The first-ever Goldman Sachs Investor Day planned Jan. 29 won’t include rigid profit goals but instead will focus on growth strategy and transparency across its business sectors, The Financial Times reported on Sunday (Dec. 1), citing sources.
Chairman and CEO David M. Solomon will join the company’s senior leadership team at the invitation-only Investor Day to deliver presentations about strategic priorities. The firm’s core Wall Street businesses will be emphasized to investors, rather than its more recent foray into consumer banking and its credit cards business with Apple.
Plans for Investor Day started when Solomon took over 13 months ago and said he would develop a comprehensive growth plan.
Targets will be set for “through the cycle” profitability instead of a fixed return on equity. One senior executive told FT that Investor Day was going to emphasize that people should invest in Goldman “for the here and now.” They want investors to realize that it was not “remotely possible” for its consumer businesses to turn a profit in the next five years.
Expanding investment banking to smaller companies and creating a cash management division are initiatives expected to be highlighted on Investor Day. Goldman will also create a single merchant banking division comprised of investment management, asset management and lending.
It is anticipated that Goldman will outline its plans to become a driving force in asset management with the introduction of new funds “to bolster a new merchant banking division with $135 billion of assets under management.”
Goldman is unlikely to set a growth target for the merchant banking operations, the source said.
“Institutions that have tried . . . to be overly precise as to a deliverable [return] have themselves found it frustrating because circumstances can alter that are not entirely in anybody's control,” a source familiar with the discussions told FT.
Evercore ISI analyst Glenn Schorr told the news outlet there was a “chance some people would be disappointed” by the lack of strict targets.
Goldman shares are hovering near historic lows and its financial performance is below its competitors.
Consumer bank Marcus, launched by Goldman Sachs in 2016, has lost $1.3 billion.