Goldman Sachs Group Inc is tracking ahead of its goal to
generate $5 billion in additional annual revenue by 2020 as growth initiatives
bear fruit, its new finance chief said on Monday.
The revenue-boosting plan that management laid out last year has produced
$2.5 billion so far in 2018, according to a presentation by Chief Financial
Officer Stephen Scherr at an industry event. He stopped short of increasing the
target, but suggested Goldman could still do better.
“While we are
meeting our objectives, these initiatives are not the limit of our ambition.
Numerous business opportunities exist beyond the $5 billion (target),” said
Scherr, who plans to provide a strategic update in the spring.
marks the first under a new management team at Goldman Sachs. The bank is now
led by a group of longtime dealmakers, including Chief Executive Officer David
Solomon, who started on Oct. 1, Chief Operating Officer John Waldron and Scherr,
who gave the presentation on his first day as CFO.
considered the most savvy Wall Street trading houses, has suffered as tougher
regulations make it harder to maintain profits at its trading businesses and as
customer trends change since the 2007-2009 financial crisis.
Its new management
wants to reshape the business. It is conducting a “front-to-back” review and
will make a “clinical assessment” of whether each business is meeting its cost
of capital, Scherr said, adding that the bank is not looking to shrink or exit
businesses, but instead determine where to deploy capital for the best returns.
presentation showed Goldman making headway on plans to lend more to consumers
and big businesses. Its fledgling digital bank, Marcus, now has 2 million
customers and it wants to grow that business’s market share to eventually
become a “one-stop shop for financial well-being,” Scherr said.
The bank is also working to improve areas such as trading, and to squeeze
more revenue from the investment bank where Solomon and his deputies built
their careers. That business has generated $40 billion in deal volume from new
customers since Goldman launched its strategy in 2016.
analyst Glenn Schorr said in a report last week that it could take a
significant amount of time for Goldman to truly change its earnings mix by
growing organically rather than pursuing a substantial acquisition. Whichever
path it pursues, he said, the bank is headed in the right direction.
“Goldman Sachs really
wants to get bigger in growth businesses that investors and clients value
most,” Schorr said.
Goldman shares were down 0.9 percent
at $227.71 in mid-morning trading.
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