Goldman Sachs Talks to Its Critics in Effort to Make Friends
January 29 2020 - 10:19AM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc. set higher financial targets Wednesday
in an effort to turn a skeptical shareholder base into believers in
Chief Executive David Solomon's turnaround plan.
Speaking at the Wall Street bank's first-ever investor day, Mr.
Solomon said Goldman aims to hit a 13% return on equity over the
next few years, which would put it closer to best-in-class rivals
such as JPMorgan Chase & Co. That figure was 10% last year,
dragged down by spending on new ventures like consumer banking and
a big legal charge related to Goldman's involvement in a Malaysian
corruption scandal.
Shares were flat in morning trading. Goldman's stock has barely
risen since 2007, while JPMorgan and other rivals have hit fresh
highs.
Mr. Solomon opened with a joke, encouraging the audience to hold
its questions until the end but "feel free to break into
spontaneous applause." The spiel that followed, intended to
convince shareholders that Goldman can regain its luster and
continue to grow, boiled down to three tactics: defend existing
businesses like investment banking, add new ones on Main Street and
cut costs.
"If this seems simple, that's the point," he said.
The firm, once famously secretive, set hard targets for
shareholders: cut $700 million in annual costs in its struggling
securities-trading division, bring $250 billion in new assets into
its money-management arm and keep costs to under 60% of revenue.
That figure was 68% in 2019, including the Malaysia legal
charge.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
January 29, 2020 10:04 ET (15:04 GMT)
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