probably the place where you can grab hold of productivity gains the most. We would -- on our measurement, we would say there's 20% productivity unlock in all of our software development work through the whole life cycle, not just the coding, but through the whole life cycle. But in some discrete cases, it's materially better than that. So you could point to certain things we're doing where the productivity unlock is a lot more than 20%, but 20% would be kind of a reasonable number across the platform. And I would say that what we get with that productivity unlock is we get the ability to drive more output. So the way we're spending that productivity unlock is we're trying to be faster in our cloud migration. We're trying to be faster in our data lake house build and our data strategy. We're trying to have more tooling that we can deliver to clients. We're trying to release more capacity into the system for innovation. And so we're essentially spending that productivity as we should to try to drive more of that output with the same number of engineers. We have 6 large use cases in that process reengineering part, which is the third aspect that I talked about. These are foundational firm-wide processes. I named some of them onboarding, lending, vendor management, enterprise risk management. These are processes that run horizontally across the firm that we have to scale, automate, digitize and make foundationally modern. And we're doing that. I feel really good about the progress we're making. You'll see us accelerate the investment we make into tooling for clients, which is that fourth vector. I think this is an area where we have to continue to invest more. And so we're releasing more investment in that arena, which I think is going to really help us strengthen our value proposition with our clients. And then I would say, finally, there's to me 2 long poles in the tent that are challenges, certainly for Goldman Sachs, I would say in my client conversations, I think for most enterprise clients, which are data, which most of us don't have in particularly perfect order and cultural change. You have to engender a lot of cultural change in these organizations to get the full benefit about this of this. But I'm super optimistic about the progress. But I just want to remind everybody, enterprise-wide full deployment takes time. It does not happen overnight.

Fascinating. We're running short on time, so I'll just move to maybe a question to wrap it all up here. Clearly, very strong execution from the management team, tailwinds around the backdrop. Investors are noticing it. The stock has gotten a fairly rich valuation. How do you think about shareholder value from here? What would you -- what would be a message to newer investors that want to get?

Rich valuation is in the eye of the beholder, right? There aren't that many companies that grow double digits and can prove that through cycles. So that's our job. That's our execution task. Far and away, the most important element for us is to accelerate our earnings power and to raise the floor on our returns. That's our job. I think we have, as I've outlined in your very good questions, we have a significant growth opportunity in front of us. We're in a very virtuous cycle right now. We don't know how long it will last, but it feels pretty, pretty durable to me, given some of the underlying drivers. We definitely have some tailwinds. Deregulation, we didn't really get into regulation, but deregulation is a tailwind. I think AI is a big unlock and tailwind opportunity, both financing of it and utilizing it. So our job is to capture the cyclical opportunity, and there will be a cycle at some point, but this cycle could run for a while in our Banking & Markets businesses in particular.

And to your question about this multiplier, this financing opportunity, we've got a big multiplier opportunity across the financing landscape to drive even better growth and better returns. The Capital Solutions Group sits, as I said, in the center of the investment ecosystem right now. I think it's an enormous opportunity for Goldman Sachs. We're not the only ones attacking that, but I feel really good about our competitive position there. One Goldman Sachs, which we will continue to drive as our operating system, gives us the ability to keep driving more wallet share improvement. AI will give us more opportunity to unlock the value proposition to be better for our clients and therefore, gain more share of wallet be more important to them, drive more synergies across our platform. And then Asset & Wealth Management is a secular growth story. We have really well-positioned businesses there. We see a lot of secular growth across those businesses, and we have to execute well there. And then on One Goldman Sachs 3.0, as I said, one of the most important things, if not the most important thing we're working on for the firm over the next many years to drive scalability, margin improvement, strengthening our client franchise and drive more top line growth. So we'll keep investing in our people. We'll keep investing in our culture. We are attracting a lot of talent to the firm in various aspects. That's really important. This is still a talent. We're not AIing everything yet. This is still a talent-driven business. We need talent. We're attracting a lot of talent. And we focus a lot on risk management, as I said. So I feel great about our positioning. We're going to capitalize on the opportunity, and our job is to deliver this durable earnings power through the cycles to adjust your comment from a rich valuation to not a rich valuation.

Fantastic. I think that's a good place to end it. Thank you very much, John.

Thanks for having me. Appreciate it.

Thank you.

Audio webcast. I will now call the meeting to order. The Board and I are happy to be here in Salt Lake City, Utah with our shareholders as well as our people, our clients and other stakeholders. Goldman Sachs has an office presence in Salt Lake City for over 25 years. We have an extraordinary team in this region and the work exemplifies each of our core values: partnership, client service, integrity and excellence.

In 2025, we delivered strong performance across our world-class interconnected franchises as we continue to execute on our strategy and serve our clients with excellence. We increased our net revenues year-over-year by 9% to $58.3 billion, grew our earnings per share by 27% to $51.32 and improved our return on equity by 230 basis points to 15%. In the first quarter of 2026, we achieved the second highest net revenues, net earnings and earnings per share in the history of Goldman Sachs. These results are the product of sustained execution.

When I look back over the past 6-plus years, I'm incredibly proud of the progress we've made as a firm. At our January 2020 Investor Day, we laid out a clear strategy to grow and strengthen our firm. From 2019 through 2025, we have increased firm-wide net revenues by roughly 60%, grown earnings per share by 144% and improved our returns by 500 basis points, and we delivered a total shareholder return of over 340%, the most of our peer group during this time frame. At the same time, we've materially improved the risk profile of the firm and enhanced the resilience of our earnings.

Building on this progress, we announced the launch of One Goldman Sachs 3.0, our operating model propelled by AI. We remain confident that over time, One GS 3.0 will drive stronger operating leverage, greater resilience and improved efficiency and returns, allowing us to continue to elevate services to our clients. This exceptional service is a direct result of our people who are the most important asset we have, and we remain focused on continuing to invest in them.

In a dynamic environment driven by accelerating technological change, uncertainty in parts of private credit and heightened geopolitical tensions, our performance continues to demonstrate that Goldman Sachs' deep expertise and culture of disciplined risk management continue to differentiate our firm. While market outcomes are inherently difficult to predict, we have consistently shown that in times of uncertainty, clients turn to Goldman Sachs as a trusted adviser for strong execution and differentiated insight. We believe Goldman Sachs is extremely well positioned to navigate the current environment and to serve our clients with excellence while we continue to create long-term value for our shareholders.

I would now like to introduce the members of our Board of Directors and to thank them for their service. Would each of you please rise as I say your name? David Viniar, Lead Director and Chair of our Corporate Governance and Nominating Committee; Michele Burns, Mark Flaherty, John Hess, Kevin Johnson, Ellen Kullman, Chair of our Public Responsibilities Committee; KC McClure; Tom Montag, Chair of our Risk Committee; Peter Oppenheimer, Chair of our Audit Committee; Vice Admiral Jan Tighe, Chair of our Technology Risk Subcommittee; and John Waldron, our President and Chief Operating Officer.

I would also like to introduce Kimberly Harris, Chair of our Compensation Committee, who is joining us remotely on the screen. Also here today with us are Denis Coleman, our Chief Financial Officer; and John Rogers, our Secretary to the Board. In addition, from our independent auditors, PricewaterhouseCoopers, we have Sam May, and from American Election Services, we are joined by Christopher Woods, our Inspector of Election. I would also like to recognize Lakshmi Mittal, who retires today from our Board and thank him for his exceptional service to Goldman Sachs over nearly 18 years.

I will now turn to the business of the meeting. We will conduct the meeting in accordance with the agenda and rules of conduct. I have been advised by our independent tabulator and our inspector of election that holders of at least 86% of our outstanding shares are present in person or by proxy, and accordingly, a quorum is present. I hereby acknowledge that the matters to be voted upon described in our proxy statement and supplemental filing are properly before the meeting. It is Wednesday, April 29 at 8:33 a.m. Mountain Time, and I declare the polls on all proposals open.

All voting at this meeting will be conducted by ballot. If you have voted your shares prior to the start of the annual meeting, your vote has already been received and tabulated, and there is no need to vote again unless you wish to revoke or change your vote. Submitting a ballot today will revoke any earlier proxies you may have submitted. Anyone who needs a ballot, please raise your hand and they'll be collected after the polls are closed.

There will be an opportunity for any shareholder wearing a green shareholder badge to ask questions on each of the proposals. After all the proposals have been presented, we'll collect any ballots and close the polls. Then we will have a general question-and-answer session. If you have a general question or comment, please wait until then to raise it. Please use the podium located in the aisle to present the shareholder proposals or ask any questions. Before speaking, please identify yourself as a shareholder, state your name and if applicable, your organization.

We will now turn to the proposals. The first matter to be voted on is the election of directors. The Board has unanimously recommended that shareholders vote for the election of each of the director nominees for the reasons set forth in the proxy statement. Are there any questions related to this matter?

The second matter to be voted on is an advisory vote to approve the executive compensation of our named executive officers. The Board has unanimously recommended that shareholders vote for the say-on-pay vote for the reasons set forth in the proxy statement. Are there any questions related to this matter?

Third matter to be voted on is the ratification of the appointment of PricewaterhouseCoopers as our independent auditors for 2026. The Board has unanimously recommended that shareholders vote for the ratification of PwC for the reasons set forth in the proxy statement. Are there any questions related to this matter?

The fourth matter to be voted on is a shareholder proposal submitted by John Chevedden regarding special shareholder meeting thresholds. The Board has unanimously recommended that shareholders vote against the shareholder proposal for the reasons set forth in our proxy statement. I believe the proposal is being presented by Drew Jorgensen.

Drew, please go ahead.

Good morning, sir. Shareholders ask the Board of Directors to take the steps necessary to amend the governing documents to give the owners of a combined 10% of the outstanding common stock the power to call a special shareholder meeting. Such a special shareholder meeting can be an easy to convene online shareholder meeting. Goldman Sachs claims that its current requirement of 25% of shares to call for a special shareholder meeting is meaningful, but Goldman Sachs fails to give even one example of a special shareholder meeting ever being conducted, which required the 25% figure. Thus, the need for the 10% figure in this proposal.

Furthermore, more than 100 major companies have published special shareholder meeting proposals, but not one of these 100 companies has ever claimed that a special shareholder meeting ever took place at any company anywhere that required 25% of shares to call for a special shareholder meeting. Thus, the current 25% figure is unattainable. Of course, companies like Goldman Sachs want the 25% figure because they know that the 25% figure means that a special shareholder meeting will never take place.

Please vote yes for the attainable 10% figure. That's all.

Thank you very much. Are there any questions related to this proposal?

As previously disclosed, the American Family Association proposal regarding charitable giving reporting that was originally included in our proxy statement as the fifth matter to be voted on was withdrawn and any votes previously cast on the proposal have been disregarded.

The next matter to be voted on is a shareholder proposal submitted by the New York City Controller on behalf of New York -- of certain New York City retirement systems regarding the disclosure of an energy supply ratio. The Board has unanimously recommended that shareholders vote against this shareholder proposal for reasons set forth in the proxy. I believe the proposal is being presented by Yumi Narita.

Yumi, go ahead. No problem. Take your time.

Award ceremony [indiscernible] supposed to win. Okay. Thank you. Which I won't. But in any event, good morning, Mr. Solomon, Mr. Viniar, members of the Board and fellow shareholders, I'm Yumi Narita from the office of the New York City Comptroller, Mark Levine. I'm presenting Item 6 on behalf of Comptroller Levine and for the New York City Pension Funds.

Item 6 requests disclosure of the company's energy supply ratio or ESR, a simple dollar-based metric that reflects how the company's financing is allocated between low carbon and fossil fuel activities. The company has reiterated its commitment to sustainable finance. However, investors still lack specifics on its annual energy supply financing within and beyond its sustainable financing commitment.

While investors believe that continuing to annually report on financed emissions is essential, we also believe that disclosure of a dollar-based ESR metric grounded in internal bank data complements such disclosure. Since this proposal was last submitted, major global developments have underscored the significance of geopolitical risks and the volatility of oil markets. Despite the U.S. policy environment, the energy transition is accelerating globally and the ESR disclosure is more critical than ever. Investors need visibility into how the bank is managing the risks and opportunities associated with the energy transition.

To underscore, ESR is a dollar-based disclosure that reflects actual financing flows, not client reported emissions or estimates. It complements financed emissions disclosures by giving investors a clear concrete view of the bank's real-world energy financing priorities. This proposal is intentionally nonprescriptive. The proposal does not request targets or constrain its finance activities in any way. It leaves the methodology of an ESR entirely at the company's discretion, which allows for evolving legal and regulatory requirements and the ability for the bank to develop a methodology relevant to the bank's specific context.

A bank calculated ESR using internal data rather than third-party estimates like BloombergNEF will enhance its transparency and accountability. Notably, Bloomberg estimates do not include lending and rely solely on public information. Goldman peers JPMorgan and Citi disclosed their ESR, which underscores both its value to investors and its feasibility even in a changing regulatory landscape. Other top fossil fuel financiers also have some ESR disclosure. I urge the Board to reconsider its opposition and for investors to support this proposal. Thank you.

Thank you very much. Are there any questions related to this proposal?

Thank you for -- I was going to say you could stay there. Save yourself for...

[indiscernible] for the next item.

Absolutely. The final matter to be voted on is a shareholder proposal regarding lobbying disclosures submitted by Mercy Rome, Fergus Foundation and Eric and Emily Johnson with Dominican Sisters of Springfield, Illinois as co-filer. The Board has unanimously recommended that shareholders vote against the shareholder proposal for the reasons set forth in our proxy. This proposal is also being presented by Yumi Narita. Please go ahead.

Thank you. Thanks again. I also stand to present Item 7 submitted by Newground Social Investment on behalf of the Fergus Foundation and 2 individual investors and co-filed by the Dominican Sisters of Springfield, Illinois.

Item 7 asked Goldman Sachs to publish an annual report that transparently discloses its direct and indirect lobbying expenditures, including federal, state and those made through trade associations and social welfare groups. The New York City Pension Funds have cast their votes for Item 7 because Goldman Sachs existing disclosures lag peers and can be enhanced. I encourage our fellow shareholders to also support this proposal. Thank you.

Thank you very much. Are there any questions related to this proposal?

At this time, it is 8:43 in the morning, and I declare the polls closed on all proposals. We will provide you with preliminary voting results on each of the proposals as soon as they're tabulated.

At this time, we invite any shareholder wearing a green shareholder badge who has questions about Goldman Sachs to approach the podium to ask their question. To ensure that every shareholder has an opportunity to participate, I ask that each speaker limit their question to 3 minutes. When asking your question, please identify yourself as a shareholder and state your name if applicable in your organization.

Are there any questions? Okay.

Okay. With that, we've been informed by the Inspector of Election that the preliminary voting results are now available. I will ask Jamie Greenberg, Assistant Secretary of the Board and the acting Secretary of this meeting to please provide those results.

Thank you, David. These results are based on preliminary estimates. The final voting results will be provided in a Form 8-K that we will file within 4 business days. First, I'm pleased to announce that each of our 13 director nominees received the support of a majority of our shareholders and consequently each has been elected..

Second, the advisory vote to approve the executive compensation of our named executive officers received the support of votes representing approximately 70% of the shares present in person or represented by proxy. And consequently this advisory proposal is approved.

The third proposed -- third, the proposed ratification of the appointment of PricewaterhouseCoopers as our independent auditors received the support of votes representing approximately 94% of the shares present in person or represented by proxy and consequently is approved. The shareholder proposal regarding special shareholder meeting thresholds received the support of approximately 37% of the shares present in person or represented by proxy and consequently is not approved.

The shareholder proposal regarding disclosure of an energy supply ratio received the support of approximately 18% of the shares present in person or represented by proxy and consequently is not approved.

Lastly, the shareholder proposal regarding lobbying disclosure received the support of approximately 38% of the shares present in person or represented by proxy and consequently is not approved.

Thank you, Jamie. On behalf of our Board of Directors and the management team, I'd like to thank you all for being here and listening in. We strongly value our engagement with our shareholders and other stakeholders. This concludes our meeting. I hereby declare this meeting adjourned.

Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs First Quarter 2026 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. 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, April 13, 2026. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Thank you, operator, and good morning, everyone. Thank you all for joining us.

In the first quarter, we delivered a very strong performance, generating net revenues of $17.2 billion, net earnings of $5.6 billion and earnings per share of $17.55. All three of which were the second highest in the history of Goldman Sachs. As a result, we delivered a return on equity of 19.8% and an ROTE of 21.3%. These results reflect the strength of our global franchise and the depth of our relationships, and our ability to execute for clients, while maintaining a strong focus on risk management in a highly dynamic environment.

2026 began with a degree of optimism. Markets hit record highs and confidence continued to build with most clients focused on growth, strategic activity and capital deployment. As we've said, things rarely move in a straight line. And as the quarter progressed, the macro environment started to weigh on sentiment, volatility increased meaningfully amid concerns around AI-driven disruption in sectors like software, heightened uncertainty in parts of private credit and the conflict in the Middle East. Against this backdrop, our performance underscores the importance of having a scaled, diversified and global franchise that can support clients across a wide range of market conditions.

Operating as a leading global financial institution requires deep expertise, long-term investment and a culture grounded in risk discipline. This is what differentiates Goldman Sachs and what clients rely on, particularly in periods of uncertainty. We pride ourselves in being a trusted adviser and providing timely and differentiated insights. This quarter, we held large-scale calls and events, reaching tens of thousands of clients across the firm. We also saw elevated engagement with our digital channels, including Marquee, with monthly average users up over 30% year-over-year and in our Global Investment Research portal, which saw its second highest single day of client activity in early March.

Beyond analysis and insights, our people operating as One Goldman Sachs delivered for clients in real time as conditions evolved quickly. In Global Banking & Markets, we delivered record quarterly revenues, reflecting strong client engagement across our franchise. Elevated uncertainty led to clients -- led clients to actively reposition portfolios, driving strong flows across FICC and Equities. We supported our clients' intermediation and financing needs across asset classes, deploying our balance sheet in response to demand.

In our commodities franchise, we acted as an intermediary for our clients amid significant moves in energy markets, including a record monthly increase for Brent crude in March and price surges of 60% in European gas markets. Importantly, the growth of our financing business has added further ballast to our performance, reinforcing our ability to perform consistently across cycles.

In Investment Banking, we remain the #1 M&A adviser globally. Clients continue to turn to Goldman Sachs for advice and expertise regarding their most important strategic transactions, amid a backdrop of accelerating technological change and industry disruption. This includes the announced $43 billion merger of Unilever's Foods business with McCormick, Sysco's $29 billion acquisition of Jetro Restaurant Depot and Coterra Energy's $26 billion sale to Devon Energy. While market conditions tempered execution for IPOs and sponsor activity broadly, we believe that activity levels will rebound once conditions stabilize. As you remember, our backlog closed 2025 at its highest level in 4 years. Even with exceptionally strong revenue production, our quarter end backlog remained extraordinarily robust.

In Asset & Wealth Management, clients continue to choose Goldman Sachs for the quality of our advice and our long-standing investment track record. We generated $62 billion in long-term fee-based inflows, including $22 billion in Wealth Management flows. The consistent inflow momentum throughout the quarter, including during the heightened volatility in March underscores the strength of our client relationships built on trust and long-term performance. We are pleased to have closed the acquisition of Innovator in the second quarter, which adds an additional $31 billion in assets under supervision across a suite of over 170 ETF focused on defined outcome strategies putting us in the top 10 of global active ETF providers.

In alternatives, we raised $26 billion across asset classes with private credit strategies generating $10 billion. We recognize that the private credit industry has been an area of increased focus in recent months. Our 30-year track record of performance in private credit is characterized by rigorous underwriting, selective deployment and disciplined portfolio construction. In our largest non-traded BDC, as an example, we saw net inflows of over 7% this quarter, reflecting investor demand for experienced investment managers who have navigated multiple rate and credit cycles.

Looking forward, our predominantly institutional drawdown structures as well as the breadth of our origination funnel give us the flexibility to continue to patiently and selectively invest capital. Overall, we feel good about the long-term opportunity in private credit and our ability to deliver attractive risk-adjusted returns for clients.

Let me spend a moment on capital and regulation more broadly. We've been consistent in our view that a strong, well-capitalized banking system in the U.S. is essential and that strength has been clearly demonstrated across multiple stress periods. At the same time, we have also been clear that the regulatory framework needs to be transparent and calibrated appropriately to achieve its objectives. Getting this right matters for the real economy, a well-calibrated framework enables banks to provide liquidity, support lending and capital formation and serve clients more effectively. Ultimately, a strong U.S. banking system supports growth, competitiveness and economic resilience.

Against that backdrop, we're encouraged by the direction of regulatory reform, including the recent Basel III finalization and G-SIB surcharge reproposals. While the rule-making process is still underway, and we plan to participate in the comment period, we believe this direction is positive for the banking system as a whole, better aligning regulatory outcomes with actual risk.

All in, we continue to see the potential for more constructive backdrop this year. The combined effects of fiscal stimulus in developed economies, ongoing AI-related capital investment and a more balanced regulatory agenda in the U.S. are powerful forces. At the same time, the geopolitical landscape remains very complex, and the ultimate impact of higher energy prices on inflation and growth is yet to be determined. We believe Goldman Sachs is extremely well positioned to navigate this current environment.

Beyond the short term, we are also investing for long-term growth, including through One Goldman Sachs 3.0. As I mentioned, clients seek our views and analysis around a range of topics, including AI, and we were able to speak to these trends from firsthand experience as we thoughtfully implemented new technologies across our 6 initial work streams and around the firm more broadly. We remain confident that over time, One GS 3.0 will drive stronger operating leverage, greater resilience and improved efficiency and returns and allow us to continually elevate service to our clients.

These efforts build on the strength that differentiates Goldman Sachs. As we demonstrated this quarter, our deep client relationships, global platform and strong risk culture position us to serve clients with excellence, while creating long-term value for shareholders.

With that, I'll turn it over to Denis to walk through our financial results in more detail.

Thank you, David, and good morning.

Let's start with our results on Page 1 of the presentation. In the first quarter, we generated our second highest net revenues of $17.2 billion as well as our second highest earnings per share of $17.55, which drove an ROE of 19.8% and an ROTE of 21.3%.

Let's turn to performance by segment, starting on Page 3. Global Banking & Markets produced record revenues of $12.7 billion in the first quarter and generated an ROE of over 22%.

Turning to Page 4. Advisory revenues of $1.5 billion rose 89% year-over-year on higher completed volumes. We remain #1 in the league tables for M&A with a lead of $150 billion in announced volumes versus our closest peer.

Equity underwriting revenues of $535 million were up 45% year-over-year on better convertibles results, while debt underwriting revenues of $811 million rose 8%, driven by better investment grade and asset-backed activity. We ranked first in equity and equity-related underwriting and ranked second in high-yield debt underwriting and leveraged lending.

FICC net revenues were $4 billion. Within intermediation, revenues in rates and mortgages were significantly lower versus the first quarter of last year as results were impacted by a tougher market-making backdrop. This was partially offset by significantly better results in currencies and commodities, illustrating the benefits of having a global diversified franchise. We produced FICC financing revenues of $1.1 billion. We remain confident in our ability to prudently grow this business over time.

Equities net revenues were a record $5.3 billion. Equities intermediation revenues of $2.7 billion rose 7% even versus very strong results last year, driven by better performance in cash products. Record Equities financing revenues of $2.6 billion were 59% higher year-over-year with particular strength in Asia amid another record for average prime balances in the quarter.

As we highlighted in last quarter's strategic update, Asia is one of the key growth opportunities for our FICC and Equities businesses. And while there's still work to do, we're pleased by the progress to date. Across FICC and Equities, financing revenues of $3.7 billion rose 36% versus the prior year and comprised nearly 40% of total FICC and Equities revenues.

Let's turn to Page 5. Asset & Wealth Management revenues were $4.1 billion. Management and other fees were up 14% year-over-year to $3.1 billion, primarily on higher average assets under supervision. Incentive fees were $183 million, up year-over-year despite the volatile environment during the quarter. Private banking and lending revenues were $638 million. Higher lending results were more than offset by the impact of NIM compression as we grew deposits in a more competitive rate environment in order to fund broader firm activity. Consistent with our growth strategy, we also expanded our lending to ultra-high net worth clients with balances rising to a record $46 billion.

Now moving to Page 6. Total assets under supervision ended the quarter at a record $3.7 trillion. We saw $62 billion of long-term net inflows across asset classes, representing our 33rd consecutive quarter of long-term fee-based net inflows.

Turning to Page 7 on alternatives. Alternative AUS totaled $429 billion at the end of the first quarter, driving $597 million in management and other fees. Gross third-party alternatives fundraising was $26 billion in the quarter, putting us on track towards our annual fundraising expectations.

On Page 8, Platform Solutions revenues were $411 million in the quarter, down year-over-year, reflecting the move of the Apple portfolio to held for sale. We expect revenues for the rest of the year to run lower, in line with seasonal trends in the business.

On Page 9, firm-wide net interest income was $3.7 billion in the first quarter. Our total loan portfolio at quarter end was $253 billion, up versus the fourth quarter, primarily reflecting growth in corporate and other collateralized loans. Our provision for credit losses of $315 million reflected growth and impairments in our wholesale lending portfolio.

Turning to expenses on Page 10. Total quarterly operating expenses were $10.4 billion, resulting in an efficiency ratio of 60.5%. Our compensation ratio net of provisions was 32%. Non-compensation expenses were $5 billion, with the vast majority of the year-over-year increase driven by higher transaction-based expenses tied to robust activity levels, particularly in Equities.

As David referenced, we are thoughtfully building out our One Goldman Sachs 3.0 work streams, and our early learnings have reinforced the need to double down on the foundational elements of our infrastructure. We are, therefore, accelerating our investments in cloud migration, and in the accuracy, completeness and timeliness of our data. These investments are critical to optimizing the deployment of AI solutions across the firm, which will allow us to unlock greater productivity and efficiency opportunities over time.

Our effective tax rate for the quarter of 13.2% benefited from the impact of employee stock-based compensation. For the full year, we expect a tax rate of approximately 20%.

Now on to Slide 11. Our Common Equity Tier 1 ratio was 12.5% at the end of the first quarter under the standardized approach, 110 basis points above our current capital requirement of 11.4%. We saw attractive opportunities to deploy capital across the firm, including in prime brokerage and acquisition financing. These activities, in addition to the increase in market risk RWAs amid higher market volatility consumed a portion of our excess capital. Additionally, we returned $6.4 billion to common shareholders, including record common stock repurchases of $5 billion and common stock dividends of $1.4 billion. We will continue to dynamically deploy capital to support our client franchise, while also returning capital to shareholders.

As David mentioned, we're encouraged by the direction of the recent Basel III finalization and G-SIB surcharge reproposals, which reflect a more balanced and risk-sensitive approach than earlier iterations.

In conclusion, our performance reflects the diversification and strength of our leading client franchises, which enable us to serve clients in a volatile market. We are confident in our ability to continue to support our clients as they navigate this dynamic operating environment.

With that, we'll now open up the line for questions.

[Operator Instructions] We'll take our first question from Glenn Schorr with Evercore.

So, I guess, I would love it if you could expand a little bit on, let's just call it, balance sheet strategy because I see you deploying capital, it's reducing the denominator. But when the CET drops 180 basis points, a lot of people ask questions. So let's just go towards the deposit strategy, deposits grew a lot. I'm assuming that's to finance -- equity financing. So I'm curious how you think about the trade-off of lower NII in Asset & Wealth, but growing financing. And I guess that feeds into your Asia strategy. So sorry to put a bunch in there, but it all overlaps each other. So maybe you could just expand a little bit on that.

Sure, Glenn. Thank you for that. So I think I would take you back to our strategic update that we gave at the end of the year, where we tried to lay out our expectations for how we were going to respond to the changes in the capital regulation. And that in particular, we'd be focused on deploying into the client franchise to support a bunch of our more durable revenue stream activities with lending being at the top of the list. And as we sit now at the end of the first quarter, you will see that we significantly expanded our activities in Equities financing, and a particular area of strategic focus was Asia, something that we also did call out at that time where we had identified a competitive gap, we saw an attractive opportunity and with the excess capacity that we saw ourselves with, we deployed into that with clients and grew our revenues.

I also note that we recorded a record level of lending balances in private wealth. We continue to grow FICC financing, we grew our corporate balances, acquisition financing. All of these were the items that we called out as the priority areas for deployment, and we saw opportunities over the course of the quarter to do that. I would be remiss if we didn't mention that we also aggressively returned capital to shareholders with a record level of buybacks. So the balance sheet growth was largely in support of those client activities that I just referenced.

Separately, you're right, we did have significant deposit raising activity over the course of the quarter. That remains a strategic source of funding for us that we continue to grow. A lot of that growth did derive through the Marcus platform, which is a benefit to the firm. Some of that activity supports activities in AWM, but as you call out, it supports overall firm-wide lending activities, and it was a strategic priority for us to extend more lending on behalf of clients across the firm, and we try to finance it as efficiently as we possibly can.

Okay. Maybe the two-second follow-up is the net of that is -- I'm going to ask it as a question, is just -- is all the net of that deployment in lending, will that come at ROEs that are in line with your long-term goals?

So you'll obviously see that the ROE performance for the firm, the ROE performance for Global Banking & Markets, north of 22% in the case of Global Banking & Markets, where a lot of that deployment is happening. So across our portfolio of activities, we are generating very attractive returns on that incremental amount of lending activity.

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

I guess, I just wanted to take a step back. A lot happened during the quarter. So David, I appreciate your remarks around the 30-year track record for Goldman in private credit. But if you don't mind, I think there is a sense that private credit is a significant growth driver for Goldman. For our benefit, given just the growth in this asset class, give us a sense of how you see this potentially impacting sponsor activity when it comes to M&A IPO, as we think about the next year, FICC financing has been a big focus with investors around how that growth may slow down. So I would love some color around how you think this actually coming home to impacting your growth outlook? And if anything, on credit that you're particularly watching out for?

Sure. I mean it's a big picture question, and I could -- I appreciate the question, and I could talk about it for a long time. I think there have been attempts to try to put this in perspective. I know the media headlines have driven an enormous amount of negative sentiment around private credit. My own view is it's important to really distinguish between different markets and really try to put it all in perspective. I think you guys know this that there -- private credit and the broadest definition you could possibly come up with is about $3.5 trillion of assets. But the thing that's been getting a lot of focus is direct lending and direct lending is about $1.6 trillion to $1.7 trillion of assets, of which the retail channel for that direct lending business is about 20% or about $230 billion of NAV.

There are obviously heightened redemptions in certain peer managed funds. These peer managed funds have been concentrated in retail outflows as opposed to institutional outflows. And one of the things that we're seeing that's just interesting that's quite constructive for our business is that spreads are becoming more lender-friendly. And so when you look at our first quarter 2026 subscriptions in our GS credit BDC, 40% of them were from institutions, many of whom are first-time investors on our platforms, including insurance companies, banks, pension funds.

And when you look at our broad platform, it's over 80% institutional partners very, very broad, very, very diverse. And we've been growing it over a long period of time. You obviously saw our positive inflows and what we raised privately in the quarter, we feel we're very well positioned and actually the opportunity set to some degree, is improving.

I know people are very focused on the cycle, and they should be. This has been a long period of time ex the COVID shutdown, it's been a long period of time without, what I'd call, a normal credit cycle, meaning a meaningful slowdown in the economy, or a recession. Whenever you have a meaningful slowdown in the economy or a recession, there are higher loss levels in diversified credit portfolios. I think risk management and portfolio construction are very important in places where people haven't followed their portfolio construction carefully and they've gotten overweighted to a particular sector. They'll obviously have more headwinds.

But I don't -- I think one of the things that's really not getting a lot of attention is if you do have a cycle, what does that look like? And so if you take a very tough cycle, the global financial crisis, the cumulative default rates across the entire leverage lending space, the entire leverage lending space during the global financial crisis was 10%, recoveries were about 50%, so the cumulative loss was 5% to 6% against coupons of 9% to 10%. And so that is the business model of this.

I think institutional investors understand that. I think there's going to continue to be some noise around the retail space. I think you should watch that carefully. But I think this continues with any sort of a medium-term or longer-term view to be a very, very attractive platform for us, and we are very confident that we have significant runway to further scale our business toward our $300 billion target. We've seen significant fundraising across the all platforms, including this past quarter, $10 billion in credit. And so we're going to continue to grow our institutional business and take a long-term view, but it remains -- I wouldn't say it's a huge growth channel for us, but it's a business that's growing, and we think has good secular construct for a scaled platform like ours.

Very comprehensive. If I can, a quick follow-up. Banks CEOs were in D.C. on Friday around -- concerns around some of the AI-driven risks to banking infrastructure. Anything you can share with us in terms of like is this something extremely different than what banks have had to deal with over the last decade? To the extent you can share any color, I think that would be helpful. And how do you perceive the risk to Goldman Sachs?

Yes. So thank you for that. Obviously, something we're focused on. I just -- I want to start by saying that cybersecurity has long been at the core of our business, and we have for a very, very long time for enormous resources forward to think constantly about cybersecurity risk in our business, and it's something we've invested significantly in and continue to invest in. And it's been widely reported, the large bank CEOs happen to be in Washington for a regular meeting in the Financial Services Forum. And so we were asked to come over to treasury. By the way, it's not the first meeting that, that group has gone over to treasury to talk about cybersecurity risk over a number of years.

So my first point is this is something the industry is focused on. It's something we're focused on, and there's nothing new in that focus. Obviously, the LLM are making rapid progress, and we're hyper aware of the enhanced capabilities of these new models. With the help of the U.S. government and the model publishers, we are very focused on supplementing our cyber and infrastructure resilience and this is part of our ongoing capabilities that we have been investing in and are accelerating our investment in.

We're aware of Mythos, and its capabilities. We have the model. We're working closely with Anthropic. And all of our security vendors to kind of harness frontier capabilities wherever it is possible, and this will continue to be an important focus, but it's not new that as technology evolves, we have to continue to upgrade for cyber risk and make sure we're at the forefront of that.

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

David, if you could just unpack a little bit your outlook on the pipeline. I know back in February, we talked about the sponsor community and their thoughts on valuation versus timing. Obviously, a lot has happened more on the negative since then on valuation. But maybe just unpack on how your thoughts are relative to timing. I mean, despite the conflict in the Middle East, markets still near all-time highs. So I would love to hear thoughts on that.

Sure. And I appreciate it, and I realize, Erika, this is getting a lot of attention. And I'd just say, first of all, the environment for Investment Banking activity continues to be incredibly robust, particularly M&A activity. And I do think, as I talk to CEOs, of course, they're watching what's going on geopolitically. But that's also balanced by the fact that they see an opportunity during this period of time to drive scale and scale creation in businesses with significant technological change, and they are focused on that. And that candidly trumps some of the geopolitical risk as they have the opportunity to do consolidating trades. And you saw that in the first quarter, you saw more large-scale strategic M&A. We highlighted at the end of the first quarter, the high level of our backlog, the highest level in 4 years. And then you saw extraordinary accruals during this quarter in M&A.

And you also saw extraordinary replenishment, okay? The backlog really did not move very significantly at all even though we had extraordinary accruals. And so we continue to see significant activity on the M&A front. And I don't see, unless the overall environment got much, much worse. I don't see that slowing based on what we see at the moment.

That said, there is no question that with the conflict in the Middle East, IPO activity slowed a little bit, particularly in March. I do think there's a very full pipeline. And at the end of the day, equity markets have been extremely resilient and if that resilience continues, I do think you'll see IPO activity accelerate again. There are some very large IPOs that are lined up, and my expectation is a number of them are going to come because it's important for those businesses and for the capital formation around those businesses for that to happen, and they are also less sensitive to kind of short-term geopolitical trends.

I do think that the level of uncertainty is higher, so we have to watch that carefully. Certainly talking actively to CEOs and CEOs are looking carefully at how what's going on, particularly with commodity prices is translating into the economy and into consumer demand. I think it's fair to say that people did not see that really translating through in the first quarter, but that doesn't mean that people aren't extremely cautious about whether or not it will translate through in the second quarter.

My guess is to the degree that energy prices remain high, you will see that translate through a little bit. But at this point, the underlying economy still remains relatively robust. But if the resolution of the conflict drags, that probably will be a headwind in some of these areas particularly inflation trends as we get further into the second and the third quarter. And so we'll have to watch that quickly.

At the moment, M&A and capital markets have been pretty resilient to that, and the environment continues to be quite constructive. But of course, I don't have a crystal ball. I and also all the market participants are watching and adapting as they see things unfold.

And just to follow up, on Ebrahim's line of questioning because I think it's so important for the stock and the stock of your peers. But given everything you said, David, during the financial crisis, the cum loss rate in leverage lending was 5% to 6%. You're seeing more lender-friendly spreads, no issues with fundraising, especially on the institutional side. It seems that if we do have a regular waste cycle or even just something sector-specific like software in terms of marks, that the ultimate loss to Goldman will be de minimis but the opportunity in terms of spreads and market share could be notable. Is that the correct conclusion?

I'm going to make a couple of comments on that. And I'm also going to ask Denis to make a comment just about historical losses. But I think, Erika, you understand it right. Remember, we're generally dealing with institutions. And one of the things that happens, if we had a slowdown in the economy or a recession where credit spreads widened, the business actually for institutional investors, becomes more attractive. And that is a point in time, institutions rely on Goldman Sachs who's been at this for a long, long time to have the judgment to be more cautious on their deployment when spreads are historically tight and more aggressive on deployment when spreads are historically wide.

And one of the things that I think has not been talked about a lot over the course of a number of years because we haven't seen it, a lot of the alpha that's generated in credit businesses comes from how the investors manage restructuring and buy in when things are tough, but we haven't had a cycle like that. I do think we all have to recognize that this has been a very long credit cycle and when credit cycles go on longer, market participants, this is a generalization, this is not the way we think about the business, but spreads get tighter, market participants get more aggressive to deploy capital. And so when you do have a cycle turn in a recession, you will see higher losses across the space than you would have had if it was a shorter cycle. And so we have to be cognizant of that.

That said, we feel very good about the way we're positioned, very good about our track record, very good about our flows. And to the degree there was a cycle, we'd actually view it as an opportunity for Goldman Sachs.

And Denis, maybe you want to comment a little bit more on historical loss rates.

Yes. I mean, Erika, I could add to another area that we get questions for obvious reasons is across the FICC financing, the asset secured lending portfolio of the firm where a lot of those clientele are in the alternative space. And we have a big diversified business that we've been growing and it's providing part of the ballast to our overall GBM revenues. But if we look back over the course of history on our FICC financing activities, our life-to-date realized losses, if you exclude some direct commercial real estate, our life-to-date realized losses are 0. So that's obviously a "nexus" with private credit as a subcomponent of that portfolio and people ask about it a lot. And that may not always be the case. But so far, the way that we underwrite that portfolio, the way we run the stresses, the way that we focus on our collateral protection, our covenant structures, our margining capabilities, that portfolio has realized losses of 0.

We'll take our next question from Mike Mayo with Wells Fargo.

Can you comment on the increase in the provisions in Global Banking & Markets? It seems like that increase was a lot more than the growth in the balance sheet and that the increase is almost equals what, like I guess, like 3/4 of the increase from last year. So is that to some degree is consistent with the growth in the balance sheet. But to what degree are you putting aside extra provisions for problem losses due to macro concerns or things that you're seeing out there? And to what degree maybe you're sending a signal, hey, things might not remain as good.

Sure. Appreciate that question, Mike, and you actually answered it for yourself, but I'll do it for you back. So the composition of that PCL build was, in part, attributable to growth. So as I went through earlier on the call, we grew lending activities in the first quarter across the firm. That increased lending activity attracts provisions. We also did have impairments, single name impairments across the portfolio, which we have typically, we have those impairments as well, and we have adjustments for the overall operating environment and the outlook.

So it was really the combination of those three things that come together for that PCL build. I kind of answered it on the previous question, but if there was a question as to whether that PCL relates to private credit somehow or relates to our FICC financing business, the answer is no. It was growth across the various lending streams, at least not from a default or credit impairment perspective, that sort of broader lending growth in the GBM segment.

And then a separate question, to what point -- at what point do investors kind of put their pencils down? It sounds like they're not that people are still trading and engaging and have high activity levels. But do you see a difference between the engagement with corporates as opposed to everybody else and investors and the whole ecosystem? In other words, my question really is, are corporates more engaged? And is there some derisking out in investor land?

So first, at a high level, Mike, I think people are very engaged, okay? Across the franchise, corporates, investors, very, very engaged. I think it's an interesting moment because there's so much going on in the world of technology and innovation and so much around that space that people are extremely engaged in understanding how that creates opportunities for enterprise, how that shifts investment thesis, and we're not seeing any decline or pencils down, as you suggested.

I will say the corporate world, and I highlighted this before, is incredibly engaged right now because they don't operate in the short-term noise, they operate over the long term. And they believe they have an opportunity to drive scale and consolidation and they haven't had it for a previous administration. And so they're focused on that. I expect that to continue.

Obviously, and as I said before, I don't have a crystal ball, if the macro situation gets bumpier for a short-term period of time, that can have short-term effects on investor behavior. But I'd say at this point, people are very actively engaged. And look, we're only a couple of weeks into the quarter, but the quarter has started with very significant engagement across all aspects of the business. Quarter has started in a positive way. We'll see. Level of uncertainty is higher. But at the moment, the engagement is pretty high.

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

So I'm going to take this in a slightly different direction. I wanted to ask on the efficiency outlook. You'd indicated some front-loading of infrastructure investments, cloud migration in advance of AI-driven investments that you plan on making. Just given all the investments that you cited in terms of what you're deploying on the platform. How should we think about the trajectory of non-comms, that $5 billion baseline is a little bit higher than what we've seen in recent quarters. And just bigger picture, how that informs the timing for when you can reach that 60% efficiency goal or if it impacts it at all?

Sure. Thanks, Steve. It's Denis. I'll take that. So obviously, we continue to make progress on the efficiency ratio overall, slight improvement on a year-over-year basis, and we remain laser-focused on driving towards the 60% level. We did have a higher level of non-compensation expenses. But if you pull apart the year-over-year delta, it was rough magnitude, $650 million of the $750 million increase was attributable to transaction-based expenses. And we talked about how we've been growing the overall activity, particularly across Equities, particularly in Asia. If you look at some of the BC&E expenses, if you look at the stamp duty expenses, we have some distribution fees in AWM, there were high levels of client activity that we executed across the quarter and some of that comes with transaction-based expenses.

So we remain focused on doing what we can on the unit cost elements of transaction-based expenses. And as in prior years, have dedicated work streams to driving benefit from a unit cost perspective, but the overall volumes, which is reflected in the record results for the equity business, obviously came with transaction expenses.

As it relates to the overall investment profile, we are continuing to make investments to drive longer-term efficiencies and the more we focus and do work on it, we appreciate that having greater capacity to migrate activities to the cloud and to harness a lot of value from data sets augurs for investment now to drive unlock in future periods. So that also features in our thinking. But at the same time, we're looking at other areas where we can reduce expenses. So there's categories of our overall operating expenses, which were moving down by more than double-digit percentages on a period basis as we look to get more efficient. So there's sort of puts and takes across it, and we remain focused on driving towards the 60% efficiency ratio.

Got it. And for my follow-up, just on the Fed's capital proposal, I was hoping you could provide some at least preliminary guidance on the three bigger buckets of proposed changes, whether it's the adjustments to the RWA calculation first? Second, the G-SIB surcharge and the proposed changes there? And then third, how the elimination of double counting could provide some relief going forward? And just trying to gauge like how that informs where you're comfortable running on CET1 versus the current ratio of 12.5%.

Okay, sure. So as David said in his remarks, we're following the reproposals closely. We do expect to comment. We are encouraged by the direction of travel, but we will have comments, and we think there is room for further improvement. Double count is definitely an area of focus for us, particularly as it relates to op risk. We think there's further enhancements that can be made to FRTB and CVA across the proposals. We think G-SIB, again, making progress, perhaps not recalibrated as far as it could have been, but making the right directional changes.

As it relates to impact on the firm and how we're calibrated, we start the second quarter at 12.5% from a CET1 perspective, 110 basis points of cushion, which is basically at the, call it, the wide end or just outside our typical operating range, and we think that's an appropriate level. It gives us capacity to step in and support the types of client activities that we continue to see coming through the franchise, gives us capacity to continue returning capital to shareholder. And I would say, finally, based on everything that we see, we think is a prudent place to be as some of those regulatory proposals get refined and finalized.

We'll take our next question from Brennan Hawken with BMO Capital Markets.

David, you spoke to strategic activity and how robust it is in banking. Curious to hear your thoughts on what you've been seeing as far as sponsors are concerned. We've heard a great deal in recent years about building pressure for sponsors to sell. And so how big of a setback is the valuation reset and tighter financing markets to that cohort?

Yes. I mean, Brennan, this is something that continues to get lots of attention. And it's sponsor activity out of the private equity section of sponsors and again, I want to highlight that that's a small universe when you think about overall capital markets activity broadly, that sponsor activity has been slower. I do think it will continue to accelerate. But it's -- when you look at the overall performance, again, I think one of the things we just want to highlight, we've been working very hard for the last 7 or 8 years to really build a larger, much more scaled, diversified business with more steady streams in it.

And I think this quarter is a great, great example. There was not -- sponsor activity did not accelerate this quarter the way we might have thought given the way things felt when we had the last earnings call in January. But at the same point, it was the best Global Banking & Markets quarter ever for the firm.

And so it was a very, very good quarter, even with weak sponsor activity. It's a big, broad, diversified business. Obviously, there's a tailwind that's coming when sponsor activity turns on. It will turn on. These sponsors do not own the capital, the LPs own the capital. They will have to return it to them. So it's been slower than we'd expect, but the business is big and broad enough and diversified that even with that slower sponsor activity, it's not had a big impact on the overall business.

The other thing I would add, a lot of those comments relate to monetization and exit activity, which we're very focused on, which ripples through the firm in a variety of places. But at a certain point, you have asset price adjustments in one industry or another, and all of a sudden, it presents opportunities for sponsors to actually redeploy some of the dry powder that they've been husbanding for some period of time. All of a sudden, public to private become back in focus. And so while there could be given the uncertainty of the war, some slowdown in IPO-type monetization, that doesn't mean that the sophisticated sponsors of the world aren't thinking much like some of the well-capitalized corporates as to whether or not they can't take advantage of some of the dislocation. So there's multiple ways to think about it.

Absolutely.

Great. And Denis, I'd love to follow up on your comments on FICC financing. Do you have any color on what proportion of your FICC financing exposure is tied to direct lending counterparts? I know it will probably fluctuate within a range, but maybe a rough idea of how to think about the bookends.

So it really is a question of categorization. So there are underlying sponsors and alt managers to whom we extend our FICC financing from like -- we think about it on an underlying asset class perspective because a lot of these bilaterally extended loans are collateralized by an underlying pool of loans to discrete end markets, residential, mortgages, consumer finance assets, private credit assets, private equity assets. So we run capital call facilities. These are all subcomponents of FICC financing and the entire book is well diversified against each of those end asset class pools, and we underwrite the loans with different sort of underwriting and risk parameters based on stresses we see for the various sort of end asset class.

So I don't think it -- first and foremost, we run it on a diversified basis, but it doesn't lend itself to the same kind of sort of portfolio concentration risk, if you have idiosyncratic bilateral structured credit extension, where you have the capacity in each discrete situation to set the protections that you think are appropriate for the underlying risk.

We'll take our next question from Manan Gosalia with Morgan Stanley.

I just wanted to follow up on the expense question. The comp ratio on adjusted revenues was down from the usual 33% in the first quarter. I know you typically true-up based on the environment at the end of the year, but is the year-on-year change so far being driven by One GS 3.0 and the AI investments you're making? And is it a signal for the direction for the full year?

Thanks, Manan and welcome to the call. Look, on the comp ratio, we grew our revenue significantly. And we remain, as I said earlier, very, very focused on driving the firm towards the 60% efficiency ratio. So given the uptick in revenue, given our outlook, we did bring the ratio down 100 basis points versus where we had set it in the first quarter last year, but we have a different amount of revenue and a different outlook. We obviously will adjust that as we go through the year based on our expectations for the full year. But currently, that's our best estimate for how we expect to pay. We remain to be -- we remain very much paid for performance. That underpins everything. Talent remains very dear, and we're very focused on attracting and retaining the best talent. That's what's required for us to deliver these results for clients. But we're also focused on operating the firm as efficiently as we can. So 32% is our best estimate balancing those objectives.

Great. And can you expand on what drove the weaker FICC intermediation revenues this quarter? You noted lower rates, mortgage and credit. Was that driven by a tougher year-on-year comp? Was it specifically driven by the higher geopolitical risks? Or is there any specific client behavior that you're seeing that may spill into the rest of this year?

Sure. Thanks, Manan. So as we say many times on this call, when we look in particular at components of our FICC portfolio, we remain very, very committed to having a leading presence across all of the sub-asset classes and continuing to do that on a global basis. In the last quarter, in the first quarter of this year, relative to the first quarter previously, we saw significant increased activity and more strength in the commodities business and more strength in the currency business, but mortgages and rates were lower. That was basically just a function of the overall environment making markets. We have big activities across all of those activities. We remain actively engaged with clients. But our performance in rates and mortgages were relatively lower. Performance in currencies and commodities was relatively stronger.

I think it's just also -- I'd just add, Manan, it's also -- a lot of this has to do with expectations that are set in the research community. This FICC performance still has to be put in context, it was the 10th best FICC quarter ever out of 100-and-some-odd quarters. And when I look at the scale and the diversity of the business, it's performing very, very well. So we obviously had a very, very strong comp in the first quarter last year. It is 29% better than the last quarter we had in the fourth quarter of the year, but it was close to a top decile FICC quarter. It certainly was a top quartile FICC quarter.

And what you're seeing, if you go back. Again, I want to go back and highlight, we've worked hard to scale the business, make it more diversified. If you go back 15, 20 years ago, we could not have a quarter like this with a quarter where FICC looked a little bit weaker because FICC was such an important component of the business. It's now a much more diversified business. FICC performed well in the quarter. And you look at the overall performance, the overall performance was obviously quite strong. Some quarters, it's going to be stronger here, stronger there.

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

In terms of private banking and lending, you talked about some of the moving parts in terms of deposit spreads as well as higher lending balances. So curious about the outlook there? And what is the reasonable goal as you think about penetration of lending within your wealth business? How to think about that in terms of the aggregate opportunity?

Great. Thanks very much. So look, I think our performance in that piece of AWM is in line with what we've been trying to achieve. So obviously, continue the lending penetration, record balances of $46 billion. I think we still have a long way to go. I think there's a lot more that we can do for clients in that segment, and we are making progress, but it's going to take time to actually meet the -- all of our ambitions for penetrating that segment. We're aggressively offering the capabilities. And I think more and more clients are coming to appreciate the value that it adds. So we feel good that we've taken that to record levels, but we think there's a lot more to do.

And we also remain very committed to growing the deposit balances across the segment. We're also able to do that very, very successfully. There is an impact from the more competitive environment for deposit raising. And we do expect that will persist as a headwind for much of 2026, but we would expect as we move into 2027, we will be back growing that segment, high double digits from a sort of durable revenue perspective. Our aggregate durable revenues in AWM were up high single digits for this most recent period, but it was a function of sort of more strength on the management fee line and less performance in the private banking and lending line, and we'd expect that to improve towards the end of the year heading into 2027.

Great. And as a follow-up, obviously, a strong quarter on fundraising for the alts again. Can you talk specifically about what strategies in credit got you the $10 billion? And as you think about the rest of the year, do you see credit as being as big of a contributor to growth or given some of the headlines and dynamics that likely is to see some moderation?

So coming out of our strategic update, we obviously gave guidance in terms of the aggregate alts assets under supervision target that we put out there for 2030 of $750 billion. We put out that annual fundraising target of $75 billion to $100 billion. Our platform is highly diversified. So we have success raising across corporate equity strategies, across credit strategies, across real estate, across hedge funds, et cetera, et cetera. And within credit we have a variety of different strategies that we can raise on based on level of the capital structure, type of risk profile, geographic location of the fund, et cetera. So we have multiple -- sort of multiple pillars that we're focused on continuing to drive the alts fundraising. It can vary from quarter-to-quarter in terms of putting together the full year results.

We'll take our next question from Devin Ryan with Citizens Bank.

Just another question on artificial intelligence. Obviously, I think investors are going business by business, just trying to understand implications. And so it'd be good just to hear how you're thinking about what businesses will be most impacted, and just whether AI overall as an accelerant for Goldman Sachs like it has been -- or technology cycles in the past have been? And just how you're thinking about it even broad strokes would be helpful.

Yes. Yes. I appreciate the question, Devin. And it's -- I am hugely forward leaning on the power of this technology to accelerate growth and efficiency in Goldman Sachs and allow us to more aggressively invest in growth in areas of our business where, for a variety of reasons, over the course of the last 5 years, we've been more constrained than I think we're going to be for the next 5 years. I think this is true not only with Goldman Sachs, I think this is true with lots of other businesses with enterprises broadly, and as enterprises take advantage of that, that spurs activity that feeds into the Goldman Sachs ecosystem.

So I do think as in other technology super cycles, this is extraordinarily constructive for Goldman Sachs. It's one of the reasons why when I think about the firm over the next 3 to 5 years, and I think about the growth trajectory of the firm that we're driving for, I can't -- I don't have a crystal ball to predict short-term uncertainty and short-term volatility, but I have a high degree of confidence. When I look out over 3 to 5 years as to how we can continue to grow the firm, serve our clients more broadly and accelerate our investment in areas of business where we see real opportunities to grow. And I mean I'd point to one like private wealth, for example, where we see still very, very significant opportunities given the nature of our private wealth franchise to grow.

It will not be a straight line whenever you have acceleration in new technology, there are going to be bumps and there are going to be risk issues, and there are going to be recalibrations. I'm sure we'll see that in the coming years as it scales. But the power that tests technology, the ability to use it in an enterprise to remake processes, to create efficiencies and also create more capacity to invest in growth, I can't find a CEO that's not talking about that and all of that with a medium-term lens when you get out of the short-term moment and noise is incredibly constructive for Goldman Sachs.

Okay. A quick follow-up, Denis, just on Asia and the success you've been having there. Obviously, really positive progression over time here. So just the gap that you talked about that you're closing, where are you in that? Is there still opportunity to accelerate? Or do you kind of close that gap with the big step-up that you had this quarter?

So we think we've made progress, but we are constantly reassessing each and every region of the world and each subproduct line gap that we think we may have relative to the potential. There were constraints on the aggregate quantum and type of resources that we could deploy to accelerate those activities, given some of the changes in capital rules, we moved quickly to do that for clients in the first quarter, and you can see it coming through in the results. I would expect versus what we're looking at, we would have closed the gap, but I do expect there's still a lot more for us to do. So I think good progress but more to do across Asia.

We'll take our next question from Matt O'Connor with Deutsche Bank.

I wanted to follow up on AWM, the long-term flows. You showed on Slide 6, just really good balance between the three channels. But I wanted to kind of dig into what's tracking a little bit better than what you laid out last quarter. I think you were targeting about 5% flows. We've got 3 quarters in a row of about 7%, a little boost from the deal this quarter. But just overall, it seems like it's tracking better than that target you had and wondering what the drivers of that are?

Sure. So we -- that was one of the new targets that we put out in the strategic update just to both focus your attention on the overall quality of our wealth business and frankly, focus our people internally on that target as well. It is an annual target. We do have a 5% LTFBA annual target. First quarter delivered 9%. So you're right, we're quite significantly ahead of the target in one quarter, but that could ebb and flow from one quarter to the next.

But I would say we're -- to David's comments on sort of just thinking about overall levels of engagement across the firm. That's not confined to traditional realm of Investment Banking or even FICC and Equities. There's strong levels of engagement across our Asset & Wealth Management business, and we're seeing good support across the wealth channel, happens to be well ahead of target for this quarter, but we'll be continuing to focus on driving it as high as we possibly can over the balance of the year.

And then any early benefits from -- there's the three deals and partnerships that you've announced in the last few months, T. Rowe, Industry and Innovator, I think Innovator just closed. So -- but any early benefits from those? And how should we think about the opportunity maybe going forward?

Yes. We feel very, very good. We obviously just closed Innovator in the last week. We feel very, very good about the partnership and the three deals -- and the two deals, excuse me. And we're integrating the teams. The teams are very excited and very focused on being here. I think the cool thing we mentioned in the script about Innovator is it immediately positions us as 1 of the top 10 active ETF providers. And obviously, in the active ETF space continues to be very, very good secular growth.

I think with what's going on in technology, the strengthening of our positioning around the venture community through Industry Ventures. We're seeing enormous synergies in the business. And by the way, synergies in the wealth business do out of that platform coming on board. But look, this is new, and I don't want to overstate it, but we feel very, very good about the decisions we've made on both the partnership with T. Rowe and the two acquisitions, and we'll report more as we have more substantive things to tell you.

We'll take our next question from Gerard Cassidy with RBC Capital Markets.

Denis, you touched on in your comments about your CET1 ratio that you folks have used the capital to grow the businesses across the firm and you specifically highlighted acquisition financing. Obviously, as David pointed out, you guys are the leader in M&A advice. Can you share with us the November changes to the leverage ratios that the regulators did away with, has that helped you guys become more competitive in acquisition financing? And second, how much of the acquisition financing do you try to keep on your books? Or do you try to syndicate it out to participants?

Sure. I appreciate those questions, Gerard. So what goes hand in glove with the uptick in strategic activity that David has been discussing and with a particular focus on the corporate sector is that a lot of those transactions require large-scale capital commitments. That's really what I'm referencing with respect to acquisition financing. Yes, the changes in the capital regulations give us more flexibility to deploy into that, but there are also a timing elements. So in the same way that you can have an announced M&A transact, you can report on announced volumes, you don't recognize revenue until that M&A transaction closes. If you take on risk in an acquisition finance book and you have that exposure on your books, you need to set aside the appropriate amount of capital, but you won't be recognizing revenue necessarily until the transaction funds or closes. So there are timing mismatches or things to be aware of with respect to those items.

As it relates to acquisition financing, our general philosophy is to facilitate the transaction to underwrite and distribute the paper into long-term holders of that loan or bond instrument. We do retain some exposures to clients or as part of an overall relationship banking philosophy. And from time to time, we can hold other exposures as well, but the general base case assumptions that we underwrite to distribute for most of the acquisition financing activity.

Very good. And then to follow up on your comments that you made about the PCL. You obviously identified the three areas of what drove the PCL on a year-over-year basis, loan growth, the single name impairments and then the operating environment. Can you give us more color on the single name impairments, what types of credits were impaired? And then just from a technical standpoint, do the impairments go through the net charge-off line? Or is it through another line on the P&L?

Thank you, Gerard, for your question. The growth piece is across the board. The impairment piece is actually several very small sort of names. I don't think it's particularly thematic. And then we have a sort of a general. We look at the overall operating environment, and we want to make sure we have calibrated the appropriate amount of reserves given the environment that we see.

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

I want to go back to the change in the CET1, the 180 basis points linked quarter. Certainly, I understand buybacks a piece of it. But I was wondering if you could unpack or elaborate just a little bit more on the RWA growth by product, anything unusual in the quarter, the $85 billion or so. Obviously, I appreciate trading assets can move around. But I'm just trying to fully understand the capital message relative to the 12.5% that you're at right now?

Sure. Believe it or not, I use words, but all those words calibrate to numbers. So the drivers of the CET1 delta of 180 is related to buybacks. And on RWA, it resides with the biggest buckets are growth in prime financing, acquisition financing and then market risk RWAs. Those are the three big buckets on the RWA side and then add on to it the record level of return of capital to shareholders, and that's what explains the quarterly delta in CET1.

Okay. And the 12.5%, roughly 100 basis points is a reasonable buffer?

It's 110 right now, and we think that, that's a reasonable buffer that gives us flexibility along each of the three principal vectors that I identified, more client activity, more return of capital to shareholders and appropriate flexibility regardless of how the current proposed regulatory rules pan out.

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

I wanted to go back to the equity results and the strength there and ask a question that I expect you guys are tired of answering, but the durability of that, what is durable versus what is extraordinary. Your equity financing revenue, $2.7 billion this quarter, that's more than double what it was in the first quarter of '24. And the intermediation income is also well above what it was even 5 years ago, 6 years ago, 2021 in the initial phases of the pandemic. But -- and balance sheets are expanding. You mentioned investor engagement remains robust. But is there a way -- how do you think about the risk here to this level of revenues? What is extraordinary versus what is durable?

And I guess, a different way of asking is maybe what kind of environment would be needed to see a reduction, lower results? And what kind of environment would be needed to see sustaining these results and even growing from here, albeit with much more tough -- much more difficult comps. So I know a lot in there, but just the whole question of durability versus what's extraordinary, what your thoughts are there?

Sure. I appreciate it. I think there's a couple of underlying drivers. So if you take -- the way you frame your question, take a multiyear trend, market caps around the world are expanding, equity trading activity and the participation by a broad range of our clients has been expanding. We have had a concerted effort to improve our market share position with leading clients across both FICC and Equities. And we have been consistently fueling some of those activities with balance sheet and capital commitments to support those client activities. It's jumping off the page given some of the most recent increases, which again, are a function of stepping up some of the capital deployment to support that activity. And then the certain subsegments of the world that are very, very attractive. So you have a slight shift in the mix profile.

So those are all the factors that are driving those activity levels consistently higher. The flip side is also possible where you see significant drawdowns or a much less active environment, if clients were looking for a lot less by way of equity financing from us, then those activity levels would reverse.

But despite all of the various types of volatility we've seen over the last quarter and the last number of years where markets go up and markets go down and clients lever up and clients lever down, there still is a tremendous amount of demand from clients for us to step in and support them with financing, and we work very, very hard to both support clients but also be disciplined and thoughtful about how and to whom we extend what types of financing so we can continue to also deliver attractive returns to shareholders.

Okay. That's helpful. Maybe just a quick follow-up then on the question of FICC results this quarter, obviously, some softness in rates and mortgages. It sounds like this is more of a -- more generalizable about -- related to the market backdrop as opposed to anything Goldman specific? Is that right? And I did notice that VaR in rates did go up quite a bit. It was an area of softness. Just any color there as to whether there's a reason for that divergence that is notable.

Sure. So you're right, VaR was up across rates, VaR was up across commodities. VaR, as you know, is a calculation that has a rolling 30-day contributor based on volatility. And volatility across rates and commodities in the first quarter went up, and that is what mathematically drives the change in the VaR ratio.

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

Just a follow-up on the sponsor activity. And what percent is the sponsor activity of your Investment Banking activity? I know you said it still hasn't come back and that's potential upside in the future, but is it like 10% or 20% or historical 33%? Where is that right now?

Yes. I don't -- it's not a number we've disclosed, Mike, but obviously, in an environment where we post an M&A quarter like the M&A quarter that we posted, it's a smaller percentage, a meaningfully smaller percentage. I'm not suggesting that it's not a meaningful business for the firm, but it's not a number that we've specifically disclosed. And I would say it moves around based on activity levels and based on what's going on. But again, I come back to the point, sponsor is important. It's a huge client base. We do a lot with sponsors. By the way, we did a lot with sponsors this quarter, but it is a big diverse business. And you look at the overall performance, we can have one sector be weaker than we would have liked and still have very strong performance.

And so this is an example where we had very strong banking performance with a weaker sponsor performance than I might have thought 3 months ago, but it didn't affect the overall strength of the banking performance.

And to be fair, you've talked about sponsors for a few years. Look, your mergers are there, you're #1, we get it. But you've talked about sponsors for a few years and you had another CEO talk about over 10,000 large companies that remain private, even with record high stock markets. So why is that?

Why do they remain private?

Yes.

Yes. I mean, look, I mean, a couple of things. First of all, Mike, I think one of the things that's just interesting to put in perspective, is when we're talking about sponsors in this context, I think you're talking about private equity. And so remember, sponsors do a lot of things. They do infrastructure, they do real estate, they do credit. I mean it's a bigger thing. But if we look at -- they do growth equity, when you look at private equity, the rough enterprise value, meaning equity and debt of all the private equity-owned companies is like $4 trillion. So it's less than one NVIDIA. So let's just start there when we're talking about capital and capital flows to put that in some perspective.

I think one of the reasons why the private equity firms have been slower to monetize is the economic incentives that are set up, give them optionality to wait. And we had a dynamic where values in private equity portfolios got marked up meaningfully in 2020 and 2021 because of that cycle and making no comments on where they're marked it raised expectations around monetization and people are waiting. And by the way, as the economy grows, the world grows, a lot of these businesses do grow into those valuations. And the way the incentive system works, they really -- really the only optionality LPs have to put pressure on GPs is to not participate in the next fund.

And so I do think there's some pressure that's mounting. I do think you'll see more activity, but at the end of the day, they've been a little -- they've been slower and they've been taking that optionality.

Now that said, I think a lot of activity will come over time. We're very well positioned for it. And again, I just want to -- when you look at this whole ecosystem and how things are working, it's a pretty constructive investment banking ecosystem at the moment. Obviously, if the sponsors in private equity turned on, it would be even more constructive for us. But it's pretty constructive at the moment as we look at it.

Thank you. Ladies and gentlemen, that will conclude our question-and-answer session and also concludes the Goldman Sachs First Quarter 2026 Earnings Conference Call. Thank you for your participation. You may now disconnect.

Thank you, [ Tricia ] for the lovely kickoff. So David, thank you for being with us in South Florida.

Thank you for having me. I'd much rather be in South Florida than the Northeast. So I'm delighted to be here.

So maybe let's start at the top in terms of your strategic priorities. You've continued to make significant progress against them. You laid out some of your plans in the recent strategic update. And of course, as everybody in the room knows, the stock has meaningfully outperformed many of your peers. So maybe let's talk about some of the most significant changes over both the longer term in the past year and maybe how Goldman is positioned for the forward?

Sure. So thank you again for having me, and I'm delighted to be here. The firm has really, for the past -- for the past 6 years, been in execution mode against the plan that was laid out in early 2020 to grow the firm. And after a period of time coming out of the financial crisis where the firm really didn't grow, we made a very concerted effort to really invest in the growth of the firm, invest to strengthen the client franchise. We had a clear understanding that if we could put more financial resources toward our client base, we could capture market share and we could grow the firm.

And we've made a lot of progress against that. I think there are a handful of significant things that we did in what I'll call the first wave the strategy to grow the firm. The first, which really is, in some way, envisioned in the narrative of One Goldman Sachs, we really made an investment to improve the client franchise, the client centricity of the firm and to really ensure that we were doing everything we could to deliver for our clients in a very holistic way.

And we've gotten incredible feedback on that. But more importantly, when you look at market share data across all different businesses in the firm, that approach has really enhanced our market shares, I think, meaningfully. Secondarily, we increased the resources available to serve our clients, particularly resources as a lender and a financier of our clients. And one of the things that we believe deeply if you're financing your clients and you're providing the liquidity that they need to run their businesses, it comes back in a virtuous cycle.

And so we were really operating as an intermediary without being as big a financier, and we've shifted that materially, and that has elevated our position with our client base and has also contributed to market share gains. Third, we had a whole handful and a half of Asset and Wealth Management businesses that were operating as independent businesses and weren't getting the benefit of a scaled platform.

And I think the most difficult thing we did was we put all those businesses together and created what is now Asset and Wealth Management, which is the fifth or sixth, seventh, depending on how you look at it, largest active asset manager, supervising over $3.5 trillion, and we went out to the world and said, we can grow this high single digits in terms of its durable revenue and improve the margins. We just, in January, increased the margin targets and the return targets for that business, and that business is growing better than 10% and it's growing double digits.

And we think there's a lot of runway to continue to grow it, but we also think there's opportunities to kind of accelerate that growth inorganically. And you saw us do 3 things last year that have enhanced the trajectory of that business, the partnership with T. Rowe around retirement and both Innovator, which gives us a top 10 position in active ETFs and also iVentures, which is obviously a very, very interesting activity for our wealth clients.

And then wealth continues to be just when you look at ultra-high net worth wealth and what's going on in the world, the opportunity set to continue to grow that and capture more share there and to continue to scale that platform is another big opportunity for the firm that we continue to be very focused on. And so that's kind of been the execution strategy up to this point. When you look forward now, and we've been talking about this consistently, I think changes in technology allow us to remake operating processes and create more capacity to accelerate our growth as we look forward.

And we're extremely focused on kind of operating in an environment where for the first time in a long time, we are not so constrained. And there are 2 things that are changing that. One is the regulatory environment, both in terms of the capital rules and the way that sets up. And then secondarily, the regulatory burden in terms of the number of people and resources we had to have addressing regulatory requests of us has backed off, and that frees up more capacity to scale wealth and continue to invest in the business. So I think we're in a terrific position.

We obviously, given the macro environment, I think, have pretty good tailwinds around M&A and capital markets activity, but we can talk about that. And I tend to look at those things over quarters and years, not over days and weeks when you see a little bit of volatility. But I still think structurally, the macro environment for a very strong M&A and capital markets couple of years is in place. And so I think the firm is very well positioned to continue to execute and deliver for shareholders. And so we feel good about the state of the franchise, feel good about the opportunities in front of us and feel like the environment sets up very well for the firm.

So before we unpack all the good things that are happening at Goldman, maybe we'll go to the tailwinds that you mentioned, David, about the current operating environment. I think optimism would be an understatement in terms of how investors entered the year with regards to capital markets expectations. So what is your current view on the macro environment and the '26 outlook?

And what is particularly on top of mind for your clients? And obviously, you brought it up, capital markets is about the momentum over quarters and years, not weeks. I do have to ask you whether or not some of the concerns, the recent volatility in the software sector has given you pause.

Yes, sure. So I'd just start by saying the firm has a deep risk management culture, and there isn't a day that goes by no matter what the environment is and no matter what's going on, that we don't have armies of people thinking about risk and risk management and what can go wrong. I wake up most mornings, I woke up this morning, and I was thrilled to see an article in the Wall Street Journal that talked about Goldman Sachs contribution to the Dow's move from 25,000 to 50,000.

My first reaction to that is what can possibly go wrong, not oh good. And so we come with a mindset of things will go wrong, and you've got to be prepared to adapt and risk manage around that. And so we start from the place of risk management. Let's start with the macro setup. The macro setup is very good broadly. There are a bunch of things going on that create tailwinds, broad tailwinds for risk assets. There's a very significant amount of fiscal stimulus in place, and we're operating in a world where it's very, very hard to see governments, developed economies back off of that fiscal stimulus.

In addition, a very significant bill was passed last year in the United States, the provisions of which are very fiscally stimulative, and they picked up, they all popped in, in 2026. So you added to that fiscal stimulus. Second, you have a massive deregulatory trend in the United States after a very tough regulatory period in the United States across all industries. And one of the things about regulatory is it requires resources to respond. And so that's coming into more balance.

And for industries broadly, it's freeing up capacity to invest because the burdens -- there should be a regulatory structure. I'm not an anti-regulatory person, but the burdens got to be kind of absurd across a range of industries, and they're getting to a more balanced place. And so that's a tailwind for more growth. Number three, we're going through a technology super cycle where there's a massive amount of investment, and that's a structural tailwind for growth in the economy.

Three, we have midterm elections and a President here in the United States who is going to take populist actions as we head to those midterm elections and those populous actions have a tendency to be stimulative. So when you look at all those things, those things create tailwinds for risk assets broadly. Now what can go wrong? There's a lot of policy uncertainty. While the President is doing populous things, he also has a tendency in policy to move from policy action to policy action.

I'd still say there's uncertainty around trade. There's uncertainty around inflation and there's uncertainty on geopolitics for sure. And all these things can contribute at some level to creating speed bumps or slowing down some of that positive macro momentum. But in the broad distribution of outcomes, I think the likely outcome in 2026 is we're going to have a pretty constructive year for capital markets, a pretty constructive year for M&A, particularly large-cap strategic M&A.

And the result of that should be very favorable for the people in this room and the institutions that you cover. But there's certainly plenty of things that could go wrong. And I would not -- I would be surprised, I was going to say I wouldn't be surprised if we have an event like the event we had in April last year that slowed everything down for a period of time. But I'll put it differently, so I wouldn't be surprised. I would expect that we'll have something like that will happen that will create somewhere in the year a speed bump or recalibration or slowdown.

And I think there are a bunch of things that you can worry about on that front. Certainly, geopolitical things and policy issues. But I'd also say what's going on with AI and technology also has the potential to create recalibrations. And there are going to be winners and losers, and this gets to your software question. There are going to be winners and losers. But -- and we've been thinking a lot about technology disruption.

But when you start painting spaces with a broad [indiscernible], I don't think that's appropriate. When I look at software exposure broadly, Goldman Sachs runs a big, big platform. Our broad -- we have software exposure, but I'd say it's insignificant in the scale of our overall platform, but it's certainly something that we're monitoring. I think the narrative over the last week has been a little bit too broad. There'll be winners and losers and plenty of companies pivot and do just fine.

So let's double-click on some of your comments on advisory. You are the #1 M&A adviser around the world. And you've touched on some of the preconditions for that kind of activity. Maybe unpack that a little bit more and also talk about where you think equity capital markets and debt capital markets are going to go in 2026.

Sure. So there are 2 big drivers for -- this is overly simplistic, but there are 2 big drivers for M&A activity, strategic M&A activity on the part of big corporates and sponsor M&A activity. The strategics for the last 5 years in a different regulatory regime, whatever the question was, the answer was no. Now whatever the question is, the answer is maybe. And scale matters enormously. Competitive positioning through scale matters enormously.

There isn't a CEO in the world that hasn't woken up and said, now is a moment for some period of years where I can do things strategically to strengthen my competitive position. So every CEO in the world is thinking about how that applies to them and what they can do. And we obviously have a great lens into this, given our leading advisory position because you engage in dialogues, you get mandated to think about things, and that gives you an ability to have a pretty broad lens as to what's going on.

And I'd say there's a lot going on. Now not all of it will come to fruition, but the pickup in activity, we've manifested it in comments we've made publicly about our advisory backlog indicates that the level of M&A activity is going to be meaningfully higher than it's been on average over the course of the last 5 years. I think there's very little to likely upset that path on the strategic stuff. Of course, if there was a big exogenous shock, it would slow it down, but that's not my base case that there's going to be a big exogenous shock this year.

And so CEOs see that opportunity and they're running toward it. With respect to sponsors, we've all kind of been waiting impatiently for that to accelerate. I think we're reaching a point where it's accelerating. You all probably saw John Gray on television last week when he reported his earnings, make a very, very strong statement that they are going to sell a lot of things this year. Now of course, there are things that can get in the way of that, too.

But I think we're reaching a point in time where that unlock is occurring. And so all that's quite constructive. I think the other thing that's going on with respect to the equity capital markets is you have a handful of these very, very large companies that have decided for a variety of reasons, they want to get to the public markets. For some of them, it's just the scale of the capital has gotten to a place that they want that additional channel.

And so I think you're going to see a handful of those happen. And just generally speaking, that will create a more constructive IPO market. In terms of the M&A market, I think this could be a top decile, top quartile, certainly, potentially top decile kind of M&A opportunity set. In terms of equity capital markets, it's not going to look like it looked in '21, which was the last kind of top quartile, top decile opportunity set, but it's going to be a significant improvement over the base that we've seen over the course of the last few years.

And I think that has reasonable momentum at this point in time. And I look at the backlog, I look at people that are going to go, and I think it's going to be a better pull-through than what's been expected. And of course, at any point in time, if there are big exogenous shocks, things can slow down, but the direction of travel, I think, is clear.

Just wanted to follow up on the sponsors because we've been waiting and waiting and waiting for the sponsors to monetize. Where are we in terms of the timing versus valuation discussion?

I think we're at a point where -- sure, you can find lots of companies where the sponsors want this, the sponsors want that. I think the pressure on the sponsor community, this is a generalization, of course, with every firm, it's different. But the pressure from the LPs at this point and people are getting into fund cycles where they've got to raise more money, they've got to return capital. And so the valuation is becoming less important.

They've got to return capital, whether they're selling stuff and they're going to the M&A market or they're getting stuff public, they've got to return more capital. I just think the pressure from the LP community and the cycle life of fundraising has reached a point in time for most of these firms that they can't get into the valuation debate as much as they've got to move forward. So I think you're going to see an improvement in that for sure.

And just as a follow-up here on debt capital markets, given the -- your expectations for advisory activity and lower rates, DCM has been a big help for all of the big firms. Is that going to continue from a momentum standpoint?

Yes. There's significant activity. That activity has to be financed. And so I think you're going to see an improvement. Again, the debt equity capital markets activity is not going to look like the peak levels that we saw in 2021 during that moment. But they are accelerating off a base. What's going on around AI infrastructure is creating an opportunity is enormous.

You look at Google, I think, just yesterday did another significant financing and they're in the market, doing some financings overseas, I believe, today. The need for capital to continue on this technology cycle is going to have an impact on the overall capital raising cycle. And so I see all this stuff accelerating. And I feel pretty good about it. That doesn't mean it all happens perfectly in a straight line, it won't. But we're just in a different place than we were in 2022, '23 and '24, and you're going to see the benefit of that pull through.

So I wanted to switch to the trading outlook. And last year, the industry saw the trading wallet expand. And of course, your firm performed very strongly in that context. So how are you thinking about the FICC and equities outlook from here? And then I just wanted to unpack maybe this discussion and talk about durability here versus just cyclicality.

Sure. The environment -- the environment for trading continues to be constructive. But I think one of the things that -- that people miss, the size and the scale of these businesses for the leading players and the breadth of products and services create, broadly speaking, more durable businesses. And there's a lot of activity in the world. There are a lot of people moving money around in the world. Some of the volatility that we saw last week creates opportunities, too.

And when we look at these businesses, we try to kind of look and say, okay, let's look at 10-year averages. We put up a great chart. I think it was a year ago, right, a year ago in our -- one of our updates, basically saying, take the 10-year lows, okay? Now look at the variability in the high. I think what we love about our business, when there is volatility that creates upside wallet.

We, I think, do as good a job, if not a better job, capturing a better share of that upside potential in those environments. But when you look over a 10-year period, these businesses are big, durable businesses that create a certain amount of activity, and they just operate with fundamentally much less leverage than they operated with 15 years ago. And people think about them through a rearview mirror lens, not through a forward lens.

So that doesn't mean that if we had a very difficult economic environment for a period of time, there couldn't be slowdowns in these businesses. But there's a base durability, especially given all the financing that's going on in these businesses. And that's one of the reasons why we try to break out the financing and the intermediation so people can see that to put a base under these markets businesses.

So as we move forward, what areas are you focused on to drive additional wallet share? And also, you mentioned deregulation a couple of times during this fireside chat. Are there opportunities to regain some of the market share that was maybe scattered when prudential regulation around the world was getting built up post financial crisis?

So in wallet, when you talk about wallet in our core business of banking and markets, our operating philosophy is to constantly look at everything we do and try to diligently understand where we're outperforming, where we're underperforming. And any place we're underperforming, try to adjust. Again, these are big, big, big businesses. We've been the leading M&A adviser for 23 years in a row, which is really extraordinary to have a position like that for that period of time.

I think one of the reasons why is because I know that team, while we might be #1 every year for 23 years, 1 year, we're #3 in health care instead of #1. One year, we could be #5 in consumer, but we're #1 in energy and tech. We're constantly looking at where we have gaps and trying to say how can we improve those gaps. The goal is to not just be #1 across the top, of course, that's the overriding goal. The goal is to ensure we're as close to #1 in every subsector we can possibly be and to strengthen the overall lead we have in that leadership position.

And that's no different than the way we look at our markets wallet share. We have 150 accounts that we call the top 150. They're the biggest, most important accounts. They're a significant part of the overall markets business wallet. We're top 3 with 123 of those 150 accounts. We're also looking at the 123 that we're top 3 with and saying, how many are we #1 with? How many are we 3 where we should be 2? How many are we 3 where we should be 1? How many are we 2 where we should be 1?

There's a constant process of saying how do we improve gaps that exist in our wallet and improve our wallet share. And if you do that, you edge along over time. Now we made some very significant wallet gains, and I'm not sitting here saying we have that kind of wallet to improve, but there's a discipline in the firm from an operating perspective to always try to add to wallet and maximize wallet. And we remain very, very focused on that wallet opportunity.

So switching gears to Asset and Wealth Management, which is clearly a big focus area for you and a big focus area for your investors. So top 5 active asset manager globally, demonstrated your durable revenues here and also updated your medium-term targets, which will unpack. What underpins your confidence in achieving these targets? And what's your growth strategy from here?

So -- the question, we get asked a question about targets, what underpins your confidence? On one of the -- we would not put a target out unless we had really done the work, and we were really confident that we had the building blocks in place to deliver on that target. What's driving the target changes in Asset & Wealth Management, which is really the margin and the returns is we had all these businesses, we put them together. They had a lot of capital in them.

We've been bringing the capital out, that improves the returns. And we've been scaling these alternative platforms and the alternative platforms are going on fee. You could all look -- everybody here can look at other alternatives platforms. Other alternatives platforms have higher margin. The profitability contribution from alternatives as opposed to the more traditional asset management business is higher margin. That mix has been improving as we scale our alternatives business, and we're raising $75 billion to $100 billion of alternatives each year, and they're going on fee. And so it's been a journey.

That's why we said we can get to 25%. Now we said we get to 30% margin because we're adding the building blocks. And you can see we see the fundraising target. We see how much more is going to come on fee, and it gives us a lot of confidence that we can grow the durable revenues. As we've said, as you grow those durable revenues and they come on fee, the margin mix is improving, and that gives us a lot of confidence that we can hit the targets. And so asset management, there are a lot of people in this room that know this.

The asset management business is a very good business, especially if you have franchise positions to continue to bring new fee-paying assets into your business. I think one of the things that makes our platform so attractive is the platform is set up globally at scale across all silos. So we're very well positioned to have tailwinds on our ability to bring long-term fee-based flows in as we look forward and not all asset management businesses are positioned that way.

Our wealth channel is also super attractive and super unique and the wealth channel drives some of that opportunity. We obviously focus on this ultra-high net worth channel. But if you look at what's going on in the world and what's going on with asset prices, you look at the generational wealth transfer that's coming up, that wealth channel is very well positioned, and that adds to our confidence in our ability to continue to deliver the growth that we've suggested we can grow here.

So let's unpack that in terms of the ultra-high net worth franchise is a key driver of growth. This is clearly a part of the wealth management ecosystem that a lot of firms are looking to expand in. What's differentiating Goldman here? And maybe detail some of the key opportunities that you're focused on?

Well, we have -- the core wealth business at Goldman Sachs is if there are 100,000 Uber wealthy people, and we do this around the world, but let's just take the United States for more. If there are 100,000 Uber wealthy people in the United States, don't take this as a fact, take it more as a direction. 15,000 of them have wealth at Goldman Sachs. And so for starters, there's no reason why 20,000 of them couldn't have wealth at Goldman Sachs, but it scales with people and footprint.

This is a business that is a high-touch, high service personal trust kind of business. We're very good in those kinds of businesses. We know how to scale those kinds of businesses. We know how to operate them, but you have to do it over time. They scale with people. And I just think we're very well positioned for that. There are other opportunities for us in wealth that we're approaching slightly differently. There are people that have broader high net worth wealth platforms, and they need manufacturing capability of really interesting products.

We have extraordinary manufacturing capability in our asset management business. And so we are a very attractive manufacturer of product. Our brand is attractive. And so other people's distribution, people like partnering with us. And so when you look broadly at third-party wealth distribution, we're a very, very attractive partner in that. And so we have access to lots of other people's distribution channels to very, very significant wealth.

But there, we don't own the client privity, we're creating the product for other people's clients. So I think we're very well positioned in this ecosystem, very, very strong growth opportunity in the ultra-high net worth area and continuing to scale that all over the world. And I think it's a very -- I think our business there and our brand there is very unique. That doesn't mean there aren't certain competitors, but we run a very, very unique platform in that business.

Before we talk about manufacturing, I just wanted to make sure we stopped at your new annual long-term fee-based net inflow target for your wealth management business. Could you help investors maybe understand the decision to focus on this target for you?

Yes. We wanted to put out something that we could track. And by the way, there are 2 reasons to create targets. One reason to create targets is to give people outside investors a sense of what we're doing and to create a road map and transparency for them. Another is to hold our people internally accountable for what we expect them to do to actually grow the business.

And so we came to this target as a way to set expectations internally as to what we expected to drive the growth of the business so that we can kind of rally the organization behind a goal that if we execute on that, we believe we can or we would not have put the target out, we can continue to deliver on what we need to deliver on our wealth growth.

So on alternatives, I think since your first Investor Day, you fund raised $440 billion. You mentioned the $75 billion to $100 billion per year target, which would be a 2030 AUS goal of $750 billion.

$750 billion of fee-based stuff in..

$750 billion fee-based. Where are you seeing the most demand at the moment?

It's -- you're really seeing it across the spectrum of the opportunity set. As we've said before, we have 2 businesses that really are truly scaled, credit and what we call XIG, our external investing platform. And there's good demand there, but there continues to be good demand around infrastructure. And there continues to be demand, and I think this is one of the things we can deliver from our clients for tailored solutions.

So you're talking to a huge sovereign wealth fund in Asia that doesn't have enough exposure to European credit. And so can we create a European credit sleeve that's specifically designed to meet exposures that they want. Because of the scale of our platform, we have an ability to do things like that. And so I think I'm seeing more tailored solutions for sure, in the alternative space.

And I think that's something that will continue. I think it's also important to put out when we -- we've talked about this fundraising, and correct me if I'm wrong, Jehan, we're talking about fundraising and we're not talking about leverage in the context when we talk about fund sizes and some of the stuff. And so others talk about the leverage and the fee-based stuff. We're talking about the fee-based stuff.

So maybe just to top off this conversation, there's a secular trend clearly in wealth on -- towards higher allocation to private assets and alternatives. We heard that from my boss yesterday. I'm sure we'll hear that from Morgan Stanley later this afternoon. So how are you thinking about that in context of your business and your wealth growth?

Well, there's no our client base in our wealth business has been deep in alts for a long, long time. And one of the things that brought people onto our wealth platform, very, very wealthy people onto our wealth platform is the access they got to alts products, to private products, whether it was direct, our manufacturing and our access to stuff that was super attractive and super attractive funds or super attractive individual investments and individual growthy companies.

And so that was something that was certainly attractive. So they've been deep in. What you're talking about a little bit now is there's no question that a broader array of wealthy investors, particularly high net worth wealth investors want access to these privates. They want access and retirement. They want an allocation to this. And we're seeing the expansion of that and the distribution of these products in different forms into those channels.

I think that is something that has pretty significant secular tailwinds, but it's not going to be without bumps and bruises. And from a risk management perspective, it's something we're thinking about very, very carefully and very thoughtfully. These are long-dated illiquid products. There are certain liquidity provisions, but generally, these are less liquid products. And I think it's important as you grow the distribution of this to be very, very thoughtful about how they're sold, how they're marketed, whether investors really understand what they're buying, whether it's appropriate. And I think those are things that require a lot of time.

But the secular growth and allowing people to participate, I think, is happening for sure. It's one of the ironies that I find very, very interesting is we put enormously high standards on letting people take long-term positions and things that should be reasonable investments. Of course, there's risk. But there are lots of other things you can buy in this world that have no regulatory oversight that are a lot riskier and the parameters are different.

So this is a good thing, I think, for participation in capital markets and capital formation. It is one of the strengths of the U.S. financial system that people have the risk mindset and they want to participate in this. I think we all as participants in the market have a responsibility to be very thoughtful and disciplined on how we execute against it over time. And there will be speed bumps because people will do things that need to be ultimately reined in or have better guardrails or provisions around them.

That's very much in line with what our CEO said.

Good. Okay. Well, then Sergio and I see it the same way.

Absolutely. Let's switch gears to capital, right? And I guess let's just put this in context because we're at a seminal moment for deregulation here in the U.S. So maybe quick thoughts on that. And you're sitting on so much excess capital. Where are the most attractive places to deploy this organically?

Well, you said we're at a seminal moment for deregulation. It seems every few years, there's a seminal moment for deregulation. I think what's happening now is a reaction to how hard the pendulum swung over the last 5 years. But I think the big thing that's going on, forgetting about the short-term swings is Dodd-Frank created a regulatory structure and significantly -- I mean, if you really step back, even though Dodd-Frank was 1,800 pages, the 2 principal things that Dodd-Frank did was it took leverage way down in the regulated financial system and it took liquidity provisioning way up, which fundamentally made the system more safe and more durable.

That doesn't mean that the system is without risk. But we're now 17 years past that. We operate in a different world with different scale businesses. And one of the things that had been going on is that capital was continuing to grow in these large institutions. And there's a cost to that. And it's never going to be perfect, but I think you want to operate here in the U.S., a banking system that is safe and secure.

But of course, safe and secure, there's going to be risk, but you want to have as much of the capital lending and redeployed and recycling into driving growth and investment. And so I think we're getting a reset around that to a much healthier place. It's interesting. Jay Powell, when he came in, said, I think capital in the banking system is about right. Yes, capital in the banking system during Jay Powell's tenure has grown, these are rough numbers, 25%.

And every year, he would say capital is about right, the capital will grow some more. Capital is about right, the capital will grow some more. So we're going through a process of kind of resetting to a level that frees up capital to be deployed into the system in a variety of different ways. And this tails back to a question that you asked that I didn't answer for you is there a little bit of rebalancing.

So there's a bunch of lending activity that was in the regulated banking system that got pushed to other participants to insurance platforms and to other participants in private credit and the banking -- the regulated banking sector is going to be more competitive on a lot of this lending, given the way whether it's SLR or the overall capital regime has shifted, that's going to change that competitive environment a little bit.

For us, the capital waterfall hasn't changed. It's the same thing. We want to deploy capital to serve our clients. And where we see opportunities, we are going to deploy. It's not infinite though. And as a result of that, if we don't -- if we can't get the capital deployed in the business to add accretive returns, we will do what we can to return that capital back to shareholders where they can recycle it.

And I do operate with a point of view that we have to get the capital out of the business because just keeping the capital in the business drags returns. And of course, there can be some short-term management of that. But at the end of the day, our job is to get it deployed against our client base and our business where we can earn incremental returns. But if we don't see those opportunities, our job is to get it out as quickly as we can.

So in the past year, you've also announced 2 acquisitions geared towards accelerating growth in AWM. Should we expect you to continue to deploy some of the excess capital for inorganic? And if so, what areas are you most attracted to?

I'll say the same thing. I've said about this for a number of years. We would love to find interesting inorganic things that can accelerate the scale and the growth of our Asset and Wealth Management platform. I think we found a handful of things this past year, but I'd be the first to caveat that they were small, small but important because they filled some gaps.

If there were other things that could accelerate that journey and continue to evolve the mix of the firm so that the scale of asset and wealth relative to Banking and Markets continue to shift, we would try to do that. However, to do significant things, the bar is going to be very high, and we're incredibly focused on the culture of the firm and the way the firm operates culturally. And we will be extremely cautious in doing anything that we think can offset kind of the cultural ethos of the way the firm operates.

The best, most attractive things generally are not for sale. And the best, most attractive things, if they are for sale, aren't for sale at times when you can buy them. And so a lot of this is deciding what looks really interesting and taking a very long-term view and then seeing if opportunities pop up. I know as a reference, and I'll make it a reference, James Gorman wanted to buy E*TRADE for over a decade, and then there was an opportunity where Morgan Stanley could.

That's as a CEO kind of strategically thinking, things pop up. And you've got to have a clear lens as to what's additive, what's not. So when things pop up, you have an ability to decide whether or not it fits and it's right for you. And so if you look -- they're small, but if you look at the 2 things we did last year, iVentures popped up, and we were very lucky because somebody approached iVentures, and we had a long relationship with iVentures. And so Hans Swildens, the owner of iVentures, came to Mike Brandmeyer of Goldman Sachs and said, somebody's come and wants to buy my business.

And I like to think about it. Can you help me think about it? And Mike said, no, I can't help you think about that, but I'll help you think about selling it to Goldman Sachs. And so that wasn't on our radar screen, but that was something we would do last year. Innovator popped up because Bruce Bond decided they were going to sell the business. And so we knew we were looking for something that could accelerate our position in active ETFs.

And so when we heard that was happening, we were ready. We had done work. We were ready to say this fits some of the things we want to try to do. So you never know what's going to pop up. You can take a long-term strategic view with some bigger things, but it's hard to buy the really good things. But if we could and it fit culturally, we'd certainly think about it, and it's a good place for capital to go if you're making the right decisions.

How real is the concept of having a narrow regulatory window to do strategic deals for you, particularly given that you're G-SIB and that you're Goldman Sachs?

I -- what I would say about that is we have a window at the moment where large financial institutions probably can do -- can do some things. The kinds of things we're talking about in Asset and Wealth Management, I don't think are things that in most environments, you wouldn't be able to do. I think there's a general point of view that a firm like Goldman Sachs doing more in asset and wealth management makes the institution more stable, more durable, and there's a regulatory lens that the regulators would like to see that.

That's very different than a G-SIB buying a large regional bank. That's very different than G-SIB to G-SIB consolidation. Those are things that I think will always have regulatory headwinds. There might be some windows when you can and some windows when you can't. But the stuff we're focused on, generally speaking, the regulatory world says more asset and wealth management, more durability. Those are things that generally in most environments, I can't say in all most environments, you get support for that direction of travel.

So finally, we just have a few minutes. Maybe to close, David, you talked about Goldman Sachs as a growing company, not just a cyclically well-positioned company for 2026, but a growing company.

We're that, too.

Yes.

[indiscernible] well positioned and growing.

So both. That's a good Venn diagram for the stock price. So maybe a few closing remarks on sort of what you want investors to most take away about Goldman in '26 and beyond.

Well, I just -- I think people have its human nature to look through the rearview mirror. And all our experiences, everything that we see is shaped by what we've experienced, okay? And so when looking at our industry, it is human nature to look through the rearview mirror. And even though the rearview mirror has this thing that's 17 years back in the rearview mirror, it was such a thing that it shaped a lot of the lens. These institutions are just very, very different, and we're operating in a different world.

There are enormous scale advantages for the large players in these businesses. And the durability of these businesses has evolved. That does not mean that there can't be environments where there are headwinds to earnings and earnings decline. If we had an economic recession, financial institutions would have headwinds to earnings. There'd also be some countercyclical things or some pro-cyclical things in that environment, too, that would balance some of that.

But these businesses are diverse, durable and have an ability in a growing economy to grow more than historically, I think they've been credited with. And I think the earnings, which are significant, I think investors are coming around to a point of view that the historic multiples are too low based on the earnings durability of these businesses now. And I think there's an opportunity to continue to grow these franchises. The world is going to -- I'm in the camp, the world is going to grow. The United States is going to grow.

Our firm, our business is definitely more correlated to the U.S. than the world, but we're correlated to growth in the world, too. And the opportunity set for us to deploy our services and our resources against our clients with that growth will allow us to continue to grow the firm. And if we grow the firm, we will grow earnings. And I just think we're well positioned to continue to do that on a relative basis, well, and so we're very focused on that. We understand our job is to grow earnings for shareholders. We're very focused on that. We're good, nimble deployers of capital. And I see lots of opportunities. And there'll be ups and downs, but I think the firm is just very well positioned in the things that we do to continue to grow and deliver for shareholders.

Well, David, that was an invigorating start to the day. So I appreciate the chat. Thank you for joining us.

Thank you for having me. Appreciate it.

Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs Fourth Quarter 2025 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. This audio cast is copyrighted material of Goldman Sachs Group, Inc. and may not be duplicated, reproduced or rebroadcast without consent.

This call is being recorded today, January 15, 2026.

I will now turn the call over to Chairman and Chief Executive Officer, David Solomon; and Chief Financial Officer, Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Thank you, operator. Good morning, everyone. Thank you all for joining us.

I'm very pleased with our strong performance in the fourth quarter, where we generated earnings per share of $14.01, an ROE of 16% and an ROTE of 17.1%. For the full year, we delivered earnings per share of $51.32, a 27% increase versus last year, an ROE of 15% and an ROTE of 16%.

Before we review our financials in detail, I want to discuss our longer-term performance and provide an update to you on our strategy. Beginning on Page 1. In 2020, we held the firm's first Investor Day and laid out a clear and comprehensive strategy to grow and strengthen the firm. We also set a number of targets so we would be held accountable for our progress. Since then, guided by our purpose to be the most exceptional financial institution in the world, supported by our core values of client service, integrity, partnership and excellence, we continue to successfully execute on this strategy.

We increased firm-wide revenues by roughly 60%. We grew EPS by 144%. We improved our returns by 500 basis points. And we delivered a total shareholder return of over 340%, the most of our peer group over this time frame.

As you can see on Page 2, we achieved this while also materially improving the risk profile of the firm and enhancing the resilience of our earnings. We have doubled our more durable revenues. We have reduced historical principal investments by over 90%, from roughly $64 billion down to $6 billion.

The results of these multiyear efforts to scale capital-light businesses and reduce our capital intensity were reflected in our most recent CCAR stress test, where we've driven a 320 basis point improvement in our stress capital buffer. All in, we have strengthened and grown the firm through a relentless focus on delivering excellence to our clients.

Turning to Page 3. I want to highlight our strong execution in 2025. Our success is fueled by our world-class interconnected franchises that deliver One Goldman Sachs to our clients around the globe. In Global Banking & Markets, we maintained our position as the #1 M&A adviser in investment banking and #1 equities franchise alongside our leading position in FICC. We improved our standing with the top 150 clients in these businesses, which has contributed to 350 basis points of wallet share gains in GBM since 2019. We significantly increased our more durable FICC and equity financing revenues, which grew to a new record of $11.4 billion for the year and generated returns in excess of 16% in the segment.

In Asset & Wealth Management, we are a top 5 active asset manager, a leading alternatives franchise and a premier ultra-high net worth wealth manager. We've consistently grown more durable management other fees in private banking and lending revenues, which were both records in 2025, and also raised a record $115 billion in alternatives. Our strong execution has led to improvement in both the margins and the returns in this segment.

Importantly, we're taking the final steps needed to narrow our strategic focus. In addition to completing the transition of the General Motors credit card program last August, last week, we announced an agreement to transition the Apple Card portfolio.

Let's turn to Page 4 for a deeper dive on our franchises, starting with investment banking, where we have been the #1 M&A adviser for 23 consecutive years. Very few, if any, service businesses of our size can claim long-standing leadership to this degree. This is a reflection of the strength of our client relationships as well as the quality of our people and the advice and execution capabilities they bring to our clients.

Since 2020, we've generated an incremental $5 billion in advisory revenues versus the #2 competitor. And in 2025 alone, we've advised on more than $1.6 trillion of announced M&A transaction volumes, over $250 billion ahead of the next closest peer. Over the last year, we've seen high levels of client engagement across our investment banking franchise, and we expect the activity to accelerate in 2026.

Our outlook is supported by a number of catalysts: corporate focus on strategically positioning scale and innovation; the tremendous public and private capital fueling growth in AI; as well as a strong pickup in sponsor activity. Given our best-in-class sponsor franchise, we are especially well positioned to help sponsors deploy the $1 trillion of dry powder they hold and monetize the roughly $4 trillion of value across their portfolio of companies. Increased levels of engagement are reflected in our backlog, which stands at its highest level in 4 years.

M&A transactions often kick off a flywheel of activity across our entire franchise, whether it's acquisition financing, hedging activity, secondary market making or investing opportunities for our AWM clients, it is unquestionable that there is a significant multiplier effect. And as the #1 adviser for over 2 decades, we are uniquely positioned to capture the significant forward opportunity.

Moving to Page 5. Another growth engine for GBM has been our leading origination and financing businesses. Last year, we announced the creation of the Capital Solutions Group, formalizing a hub to provide our clients a comprehensive suite of financing origination, structuring and risk management offerings across both public and private markets. On the public side, we are optimistic about the outlook for equity debt underwriting, particularly amid the resurgence in the IPO market and a higher acquisition finance-related activity where we have a long-standing track record and leading market positions.

On the private side, our ability to structure holistic solutions has led to a number of asset-backed financings across infrastructure, transportation and data centers, supported by strong origination, structuring, the feed opportunities across our client franchise and our asset management platform. These capabilities have supported our deliberate strategy to grow our more durable financing revenues, providing a ballast to our results and comprising 37% of total FICC and equity revenues in 2025. Since 2021, these have increased at a 17% CAGR. And with risk management always top of mind, we still expect to prudently drive growth from here.

On Page 6, we illustrate the strength and resilience of the FICC and equities intermediation businesses, we have demonstrated -- where we have a demonstrated ability to deliver strong results in a broad array of market environments. While client activity levels in different asset classes ebb and flow in any given quarter, our overall results have been remarkably consistent over time. This reflects the breadth and diversification of these businesses, which have been bolstered by our share gains.

We see even more opportunities to further strengthen our franchise. This includes investing to improve our market-making capabilities and broaden offerings for active and passive ETF issuers. In addition, we are working to close share gaps with key client segments, including insurers, wealth managers and RIAs, as well as in certain product areas like corporate derivatives. Geographically, we are looking to close the share gap in Asia, in part by focusing on these areas.

Turning to Page 7. Our scaled Asset & Wealth Management business has $3.6 trillion in assets under supervision with global breadth and depth across products and solutions. We've grown more durable revenues across management and other fees in private banking and lending at a 12% CAGR, ahead of our target, and we continue to see significant opportunities across wealth management, alternatives and solutions.

We have also improved our AWM margins and returns. And given our growth outlook across these businesses, we are setting new targets. We are increasing our pretax margin to 30% -- pretax margin target to 30%, which will help drive high-teen returns in AWM over the medium term.

Let's dive deeper into our key growth opportunities, starting with wealth management on Page 8. Over the last 50 years, we have built a premier franchise with $1.9 trillion in client assets that is centered around meeting the distinct investing, planning and borrowing needs of the ultra-high net worth individuals, family offices, endowments and foundations. Over the last 5 years, we drove long-term fee-based inflows at an annual pace of 6% and grew wealth management revenues at a CAGR of 11%.

And we expect further growth from here. Specifically, we are broadening our client base by increasing the number of advisers, content specialists globally. We are expanding our loan product offerings in line with client demand. We are enhancing alternative investment offerings to facilitate clients moving closer to their optimal target allocations, and continuing -- we are continuing elevating the overall client experience, including via enhanced digital offerings and more expansive thought leadership engagements that lever the convening power of Goldman Sachs.

To sharpen our focus on future growth in wealth management, we are introducing a new target of 5% long-term fee-based net inflows annually across the platform.

On Page 9, we highlight our other key growth opportunities in Asset & Wealth Management: alternatives and solutions. We have a leading alternatives platform where we've raised $438 billion since our 2020 Investor Day, and we have grown alternatives management and other fees to a record $2.4 billion. We continue to scale our flagship fund programs while concurrently developing new strategies. Given our success in strengthening and growing our alternative platforms, we believe we can raise between $75 million and $100 billion annually on a sustainable basis. As these funds continue to be deployed, we expect double-digit growth in alternative management and other fees.

We expect fee-paying alternative assets under supervision to reach $750 billion by 2030. This further supports our existing target of generating $1 billion in incentive fees annually.

We are also pleased with the progress across our solutions business, where we see secular growth in demand for our products and services. We are the #1 outsourced CIO manager in the U.S., providing clients a one-stop shop for their investment needs: advice, portfolio construction, risk management and hedging. And we've run significant global mandates this year from firms including Eli Lilly and Shell. We are also the #1 separately managed account platform and the second largest insurance solutions provider.

Looking forward, we see continued opportunities for growth, including the third-party wealth in the context of alternatives offerings, ETFs and customized solutions like direct indexing. In addition, we are expanding our capabilities in the retirement channel via partnerships, further deepening our strong relationships with insurers and enhancing our offerings for institutional clients, including sovereign wealth funds.

Turning to Page 10. Building on our strong organic growth, we are accelerating our growth trajectory in Asset & Wealth Management through our recent strategic partnerships and acquisitions. Our collaboration with T. Rowe Price will deliver a range of public private market solutions for retirement and wealth investors. Last month, we announced the launch of co-branded model portfolios, the first of 4 planned product offerings.

We recently closed the acquisition of Industry Venture, a venture capital platform that adds an attractive technology investment capability to our market-leading secondaries investing franchise, XIG, where we now have over $500 billion in assets under supervision. Recently, we announced the acquisition of Innovator, which significantly scales our businesses to be in the top 10 of active ETF providers globally, particularly in the fast-growing outcome-based ETF segment. While the bar for transformational M&A remains very high, we will continue to look for ways to accelerate growth in Asset & Wealth Management.

Turning to Page 11. We have a long history of prudent and dynamic capital management, and our philosophy remains unchanged. We prioritize investing across our client franchises at attractive returns, sustainably growing our dividend and returning excess capital to shareholders in the form of buybacks.

We see meaningful opportunities to deploy capital across our franchise. This includes leaning into acquisition financing as M&A activity accelerates, supporting growth in equities and FICC financing and increasing lending to our ultra high net worth clients. That said, given our strong earnings generation capability and excess capital position, we also have capacity to return more capital to shareholders. Today, we are announcing a $0.50 increase in our quarterly dividend to $4.50, representing a 50% increase from a year ago. In addition, we have $32 billion of remaining buyback capacity under our current share repurchase authorization. And while we are mindful of our current stock price, we will remain dynamic in executing repurchases.

Turning to Page 12. As we continue to grow the firm and strategically deploy our balance sheet to support client activity, our unwavering focus remains on maintaining a disciplined risk management framework and robust standards. We've been on a multiyear journey to diversify our funding footprint, including building strategic deposit-raising channels such as private banking, markets and transaction banking. This has significantly improved our funding structure. Our deposits have grown to $501 billion and now represent roughly 40% of our total funding. We continue to optimize activity in our bank entity, which held 35% of firm-wide assets at year-end versus 25% at the time of our first Investor Day. Overall, this progress underscores our commitment to the diversification and resiliency of our funding profile, which has improved our funding costs and our financial flexibility.

All in, our robust capital position, diversified funding mix, dynamic liquidity management and strong risk discipline are foundational to the strength and stability of our balance sheet, allowing us to meet the evolving demands of our clients.

Moving to Page 13. Last quarter, we announced the One Goldman Sachs 3.0 -- we announced the launch of One Goldman Sachs 3.0, our new operating model propelled by [indiscernible] AI. We are excited to embark on this effort, starting with 6 work streams we identified as ripe for disruption. Our people have begun thorough assessments of opportunities for efficiency, and we will then invest to reengineer these processes from the ground up. We will be measuring and driving accountability, and we will update you over the coming year with additional details regarding these metrics.

Let's turn to Page 14. The exceptional service we provide our clients is a direct result of our people, who are our most important assets. Our client franchise is powered by our best-in-class talent and culture, and it is critical that we continue to invest in them. Goldman Sachs is an aspirational brand around the globe, which allows us to attract quality talent at all levels. As an example, in 2025, we had over 1.1 million experienced hire applications, a 33% increase from last year. And in our summer internship program, we maintained a selection rate of less than 1%.

Many of the individuals will have long careers at the firm, exemplified by the fact that roughly 45% of our partners started as campus hires. And while some leave for opportunities elsewhere, these firms often become important clients to Goldman Sachs. Today, more than 650 of our alumni are in C-suite roles at companies with either a market cap greater than $1 billion or assets under management greater than $5 billion.

On Page 15, we outlined our firm-wide through-the-cycle targets. Given the successful execution against our strategic priorities, we are confident that we will continue to deliver on these, and in the near term, we believe there are catalysts that position us to exceed our return targets. We have the #1 advisory -- we are the #1 M&A adviser within our leading Global Banking & Markets franchise that is poised to capitalize on a cyclical upswing in investment banking activity, a scaled Asset & Wealth Management business with higher margin and return targets and clear opportunities for future growth, and tailwinds from a more balanced regulatory regime.

In closing, I am incredibly proud of what we have delivered and I'm confident that we will continue to serve our clients with excellence and drive strong returns for our shareholders. Let me now turn it over to Denis to cover our financial results in more detail.

Thank you, David, and good morning. Let's start with our results on Page 16 of the presentation. In the fourth quarter, we generated revenues of $13.5 billion, earnings per share of $14.01, an ROE of 16% and an ROTE of 17.1%. For the full year, we delivered earnings per share of $51.32, a 27% increase versus last year; an ROE of 15% and an ROTE of 16%, improving 230 and 250 basis points, respectively, compared to 2024.

As David mentioned, we announced an agreement to transition the Apple Card portfolio. For the quarter, the transition had a net positive impact of $0.46 to EPS and 50 basis points to ROE as a $2.3 billion revenue reduction was more than offset by a $2.5 billion reserve release upon moving the portfolio to held for sale. Given that we are taking our final steps to narrow our strategic focus, you will have seen we implemented minor organizational changes and made corresponding updates to our segments, which are incorporated in our earnings presentation today.

Turning to results by segment. Starting on Page 18, Global Banking & Markets produced record revenues of $41.5 billion for the year, up 18% amid broad-based strength versus last year. In the fourth quarter, investment banking fees of $2.6 billion rose 25% year-over-year driven by increases in each of advisory, debt underwriting and equity underwriting. For 2025, we maintained our #1 position in the league tables for announced and completed M&A and also ranked first in leverage lending. We ranked third in equity underwriting and second in common stock offerings, convertibles and high-yield offerings.

Even with very strong accruals in the fourth quarter, our investment banking backlog rose for a seventh consecutive quarter to a 4-year high, primarily driven by advisers. As David mentioned, we are optimistic on the investment banking outlook for 2026 and the multiplier effect this activity has across our franchise.

FICC net revenues were $3.1 billion in the quarter, up 12% year-over-year. In intermediation, the 15% year-over-year increase was driven by rates and commodities. And in financing, revenues rose 7% to a new record on better results within mortgages and structured lending.

Equities net revenues were $4.3 billion in the quarter. Equities intermediation revenues were $2.2 billion, up 11% year-over-year on better performance in derivatives. Equities financing results hit a quarterly record of $2.1 billion, up 42% versus the prior year amid record average balances in prime. For the full year, total equities net revenues were a record $16.5 billion, surpassing last year's record by over $3 billion, helped by the multiyear investments we've made in this business.

Moving to Asset & Wealth Management on Page 20. For 2025, revenues were $16.7 billion and our pretax margin was [ 25% ]. Segment ROE for the year was 12.5% and in the mid-teens when adjusted for the 230 basis points impact from HPI and its related equity as well as the FDIC special assessment phase.

In the quarter, management and other fees were a record $3.1 billion, up 5% sequentially and 10% year-over-year. Private Banking and lending revenues rose 5% year-over-year to $776 million as higher results for lending and deposits related to wealth management clients were partially offset by NIM compression in the Markets deposit portfolio. Incentive fees for the quarter were $181 million, bringing our full year incentive fees to $489 million, up 24% versus the prior year. We expect to make further progress in 2026 towards our annual target of $1 billion.

Now moving to Page 21. Total assets under supervision ended the quarter at a record $3.6 trillion, driven by $66 billion of long-term fee-based net inflows across asset classes and $50 billion of liquidity inflows. In conjunction with our new long-term fee-based inflow target in wealth management, we are providing enhanced disclosures outlining inflows and long-term AUS by channel.

Turning to Page 22 on alternatives. Alternative AUS totaled $420 billion at the end of the fourth quarter, driving $645 million in management and other fees. Gross third-party fundraising was $45 billion in the fourth quarter and $115 billion for the year.

Moving to Page 24. Our total loan portfolio at quarter-end was $238 billion, up sequentially, reflecting higher collateralized lending balances. Provision for credit losses reflected a net benefit of $2.1 billion, including the previously mentioned reserve release associated with the Apple Card portfolio.

Let's turn to expenses on Page 25. Total operating expenses for the year were $37.5 billion. Compensation expenses were $18.9 billion, that included $250 million of severance costs, driving a full year compensation ratio net of provisions of 31.8%. Full year noncompensation costs of $18.6 billion were up 9% year-over-year, driven primarily by higher transaction-based activity.

While the operating environment for our businesses continues to improve, we remain committed to our key strategic priority of operating more efficiently and are maintaining a rigorous focus on advancing our productivity and efficiency initiatives as part of One Goldman Sachs 3.0.

Our effective tax rate for 2025 was 21.4%. For 2026, we expect a tax rate of approximately 20%.

Next, capital on Slide 26. Our common equity Tier 1 ratio was 14.4% at the end of the fourth quarter under the standardized approach. In the fourth quarter, we returned approximately $4.2 billion to common shareholders, including common stock repurchases of $3 billion and dividends of $1.2 billion.

In conclusion, our strong performance this year reflects the strength of our client franchise and our multiyear execution on our strategic priorities. We see a highly constructive setup for 2026 as the improving investment banking environment and our deep client connectivity position us to capture significant opportunities across the entire firm. At the same time, we remain mindful that the operating environment can shift quickly. Economic growth, policy uncertainty, geopolitical developments and market volatility are factors we continue to monitor closely. And as always, disciplined risk management will remain central to how we serve clients and allocate resources.

Even so, with solid momentum and growth opportunities across our businesses, we are optimistic on the forward outlook for Goldman Sachs and remain confident in our ability to deliver for clients and drive strong returns for shareholders. With that, we will now open up the line for questions.

[Operator Instructions] We will take our first question from Glenn Schorr with Evercore.

Great thoughts and detail in there. One narrow one first. I guess I'll ask it simply. How do you plan to scale wealth from here? And I want to include in that, if you could, your aspirations, meaning we had a little experiment with United Capital, but like you're amazing in ultra-high net worth, and I'm curious about the rest of wealth. You've done a couple of things in RIA land. So maybe we could talk about that and then zoom out after that.

Sure. And I appreciate the question, Glenn. I think our ultra-high net worth franchise is extraordinary. I think we have a leading position here in the United States, strong position but, obviously, with room for more share in footprint in Europe and in Asia. But I think it's a highly differentiated offering for wealthy individuals and people that have very, very complex needs from a wealth perspective. .

That business scales with people, you heard -- and technology. But you heard in our remarks that we're continuing to invest in broadening the footprint and the coverage available on the resources to expand that ultra-high net worth footprint.

As you point out, we did do an experiment with United Capital, but we've reached the conclusion that the right way for us, given our manufacturing capability in asset management to really explore broader access to wealth is through third-party wealth channels. And so I think you know we're making very significant investments in our third-party wealth capability. That includes partnerships with RIAs and footprint with RIAs. And we have great product manufacturing capability. We can use others' distribution very, very effectively given our brand and our very, very complete a diverse product offering, and that will help us continue to scale.

But in direct full-service wealth, we're going to stick with ultra-high net worth wealth. And what's interesting is, obviously, you've got a bunch of secular things going on that are growing the available people that need these services. You have a huge generation of wealth transfer that's going on that's bringing a whole new generation in these services, and it's a very fragmented business, and we think we have a very differentiated offering with lots of upside. And look, you heard what we said about our capabilities in wealth, and our target is to continue to grow those long-term fee-based wealth assets by 5% as we go forward.

I appreciate all that, David. Bigger picture, obviously, really strong results, good backdrop. Middle of the range despite all these strong results, because I think there's mixed operating leverage where people always want more operating leverage during big market peaks. So I'm going to flip the comment around and just to ask, what's your level of confidence you've raised the floor with everything that you've laid out and everything you've executed on? Because in the past when markets pull back off highs, returns for you and others would drift back to the like low double digits and sometimes a little bit lower, but like I guess I'm curious on how much you think, with all that progress you've built, how much have you raised the floor?

I think we've raised the floor -- I think we've raised the floor meaningfully based on the work we've done, the growth that we've done. In particular, the growth of durable revenues, which will be less effective, less effective, not not effective, but less effective, if we get into some sort of a downturn or a more challenging environment. If you step back to our Investor Day, the firm's returns in the 10 years before our Investor Day averaged 9-and-change percent. And so I think we now are operating with a Global Banking & Markets franchise that should run mid-teens through the cycle. That doesn't mean you couldn't get a very tough environment where it runs lower, but you can also get environments, and this is part of what we've said about 2026, where it has the potential to run higher. But I think we've uplifted the floor very significantly.

Now of course, in very severe downturns, it slows down activity, it impedes confidence. But I just think the firm is bigger, more diversified, much more durable and better positioned when we have that kind of environment than we've been before. I'm not going to predict the future and I know it's not a straight line, but I think we've uplifted it very materially.

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

I guess maybe just sticking with the -- [ through-cycle ] ROE, David, maybe the other end of the spectrum, when I talk to investors, just given where the stock is trading, given the performance you had, and 2 structural things seem to be happening at Goldman Sachs. One is, obviously, the regulatory backdrop changing is creating more capital flex, and the productivity focus that you had doubled down with the Goldman Sachs 3.0, is it fair for a shareholder to assume that, absent like big, big peaks and troughs, that the business is rebasing to maybe something better than mid-teens returns towards closer to high teens? Or is that sort of misplaced and misunderstanding kind of the business dynamics?

I appreciate the question. And look, our goal is going to continue to be to work very, very hard to do everything we can to continue to take the returns higher. We were very pointed in our comments on the last slide in that presentation that we're reaffirming our mid-teens target. I certainly remember it is not that many quarters ago where many people on this call would ask questions about how we will get to mid-teens. So we've arrived. I think we were pointed saying this is an environment where the potential to be positioned to exceed targets in the near term is there. But as the previous set of questions just pointed out, there'll be other environments where there could be headwinds.

So I think we're very comfortable that we are operating as a mid-teens firm. We think that we can do things that, over time, will drive upside to that. But we're not going to set targets until we're very comfortable that we further elevated the firm.

I think one of the most important things coming out of the presentation is the next step in our asset wealth management journey to tell you that given the work we've done and the progress we've made, we now have more confidence that we can operate that business at a higher margin, 30%, which drives a higher return. And so we're comfortable putting that target out. And that, of course, elevates the overall performance of the firm.

The other thing I just want to highlight, that comes out of your comment, is people think about the regulatory environment as changing the capital rules and giving us more capital flexibility. But I'd also highlight the regulatory environment over the last 5 years put costs and burdens on the firm that we now won't have going forward that actually gives us flexibility to invest over time in other things that drive growth. So it's not just the capital stuff that's important; it's also the fact that we and others in the industry were burdened by additional costs that now can be directed to what I'd call more productive growth and return for our clients and for our shareholders.

That's great. And I guess maybe a second one just on capital deployment. So it's very clear the bar for M&A is high. But when you think about the stock valuation today, the regulatory backdrop, there is a cycle or an environment where there is room to do something transformational. Just give us a sense in terms of, do you see this as the right time or, if the right opportunity presents itself, to do something that would shift the mix, boost the mix of AWM business a lot more? Or do you think that's kind of anti Goldman's DNA to do something that would be too large a transformational?

I appreciate the question, Ebrahim, but I'm going to be very consistent with what I've said multiple times with this question. We very -- we feel very good about what we did in 2025, the T. Rowe partnership and the 2 small acquisitions. They fill in gaps, they accelerate our journey in Asset & Wealth Management.

But the bar for doing something significant and transformational is very, very high. And it has to be. One, because there are very few really, really great, large businesses. Most of them are not for sale available. And I think the cultural aspects of Goldman Sachs and what makes Goldman Sachs unique and different, there has to be a tremendous sensitivity to integrating businesses into it to make sure that Goldman Sachs can continue to be Goldman Sachs.

And so I won't say that we don't look at those things and think about those things, but really my key message is the bar is very high. I do think that we will see other things like the things that we've done that can accelerate our journey and, therefore, increase the growth trajectory of the Asset & Wealth Management business.

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

I hate framing this question this way, but I can't think of a better way to frame it. In terms of the capital market cycle ahead, what inning are we in? And as investors think about the scale of potential upside to Goldman, maybe compare and contrast the preconditions that you see for the capital markets backdrop in 2026 with 2021. And I'm only asking this question as investors try to think about the EPS potential of your company, and I think 2021 is sort of seen as like a ceiling in terms of what you could produce in this business.

I'll give you a couple of things, Erika, to think about, and I appreciate the question. The first thing I'd just say as a student of these businesses for decades and decades and decades I would bet you that 2021 is not the ceiling. That doesn't mean that in this cycle we surpass 2021, because things can change and things can go wrong. But this business, when you go back and you step out and you look over 25, 30 years, there's not a ceiling that hasn't been exceeded at some point down the road as you run through cycles. And I'm sure, given the growth in market capital world and activity, the 2021 activity levels will be exceeded again.

They might be exceeded in 2026. There was a slide that my team was showing me that shows a range of outcomes, including a conservative outcome for M&A, a base outcome for M&A and a bull outcome for M&A. And the base outcome is pretty close to 2021 and the bull outcome is ahead of 2021. I think the world is set up at the moment to be incredibly constructive in 2026 for M&A and capital markets activity. And I think the likely scenario is it is a very, very good year for M&A and capital markets activity.

What could change that? Something could go on in the world, some sort of an exogenous event or a macro event that changes the sentiment. If you look at 2025, we saw that in April for a period of time and things got slowed down. I don't think that's the likely outcome, but it's certainly in the distribution as a possibility. But I do think that we are not yet in the middle of the potential for a full-on M&A and sponsor cycle. And I think over the next few years, barring some sort of an exogenous event that slows it down, we're going to have a pretty constructive environment for those activities given the combination of fiscal, monetary, capital investment, deregulatory stimulus, you've got this combination of stimulus activity that I think is pretty constructive for these businesses.

Erika, a couple of things I'd add on just to supplement everything David said. If you look at sort of industry-wide volumes in the various categories of investment banking activities, compare it the last 5 years, a number of them have started to trend above the average level. One that's decidedly below the averages remains the IPO business for equities. That's a lucrative business that we have a very long-standing leadership position in.

And it's also the case that while some of the debt activities have been trending up in terms of overall volumes, we still haven't seen enormous volumes of sponsor capital committed deals or large cap capital committed investment-grade activity. So there still remains other types of transaction activity as we progress through the cycle that is very strategic to clients, things that Goldman Sachs is very good at executing, that could further propel upside across the capital markets line items.

Great. And just the follow-up question is, I really appreciate how you laid out your internal opportunities to deploy the capital, your excess capital, which is so much, right? If you take into account the excess, your buffer and potentially the redefinition of that capital. As we think about a year where -- you talked about the cap markets, your ability to organically generate capital is also best-in-class, how do we think about how that buyback fits in? I appreciate your prepared remarks that if you're going to be opportunistic. You did $12 billion in '26, but it seems like you have plenty of room to meet or exceed that and check off your wish list. Is that the right way to think about it?

Sure, Erika. So I'll quickly give you our standard answer on the prioritization of the deployment of capital, and that remains unchanged, as Dave said. And that's what we'll focus on, first and foremost. But to get to your buyback question. Given the degree of excess capital that we sit with today and our expectation that we'll continue to generate capital over the course of the next year, buybacks remain an important tool in our toolkit. Over the long term, you will notice that Goldman Sachs has reduced its share count quite significantly and quite sustainably, and it gives us leverage to continue to generate EPS growth.

So like anyone, we are mindful of the price at which our equity is trading, but we're also trying to take a strategic long-term approach to, first and foremost, fuel the franchise to support client activity, but also drive returns for shareholders over multiple years. So buybacks will continue to feature as an important part of our capital deployment strategy.

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

Just continuing on this theme, I wanted to understand a little bit about how the equities markets revenues and the fixed income revenues are aligned with the issuance calendar. Just wondering how much of the issuance that's going on is helping those 2 line items as well? Or is issuance all within banking?

So thank you for the question, Betsy. I'm not sure I understood the very last tail end of your question, but maybe I'll start off answering it and then you can redirect me. I think across our FICC and equity businesses, we obviously have a very diversified portfolio of activities, both intermediation and financing. Even with intermediation, diversified by asset class, by cash, derivatives and equities. And I think there are contributions that the primary market activity makes to enhance the overall liquidity provision, secondary market making opportunity set.

But my own view is that we'll continue to see an increase in the overall level of capital markets activity. And if that pulls through as well as we hope and expect, that should catalyze incremental levels of activity across intermediation activities as investors even more dynamically work to assess their existing secondary market portfolio versus "making room for primary," et cetera. So I think there remains opportunity in that front as we move into 2026.

And then you mentioned that your backlog today is the highest in 4 years. Maybe we could just ask you to unpack a little bit. There's a lot of different backlog. So would you mind going through what you're anticipating getting on released into production, so to speak, as we go through '26?

Sure. So the way -- we report our backlog consistently each and every quarter, so there's no change to the way we're reporting that. It's comprised of our advisory activities, our debt underwriting, our equity underwriting. We're very, very deliberate in our disclosures each and every quarter to highlight if the deltas in the backlog have particular drivers.

In this particular case, we say a couple of things. We say its seventh consecutive quarter. It's the highest in 4 years, one of the highest levels ever. It is a large level of backlog. And we make that point because, obviously, the results that we just delivered in Q4 and for full year 2025 were very strong. But the indication is that not only have we delivered those results, but more than replenished those results. And so that is what's giving us the confidence.

And then all of David's comments that he made with respect to the flywheel and the catalyzing of activity, because the growth in the backlog is driven by advisory, we're also trying to give our investors the sense that that could in turn drive other pieces of activity across the firm, other types of activity that doesn't get registered in backlog and doesn't lend itself to that type of reporting metric. So that's sort of our orientation and that's what I would offer up to help you get the insight on why we're putting that out there and highlighting it.

We'll take our next question from Brennan Hawken with BMO.

First of all, sort of great timing on the Apple Card deal. I mean that's announced a week before we get the tweet on the limits. I mean I couldn't help but chuckle about that. I'd love to hear about -- obviously, you've got a long pathway to close, 24 months and then it closes. But could you help us maybe understand the right way we should be thinking about like platforms run rate after it closes, and then whether or not there's any operating expenses given this is your last card exit that might be running off? And what are the plans for the deposits, the Apple deposits, that may not have been reflected in the announcement?

Sure. Brennan, thank you for the question. Thank you for the observation. The same thing occurred to us. So thinking about Platform Solutions on the forward, it's really comprised, the vast majority of it is the Apple Card business and the savings program. The loans are now obviously in a fair value standpoint from an accounting perspective, so they're mark-to-market. The performance contributors will obviously be NII, charge-offs, operating expenses, et cetera.

I think we'd observed from a seasonality perspective and across the balance of the year perspective the same dynamics we've observed over the last couple of years with the portfolio, where the first quarter is typically stronger in terms of reflecting paydown of balances and things like that, which then, generally speaking, grow over the balance of the year. When you put that all together, our expectation is we'll have a small pretax loss for the year in the segment, but nothing that's material for Goldman Sachs.

You asked also, Brennan, about -- you asked also about savings. I just wanted to comment on this. So there currently is no agreement to transition the savings program. We're going to continue to service and maintain our existing Apple Savings customers, and we're going to continue to offer them high-yield savings accounts as Apple Card users. And users should expect that this service will be seamless, it will be uninterrupted and they'll continue to earn the same competitive rate they've been getting on the Savings, and it's attractive to us.

Obviously, we are very focused on the transition of the card, and there's a lot of work to do over the next 24 months to transition of the card. But at some point in the future, we will expect to have additional conversations about the future of Apple Savings. As we've mentioned, our deposits are diversified in tenor and channel, and that remains true even if we excluded Apple Savings deposits, they're just a small fraction of the deposits. But at this point, there have been no discussions about the Savings plan.

Got it. For my follow-up, so one of the sort of debate points this morning with investors was on the efficiency ratio and how things looked year-over-year. Now of course, you have to adjust for the revenue impact of the Apple Card announcement. And I might be doing the math wrong, but -- so correct me if that's the case. But when I do make that adjustment, it looks like there's a negative year-over-year impact on the efficiency ratio, like it was -- the efficiency ratio was stronger last fourth quarter versus this fourth quarter. Is my math right? And if so, could you speak to maybe what some of the factors were that prevented greater operating leverage, and how we should think about operating leverage going forward?

Sure, Brennan. I'll start with that. So first, thank you for observing correctly that the efficiency ratio is one of those places where based on the accounting for the Apple Card transition, it goes in the opposite direction versus our intention and the trajectory that we've been on. So that does explain why it's going in that direction based on the reduction to revenues.

But you need to look at the efficiency ratio on a full year basis. There have been some other things I've seen where people are looking at quarter -- year-over-year fourth quarter operating expenses or efficiency. Given the way that we manage compensation and noncompensation expenses over the course of the full year, you need to look at that sort of in totality. And in this particular, when you do that for the year-over-year fourth quarter look, in this particular year, it looks like you have a significant increase in operating expenses. But when you step back and look at the full year performance, it's very clear that the firm delivered significant operating leverage. Obviously, we have reported revs at plus 9%, we have pretax at plus 19% and we have EPS at 27%. And so you have to sort of step back, take account of the provision release and look at the full year results.

The fourth quarter year-over-year, the only thing I'd add, the fourth quarter year-over-year was affected by the way we accrued comp last year and the way we accrued comp this year and the revenues in the quarter. And so you can't look at the fourth quarter year-over-year. To Denis' point, you have to look at the year.

We'll take our next question from Mike Mayo with Wells Fargo Securities.

I guess it's an exciting time. This is a new era for Goldman Sachs, Goldman Sachs 3.0. And you're redesigning the whole firm around AI, so that could be very exciting. But I'm looking through the output that you're looking for from this. I know it's early days. But whenever I ask about AI, it's always answers at a 10,000-foot level. Like it's transformational, it's a game changer, it's a super power. We all get that. But what are you hoping to achieve? Like this decade, your revenues are up 2/3, your head count is up 1/4. So that's one way maybe you could frame the output that you like to achieve. But how much more in revenues, how much more efficiency? Can you put some meat on the bones?

I appreciate the question, Mike, and I appreciate the way you frame it, and I understand why there's a strong desire to get more from us. And what I promise you is you're going to get more over time as we're in a position to give you metrics, to give you targets and to really explain it.

I want to step back at a high level. Just the one thing that I'd say, and I'd frame it slightly differently than you'd frame it, this is not a new era for Goldman Sachs, One GS 3.0. We're not going to transform the whole firm with we are focused on our 2 core businesses, driving growth in our 2 core businesses and both, I think, incredibly well positioned and positioned to win.

AI and the technology is an opportunity for us to drive productivity and efficiency in the organization, and we are very, very focused on it, because it will add to our capacity to invest in growth in the business. At a high level, and I think I talked about this a little bit before, there are 2 things that I would focus on. One, we have very smart, very productive people, and you can give them these models, these tools, these applications, you can put them in their hands, and they're very good at playing with them and figuring out how on a day-to-day basis they can use these tools to make themselves more productive, to do more, to affect our clients more. And we're pretty good at that. We put technology in their hands for decades. They're pretty good taking that technology and figuring out how to use it. And that is going on and there is progress in that.

The thing you're talking about is our ability to really, in the enterprise, deploy the technology to reimagine operating processes and create real efficiency. And we think there is an ability to do that on a basis that would be meaningful and significant for Goldman Sachs. It's not just to take cost out, but it's also to free up capacity to invest in other areas where we see growth opportunities that we've been a little bit constrained.

I talked about wealth management because somebody asked the question and our desire to put more feet on the ground to broaden our footprint and our platform, we would like to do more of that this year than we're doing but we're constrained because we're also trying to balance and deliver returns. If we can remake processes and create more operating efficiency and flexibility, that will free up more capacity from an efficiency perspective to invest in these growth areas.

To change operating processes in the firm, and we've identified 6 specific processes that we're attacking, takes an enormous amount of work to bring people along. We started doing this in the fall. We're making good progress. To be honest, I hope to give a little bit more transparency at this earnings call, but we don't have the full confidence to put information out publicly. But we are committed to giving you more over the course of the next quarters so you can track with us the efficiency progress and how we're deploying that progress into the business. And so we'll continue to keep you posted as we do it. But I think it's meaningful, but for the moment, it's focused on 6 distinct processes.

And just as one follow-up, if we were to look at 1 metric for progress 5 years from now, would that be like revenues per employee? Would that be efficiency? Would it be headcount? Or how do you think about that?

Well, if you look out 5 years from now, I think this technology -- and I think this has to be put in the lens of a journey that a firm like ours has been on for decades. I mean I joined Goldman Sachs in 1999 on a revenue per employee basis. I mean you pointed out a revenue per employee metric over the last 5 years, you go back and you look at 25 years, the same thing. We continue, our people continue to get more productive. I think the technology and the work we can do in One GS 3.0 creates an ability for us in the next 5 years to accelerate the pace of that once again. And so that is a metric, but I don't think the only metric.

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

So David, there have been a number of significant developments in the area of market structure, whether it's tokenization, the recent expansion of prediction markets. You guys are always quite front-footed when it comes to innovation. And I was hoping you could speak to how you're evaluating some of these emerging opportunities within the market structure, tokenization landscape. Where do you see the most compelling opportunities for Goldman and how are you positioning the firm to participate in a more meaningful way?

Yes. So I appreciate the question, Steven. First off, I'll start, I mean, you mentioned 2 things in the both things that we have an enormous number of people in the firm extremely focused on. Tokenization, stablecoins, obviously, there's a lot going on in Washington right now with The Clarity Act. I was actually in Washington on Tuesday speaking to people about things that we think are important to us in the context of framing of that. Obviously, that bill, based on the news over the last 24 hours, has a long way to go before that bill is going to progress. But I do think these innovations are important. I don't think we have to be the leader, but it would not surprise you that we have a big team of people spending a lot of time with senior leadership and doing a lot of work so that we can clearly decide where we're investing and playing and how those technologies can expand or accelerate a variety of our existing businesses and where there are new business opportunities, candidly, around those technologies.

I think the prediction markets are also interesting. I've personally met with the 2 big prediction companies and their leadership in the last 2 weeks and spent a couple of hours with each to learn more about that. We have a team of people here that are spending time with them and are looking at it. When you think about some of these activities, particularly when you look at some of the ones that are CFTC regulated, they look like derivative contract activities. And so I can certainly see opportunities where these cross into our business. And we're very focused on understanding that, understanding the regulatory structure that's going to develop around that, seeing where there are opportunities for us to have capabilities or to partner to serve our clients around these.

I think it's early on both. I think sometimes the -- I think there's a lot of reason to be excited and interested in these things, but the pace of change might not be as quick and as immediate as some of the pundits are talking about in both of these. But I think they're important and real, and we're spending a lot of time.

And just a quick follow-up on the financing opportunity. If I think back 5-plus years ago ahead of the 2020 Investor Day, when you first started talking about the financing opportunity, you noted it was less than 20% of Goldman's trading revenue, it was 40% at some of your larger money center peers and that you were planning to narrow that gap. And if I fast forward to today, you're now approaching that 40% threshold. I was hoping to get your thoughts on how large you think that financing piece can grow over time, and your approach also managing risk against any potential drawdown or deleveraging events within that business.

Yes. No, it's a very good question, Steven, and you're focused on the right thing and so are we. I mean, I think what I would say is over the last 5 years, we've gone from being underweighted given our market footprint and our market shares and our wallet shares to being more closely weighted. I think we've got a little bit of room. But it wouldn't surprise you in the formation of the Capital Solutions Group and thinking about the connectivity between our asset management business and our origination capabilities, we see the potential to basically put a lot of this activity over time into our asset management business and allow our clients to have access to these origination flows.

And so we're very conscious from a risk management perspective. We see opportunities to continue to serve our clients. But because of our asset management business, we have the ability to grow this, and not all of it has to be on balance sheet in the same way. And so we're keenly focused on the evolution of that in the coming years, and that's something you'll hear us talk more about.

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

Another one just on expenses and really noncomp and all you've been doing with the GS 3.0. I was curious as you start 2026, how does the growth for noncomp look versus maybe 2025 in the budgeting process? And maybe what's different in terms of some of those metrics?

So I appreciate the question. You've heard us say over many, many years, we maintain a rigorous focus on managing these expenses as tightly as we possibly can. There are a lot of them, certainly by dollar quantum, that are very linked with the overall level of activity inside of the firm, notably, transaction-based expenses and also to an extent some of the market development expenses.

We're at a point in the cycle where, as an example, it's more important to feed some T&E capacity into the firm to get people front-footed and meeting face-to-face with clients than it is to overly constrain that expenditure. Transaction-based, similarly, as we continue to grow these activities, there are necessarily transaction-based expenses that go alongside those.

On the other side of the equation are those types of expenses over which we have more control, and we have a very concerted effort to constrain the growth of fees, which may be inflation-linked or maybe substitutes for other types of work. And we're focused on sort of grinding those down as much as we possibly can.

And as a follow-up, for the private banking and lending, I was hoping to get an updated outlook as you think about 2026, in a backdrop where rates are coming down, how you're thinking about the offsets of revenue from both demand and deposits.

Sure. So there, we've obviously been quite deliberate trying to make sure you have all the pieces of the puzzle. As we head into 2026, we've dealt with some of the sequential comparisons in that line item based on the one particular loan that had been previously impaired and then we had exceptional levels of revenue, we want to understand that as a comparison. That frankly will still be relevant as we head into 2026.

Our focus is continuing to grow lending activities and the lending penetration. We made good progress there. That's a piece of unlocking incremental growth in the wealth channel, remains very important to clients. So we expect to grow lending. We focus on growing our overall level of deposit activity across the segment. But we do expect there could be some NIM compression given our expectations on the rate cycle, and so we just want to flag that as an expectation as we head to 2026.

We'll take our next question from Matt O'Connor with Deutsche Bank.

I was hoping to follow up on the 5% long-term asset flow target within wealth. You were slightly above this in 4Q. And I just wanted to get more color in terms of how you arrived at that and maybe framing how much is doing more with existing advisers and customers versus the efforts that you have to hire more advisers and presumably attract new customers?

So look, we think wealth is a big opportunity for the firm. We have a very strong business at the moment. We think there's a good opportunity to grow it. And we are making extra efforts to drive accountability and focus on our execution against that opportunity set. And so this is an external target that we expect you all to hold us to account.

And we also think it's an important signal to send to all of our people in terms of how laser-focused we are on this opportunity set. As you said, we have a track record of delivering this type of annual growth. So we want to maintain the focus. That is one component of the overall sort of revenue equation and opportunity set in wealth management. But it's an effort for us to just apply incremental amounts of granular focus. This is one of the key underpinnings for the overall revenue trajectory in the wealth business.

And any color you want to provide in terms of -- when you talked about growing advisers, you've got some planned this year. You said you'd like to do more, but you're mindful of trying -- managing the profitability. Just any way of framing whether it's your plan this year or just kind of longer term, where you're at now and where you'd like to be on the number of advisers?

I think the best way, Matt, I think the best way to frame it, this is a very fragmented business. My guess is in ultra-high net worth, our share in the United States, for example, is somewhere mid-single digits, and that's probably leading share. So you think about there are hundreds and hundreds of firms and people that do this in a variety of ways. So with our franchise and our platform, I said before earlier in the call, it scales with people, there is lots of ability to still grow market share in this business if you've got a leading franchise by adding advisers, adding footprint, broadening the clients that we touch. And so we think we've got a good trajectory to do that. And there's a real focus on that.

I'd add too, alts is a component of it. We put out specific targets around sort of alts opportunity set. And while we obviously have penetration of alts within our clients, given that the average wealth of a client on our platform is north of $75 million, it's not only appropriate, but you could advise a distribution of exposure to alternatives and there's still probably opportunity to grow that with our clients. So in addition to the footprint, the advisers, the mix of their activities, lending remains an opportunity there.

And we do -- as we've mentioned, we see more opportunities to enhance our technology investment, the digital experience for those clients and ensure that we're very well positioned with the existing clients and their successors.

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

Can you guys share with us, in the past, David, you talked about the IPO market and the sponsors maybe not getting the valuations that they would like as being one of the areas that had to loosen up. And it appears like it is. But when you look at this year, and I think Denis, you touched on it in your remarks, that we're still below -- IPO business is still below the long-term averages. Is it market conditions, do you think, will be a greater influence on the IPO market this year? Or is it still the valuation challenge that you've referenced in the past?

I don't think you've got the valuation challenges we've referenced. I think you're going to see a bunch of sponsor stuff unlock and you're going to see more activity from sponsors. I also think one of the dynamics that we have, and it's just the reality of market structure and the way the world has evolved, companies are staying private longer, and we've got a lot of big, big companies in the pipe that I think, just for a variety of reasons, are reaching a moment in time where they're saying, "You know what, it's time to go."

And I think you're also this year going to see a bunch of IPOs this year and next year of very, very large companies, which is something we really haven't seen a lot of. So a combination of sponsor momentum and more of the big companies that have stayed private longer are now turning toward the public markets. And I think the confluence of that is going to be constructive, provided we have the kind of market environment we have now.

Okay. That's helpful. And second, and not to really get political in this question, but it seems like the M&A activity, as you guys do so well and as your peers, in 2025, it seems like this administration is more supportive of consolidation than maybe the prior administration. When you talk to executives about transactions, are they more focused on just the economic outlook and the opportunities there? Or does the regulation also factor into their thinking, thinking that the window is open now and you really need to move possibly before the change in administration in 2029?

Yes. Sure, Gerard. I think a way to frame it, you framed it effectively, we had a very, very different environment from a regulatory perspective for M&A for the last 4 years. And that doesn't mean that it's just a blank check, no regulatory oversight of large-scale consolidation. But CEOs definitely believe that the art of the deal and scale consolidation is possible now. And when CEOs see that opportunity, because scale matters so much in business, business is so competitive, CEOs get very front-footed.

And so I think CEOs and boards are looking and saying, okay, we've got a window here of a handful of years where the opportunity to consider big strategic, transformative things is certainly possible. And therefore, you've got a much, much more front foot forward across industry group of CEOs really thinking about, is there something we should do, is there something we should dream about that really advances our competitive position. And that's leading to -- you see that filtering into our backlog, but I think that's leading to a significant upswing in activity. Provided we don't have some sort of an exogenous event that changes the current sentiment that we now have.

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

A lot of discussion on the capital impact from dereg. I think in your earlier remarks, you talked about expenses. I'm wondering if you could quantify that potential pool of money that could be freed up and redeployed. I guess how much of a drag has it been?

I appreciate the question. I'll follow on David's comments. I mean, I don't think we're going to give you an exact number, but you can imagine that there are a variety of, call it, different human capital, consulting, professional fee-type surge experiences that have been observable across the industry over the last couple of years. And while there will always be work to be done and each and every institution has a responsibility to still govern and run itself in line with regulatory expectations, the current levels of engagement and focus are on the safety and soundness of the banking system. And there's just a different formulation and mix of expenses required to ensure that most important goal of safety and soundness. And it, therefore, frees up capacity from some of the secondary or tertiary activities, which can then be redeployed to driving growth across the franchise and, actually, frankly, strengthening the safety of the soundness of the firm in another respect.

So I think I wouldn't look at it as much of a bottom line unlock as much as an opportunity to redeploy towards helping to grow the firm and actually improve its resiliency.

Yes. The only thing I'd add, Chris, to what Denis said, just to get a little bit more -- we're not going to be able to quantify for you. But the things that you should look at, obviously, if you go back over the last 10 years, capital in the large banks has grown meaningfully over the last 10 years. And now it's actually -- the growth has certainly stopped. And because one of the big things that drove the capital growth was the stress capital buffers for all the firm and the CCAR process, which is very, very opaque, and there's now going to be more transparency around the models of the CCAR process, I think you're getting a different result there.

So one piece of the quantification comes from doing the analysis to look at how [ SEBs ] change from kind of the late part of the last decade up to 2025 and where they are now and how they've evolved. That's a quantification.

The second one was there was an expectation that Basel III was going to put more capital on top of the stack. That's another way that people thought capital is growing. Now the perception is that Basel III is going to be more of a neutral event when it's ultimately closed out.

And then the third thing is G-SIB was supposed to be calibrated to growth in the world and market cap growth that was put in the statute, but it never followed through. So G-SIB, as the world grew, g-SIB wasn't supposed to grow as fast as it was growing, but it grew faster. That's now going to be recalibrated. That's another one. So if you want to kind of calculate those differences, those are 3 important things I would point you to where you can look at the different banks and calculate that impact.

That's very helpful. Second question would be more of a business mix desire rate. If you look at the fourth quarter revenue mix, trading 50%, IB 20%, AWM 25%, dominant share, great growth. If you were to fast forward over the next few years, like what do you think this mix looks like? Maybe how do you want to be viewed by the market? Because there are I think implications for the multiple that we'll want to put on your stock.

Yes. We are going to continue to invest in the growth of Asset & Wealth Management and we would like the mix to continue to evolve. I think it can evolve very slowly with the organic growth differential because, this is not an unfortunately, but it's a reality, we've been able to grow Global Banking & Markets faster than we might have expected. And even though we've grown asset wealth management very nicely, just given the scale of Global Banking & Markets, that's made the shift in mix slower than we might have all imagined to go back 5, 6 years and kind of think about the trajectory that we're on.

We will try to find things that accelerate that, in addition to the organic -- inorganically, again, with a real discipline around that, as I've stated over and over again. But I do think if you look forward, the mix of the firm will continue, because the growth in Asset & Wealth Management is faster, it will continue to shift. And we're focused on that.

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

I just have one question, and it's a clarification more than anything to Erika's question about where we are in the investment banking cycle. And I think, David, in your response, you said that your people are suggesting that in a base case view, 2026 investment banking fees could be close or approach where they were in 2021, which was over $14 billion, and we're running, I think '25 was a bit over 9. The delta really is ECM, obviously, and advisory and DCM are kind of tracking to '21 levels already. But I just wanted to clarify that -- were you talking about IBCs as a whole or were you talking about the individual segments, advisory, DCM? I apologize if it was clear to everybody else but me. But obviously, an environment where you do $14 billion of investment banking fees, it would seem like an environment where your ROEs for GBM and the firm as a whole would be materially above the mid-teen level. But just if you can just clarify that, that would be helpful.

Sure. I'm sorry, Saul, if I confuse you. What I was referring to was advisory fees only. I'm sorry. What I was referring to was advisory volumes -- excuse me, advisory volumes. Now advisory volumes are very correlated to fees, okay? But the chart that I was referring to was one that looked at 3 different cases for advisory volumes, okay? So it wasn't equity capital markets, et cetera.

I will tell you that what went on in 2021 with equity capital raising, particularly around the SPAC phenomenon, that's not going to occur in 2026. So my guess would be that equity capital markets levels will still be meaningfully below the 2021 peak in 2026, but they will be higher than they were this year. That would be my estimate based on what we see today.

But I was talking specifically about advisory volumes when I made that quote. And look, the advisory, as we've said over and over again, when advisory activity grows, the flywheel creates lots of activity. And we were talking industry-wide, not just GS, looking at just industry-wide volume.

Yes. Okay. Got it. No, that's helpful. Thank you for clarifying that.

Yes.

Thank you. At this time, there are no additional questions. Ladies and gentlemen, this concludes the Goldman Sachs Fourth Quarter 2025 Earnings Conference Call. Thank you for your participation. You may now disconnect.

It is 10 a.m., so we're going to move on to the next presentation. I am delighted to be joined by Denis Coleman. I don't think Denis needs any introduction, CFO of Goldman Sachs, been at the firm since 1996, CFO since 2022, regular attendee at the conference. Prior to the CFO role, Denis was Co-Head of the Global Financing Group, which was actually the predecessor to the Capital Solutions Group.

Delighted for you to join us again this year. So why don't we just start off with a high-level overview. Maybe we can talk about the operating environment, what your view is on the operating environment heading into next year and maybe talk a little bit about how that environment informs your strategic priorities heading into 2026.

Sure. All right. Thank you. Thank you, Richard. First, let me just start off by welcoming everyone. Thank you very much for being here, for attending this year. I think we have a record number of issuers and investors attending tremendous interest in the sector.

So thank you all for your engagement with the firm. Our outlook from a macroeconomic perspective, I guess I would characterize the U.S. economy, in particular, as resilient and conducive to business. We obviously have a Fed decision upcoming. Our economists expect 25 basis points, probably a pause in the beginning of '26, then maybe 2 more cuts. But if I were to take a step back and think about Goldman Sachs, how we're positioned, the operating environment for us, our outlook heading into 2026, our focus remains very much the same.

We are focused on strategically executing our plan. We aspire to be the world's most exceptional financial institution. We have a Global Banking & Markets business, which is global, which is scaled. It has leading market share positions across its major businesses, #1 in M&A for the past 20 years, a business extremely well positioned for the forward, #1 equities franchise, leading FICC franchise and a lot of sustained investment in the client franchise and market shares over the last couple of years.

The Asset & Wealth Management business, we are relentlessly focused on growing those durable revenues. We have the Top 5 active asset management business inside of that segment. We have a leading alternatives platform and the premier ultra-high net worth business in the world. We have been sustainably growing our durable revenue streams across that business and think we can continue to do so, if not accelerate them.

As we look into 2026, our focus is harnessing the power of One Goldman Sachs, continuing to serve clients with excellence, drive synergies across these 2 big businesses. And importantly, we're looking to invest so that we can continue to operate at scale. We're very focused on driving scale across the franchise. So we feel very, very good about the investments we've made over the last several years, where we stand from a market positioning perspective and how we're set up to attack all different vectors of client activity heading into '26.

Okay. That's a great place to start and obviously, a lot to unpack. So let's start off with the M&A business. Firm obviously had good -- very good results last quarter, particularly in M&A. But I think what stood out, at least to me, is that both you and David had a very optimistic outlook on the forward for the Investment Banking business in particular.

As you mentioned, look, we have the leading M&A franchise for the last 20 years. On my calculations, I think we're 1/3 of the announced volume year-to-date. That really does give you a unique insight into how corporates are thinking about the world. So a couple of questions. The first is, look, how have dialogues shifted over the course of the year? How are you thinking about the cadence of activity heading into 2026? And then obviously, we've just come out of the government shutdown in the U.S., what sort of impact did that have on activity? And how are you thinking about business that was put on pause as a result of the government shutdown?

Sure. So I think David and I have been pretty consistent over the totality of 2025 and that we were seeing high levels of client engagement coming through our franchise, perhaps even when others were noting uncertainty and lack of CEO confidence, there was a lot of engagement coming through our franchise. That's obviously what has enabled deals to actually be announced and/or close crystallizing revenues.

On an announced basis for M&A, I think we will probably have the second biggest year in history. We've advised on over $1.5 trillion of activity so far this year. We feel very, very good about how the franchise is positioned heading into 2026. I would not say that we had significant disruption to the M&A business given government shutdown. I don't even think it was really impacted that much as far back as Liberation Day.

I think government shutdown is more relevant to things like equity underwriting, IPO calendar, some of the other activity, which sort of had to take a pause for a period of time. I think that's really just a Q4 issue. I think the overall outlook and expectation for equity underwriting calendar remains very positive, and we should continue to see good levels of activity into '26.

Importantly, for us, between our M&A market share position and equity underwriting, those types of activities often work together. They often create multiplier effects across the franchise. It can be associated financing, there could be risk management, derivatives activity. We end up creating transactions, some of which become interesting investment opportunities for wealth clients, for asset management clients.

Some of that new issue activity can catalyze secondary market-making activity around the institutional franchise. So I think our outlook and visibility on M&A is, I think, is very encouraging for aggregate, overall levels of activity heading into 2026.

And then within M&A, we've also seen a meaningful pickup in sponsor-led transactions, which I think is very encouraging. And I think something the market has actually been waiting for, for quite a long period of time. Again, leading market share in that business. How would you characterize the dialogue with financial sponsors in particular? And how is the momentum for that part of the franchise heading into 2026?

So this one, I feel like I've been talking about for a number of quarters, maybe even years. I think it's fair to say it's now happening. So sponsor announced volumes industry-wide are also up 40%. So they are starting to become more active. They still have $1 trillion of dry powder that they need to look to deploy in the market. There's about $4 trillion of assets in their portfolio companies. So between sell-side M&A activity, equity market monetizations, continuation vehicles, other strategic types of transactions, there's just a lot of pent-up activity that should come through the sponsor space, and we are seeing the beginnings of that activity actually start to happen. So I think we will see more of that heading into 2026.

Okay. So let's talk about the trading businesses. So FICC and Equities. Again, the firm, I think, has gained on my calculations, 350 basis points of market share over the last 5 years. But I think what's really stood out is the FICC and Equity businesses have proven to be very resilient across a range of different market conditions and continue to grow relative to 2019. And I think I'll go back a few years, everybody thought they're going to mean revert back to those levels, and that clearly hasn't happened. So maybe you can talk a little bit about the outlook for those businesses. But I think more interestingly, talk about the areas that you see the greatest opportunity for investment just given the starting point from a market share perspective.

Sure. So as Richard indicated, those businesses have proved, you look back over the last 5 years, incredibly resilient. I think that's a function of the investment and the commitment that we've made to those businesses. Our strategy in those businesses is to have a global, broad and deep set of capabilities where we maintain committed to across the market cycles. And if you look across the last several years, different components of that portfolio of businesses have contributed relatively more or less based on the ultimate backdrop.

The focus of the professionals of that business has been driving client wallet share, serving clients with the One GS ethos more comprehensively, driving towards longer-term market share improvements. We think we have over 350 basis points of share. We continue to focus on the top 150 clients. We're moving up into a top 3 position with about 125 of them. We're looking how we can move people that are maybe #2 or #3 into the #1 position, expanding our wallet share focus across other clients.

And importantly, we may have these aggregated market shares with these clients, but we don't have that level of share across each individual product area within the portfolio of FICC and Equity activity. So we continue to go through that granularly, look at where we have gaps, where we have opportunities for improvement, continue to serve those clients more holistically.

Financing continues to be very important to clients in both FICC and Equities. It's been a strategic focus of ours to grow those durable revenue streams, but it's also highly valued by the client franchise. And so we continue -- our expectation, we continue to invest in those activities. And there's other pockets of growth opportunities across the FICC and Equities business. There's regional opportunities in Asia.

There's growth in ETFs. There's growth in the insurance sector. There are a number of different sort of subsector type of growth initiatives that we're looking at and working on across the portfolio of FICC and Equity activities, both intermediation and financing.

Okay. So let's talk about another important strategic initiative, which was the Capital Solutions Group. I think it's coming up to the 1-year anniversary when that was announced. And I think that was established to help capture the growing opportunity set in private markets. So a year in, what has been the impact? What have you learned? And what do you -- and maybe you can talk a little bit about how you think the Capital Solutions Group is a driver of growth going forward from here?

Sure. So as a reminder, the Capital Solutions Group basically subsumes the old financing group, which houses sort of debt and equity underwriting activities as well as all corporate derivative type activities, structured finance, real estate financing, all that suite of client underwriting and risk management activities. We added sponsor coverage. We added in coverage of alternative asset managers basically to create one super hub of origination and structuring activity for the firm rather than having it dispersed across the firm.

That has proven to be very successful. We continue to enjoy the leading market shares across what I would call the traditional financing group product suites, and we're creating more opportunities to do large, strategic financing transactions, whether it be in infrastructure, digital asset space, finding opportunities to create product for institutional investing clients, opportunities in our asset and wealth management businesses that are sourced from the Capital Solutions Group.

And then we also continue to conduct activities in that group, which we end up retaining on balance sheet. So very pleased with how that's come together, and we think it will be an important contributor to growth as we head into 2026 and especially jumbo, more structured financing opportunities of which there are now many percolating.

Yes. So maybe let's talk about FICC financing in particular because I think that's an important part of CSG. It's the asset-based lending component within FICC financing. It's grown a lot across the industry. It's grown a lot at Goldman Sachs. Can you help us understand the composition of what's in there? And maybe also talk about the growth dynamic in that part of the business heading into next year?

Sure. So FICC financing activities, we've been at that for a while. That is a key underlying component of our overall GBM strategy, particularly in the FICC and Equities part of the business, drives an increasingly a higher percent of the revenue composition in that business. It comprises a lot of our asset secured lending activities, our repo activities, to a smaller extent, commodity financing.

And within those streams, the underlying asset classes against which we lend would include commercial real estate, residential real estate, private credit, consumer finance, capital call facilities. Those are the types of facilities that we lend against. We have a very robust origination platform, having been in that business for a long time, having been a scaled on-balance sheet lender, which drives those FICC financing revenues, we see a lot of the flow, gives us a position to be very selective in terms of the composition of the portfolio and that sort of aggregated funnel also ends up being a good risk management tool for us.

So just on the risk management side, obviously, a lot of focus, especially around October. How are you thinking about risk management in that business? And has your perception of risk in that business changed relative to a year ago?

So risk management in this business, super important. Risk management across the whole firm is super important. This business benefits from the same firm-wide culture and focus on risk management. I've not been involved in any of the names that have been sort of publicly running through the headlines. They're reasonably idiosyncratic, but nevertheless, we avoided them.

But that doesn't mean we are sort of resting on our laurels. We're making sure that we are -- remain extremely attentive to risk. In that portfolio, we have multiple ways of thinking about the sort of the risk management construct. But to give you a couple of examples, we obviously have very disparate LTV parameters for different underlying asset classes. We set and establish those based on stress tests, GSE type stress test to calibrate what the right sort of attachment point is for that type of collateralized lending activity.

We're very focused on covenants, triggers, the way in which we call for collateral or require paydowns. That all has to be very closely negotiated, and it has to ultimately be monitored very closely. So we have a big investment globally in the infrastructure that does the underwriting and ongoing monitoring, all of the nuts and bolts processes underlying the securing, perfecting processing of collateral is really important to the risk management of that.

So that has always been a big focus for the firm. Obviously, we have gone back through our portfolio over the last couple of months just to make sure that we have our processes as crisp as we possibly can. But we continue to think that's an attractive business. So if you have a large funnel, you have the capacity to credit select on a selective basis.

And if you maintain sort of disciplined risk management standards, you can generate decent durable revenues over time. And we think we can continue to grow that given all of the demand that's coming through from the client base.

Okay. So let's segue and talk about the outlook for capital and regulatory capital, in particular, very important topic, I think, for a number of investors in the room. And look, I appreciate there's a lot of moving pieces here around what's going to happen with the Basel III end game, what's going to happen with G-SIB recalibration, open question marks around how the stress test is actually going to change in practice.

But it does feel as if the industry is going to be in a position where there is quite considerable excess capital, and I think that will apply to Goldman Sachs as well. So can you talk us through capital management philosophy and maybe talk through where you see some of the best opportunities to redeploy that capital from a risk-adjusted return perspective?

Sure. So there have been multiple moving pieces. There continue to be multiple moving pieces, but some things are coming to be more clear. So obviously, we have resolution on SLR. We had last year's CCAR results. There remains some uncertainty as to how some of the outstanding rules with CCAR will progress, which may dictate the calibration, the pacing and the quantum of deployment.

But the fact remains for Goldman Sachs, based on those rules as written and as they apply to Goldman Sachs, we have a significant amount of excess capital. And for the last several years, we've been driving our franchise and delivering returns in a sort of very constrained capital optimization way of living. And now we find ourselves unusually with a bunch of excess capital and the question now becomes the prioritization of the deployment.

Our philosophy on that is unchanged. We are going to prioritize deploying into the client franchise on an accretive basis, continue to be committed to sustainably growing the dividend and then return excess capital to shareholders. There are a lot of attractive deployment opportunities for us based on precisely where we are in the cycle and given our leading M&A market share position, the opportunity to deploy sizable capital into acquisition financing is a very attractive activity for Goldman Sachs and the market environment is conducive to that type of deployment.

We're very focused on continuing to drive our wealth business. We think it's a jewel inside the firm. We need to feed it with resourcing. Our clients there want us to lend more. That's an opportunity. And our institutional clients across FICC and Equities also would like to see us continuing to support their own growth across both FICC and Equities. So there are across the entire firm, lots of different things that we can deploy into attractively.

So we're pretty optimistic about that. As you say, Basel III end game, I think, coming soon. I don't know exactly where that's going to end up yet, obviously. And G-SIB, there have been comments made that it should be recalibrated, but we're going to have to see the detail of exactly what that means. But regardless of how those 2 pan out, at least within a band of expected scenarios, we should have a bunch of excess capital that we'll be looking to deploy into the client franchise.

And then as a follow-on, can you talk about inorganic growth as an opportunity to redeploy excess capital? And I guess, to that end, we announced the acquisition of Innovator Capital Management last week. Maybe touch on the rationale behind that transaction, but also touch on the pipeline for those types of transactions going forward.

Sure. So inorganic is something that traditionally we've used reasonably sparingly. We did just announce the Innovator acquisition, a defined outcome ETF platform, great business, good platform, growing at much higher growth rates than the sector overall and really elevates our standing in the overall ETF space, which is something that we're focused on strategically.

A couple of weeks before that, Industry Ventures, another business that we acquired, which will help our presence in the venture capital space and the secondaries business. Given the long-standing track record, the performance, the reputation of that investment team, we think it will also be accretive to Goldman Sachs in a One GS fashion across banking and wealth because that business and its people are very, very embedded in the venture capital ecosystem.

And then obviously, we announced a strategic collaboration with T. Rowe Price, where we're looking to work together, combine public and private investment alternatives for the retirement channel, wealth advisers, something we're also excited about. So we've done a couple of strategic, bite-sized acquisitions that can accelerate growth for us in the durable revenue streams of Asset & Wealth Management, and there are activities that we should be able to sort of integrate reasonably easily into Goldman Sachs. The bar for more transformative acquisitions for us remains very high.

Okay. So you mentioned Asset & Wealth Management. So let's talk a little bit about those businesses. And you did say top 5 active asset manager globally. Where do you see the best opportunities for growth within the Asset Management franchise from here?

So top 5 player, $3.5 trillion assets under supervision across both public and private investing strategies. We have a leading alt platform. Last publicly reported number, $567 billion of alts assets. We continue to have momentum in the fundraising. Last quarter, we had $33 billion in the quarter. That was a record. We took up our full year guidance to north of $100 billion of alts capital raising on the year, and we continue to see good opportunities to further grow that alts platform on a diversified basis.

We're working very closely with our third-party wealth activities, driving activities across other platforms and see opportunities in evergreen alts and a number of different spaces where we can drive incremental revenues in those areas, which are experiencing sort of outsized growth prospects.

Okay. And then on the wealth side, can you talk about the ultra-high net worth franchise? I think it's $1.8 trillion of client assets. I think the average account size is $75 million. Maybe talk a little bit about how you see the growth for that business going forward, but also the competitive environment given that a number of firms are investing in that business.

Sure. So we've obviously been in the wealth business for a very long period of time. And as I said earlier, I think it's really one of the jewels of Goldman Sachs. It's already a very scaled business at $1.8 trillion in client assets, and the average account size is quite large at $75 million, which means we have a responsibility to those clients to make sure that they are seeing the full suite of attractive investment alternatives, which works very well with our platform and other platforms that we work with and make available to them.

Our market share, if you will, and there's not great data on this, but it is very, very low relative to many of the other activities that we operate in. So we think there's enormous opportunities for us to grow share in the wealth business. We're very focused on continuing to drive the adviser count and all the associated support services.

We're continuing to focus on the wallet share that we have with clients, making sure that we offer them attractive alternative investment opportunities, continue to focus on driving incremental lending penetration, making sure that's available if clients want to take advantage of that. We're focused on making the right tech investments to make it easy to interact with us and get all access to all of our products and services. So a lot of investment in human capital and technology and the product offering to move us from a very good business with a low -- a relatively lower global market share to capture more over time.

Okay. And then within the private banking business, we've seen very good growth in loan balances and deposits over the last few years. Maybe you can talk a little bit about the outlook for further growth from here. But maybe also talk about the revenue outlook for the lending and the deposit business if we do get more rate cuts over the course of the next 12 months.

Sure. So I think outlook for lending, as I was running through in the wealth business, we continue to expect to make resourcing available, make that offering available to the wealth advisers and continue to drive lending penetration across the portfolio. We're optimistic we'll be able to do that. We're also optimistic we'll be able to continue to drive notional growth in the deposit platform. That's Marcus and the private banking and lending line item. But as you say, given the rate outlook, we'll ultimately experience NIM compression that probably be an offset to the overall level of growth in the Private Banking and Lending segment in '26.

Okay. So let's talk about efficiency and AI, 2 very popular topics. Firm recently announced One GS 3.0. Can you talk us through that initiative? But just more broadly, talk a little bit about the outlook for efficiency gains broadly for the firm going forward and just touch on the role that AI is playing in driving those efficiency gains.

Sure. So the firm has always been focused on operating efficiently. When David first took his post and set out sort of 3 key pillars, operating the firm more efficiently was one of them. We've done a lot of things over the last couple of years, as many of you would appreciate, to continue to invest in driving the firm more efficiently. It's our view that at this moment in time, we can actually step back and implement a more comprehensive and foundational review of the entire operating model at Goldman Sachs.

We've called it One GS 3.0. One GS basically signals a top priority from the leadership of the firm and is expected to include everybody in the firm across every aspect of the firm from businesses to control functions to engineering, et cetera. And it's a big priority in terms of where we think Goldman Sachs is headed over the next several years. It is at its core, an effort to drive more scale and more growth.

We think that there are opportunities to drive efficiency that should help unlock and enable that. And so we are comprehensively focused at multiple levels across the firm. We're focused on the quality, availability, accuracy, timeliness of our data. It's an underpinning to all of these AI exercises, making sure we have the right investment in platforms, particularly in activities that span across the firm.

We're asking all of our people to think and re-underwrite the human processes that they go through. And then we are making investments with AI, agentic AI to accelerate some of the change across these processes and platforms. We've identified 6 discrete work streams, stood up teams, and we're asking them basically to go through, underwrite all of those activities, run through all the pain points, problems, opportunities for efficiency, come up with sort of 4-wall investment cases, and we'll fund some of that investment and then measure and drive accountability for the productivity outcomes that come across that business.

I think it's a fundamental rethinking of the way that we want people to think about operating at Goldman Sachs. We don't want to just add more manual processes to drive growth. We need to convert some of the resourcing that goes into growth engines, digitize it, automate it and rethink the way these things work. And we're very optimistic that, that will be one of the things that continues to help us fuel the growth of the firm and let us operate even more efficiently than we already are.

Okay. So let's talk a little bit about the environment for talent. I think one of the themes that is emerging out of this conference is that everybody is very optimistic on the operating environment heading into next year, in particular, on the investment banking and I think on some of the trading businesses as well. So can you talk to the current environment for talent? Have you seen a noticeable change over the last 12 months in terms of willingness for people to pay up for talent? And maybe talk a little bit about the initiatives the firm is putting in place to retain talent in what I think is a very competitive marketplace.

Sure. So talent has always been top of mind at Goldman Sachs. It's one of the actual absolutely mission-critical components of what we need to actually deliver for clients. That has always been the case. And there has always been an incredibly competitive market for our people. We continue to see incredible demand from people to want to come and work at Goldman Sachs, more than 1 million people asking to move in laterally to the firm.

We can accommodate far less than 1%. So we're still in a position to be extremely selective on the people that we hire and try to keep a very high bar in attracting really the best and brightest that will fit culturally inside of Goldman Sachs. And then we have the obligation to invest and develop them, and we have a tremendous amount of programming, and we continue to invest incrementally to retain our very best and brightest.

Overall sort of compensation environment, I think it is -- it remains competitive. I think it's particularly competitive for the very best people in any particular sector or domain expertise. Our philosophy is to continue to be a pay-for-performance organization, and we want to make sure that we're in a position to pay very competitively, particularly for our very best people by domain. So laser-focused on that. I think that will -- as long as the markets are as buoyant as they are and with optimism on the outlook, that will continue to be a focus.

Okay. So we've only got a couple of minutes left. So why don't we just wrap up with, a, the key messages that you want investors to take away from this. But I think what would also be interesting is to hear your view on the investment case for Goldman Sachs shares just given where the valuation and the share price have got to.

Sure. So I think over the last couple of years, we've basically put in place all the building blocks. We've concentrated our efforts in having a world-leading Global Banking & Markets franchise and an Asset & Wealth Management business relentlessly focused on driving durable revenue growth. That Global Banking & Markets business has consistently delivered mid-teens returns through multiple different cycles.

And the Asset & Wealth Management business is consistently improving its margins and return profiles. We think our leading market share positions across those businesses will give us a lot of edge as we move into 2026. We do believe being the world's leading M&A adviser is very important moving into this cycle and will unlock a lot of opportunity for Goldman Sachs.

We think the investments that we've made to drive durable revenue growth in Asset & Wealth Management and/or accelerate it will prove to be very beneficial. Our commitment to continuing to invest to operate at scale and drive more efficiency will pay long-term dividends, and we do have regulatory tailwinds that I think are not fully sort of realized that we should drive incremental benefit from over the next several years.

So overall, it is a moment in time. But at this moment in time, based on the quality of our franchise and the current outlook, we feel really, really good about continuing to drive growth for our clients and returns for our shareholders.

That's a great place, I think, to end it. Denis, thank you very much for joining us this year and look forward to seeing you next year. Thank you.

Thanks, Richard. Appreciate it.

Good morning. My name is Katie, and I will be your conference facilitator today. I would like to welcome everyone to The Goldman Sachs Third Quarter 2025 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.

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, October 14, 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.

Thank you very much, operator, and good morning, everyone. Thank you all for joining us. We delivered very strong results in the third quarter and generated net revenues of $15.2 billion, earnings per share of $12.25 and ROE of 14.2%, resulting in an ROE of 14.6% and an ROE of 15.6% for the year-to-date. This performance reflects the strength of our market-leading franchises, where we continue to harness the power of One Goldman Sachs to serve our clients with excellence. In investment banking, we've seen increased momentum in our #1 M&A franchise as clients turn to us for their most consequential transactions.

Recently, we hit the milestone of advising on over $1 trillion in announced M&A volumes for 2025 year-to-date. This is $220 billion ahead of our next closest competitor and underscores our dominant position as the adviser of choice for clients. We've built this leadership position through decades of investment in our dedicated teams across the globe. This allows us to advise our clients on their most important transactions. We were the exclusive adviser to Electronic Arts in a $55 billion sale to the [indiscernible] comprised of the public investment fund of Saudi Arabia, Silver Lake Infinity Partners. We were also the lead adviser to [indiscernible] on its strategic acquisition of Chart Industries for $14 billion and advised and provided financing to [indiscernible] for its $12 billion leverage buyout of [indiscernible].

Importantly, given our One Goldman Sachs operating approach, increased M&A activity creates a real multiplier effect whether it's bridge financing, derivative hedging or investment opportunities for asset wealth management clients, our advisory relationships are often the genesis for client activities across the firm.

Looking forward, it's important to recognize the tailwinds behind our optimistic outlook for investment banking. We're encouraged by the steady build in sponsor activity, which is now tracking 40% higher versus last year. and considering that sponsors have a $1 trillion of dry powder and $4 trillion of private equity assets in their portfolios, coupled with the expected rate cuts in the U.S., the setup remains constructive. For corporates, it's clear from our conversations in boardrooms that after a period of heightened uncertainty, volatility early in the year, many of our clients have navigated and adapted to the current state of play. So near-term policy considerations are still relevant. Many CEOs have shifted their focus back to long-term and strategic decision-making, particularly amid a more supportive regulatory environment. Scale and investing for growth remain paramount especially in the context of harnessing AI capabilities.

In addition to a robust investment banking backdrop, we have seen continued strength across our leading second Equities businesses which in total rose on a year-over-year basis for the seventh consecutive quarter. Much of the momentum from the first half of the year persisted through the summer and into September, contributing to our record year-to-date performance for Equities and notable strength in our rates business within FICC. All in, our markets businesses continue to demonstrate resilience that comes from having a global, broad and deep franchise. Taking a step back, there is no question that there's a fair amount of investor exuberance at the moment with U.S. equity markets consistently hitting record highs over the last several months.

Much of this has been fueled by a tremendous amount of investment in AI infrastructure, which has driven significant capital formation. But as students of history, we know the following periods of broad-based excitement or our new technologies, there will ultimately be a divergence where some ventures thrive and others falter. While I feel good about the forward outlook on balance, the market operates in cycles and disciplined risk management is imperative. We are especially vigilant in times like these to proactively manage risks as we continue to serve clients with our best-in-class execution capabilities and insights.

In Asset & Wealth Management, we are relentlessly driving forward our growth strategy. Assets under supervision rose to a record $3.5 trillion. We again delivered record results across our more durable revenues and management and other fees in private banking and lending. In alternatives, we raised a record $33 billion in the quarter. As a result, we now expect to raise approximately $100 billion in alternatives this year, substantially exceeding our prior full year fundraising expectations. In wealth, client assets rose to a record $1.8 trillion as we continue to grow our adviser footprint and expand our suite of client offerings. It is clear that we've been making very strong progress in enhancing our business mix by growing our more durable revenues in AWM. We are also accelerating our growth via innovative partnerships and acquisitions Yesterday, we announced the acquisition of Industry Venture, a leading venture capital platform with a track record of strong investment performance and the proven ability to invest across all stages of the VC life cycle. This transaction complements our market-leading secondaries investing franchise.

We have been a pioneer for over 25 years and has a highly attractive technology investment capability to the platform. This business will sit in our external investing group or XG, which has over $450 billion in assets under supervision across asset classes and is a market leader in investing in alternative manager strategies, secondaries co-investments and GP stakes, Importantly, facilitated by our One Goldman Sachs approach, Industry Ventures deep relationships across the VC ecosystem have the potential to drive new opportunities for the firm particularly in investment banking and wealth management. Additionally, last month, we announced the strategic collaboration with [indiscernible] to deliver a range of public and private market solutions designed for the unique needs of retirement and wealth investors. We are thrilled to partner with T. Rowe, which like Goldman Sachs has a strong brand with a long track record of success across investing in capital markets and in producing strong investment returns for clients, with our 30 years of experience in private markets and an ability to blend asset classes to address outcome-oriented objectives, we can help bridge the gap between growth opportunities in private markets and the needs of individual investors.

As we drive growth across our businesses, operating efficiency remains 1 of our key strategic objectives. Although we review our operations on an ongoing basis, it is also important to make long-term decisions that best position the firm for the future, especially as rapidly accelerating advancements in technology present significant opportunities. To this end, earlier this morning, we announced to our people the launch of One Goldman Sachs 3.0. Propelled by AI, this is a new, more centralized operating model that we expect to drive efficiencies and create capacity for future growth. This is a multiyear effort that we will build over time, and we plan to measure our progress across 6 goals: Enhancing client experience, improving profitability, driving productivity and efficiency, strengthening resilience and capacity to scale, enriching the employee experience and bolstering risk management.

To start, we are drilling in on a handful of front-to-back work streams that can significantly benefit from AI-driven process reengineering and will help inform our longer-term approach. These include priorities such as sales enablement and client onboarding that directly impact the client experience as well as other critical areas that have touch points across the firm. For example, our lending processes, regulatory reporting and vendor management. We have been successful by not just adapting to change, but anticipating it and evolving the firm's operating model as part of the long-term discipline that our people, clients and shareholders of Goldman Sachs.

We will provide you with an update with additional details on our call in January. While we've made significant progress on our strategic priorities, we will continue to execute. The foundation we've laid to grow and strengthen the firm, coupled with our market-leading franchises and best-in-class talent, give me confidence in our ability to deliver for clients and drive strong performance for shareholders.

I will now turn it over to Dennis to cover our financial results for the quarter.

Thank you, David. Good morning. Let's start with our results on Page 1 of the presentation. In the third quarter, we generated net revenues of [ $15.2 billion ] earnings per share of $12.25, an ROE of 14.2% and an ROTE of 15.2%. Let's turn to performance by segment starting on Page 3. Global Banking and Markets produced revenues of $10.1 billion in the quarter with an ROE for the year-to-date of 17%.

Turning to Page 4. Advisory revenues of $1.4 billion were very strong, up 60% versus a year ago, reflecting a significant increase in completions in the quarter. Year-to-date, we remain #1 in the league tables for announced and completed M&A, not only globally, but in each of the Americas, EMEA and APAC. Equity underwriting revenues of $465 million were up 21% year-over-year on significant pickup in IPO activity as we price some of the most highly anticipated IPOs, including Klarna, Figma and [indiscernible] Technologies.

More broadly, we're pleased to see the broad-based recovery in the IPO market pick up steam. Debt underwriting revenues of $788 million rose 30%, primarily reflecting higher leveraged finance activity. While acquisition-related activity is picking up amid more deal announcements, there is more room to run, which plays to our strengths as a firm. Year-to-date, we ranked second in high-yield debt underwriting and leveraged lending. Cross Investment Banking, we continue to see strong momentum with our quarter-end backlog at its highest level in 3 years despite very strong accruals.

FICC net revenues were $3.5 billion in the quarter, up 17% year-over-year. Intermediation results were driven by improved performance in rates, mortgages and commodities, partially offset by lower results in currencies and credit products. financing revenues of $1 billion were driven by strong results in mortgages and structured lending. Equities net revenues were $3.7 billion in the quarter. Equities intermediation revenues of $2 billion fell 9% year-over-year, driven by lower revenues and cash products partially offset by better performance in derivatives.

Record Equities financing revenues of $1.7 billion were 33% higher year-over-year, amid record average prime balances for the quarter. Total financing revenues of $2.8 billion rose 23% versus the prior year as we continue to deploy resources to grow FICC financing and bolster our leading position in Equities financing, while maintaining a keen eye on risk management. These revenues comprised nearly 40% of overall taken Equities revenues.

Let's turn to Page 5. Asset and Wealth Management revenues in the quarter were $4.4 billion. Management and other fees were up 12% year-over-year to a record $2.9 billion on higher average assets under supervision. Private Banking and lending revenues were $1.1 billion. Excluding the payment of interest on a previously impaired loan, year-to-date revenues were up in the high single digits year-over-year, driven by higher net interest income from lending to our ultra high net worth clients.

In aggregate, our revenues across management and other fees and private banking and lending totaled a record $4 billion in the quarter and $11 million for the year-to-date. We continue to expect growth in the high single digits on an annual basis over the medium term. In the AWM segment, we generated a 23% pretax margin and a 10.5% ROE for the year-to-date. Excluding the impact of HPI and its $3.6 billion of average attributed equity, our pretax margin and ROE would have been approximately 150 and 250 basis points higher, respectively.

Now moving to Page 6. Total assets under supervision ended the quarter at a record $3.5 trillion, up sequentially on $80 billion of net market appreciation as well as $56 billion of long-term net inflows across asset classes, representing our 31st consecutive quarter of long-term fee-based net inflows. Turning to Page 7 on alternatives. Alternative assets under supervision totaled $374 billion at the end of the third quarter, driving $597 million in management and other fees. Gross third-party alternatives fundraising was a record $33 billion in the quarter, driven by demand across strategies, including private equity and credit, bringing year-to-date fundraising to $70 billion.

On Page 9, firm-wide net interest income was $3.9 billion in the third quarter. Our total loan portfolio at quarter end was $222 billion, up modestly versus the second quarter. Our provision for credit losses of $339 million, primarily reflected net charge-offs in our credit card portfolio.

Turning to expenses on Page 10. Total quarterly operating expenses were $9.5 billion. Our year-to-date compensation ratio net of provisions is 32.5% and represents our best estimate for the full year, inclusive of higher severance costs. 100 basis point improvement year-over-year reflects stronger revenue performance. Quarterly noncompensation expenses of $4.8 billion rose 14% year-over-year, driven by higher transaction-based costs as well as charitable giving and higher litigation expenses. Our effective tax rate for the year-to-date was 21.5%. For the full year, we continue to expect a tax rate of approximately 22%.

Next, capital on Slide 11. In the quarter, we returned $3.3 billion to shareholders, including common stock dividends of $1.3 billion and common stock repurchases of $2 billion. Our common equity Tier 1 ratio was 14.4% at the end of the third quarter under the standardized approach. In the current regulatory framework, our CET1 requirement is 10.9%, though the NPR on CCAR averaging is still outstanding.

In conclusion, given the continued execution on our strategic objectives, our market positioning and the improving operating environment, we are confident in the outlook for our businesses. We are the #1 M&A adviser globally, well positioned to capitalize on the upswing in investment banking activity, which we expect in the next 12 to 24 months. We're delivering on our growth strategy to drive more durable revenues across AWM. We are focused on efficiency and leveraging AI to meaningfully transforming the firm, and this is all in the context of improving regulatory backdrop which should allow us to be on offense as we deploy resources and service of our clients. Altogether, we remain confident in our ability to continue to deliver for shareholders. With that, we'll now open up the line for questions.

[Operator Instructions] We'll take our first question from Glenn Schorr with Evercore.

I wanted to follow up on your question about remaining, especially vigilant and actively management at times like these. I did notice some more new stories lately that you and others in the industry have been more active on the SRT front and synthetic risk transfer. I wonder if we could talk about how you're executing that, especially vigilant on managing risk and what loans are moving off potentially off-balance sheet on these risk transfers. Just curious what's driving that other than just we're 17 years into a good cycle [indiscernible] valuations are high and things like that.

Sure, Glenn. Thanks for the question. Look, this -- there have been a number of articles on those transfers, including naming us. I would say that our practice is pretty unchanged and that we are constantly looking to dynamically risk manage our portfolio of credit exposures. We have a variety of different tools that we use to risk manage and hedge that risk. SRT at one of those tools that's available to us. We're basically trying to ensure that the firm is in a position to continue to be able to support ongoing levels of client activity. prudently risk managing the existing portfolio as we think gives us the capacity to do that.

So no flash warning signs. It's just prudent risk management. It just so happens to be year-end. So Fed cutting balance sheet, things like that, just keeping clean. .

Good hygiene. This is a ordinary course risk management for us.

Okay. Cool. The other clarifier I wanted to get was the messaging behind the NGS 3.0, meaning normally, you see some companies go through strong generations of that when they're having some revenue issues you're not having any revenue issues you talked. You've been putting up great numbers and you talked about a great banking pipeline in the next 12 to 24 months. Is technology enabling this heightened awareness on efficiency in some of your AI investments. I'm just curious a little bit more about the why behind the [indiscernible] We like it. I'm just curious.

I appreciate the question. And you've got it right. I think we're at a place where the -- the evolution of the technology is allowing enterprises broadly. I find this as I'm talking to all over the world. All businesses are focused on this because the technology actually allows you to take a fresh look front and back at certain operating processes and really reimagine -- and so this has nothing to -- obviously, the firm is performing. The firm is growing. We feel very good about the execution, but we see this as an opportunity to use technology to automate drop scale, create efficiency and actually give us the capacity to invest more in the growth of our business. And so our responsibility to shareholders is to grow earnings and is to run the firm the best that we can -- that doesn't matter whether it's good times or bad. And in order to execute on something like this, it's scaling the organization, you have to bring the organization along too. And so part of the purpose, we've been working on this for a while. We've been talking about it as a leadership team. Part of the purpose of putting this out is it now allows us to talk more broadly and create a framework for the organization to understand the process that we're going to go through. And I think there's enormous upside for our business here. to allow further investment in growth. And by the way, I think you're going to hear this from lots of companies and lots of industries that people are very focused on taking advantage of this acceleration in technology to really allow automation, efficiency, and therefore, investment. And by the way, this is one of the reasons why we're optimistic about the forward the productivity gains in the economy from enterprises finding ways to do this really, I think, are going to be very meaningful over the next few years, and that creates a good tailwind that will balance other macro factors that may or may not come into play.

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

I guess if you wanted to go back to -- there's been obviously a lot of headlines and some right, some misplaced around risks on the private credit side. I think, David, you have -- Goldman has an interesting perspective, given how long you've been in this space and you've seen the evolution of the space. address it in 2 ways, if you could, please. One, when you think about the leverage that banks and Goldman provides to some of these players, how should shareholders think about the risk that at the back end, you could suffer losses because of the lending to NFI. And secondly, does any of this cause you to kind of recalibrate how you're thinking about growing in the halls of the private credit business?

Yes. I mean I'll start, and Denis can add some more granular detail, maybe comment just on some of the things that have been in the press more recently. But first of all, we're we're in business to serve our clients, finance our clients, but all of this is underpinned by the fact that we have a very strong risk management culture and strong underwriting is really central to everything that we do. So it's important to take a step back and you asked about MDFIs. It's a very broad category. There are all sorts of different activities. We have a very, very diversified book of lending exposure. The vast majority of our lending is collateralized financing and investment grade rated structures. So the vast majority of it is investment-grade rated. But look, we're constantly risk managing. We're constantly trying to create more capacity to do other things to support our clients and we think about it as a broad, big diversified portfolio. Obviously, if you got into a period where we had a credit cycle, which we have not had in quite some time, there'd be headwinds for all the banks. But I think we feel very, very good about our processes, our collateral, the structure of the book and a little bit back to the question that Glenn Schorr started with, we have a whole series of risk management processes that we constantly execute on to try to make sure we're being prudent at times like this. And if you want to comment a little on some of the specific things that have been in the press and add anything to what I said.

The only thing to add, we obviously don't have any direct exposure to either of the big names that have been the press lately. And picking up on David's point, we've been in the Full previous calls, that we've had good opportunities to grow the FICC financing line, but we have said multiple times that the demand from our clients far outstrips the growth that we have maintained a level of selectivity with respect to credit selection and risk return profiles. And that's still the case. Credit selection being disciplined about that on the -- going in is ultimately where it protects you when inevitably certain things will go wrong.

That's helpful. And I guess just one more. When we think about regulatory changes, we had the treasury secretary talked about this in a speech last week, just give us a mark-to-market around your expectations as you think about the GE subcharge and [indiscernible] how are you thinking about the time line and capital planning around all of that. And I think the bigger question that's come up with investors is is the competitive positioning of Goldman getting better where you're not being buried with incrementally new regulations. And so when we think about Goldman competing with the nonbanks across varied businesses. Is that also just at the margin getting better, if you can comment on that?

Sure. I mean on the second point, I absolutely think that the regulatory direction of travel is improving our competitive position significantly. On the time line, it's harder to give you an exact time line, but I'd say you're going to see real progress this fall and real progress during the first half of 2026. I would expect to have a very, very clear picture of a bunch of the regulatory issues that we're all focused on collectively over the course of the fall and the first half of '26 into the end of the CCAR cycle next summer. I think we're certainly going to see SLR relief. I think we're certainly going to see more transparency around CCAR and a continued recalibration because of that. I think we're going to see a recalibration of GSIB. I think we're going to see a much more constructive Basel III end game. And obviously, the regulatory tone and the focus of resources that we have to direct toward regulatory is shifting in a way that we can redeploy those other things that create avenues of growth. So I would say quite constructive. These things take time, but it's happening real time. And I do -- going back to where I started, I do think this improves our competitive position relative to others that are outside of the regulatory landscape.

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

Given the comments about the regulatory landscape and focusing on growth and the opportunity to play offense. And clearly, you announced the collaboration with T. Rowe and industry Ventures. I'm just wondering, David, as you think about Goldman Sachs in the future, One Goldman Sachs 3.0 what are those opportunities for growth that you think maybe are missing or not scaled in the business right now that will really sort of maybe stabilize or enhance that sort of 15% ROE as we look forward even without such a robust capital markets backdrop?

Sure. So I think we've -- I appreciate the question. I think we've talked about this a lot, Erika. But at the end of the day, our strategy remains the same. We continue to invest in global banking and markets and a very, very focused on share and wallet share. We believe through the cycle, that is a mid-teens business. That doesn't mean there couldn't be a year or environment where that business is different and a different in a different capital markets environment, but we believe consistently through the cycle, we now have that business operating as a mid-teens return business. And we've been clear that Asset & Wealth Management remains a very, very attractive growth channel for the firm. And you can see us improving margins and uplifting returns there, but there's still more to go. And we are highly confident in our ability to uplift the returns and asset wealth management over the next couple of years. That obviously strengthens and enhances the overall return profile and durability of the firm we are executing against that. And I think you can see through TR and also through our acquisition of Industry Ventures that we -- this gives you an idea of how we're thinking about strategically accelerating that growth and strengthening that overall platform. We're going to do it thoughtfully. We're going to do it carefully. We're going to do it prudently, but we're going to make investments that we think strengthen the platform and allow us to continue on that trajectory. So when you think about the firm, 2 big businesses, banking and markets, asset and wealth management, banking and markets, mid-teens through the cycle and as we execute on asset and wealth management and continue to enhance the returns that should produce a significantly higher return than it currently produces, and we're confident on our ability to deliver that. That, therefore, gives you a more durable targeted return.

We'll take our next question from Christian Bolu with Autonomous Research.

Just firstly, on the equities business. I appreciate that we can't read too much into 1 quarter. But curious what drove -- what you think drove the underperformance versus peers. Also would love to get some more color around, I guess, the decline in equity intermediation revenues. I believe you called out cash Equities as a driver.

Sure, Christian. So as you say at the beginning of your question, the overall strength of our equities platform remains in excellent condition. We're having our best year-to-date performance ever for that business. The cash component of equities intermediation was softer. In the prior year period, that activity is up almost 30%, and the prior quarter was a top decile quarter. So our comps were difficult and we had slightly less robust performance in the cash portion of the business, but the rest of the franchise continues to perform extremely well across the derivative components of intermediation. The financing piece was a record. And in aggregate, again, the franchise feels extremely well positioned. We're seeing high levels of client engagement and feel good about how it's set up for the forward.

Okay. And then this one is a bit of wonky question, so please bear with me. But just given all the jitters around things like first brands and tricolor, which apparently had, I guess, some fraud issues around collateral being pledged multiple times. Can you talk about or at least remind us how you manage risk in your financing businesses, especially around collateral integrity.

Sure, Christian. And this will sound familiar to my previous remarks. But the process for us is and the importance for us is to make sure we have a consistent set of underwriting standards, and we have robust upfront due diligence that we have ongoing monitoring and reporting with diligence underlying collateral that we manage the granularity of our portfolio within our own internally set diversification and concentration limits and that we have consistent standards to what we expect the risk return characteristics to be. Some of those idiosyncratic names that you give reference to we didn't have direct exposure to those names. Part of the key to credit underwriting is to make sure that you miss some of the more challenged credits. And that all comes down to upfront diligence and having a long-standing track record and an ability to be selective. We have a very big market presence here. We see a lot of opportunities. There's a lot of demand from clients for us to support them, and we have the ability to be selective with respect to where we extend our balance sheet make sure it complies with our own standards of risk management.

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

David, you mentioned earlier about -- okay, great. David, you mentioned earlier about how prudent, careful, strategy execution as we were discussing the -- as you were discussing the partnerships and acquisition that you announced the other day. It would be interesting to understand what you think the opportunity set is for you in the space, in wealth and asset management from an acquisition perspective in the sense of is should we expect these kind of bite size over time, building up over time? Or are there opportunities that you see that could potentially get you to a larger scale faster?

Yes. I mean first of all, Betsy, I appreciate the question. And some of this will sound familiar to things I've said on other earnings calls when I say publicly in my public comments, we're obviously focused on accelerating the Asset & Wealth Management business. Our Wealth Management business is an ultra high net worth franchise, and I would say it is scale. And we don't -- unlike other peers, we are not looking to directly control client relationships in the broad high net worth space or in other broad Wealth channels. That's not really our strategy. Our strategy is to continue to grow and be the leading ultra-high net worth, high touch wealth platform [indiscernible] married with our extraordinary manufacturing capability product offering in our asset management business and the acquisition that you saw today of industry Ventures adds to that, it's giving our very, very wealthy clients access to other investment opportunities and products that are hard to access in different channels. So we feel very good that, that's very on strategy. Are there larger acquisitions that could enhance our wealth platform, Absolutely. But things I've said before, the bar to do more significant things is always going to be very high. And I've also said, when you look at the best companies and the best businesses around asset and wealth management, they're generally sold, not bought. And most of the best ones are not for sale and not available. But if we saw something that could accelerate our journey in Asset & Wealth Management, we certainly consider it but always with a very, very high bar. At the moment, what we're seeing is interesting things that enhance our distribution, enhance our ability to offer very, very unique products to our client base already, and we'll continue to capture through third-party wealth channels opportunities to use our manufacturing capability and asset management more broadly.

Okay. And then just separately, is there -- should we still be anticipating and exit from the Apple card at some point in the near or medium term? Or is that no longer expected?

So we've been clear that credit cards are not a go-forward focus for Goldman Sachs. I don't have anything more to say on the Apple Card program at the moment. You saw us completely, and we now are completely exited from the GM card platform, when there's something more for me to report on the Apple Card, I guarantee that this broad group that's on the call will be among the first to know it.

We'll take our next question from Mike Mayo with Wells Fargo Securities.

What role is -- on the negative side, Goldman Sachs 3.0, I would think Platform Solutions might not make the cut. And I guess that relates to the Apple Card and I guess I'm just wondering why you're the leading deal maker in the world, and that's still hanging around. I guess that's a follow-up. But on the positive side, you said the quarter end backlog is at the highest level in 3 years. Can you give us a sense of that mix. And also, if I heard you correctly, you said -- I might have heard this incorrectly, 40% of your FICC and equity trading is financing. If I got that wrong, if you could correct me and what's comprising that?

Sure. So you heard correctly, our backlog is the highest level in 3 years. That backlog that we report comprises the advisory, equity underwriting and debt underwriting components in aggregate. We made a point that it actually stands at that position, notwithstanding very high levels of tools over the course of the previous quarter, and it gives you a sense for our optimism on the outlook and our expectation for other types of activity that are to come through our franchise broadly. You're also correct in your understanding of the contribution of FICC financing and Equities financing as a combined component of the FICC and equity lines combined. So we continue to focus on growing those durable and predictable financing revenue streams and are just reporting out on the sort of marginal contribution that they represent within the overall [indiscernible] business.

And as far as that 40%, that's up, I think, from 33% quarter-over-quarter. And I'm just wondering what were the sources of that incremental growth.

This has been an activity that we have been steadily growing over the last couple of years as we think about the durable revenue profile of the firm those components of global banking and markets together with management and other fees, private banking lending and asset wealth management. Those are the areas of the firm that we've been consistently deploying resources against and been focused on that has been steadily growing. So I don't think that's -- I don't think there's a new step function change in that contribution. It's been a constant commitment that's been steadily growing in the last couple of years.

We'll take our next question from Brennan Hawken with Bank of Montreal.

Just curious about AWM. So if we adjust for the impact of HPI, pretax margins are sort of roughly at the mid-20s and you roughly mid-20s target on a core basis. So if we think about what's going to drive you to that mid-teens ROE, is it more around the capital side? Or do you still have continued room on the profitability front that ROE?

I think, Brennan, at a high level, just because boil was down, and we've been pretty consistent on this we continue to fundraise and we continue to grow the scale of the platform as that fundraising goes [indiscernible], that adds to the management fee and the marginal margin as you scale the business continues to improve significantly. So we are very confident as we continue to fundraise and scale the platform that there's more room on the margin side as we continue to shift our strategy and finish with the HPI portfolio, that will free up a little bit of capital. But at this point, most of the margin and churn improvement is coming from the continued growth and scaling of the platform.

David. And on the expense side, you were clear in your expectations on the comp ratio, but curious about noncomp. We saw a charitable contribution this quarter, which is normally, I believe, in the fourth quarter instead. So was that just a timing change? Or is there going to be contributions in just the back half going forward, like third and fourth quarter? And what's the right way to think about it jumping off point for non-comp?

So I appreciate the comment on non-comp. We continue to have all the same programming and discipline around managing overall noncomp growth. The biggest driver for us, again, was transaction-based expenses, that's obviously correlated with the elevated levels of activity we're seeing across the board. We did call out the charitable expenses. You are correct in your recollection that traditionally we did recognize most of those expenses in the fourth quarter. This year, we're making an effort to actually spread it out over the course of the year. So it won't be showing up only in the third quarter.

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

You've exceeded or met most of, if not all, of your targets in asset and wealth management, except the kind of $1 billion of incentive fees you're tracking below that this year. Just curious as to when you think your ability to hit that is.

So our fair point, Dan, that -- and your question actually also helps answer the question on how asset and wealth management sort of migrates towards a higher return profile over time because it's another one of the contributors to the top line. It also has significant marginal margin contribution -- and you're right to ask because the unrealized balance of incentive fees as of the last quarter is now at $4.6 billion. So we still do have a visibility and expectations that there's significant amount of incentive fees that will pull through the P&L over the next several years. Ultimately, it's going to be a function of the way in which certain of those vehicles are able to finally monetize their investments and return carry to their investors and enable us to recognize the incentives. But the overall environment, deal-making environment, monetization environment, proportion of sponsor activity in the world, all of that is trending in the right direction, and that should help propel us closer to our medium-term targets of $1 billion of incentive fees per year.

Great. That's helpful. And then just I wanted to follow up on the alts business given the strength in fundraising you raised the guidance after several years of strong growth. Can you talk about the funds that are coming in either bigger or the more funds coming to market? Anything specific you could point to that's driving some of that excess growth?

Sure. So obviously, the last 5 years, we've been raising about $65 billion a year, which was a healthy clip. Our expectations now for this year are step function higher, approximately $100 billion. But the contribution is broad-based. So it's across multiple different asset types and it's a combination of having certain vehicles that are larger than previous vintages as well as launching new types of fundraising vehicles. So it's pretty broad-based contribution across the board.

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

David Dennis. First question just on the financial advisory strength, obviously, really nice on an absolute basis and then relative to peers as well. And all the data we look at would suggest we're still pretty early in the recovery for that business. sponsors are just starting to reengage. And then I know you talked -- touched on the market share gains as well. Just be good to get some additional context on where you feel like we are in the broader recovery for the advisory business for the industry right now how far away we are from the baseline. And then just from a market share perspective, is that senior banker headcount up a lot? Or is that just One Goldman Sachs resonating?

So a couple of aspects to it, Devin. I appreciate the question. First, on the cycle, we've been talking about an improvement an M&A all year because 1 of the things we see inside the firm is we've got really great transparency inside the firm as to all the transactions that are in progress. And and kind of what CEOs are doing in thinking. And in my prepared remarks, as I remember, I said after a little bit of volatility earlier in the year, CEOs are really focused on strategically where they want to go. I think one of the things to frame is that we're in an environment of involvement where CEOs think that the opportunity to get things done strategically is now possible after being in a period of time where they felt it was not possible. And so that's turning them all to focusing strategically. We have significant activity in the shop. You saw the comments around our backlog. That kind of shows you the sustainability I think that we are going to see a very constructive M&A environment through the end of the year into 2026. I'd expect 2026 to be a stronger M&A environment and less there some macro disruption. So I think the -- there's been a meaningful improvement on where we are in the cycle, but I still think, given market cap expansion growth, the fact that we were underpenetrated in terms of activity because of the regulatory environment for the last 4 years, I expect a pretty healthy environment. We commented on sponsors. -- sponsor activity is up kind of 40%. We see more of that in the pipeline. And so I think you're going to see an acceleration there. So I think it's quite constructive.

That's great. Okay. Just want to come back to the prime services and financing as well. I know it's been steady growth, as Dennis mentioned, but suspect there's also a bit of a cyclical component there just tied to higher risk appetites and then there's the obviously, the secular and kind of Goldman Sachs market share story. So just with where we are with record valuations across a number of assets, is there a way to frame how you're thinking about the cyclical demand in that business right now significantly elevated? And then just from a secular growth story, just talk about how much more room there is over the next handful of years here.

Sure. So you're right, this business definitely benefits from the underlying environment. Balances are very, very correlated with overall levels in the markets that is an attractive feature of the business. But there's obviously the composition of the portfolio and the nature of the activities and the flows that go into it. So you can calibrate more or less growth relative to the underlying backdrop based on how you manage your portfolio of credit extension. It has been together with FICC financing, a good source of stable revenues for us across the franchise. It's a product that is highly valued by our clients. There's a lot of demand for us to provide more by way of prime brokerage services to our clients. And so it's something that we're very strategically focused on continuing to provide -- to meet with clients demand.

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

On the comments you made, David, on Goldman Sachs 3.0, which obviously is very positive. As outsiders, how do you direct -- where should you direct us how we measure that success over the next 3 to 5 years as you roll this out throughout the organization. Is it going to be primarily through the ROTCE number? Or is there something else we should focus on?

So Gerard, I appreciate the question. In my prepared remarks when I laid it out, I said to you that in the first quarter, we'll give you a further update on this. If you go back and you think about the way we've operated in the past, we give you information. We then hold ourselves accountable for that.

The reason that we made this announcement today is to do these kinds of things in their organization like [ Goldman Sachs, ] we have to bring the organization along and we have to create a road map for the organization when we're in a position that we can give you more concrete metrics that you can track and we can quantify and proportionalize we have good ideas on those things now, really good ideas on those things. We're not prepared to lay that all out specifically for you. But I promise you that as we go into the first quarter and the second quarter, you'll have more transparency on what we're doing, the opportunity, how to think about it and how it drives further earnings growth for the firm.

Very good. And then as a follow-up, obviously, you guys are very well capitalized with the CET1 ratio just over 14%. The requirement 10.9%, you've been very active in returning that excess capital through share repurchases. As we go forward, assuming the regulatory environment continues to move in the direction that you've referenced, David, where should we see the buffer? I mean, if you come in with a final number maybe in a year something closer to 10.5% the regulatory requirement, what kind of buffer do you guys like to operate above your regulatory requirement when it comes to CET1?

So I think the way to think about a buffer is it depends on the clarity you have on the capital regime. I think that there is a reasonable chance or a good chance that after operating in a period of time where there was a lot of capital volatility and firms had a hard time planning their capital on a year-to-year basis, there's a good chance we're going to be in a regime where we have more clarity on our capital for a multiyear period of time, certainly within a tighter range. That would lead to narrower buffers than what we and others on the Street have been running with over the course of the last 5 years when there's been more capital volatility. If you go back and you look over the last few years, most of the institutions have been running larger buffers because there was more capital volatility through the CCAR process. You have more transparency around that process and also because you put in something like averaging that means that there's going to be less volatility on a year-to-year basis, I think most firms, including ourselves, would be comfortable running with buffers that are less than the buffers you've seen on average over the last few years. But as we have more clarity in that, as I said earlier, I think the direction of travel is quite positive. We'll give you more of a sense of how we think about the buffers, but that's a macro way to think about it. And this is another thing that's actually quite constructive for Goldman Sachs and for others in the industry.

At this time, there are no further questions. Ladies and gentlemen, this concludes the Goldman Sachs Third Quarter 2025 Earnings Conference Call. Thank you for your participation. You may now disconnect.

If we could just throw up the first ARS question that we've been asking in all the presentations, and we'll get started. But concluding day 1 of what I've been told has been a very successful 23rd Annual Global Financial Services Conference. Very pleased to have Goldman Sachs Chairman and CEO, David Solomon, with us. Again, last year, h was in this exact same time slot and it worked very well. So we thought we'd try it again.

Great.

So David, thank you for being here. Dave is about to embark on his eighth year of CEO at Goldman. And maybe the best place to begin is since we spoke last year, definitely have made progress on the strategy. Stock has outperformed since then, so appreciated by investors. And maybe just share your perspectives on strategy and what's been accomplished over the years.

Sure. Well, good afternoon, everybody. And Jason, thank you for having me. And when do I get to see the answer to that question?

There's in the middle of the table. I think once we get a quorum of people to respond. There we go.

I want somebody to tell me the underweight short story. Look, we've made -- Jason, you and I were just talking in the back. We've made a lot of progress over the last 7 years. We had a very conscious strategy to grow the firm, to grow the franchise. And when you step back and look at what we've done, we've really enhanced the client centricity of the firm, really evolved this one Goldman Sachs operating ethos, which is penetrating the firm and has really helped us improve our client market shares across the board.

If you look at our core business in Banking and Markets, we've improved our wallet share by about 370 basis points. We've taken the revenues of the firm from mid-30s, high 30s to $54 billion, $55 billion last year. We've significantly grown our assets under management. We've taken our assets under management from 2019 up by about 77%. We've meaningfully increased durable revenue. And the result of that is we've created a more stable firm. We've created a more durable firm, and we've also grown the firm and the firm's earnings meaningfully, and that's responded in a larger market cap and improved uplifted returns.

And I think the market is getting more and more confidence in their durability. And of course, there are going to be cycles in our business, our industry, but the durability of these businesses, and I think one of the interesting things that's going on is that the market is starting to appreciate that these large financial institutions have become much broader, much more diverse, much more durable, and with a market multiple for the market of 22.5, they probably deserve a better multiple than they've had, and those multiples are improving, and we're participating in that. But our relative performance, I think, has been quite strong.

We just throw up the next ARS question. But David, let me ask you in terms of just forward strategy as you kind of look ahead the next few years, how would you characterize the opportunity set and your strategic priorities from here?

Well, one of the things that I like a lot is we've been in such a tough capital markets and M&A environment, and we're really now in the last couple of quarters, starting to see a real improvement and a real opening up of that. But I think there's a long way for that to run. The sponsor community has still been relatively quiet.

We're seeing a real pickup in strategic M&A because I think large companies who really have been shut down for the last 4 or 5 years and believing that they could not do anything they wanted to do strategically, now actually believe they're an administration where they can dream big and do things that are significant. We've seen a massive pickup in that strategic M&A activity. And so I think we're going to have -- I can't tell you what the market is going to do, what the world is going to do, but I think from kind of a secular move, we're going to have more of a tailwind in terms of M&A and IPO and capital markets activity. And so I'm quite excited about that.

I think broadly for the firm and our strategy to continue to execute, our strategy remains the same, Jason. You know what we're focused on. And we continue to think that we've got really good room to continue to, at the margin, improve our world-class Global Banking and Markets franchise, continue to focus on opportunities where there are share gains. There's not as much as what we've accomplished over the last 7 years, but there's still room for improvement.

And in Asset & Wealth Management, we think we can continue to grow that franchise high single digits. We can continue to meaningfully uplift the returns over time in that franchise, and that will contribute to a higher overall return for the firm. And so we're making good progress there. On top of that, you obviously have a different regulatory environment that I think is creating a tailwind for all these institutions.

I think there's still time to see how that plays through and how much of that is captured. But I think all those things set up very nicely for a good organic growth story that's in line with what we've done. And obviously, if there are opportunities that can accelerate our asset and wealth management strategy and kind of solidify the position of that franchise, we're going to think about them. We've obviously got capital to deploy. And so we're going to think carefully about them, but the bar will always be very, very high for us to do something in that context.

Okay. A lot in there. So maybe we'll -- we'll unpack some of that. But I guess maybe first on just the operating backdrop. You mentioned a massive pickup in M&A. You mentioned IPO activity and issuance in general. Maybe just talk a bit more about the operating backdrop, your views on the kind of the macro environment, obviously, talking to clients all the time. What's on their minds and just activity in general?

Well, broadly speaking, there's -- we're -- it's indirect. We're operating in an environment where I'd say there's a lot of noise. And I think one of the things we're trying to do is trying to pick apart what's noise and what's substantively changing or affecting the macro operating environment.

I mean there are a few things that I'll point to that are having a big impact on the economic trajectory at the moment. One is the world and developed economies broadly are running pretty fiscally expansive plays, and the U.S. is no exception to that. And that fiscal expansion is a big tailwind for economic activity even when you throw things up that slow down growth. And my own view is if you look at economic growth in the United States today, it's chugging along pretty well, but it would probably be doing better if there was more certainty around trade policy.

Trade policy has been a headwind to growth to some degree. And the uncertainty, I think, has slowed investment. And obviously, there's still uncertainty as how this all resolves, how it plays through, how we see it in the economy, but the fiscal stimulus has really kept the economy going quite well. I think regulatory relief across a number of industries, given where we were for the last 4 or 5 years, is also a tailwind for economic growth. Obviously, the constructive resolution of the tax bill and moving it forward is constructive.

And so you've got a handful of constructive forces against some headwinds, some uncertainty. But the net-net of that is it's a pretty constructive economic environment. We are obviously seeing some softening in labor. There are a number of things that are contributing to that. I think one of the things we're going to have to wrestle with is immigration policy has slowed obviously materially people coming in. That's important when the economy is growing.

And so that's something that we'll have to wrestle with over time. But it's a relatively constructive economic environment. And then also put on this whole technology push forward around AI, huge productivity gains for enterprises because of that. That's another tailwind. That's also generating a lot of economic activity, also creating a lot of hype, which we'll have to watch. And I think you've got to be very thoughtful and balanced on when you think about the overall direction of travel on this.

But if you put it all together, it's a relatively constructive economic environment. I think there'll be some volatility in the next 6 to 12 months, but the direction of travel for activity, particularly in our business, I think, is going to be quite constructive.

This is the most constructive I've heard you sound in quite some time?

Well, I don't know about that. I think I've been pretty constructive for the last 6 to 12 months. But it was hard when you look at what was going on 2 years ago, it was hard to be super constructive about the overall environment. Now there are things going on now that I don't like also. But when you're talking about economic activity and clients being more active, this just seems like a better environment for the moment.

But it's -- I'd also say it's interesting when you look at -- one of the things that's interesting to me, there's a lot of talk about the policy rate. And it just doesn't feel to me like the policy rate is extraordinarily restrictive at the moment when you look at risk appetite. And so risk appetite is definitely out on what I'd say is the more exuberant end of the spectrum. And that obviously creates activity, too.

Makes sense. Maybe spend a minute just unpacking the longer-term opportunity for global banking and markets. Obviously, you have leadership position in investment banking, FIC, equity trading and expanded wallet share. So I guess where do we go from here? I guess, specific areas or initiatives that you're prioritizing the longer term?

Sure. It's a big business. It's a big, diverse business. And we have, I think, a clear and undisputed leadership position in investment banking, and we have a top 2 position, let's say, in FIC and equities. The integration of it, I think we do very, very well, and it's a very, very powerful client franchise.

Even though we've taken our client wallet shares up about 370 basis points over the last 5, 6 years, there are still opportunities to improve with individual clients. There are places where we underperform our overall wallet shares. And we're always constantly looking at that, taking that apart and saying, how can we add to the overall picture. Obviously, you don't have the same upside from a wallet share perspective that you have, but I think you can continue to do more and you can continue to put more financial resources forward to serve our clients and strengthen that position.

With the regulatory push that's going on, that frees up more capital and RWAs. There's still uncertainty around how that's all going to come through, but the direction of travel is one that's quite constructive around that. And so when you think about that, that allows us more financial resources and improves returns in some of these businesses, and that creates a trajectory for some more upside and some more glide path.

But we're very focused on places where we have gaps. We're very focused on our ability to close those gaps. And I do think that when you get the investment banking machine really turned on, it spills into our firm in a very pronounced way. And we really haven't seen that really since 2021. And it's improving, but we're still not in an environment where, for example, the sponsor community is still muted. It's improving, but still muted. See more strategic activity, but my guess is in the next 12 to 24 months, we'll continue to see that sponsor community unlock.

There are $4 trillion of private equity companies kind of in play, a good year for monetization. This is off the top of my head, it's about $400 billion. So there's kind of 10 years of backlog of monetization and turnover based on the private equity investment that was put in place over the course of the last 5, 6 years.

Powerful.

Yes, very powerful.

Maybe expand a bit just on private credit. It's obviously been a hot topic. Earlier this year, you put out a press release forming this Capital Solutions group. One of the -- I wrote down one of the comments from that, but it was -- you described it as one of the most important structural trends taking place in finance. Maybe just talk to kind of what progress you've seen in this space so far and how does this initiative kind of play into your longer-term strategy?

Sure. Private credit, when you step back and you think about private credit as an asset class, it's still growing. And I think we're in the early innings of the ability for private capital formation and credit to continue to play a big, big role in the way businesses finance. And I do think, look, just to put things, when people talk about the private markets, just to put things in perspective.

I was talking about private equity companies, when I said $4 trillion, we should remember that one company, NVIDIA is $4 trillion. So when you think about the public markets and the scale of the public markets and you think about what's going on in private capital formation, there's lots of room to continue to broaden and run and there's lots of capital out in the world, especially as access to these products become more accessible to wealth management systems and investors -- wealth investors broadly.

And we've been a player in private credit for 30-plus years. We've got a scaled private credit platform. But the thing that I think uniquely positions the firm, which led us to form the Capital Solutions Group is there's a lot of capital in the world. What all the capital allocators and investors want is access to products and ideas and differentiated things that they can deploy that capital into.

And what we were really trying to do with Capital Solutions Group because we sit in a very unique place, given the fact that we've got a large private credit platform, but we also have this very powerful investment bank and markets business, we're a great originator of product, a differentiated originator of product.

And our ability to see what's going on in the world and turn that into opportunities for people to deploy capital, we think might be second to none. And so we're very, very focused on how we create a seamless capability to really drive differentiated origination. So you look at the last few weeks, I'd point to 2 things just off the top of my head that come to mind that are indicative of our ability to do this. We got a structured financing for Altice that was kind of a $1 billion financing.

We did for air lease. We put together a $12 billion financing package that had $2 billion of structured equity in it and also a significant slug of private credit. We're very good at finding these opportunities to deploy significantly. We're in the middle of some very, very large infrastructure around AI infrastructure type financings that are tens of billions of dollars, and there's a lot of that coming.

And so we sit in a very interesting place. We not only have capital to employ and we're a very, very significant lender through our private credit platform, but we see these things earlier. People come to us for advice on how best to structure them. And we're very, very important in [indiscernible] system. And through Capital Solutions, we're trying to ensure that we have very, very differentiated origination capability.

Got it. Maybe spend some time on Asset and Wealth Management. We've definitely seen growth in some of your more durable revenues. Margins have improved. I would suspect both are probably not where you want them to be, though. Just talk about maybe the growth strategy in that business and where you can take the margins and returns going forward.

Sure. I mean we've been -- we've laid this out pretty clearly. Long term, when you look at Asset and Wealth broadly, we say high single-digit growth rate in that business and that we set a target of 25% margins, but that's not our long-term aspiration. But we're pretty confident that we can, over time, in the medium term, drive these returns for this business above the mid-teens for sure.

And we've grown it very nicely. I talked before about how the fact that since 2019, we've taken the assets under supervision up to $3.3 trillion, which is 77% growth. We've grown our management fees and our durable revenue during that period by 12%. And so we're performing that. We've raised $360 billion of alternatives over the course of the last 5 years. And so I just think we're very well positioned to continue that growth trajectory that we've laid out.

And it's a little bit like investment in the ground, it takes time for it to ramp up. But it's in the ground. It's ramping up. The fee streams are coming online. We're continuing to raise capital. It continues to get deployed that continues to bring in more durable revenue, and I think that will continue.

On the wealth management side, we've continued to make great progress there. I look at our private banking and lending business, which has been key to our growth in Wealth Management. Since 2019, we've taken that from about $1.5 billion. We've almost doubled it to just under $3 billion, $2.9 billion, and we see lots of growth. We're still underpenetrated as a lender into the wealth channel, the ultra-high net worth wealth channel. So we've got a very, very differentiated wealth franchise. We have about 17,000 clients, half of whom have been with the firm for more than 10 years. The average client size in terms of assets on our platform is $75 million, very differentiated from others.

And when you look at the amount of wealth that's compounding in the world, we're just extremely well positioned in this ultra-high net worth marketplace. And we think there's a lot of growth and opportunity for us to continue to expand it.

And then maybe on kind of tease me up third-party wealth. I guess talk to some of the opportunities in that space. Obviously, I think we also saw the T. Rowe announcement from last week. Kind of just talk through that and give us some color on the opportunity.

Sure. I mean there's no -- we have a great manufacturing capability in our asset management business. We have some distribution, but there's lots of distribution that we haven't had access to. And our third-party wealth focus is a real opportunity for us to expand the access that others have to our very, very unique product set. And we've been working very hard at this and making very good progress broadly.

The T. Rowe partnership represents a great opportunity for us to buy distribution into retirement channels with, I think, the premier retirement platform that's out there with a great brand and a great reputation. And so we're talking about a number of ways that our products can fit in target date funds that we can look at together, creating co-branded opportunities for investors around their retirement portfolios, how we give advice around retirement portfolios, how we can help people model retirement. And so this really gives us great partnership access to distribution that we haven't had before in this very important and I think evolving channel.

Just talking to investors after that, I guess, I think most thought the announcement kind of made sense from Goldman's perspective. I think some are a little surprised about the equity stake or buying equity in the Oakland market. Just your kind of thoughts around that.

Look, our partners wanted a commitment and alignment. We run a $1.8 trillion or $1.9 trillion balance sheet. We wanted to show support. What was interesting to me, this is about our partnering in retirement and in other areas to give investors access to some very, very unique products. The investment gives us some alignment, but it's interesting. If you were reading the press, the press made it look like the deal was the investment, okay? It's a small investment for Goldman Sachs. We're delighted to be partnering with a great firm. It's a small investment for Goldman Sachs.

No, I agree, I agree. I think we just -- we weren't used to seeing something like that. I guess on the alternative space, obviously, another key growth driver. Maybe just unpack your priorities and your competitive advantages here and just where you're seeing the most demand.

In alternatives?

Yes.

Yes, we're a scaled alternative player. We have just under $550 billion of alternatives. We've raised $360 billion, as I said, over the course of the last 5 years. We are on track to raise a comparable amount of money to what we raised last year. And so last year, we raised $79 billion, I think. Is that correct? $79 billion of alternatives last year. When you think about that, there aren't a lot of platforms in the world that can raise $79 billion of alternatives in a year.

We are a very significant player. We have some franchises and alternatives that are really at scale, and we have others where we'd like to bring more scale to them. Example of that would be infrastructure. But when you think about credit, equity, when you look across equity and growth in private equity and other equity strategies, when you look at secondaries, we're a clear leader in secondaries. And so we're a very, very well-positioned alternatives franchise that will continue to grow as the alternatives industry grows.

I think that when you think about alternatives broadly, we're still in the early innings of the secular growth of alternatives and the participation by investors in these products. That doesn't mean it will be a straight line. That doesn't mean there won't be -- it won't be without bumps. But I think we're still in the early innings of kind of alternative capital formation and access for a broader array of investors to these products, and we're trying to position the firm as well as we can to make sure we deliver on that.

Got it. Earlier, you mentioned just the regulatory backdrop and maybe we'll put up the next ARS question, but it's certainly something that's top of mind of investors, both the regulatory environment and capital and a lot of moving parts. But can you just kind of talk about the current state of play?

With respect to inorganic growth, we...

That's for the next question.

I'm sorry.

Regulation and cap.

Regulation and cap. So Regulation has been a real headwind for our industry over the last 5 or 6 years. It's clear that we're in a new regulatory environment, and we're going to see a shift. I think what's unclear is how this will all filter through, what will be more permanent and what will be more still caught in the political back and forth.

But the trends are quite positive. They're quite positive around capital. They're quite positive around eSLR and leverage, and they're quite positive around supervision.

And so when you look at all that, I think one of the things that's happened over the course, I mean, it's very interesting. You can go back and there's been a lot of talk about how the capital levels for the large banks have been about right. I mean you can go back 8 to 10 years and listen to that over and over again, yet the capital levels for the large banks have grown very materially. I'm not going to sit here and say they're going to reduce very materially. But when you think about the growth in these businesses, if we can stop the growth to some degree and have a capital regime that's clearly articulated so that people can plan multiple years at a time, that would be a huge improvement.

I think as an industry, we've shown a lot of nimble flexibility around capital in an environment where capital is moving all over the place, a huge improvement that would allow more employment, more deployment into business, which is more productive for markets broadly would be a clearer capital regime. And I think there's a good chance we're going to get a much clearer capital regime.

And I'm hopeful that some of what's been said and is representative will get put into place over the course of the coming months. I think they're pretty forward on eSLR relief, which is obviously capital relief and very, very significant because that had become binding to most of the firms. I think you're going to get a resolution on Basel III that will be quite constructive. And I do think that some of the headwinds around SCB, you've seen it in the last go round and the fact that there's -- the industry has kind of pushed back and there's going to have to be more transparency on how that's done and how that's modeled, I think that's quite constructive for capital levels.

So we need to see it all come through, but I think that's a good opportunity. Now what does that do? That creates more excess capital. But I think one of the things that's important to note is everybody has been running with very large buffers because there's been so much uncertainty around how much capital you have to carry. And if you actually understand the capital regime, buffers can come down and that -- just that itself is a release of capital back into the system, which would be quite constructive.

So I think we're heading to a more constructive environment, but we have to wait and see how this plays out. And on supervision, we've all put an enormous amount of time into this. There should be supervision. Banks need to be safe and sound, but the supervision should focus on the safety and soundness of institutions. And if it's not strain the way it was straining for the last 5 years, that frees up a lot of resources for us to invest in other things like client service and growth of our business. And I think we're definitely heading in that.

We actually had the Controller of the Currency, Jonathan Gould this morning, and he actually shared that exact same view in very similar termality. So obviously, your SCB came down a lot this year. You mentioned SLR proposal out there. G-SIB surcharge, I guess, has been another kind of headwind and kind of increasing constraint over the last few years. Any kind of thoughts in terms of...

Well, G-SIB I didn't mention G-SIB. G-SIB is another place where I think you're going to get relief. I mean, a minimum when the statute was put in place, the statute was supposed to be calibrated to economic growth in the world, and they just didn't implement it. Really, we should -- it should be backdated for 10 years for all the economic growth in the world. I'm not suggesting that's going to happen. But by the way, it would be a good thing if it was just calibrated going forward because that certainly would help.

But look, it's all a cocktail. And I think the most important thing is consistency and understanding of the capital levels so that people can be thoughtful about their buffers and people can plan. And when people plan, they invest in their business, they grow their business, that's more constructive.

So I guess on that point, in this world, hopefully not too far away, just more ability to kind of plan on capital deployment. I guess, from an organic perspective, maybe talk about the biggest opportunities. And then I obviously going to have to follow up and ask you about inorganic.

Our capital policy remains pretty consistent. First and foremost, we're looking to deploy capital that we have into our business for incremental returns, and that has not changed. So there are certainly -- we see opportunities to deploy capital in the business, and we're focused on that. Financing, lending, some of the things we've talked about are clear examples of our ability to deploy more into the business.

We're also in an environment where depending on how what's been put forward plays out, it frees up more RWA capacity and capital capacity for us to deploy. And some of the things that we can deploy and look more attractive than they might have looked in a different capital regime. First and foremost, we want to put resources forward to serve our clients and our franchise if the returns are reasonable, and we see opportunities for that this year, next year and in the future. That's first.

Second, if we don't do that, we're going to continue to find ways to return capital to shareholders. We've grown our dividend very materially over the course of the last 7 years. We're very committed to that. And so we'll grow our dividend. And if not, we'll then return that capital.

Now to jump to your next question, if something comes up inorganically, particularly around the Asset and Wealth Management business and our ability to expand that franchise or accelerate what we're trying to do in that franchise, we will consider it. But the bar to do something significant has to be very, very high. These things are difficult. They're disruptive and the bar has got to be very high. Are there small things that you can incrementally add, sure, and we'll think about that stuff. But to deploy a lot of capital into something significant, the bar would have to be very, very high.

The audience seems to favor the wealth management part over the asset management part of AWM. I'm not sure if you have a view.

I think there are interesting opportunities that allow us to accelerate things we do in both those spaces. It's interesting in the boutique investment bank. You know, boutique investment banking is about people. We have the most extraordinary talent in our investment bank, long-dated talent. There aren't a lot of people that leave our shop to do other things. If they're going to practice, they'd rather practice on our platform.

And every few years, we go out and hire a handful of people that we think are the best people out there that don't work for us. And we're finding, generally speaking, when we go target people, we can find people to enhance that franchise. But our focus, if we were to think about things inorganically would be around Wealth and Asset Management.

I guess I wanted to follow up with something you said a second ago in terms of in the kind of maybe this new capital regime world to hopefully get to at some point next year or the year after, certain businesses may become more attractive that aren't as attractive now. Maybe you could just provide an example or two.

If you think about some of the lending activity that you do, there's lending activity that we turn away because it's not meeting our return expectations from a risk-reward perspective. And we're running a higher return firm that -- one of the things that, that does is it closes off certain activity. If you're running an 11% firm or a 10% firm, you can look through the lending edge in terms of where you're willing to deploy capital.

There are some firms that run firms that those are their base returns. So their -- what their lends as to how they deploy capital is different. We're trying to run a mid-teens return firm. And so if we wind up with a lower fundamental capital level, there's some lending that we might have turned away that didn't look attractive that now looks more attractive. So that's one example.

Helpful. And then at your strategic update in January, you spent a lot more time on talking about expenses and efficiencies than I've kind of previously heard Goldman talk to. Maybe just talk to kind of what you're doing on that front and just how you -- the opportunity there.

Yes. Well, first of all, we don't always talk about it. But when you go back to our original Investor Day 6 years ago, besides growing the core business, besides the 4 growth areas we outlined, the third pillar was operate the firm more efficiently. And it's always been kind of core to who we are. And I mean, I know you've noticed this because we've talked about it, Jason. But when you look as we've grown the firm on non-comp operating expenses, we run a tight ship.

And we're very, very focused and diligent about efficiencies and being -- we've got to invest in the business to try and operate as efficiently as possible. One of the things that we're excited about, which is leading us to talk about it more is we really see this AI technology is creating opportunities for us to fundamentally change processes inside the firm and make them much more efficient and therefore, free up resources to do other things that allow us to invest in more growth and productivity in the business.

And so if you think about it, we spend a very significant amount on technology and engineers and engineering. I would want to spend more. I'm limited not by what we'd like to spend because we could grow and invest in the business, but I'm trying to balance returns, we're trying to balance returns, and so we're limited. If you can create operating efficiency and automation and free up excess capacity to invest more, you can accelerate some of the technology investment. And so that's one example of something we're very focused on.

It's hard to change processes inside business, but you're going to hear us talk more and more about it because we think the productivity opportunities in professional services business with this technology. And it's not just to rip out cost, it's to redeploy into things that drive growth in addition to doing some things much more efficiently. We've got very detailed plans on a variety of areas where we think we can make good progress in really reimagining processes, creating automation, creating efficiency, looking through a different lens. And we're going to push the organization very, very hard. And that's going to create some movement of people, and it's going to create opportunities to kind of redeploy into things that can accelerate growth.

I guess you touched on AI. So maybe just expand on that a little bit. I mean I've seen headlines about your collaboration with Cognitive Labs -- Cognition Labs, your positive usage of Devin. Maybe just tell us more about the ability to leverage AI?

Yes. I mean those are 2 great examples. I mean, Devin is a great example. When I saw the first demonstration, I saw Devin, it did something in an hour that would take 10 engineers a few days. And so the power of that is really enormous. When you get it right, you can deploy it.

But again, the lens has got to be -- these -- there are 2 things. You could put these tools. We have very productive people. You can put these tools in their hands and make them more productive. That's no different than what's been going on for 40 years. That's no different than when I started and I had to do a common stock comparison, I had to go to library and get microfiche and it took 6 hours. Today, you see it in your phone, you get it in 2 minutes.

It doesn't mean we don't have -- we have a lot less smart people running around. It's just they're doing things that are more productive on the spectrum of productivity. Getting these tools into our very productive people's hands allows them to do more productive things that allow us to serve more clients and be better at what we do. That, I think, is easy for people to understand and easy for people to execute on.

What's harder to really figure out is when you think about things like onboarding of clients, you think about things like the preparation of financials for all the entities that we have. When you think about how certain compliance functions and searching in the firm and knowledge works in the firm and how you distribute it, there are so many manual processes that exist in these institutions. How can you automate them, make them more efficient, get to what you really need. These tools are accelerating the ability to do that, and it requires focus, investment, leadership, and we're really focused on this in a very, very targeted way.

And as we get comfortable with things that we're doing, we will talk more about it. But this has this organization's attention on steroids, and we're going to continue to find ways to operate the firm more efficiently and therefore, deploy into things that can grow the firm and keep the firm on a relative basis, just a little bit more competitive, a little bit more on edge in what it does.

And then a lot of talk about stablecoins. There was a release a couple of weeks ago about the tokenized money market fund in collaboration with BNY. Maybe talk a little bit more about what that means and just kind of the overall digital strategy.

Yes. I mean it's super interesting technology, super interesting. We're trying to tokenized money market funds as an example of our trying to take the technology and deploy it in a way that creates advantage for something that we're obviously a huge player in. Obviously, this bill that was passed is significant and moves us all forward. But the market structure bill still hasn't been passed. It's going to be a lot more complicated. There's going to be a lot of regulatory navigation around all this, and it's still early, but we're watching it very closely.

Can it be a big opportunity? And will it create a disruption of where certain rents are collected in the financial ecosystem, particularly around things like payments and money movement, absolutely over time. Interestingly, I think those are things that we're less exposed to. But through this technology, it might be easier for us to have access to some of those rents in different ways. And so we're thinking about that, strategizing about it. There are a lot of people talking about it as though it's easy and it's going to be fast, it won't be. But it's certainly something that's interesting and has our attention.

We put the last ARS question. And there's also, I guess, the last question for this session, which I'm going to keep for myself. So I guess, David, you mentioned more durable revenues. You mentioned the constructive macro backdrop that feels like it has some legs to it. We talked about a likely new capital construct that allows you to kind of plan better with lower management buffers and maybe lower kind of overall requirement. I guess against that backdrop, I guess, how do we think about the forward trajectory of Goldman, return profile, the target? It sounds like maybe a better return profile today than when we had Investor Day a couple of years ago and...

So we've been talking about the fact that we really believed that we could drive sustainable mid-teens returns for the firm through the cycle. And we really haven't said anything different. We've been -- we're kind of getting there. But that was really driven through our ability to prove to the market, and I think we've now proved this, okay, that our Banking and Markets business is mid-teens, okay, through the cycle. You've got a number of years. Now could you create a year, okay, where it's not? Okay, Sure. I mean, of course, okay?

But I think you've got a lot of data points now where our Banking and Markets business has delivered mid-teens returns. And we think we've got a pretty sustainable mid-teens ROE business, and we're going to work hard to protect that and invest in that. On Asset and Wealth Management, the returns are below our target, but they're moving up. And I've told you that I believe that we can do better than mid-teens in that business. And we think we've got a very high degree of confidence in our ability to execute on that in the coming midterm number of years.

And if you think about that, that's the firm, okay? A Global Banking and Markets business that people have increasing confidence is mid-teens and an Asset and Wealth Management business that is not yet mid-teens, that should be higher than mid-teens. And that's what we're driving toward. And so when you put that together, you certainly get a mid-teens durable business. We have a very high degree of confidence that through the cycle, we can deliver on that for investors. And I think investors are getting more confidence in our ability to do that.

Perfect. On that note, please...

By the way, the bottom chart actually shows that people are -- 63% of the people think we'll achieve or exceed our targets. I mean that's pretty good. You get 2/3 kind of believing what we think we can do, and that's pretty good. I'll take that.

It supports the stock at an all-time high.

I'll take that.

On that note, please join me in thanking David for his time today.

Thank you very much.