Goldman Sachs (NYSE:GS) CEO David Solomon acknowledged certain shortcomings at the company’s investor day on Tuesday but maintained the firm was on a solid path forward.
"Our franchise is strong," Solomon said during his opening remarks. "Success is not a given. Sometimes we fall short, sometimes we don't execute, but we always learn and adapt."
Most notably, the company grappled with a foray into the consumer banking sector that has not gone to plan. The firm’s consumer banking service, called Marcus, was largely unsuccessful at competing with firms such as JPMorgan Chase. Rising interest rates didn’t help either, and media reports have alluded to a negative workplace culture.
"It was clear we lacked [a] certain competitive advantage and we did too much too quickly, which affected our execution,” Solomon said, noting that strategic alternatives for parts of the consumer business were on the table.
The path forward lies with Goldman’s asset and wealth management unit, which has roughly $2.5 trillion in assets.
Goldman’s management team outlined a three- to five-year plan, which includes "high single-digit percentage organic durable revenue growth from management fees and private banking and lending," according to reports, along with a mid-twenties pre-tax margin and mid-teens segment return on equity.
The firm also set a target for return on tangible equity between 15% to 17%. That's higher than its 2020 goal of 14%, but it lags behind competitors Morgan Stanley (NYSE:MS) and JPMorgan Chase, which currently boast higher multiples.
Shares of Goldman fell 2% to $357.86 Tuesday morning.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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