Goldman Sachs Group Inc (NYSE:GS) is set to unveil its medium-term financial goals at its second-ever investor day, according to analysts. The bank is expected to update its target for return on tangible equity (ROTE), which currently stands at 15% to 17%. Its ROTE was 11% in 2022, missing analyst estimates due to a slowdown in dealmaking caused by rising interest rates.
Investors are keen to see how Goldman plans to generate profits from its fintech unit, Platform Solutions, following its costly foray into consumer banking. The bank has since reined in its ambitions and reduced costs, which could help it meet efficiency targets. CEO David Solomon’s plans for growth, and his strategies for decreasing the bank’s reliance on trading and investment banking, will also be closely watched by observers.
Goldman has announced plans to slim down some alternative investments that weighed on profits last year. However, analysts predict that earnings may continue to be subdued for the next year or more due to an uncertain economic environment, which could pressure investment banking and asset management revenue.
Despite a solid performance in recent years, Goldman’s markets division could weaken in the short to medium term due to market volatility. Trading has been described as a “wild card” by Michael Wong, an analyst at Morningstar Inc.
Investors and analysts will be looking for a clear roadmap to profitability for Platform Solutions and reassurances about the bank’s long-term growth plans. Solomon and his top executives will need to demonstrate their ability to adapt to changing market conditions and continue to generate strong returns for shareholders.
Goldman’s investor day comes amid a challenging period for the banking industry, as the Covid-19 pandemic and geopolitical uncertainty continue to impact global markets. As such, the bank’s ability to navigate these challenges and deliver on its financial targets will be closely watched by investors and industry experts alike.