Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Welcome to our Bloomberg television and radio audiences. I'm Shanali Bassek,
Speaker 2: and I'm standing by with the chief financial Officer of
Speaker 2: Goldman Sachs, Dennis Coleman. And I know Dennis that you
Speaker 2: are deep into planning for twenty twenty five. What is
Speaker 2: your number one priority as you head into next year.
Speaker 3: Well, first and all, let me just say welcome to
Speaker 3: the Goldman Sachs Financials Conference.
Speaker 1: It is our thirty fifth annual.
Speaker 3: We have over one hundred issuers here as many as
Speaker 3: fourteen hundred other guests interested in the financial sector. So
Speaker 3: a really big event and we're really happy to have
Speaker 3: Bloomberg here with us today.
Speaker 1: In terms of our priorities as we.
Speaker 3: Head into twenty twenty five, given our outlook and given
Speaker 3: our two world class interconnected businesses, we are really optimistic
Speaker 3: on the prospect to continue to drive growth for our
Speaker 3: clients and for Goldman Sachs. And so my number one
Speaker 3: priority is making sure that all the people of Goldman
Speaker 3: Sachs are front footed and focused on clients we can
Speaker 3: serve them as.
Speaker 1: Best we can.
Speaker 3: Heading into twenty twenty five, many of the other things
Speaker 3: should take care of themselves.
Speaker 2: Front footed and ready to go. You know, if you
Speaker 2: take a look at the market reaction, you see so
Speaker 2: many investors betting on investment bank stocks. Goldman benefiting more
Speaker 2: than any any of the big six banks out there.
Speaker 2: Your stock is up more than fifty two percent this year.
Speaker 2: What does that mean in terms of what investors should
Speaker 2: expect for next year? Is that runoff justified? Is there
Speaker 2: more to come? How much activity should they expect?
Speaker 3: So? I think what investors see is a combination of factors.
Speaker 3: They see an improving macroeconomic backdrop, They have increasing optimism
Speaker 3: about the growth trajectory in twenty twenty five, and they
Speaker 3: recognize that Goldman Sachs has established leading market share positions
Speaker 3: across both global banking and markets and asset and wealth management.
Speaker 3: Certain of the activities within our portfolio of global banking
Speaker 3: and markets have not been performing at their ultimate potential,
Speaker 3: yet our rankings and our market share positions are absolutely
Speaker 3: top and so as we see an uptick in activity
Speaker 3: heading the two tenty twenty five, I think they appreciate
Speaker 3: that our firm, with our client franchise, should be able
Speaker 3: to drive a lot of elevated activity.
Speaker 2: Do you think there could be some choppy waters on
Speaker 2: the road to more M and A. You look at
Speaker 2: just the last couple of weeks of the Biden administration.
Speaker 2: You see the Kroger Albertson's deal fall apart in under
Speaker 2: the weight of the FTC. You see a bigger crackdown
Speaker 2: on that Nippon Steel ustal merger from the Biden administration.
Speaker 1: And you have.
Speaker 2: Trump naming somebody to lead the FTC with Andrew Ferguson.
Speaker 2: Stack it all up together, do you think that there
Speaker 2: could still be headwinds to M and A given the
Speaker 2: future antitrust environment and the one that we're still making
Speaker 2: our way through today.
Speaker 3: So I think we've seen some sustained growth in M
Speaker 3: and A activity moving towards the average levels of activity
Speaker 3: over the last ten years. There have been a number
Speaker 3: of headwinds to the unlocking of the ultimate quantum of
Speaker 3: MNA activity over the course of the last year. I
Speaker 3: think with Fergin's nominee there could be a new direction
Speaker 3: at the FTC. Obviously, as a sitting commissioner scented with
Speaker 3: the current leadership on a number of cases, and so
Speaker 3: we could see a more favorable environment heading into twenty
Speaker 3: twenty five that could actually spur more by way of
Speaker 3: CEO confidence and in turn unlocking more investment, more activity,
Speaker 3: and provide a more favorable strategic backdrop.
Speaker 2: Now, what is it that you're preparing for. We've had
Speaker 2: bankers tell us investment bankers across Wall Street tell us
Speaker 2: they're preparing for the return of the mega deal. Do
Speaker 2: you think big ticket, more than fifty billion dollar deals
Speaker 2: can come back at scale?
Speaker 3: So, we historically have the leading market share in both
Speaker 3: announced and completed M and A over many, many, many years,
Speaker 3: and a big part of that franchise is doing some
Speaker 3: of the biggest deals as they present themselves for opportunities
Speaker 3: as we move into.
Speaker 1: Twenty twenty five.
Speaker 3: Given where the markets are, given the backdrop, given the
Speaker 3: quality of our client franchise, and given the level of
Speaker 3: engagement that we've seen post the turnover in the administration,
Speaker 3: we are optimistic about the prospect for more deal flow.
Speaker 3: And in particular, we see through our business inquiry coming
Speaker 3: from clients for more by way of capital committed financing
Speaker 3: transactions that is, in and of itself a signal for
Speaker 3: a different type of transaction and a different level of
Speaker 3: activity dovetails very well with our capability set, and I
Speaker 3: think is reinforcing of the prospect for more deal activity.
Speaker 2: You know, it's interesting as I sit here with you today,
Speaker 2: you also had that CPI report and an inflation report
Speaker 2: that did drive yields lower. But when you look across
Speaker 2: the horizon, you are looking at a lot of uncertainty
Speaker 2: when it comes to the industry outlook from investors. How
Speaker 2: much can that throw a wrench in the activity for
Speaker 2: next year? Are you worried about the direction of interest rates,
Speaker 2: especially if tariff policies were to drive inflation higher.
Speaker 3: So interest rate policy is obviously a really big piece
Speaker 3: of the equation overall level of interest rates coming down.
Speaker 3: Notwithstanding the CPI print this morning, I think we're still
Speaker 3: pricing a greater likelihood of a twenty five basis point
Speaker 3: cut into the end of this year the December meeting.
Speaker 3: As we head into twenty twenty five, there are some uncertainties.
Speaker 3: We'll have to see what types of policies present themselves.
Speaker 3: We have to see how the economic growth continues to unfold.
Speaker 3: There currently are more cuts priced into twenty twenty five,
Speaker 3: but that type of environment where you have rates coming down,
Speaker 3: you still see sustained levels of GDP growth, unemployment under control.
Speaker 3: That is a favorable backdrop for ongoing levels of deal activity.
Speaker 2: So do you worry at the end of the day
Speaker 2: at all about the necessity for interest rate rise even
Speaker 2: next year or do you think that wouldn't even be
Speaker 2: on the table.
Speaker 3: I'm in the business of worrying about a lot of
Speaker 3: things as a CFO, and as a CFO of Goldman Sachs,
Speaker 3: we see risks in many different places, so we're always
Speaker 3: focused on sort of counter consensus moves that could occur.
Speaker 3: But I think the consensus that we're seeing in the
Speaker 3: way the markets are pricing things, and what we're seeing
Speaker 3: from our clients and based on their own behavior for
Speaker 3: the time being, the base case expectation is for an
Speaker 3: improved and benign backdrop, But of course the unexpected things
Speaker 3: can happen and we need to be prepared for that.
Speaker 2: What is your biggest worry when you head into twenty
Speaker 2: twenty five.
Speaker 3: So there are again long list of things that we
Speaker 3: need to be focused on.
Speaker 1: The Things that are very much.
Speaker 3: Top of mind for me in these days geopolitical risk.
Speaker 3: You know, recently we discussed and in the last week alone,
Speaker 3: we've seen, you know, government disruptions across Korea, across France,
Speaker 3: across Syria.
Speaker 1: That's just in one week.
Speaker 3: So it's a reminder that around the world there are
Speaker 3: levels of instability that you need to be mindful of.
Speaker 1: I'm always quick.
Speaker 3: To point out that cybersecurity is a risk. It's a
Speaker 3: risk that all of us experience operating in a global
Speaker 3: and interconnected world. So just off the top of my head,
Speaker 3: those will be two things I would flag for you, Shinali.
Speaker 2: Another thing you mentioned a little earlier is that your
Speaker 2: number one priority is to get your people on their
Speaker 2: front foot for next year. What does that mean if
Speaker 2: you think about the talent story, is Goldman Sachs ready
Speaker 2: to be hiring bankers once again to capitalize on that
Speaker 2: M and A activity. How do you think about where
Speaker 2: you stand on the talent story today?
Speaker 3: So talent is the mission critical component of Goldman Sachs.
Speaker 3: It's one of the most important things we need to
Speaker 3: be successful as a company, successful for our clients. Very
Speaker 3: proud history of attracting the best and brightest, developing them
Speaker 3: and then making sure that we create the kind of
Speaker 3: work environment client franchise that makes them feel confident they
Speaker 3: can develop long term productive career at Goldman Sachs. I
Speaker 3: think there's an excitement that they feel in terms of
Speaker 3: the overall uptick in activity. These are professionals at the
Speaker 3: top of their game, and they want to be involved
Speaker 3: in some of the most impactful and consequential developments that
Speaker 3: occur across the global capital markets. I think they recognize
Speaker 3: that being part of our platform is a really special
Speaker 3: opportunity for them to realize their potential and serve their
Speaker 3: clients as best as they possibly can.
Speaker 2: Does that mean it's kind of like a now hiring
Speaker 2: sign for Goldman Sachs or do you feel like you
Speaker 2: have what you need to get the job done for
Speaker 2: next year?
Speaker 1: Fair question.
Speaker 3: So we're always focused on ensuring that we have the
Speaker 3: absolute best people in almost every sort of sub segment
Speaker 3: of our business. We feel really good about the team
Speaker 3: we have at Goldman Sachs. We feel really good about
Speaker 3: the depth of the team that we have at Goldman Sachs.
Speaker 3: In many respects, Goldman Sacks as a talent factory. And
Speaker 3: you know, I've been at the firm almost thirty years,
Speaker 3: and we develop really highly talented professionals.
Speaker 1: At some point they leave the firm.
Speaker 3: And then there's another professional that steps right into the
Speaker 3: shoes and carries on the strength of our franchise in
Speaker 3: a really positive fashion.
Speaker 2: A little earlier talking about how Goldman stock has risen
Speaker 2: well over fifty percent this year, already, you know what's
Speaker 2: going to drive the next fifty percent because you think
Speaker 2: about those drivers for your stock. Is it the M
Speaker 2: and A story, is it that push into asset and welp?
Speaker 2: What should investors be hanging their hat on.
Speaker 3: So our story at this point is pretty simple. We
Speaker 3: have two world class businesses, both of which are positioned
Speaker 3: to grow into twenty twenty five. On the global banking
Speaker 3: and market side, the piece of the puzzle that we
Speaker 3: could see incremental growth unlocked would be through ongoing capital
Speaker 3: markets activity, and particularly capital markets activity that is connected
Speaker 3: to strategic activity, so less by a way of plane
Speaker 3: vanilla or refinancing activity if you think about the debt markets,
Speaker 3: and more change of control or deal related activity, which
Speaker 3: is something we're particularly good at doing for clients. We
Speaker 3: can see more of that activity that will propel growth
Speaker 3: across that segment. We have a global, broad and deep,
Speaker 3: thick and equities business, leading positions in the equities business
Speaker 3: number one top three in thick covering the whole globe
Speaker 3: across products, that remains an attractive opportunity set for us,
Speaker 3: and the big growth engine for the firm sits within
Speaker 3: asset and wealth management, where we've communicated publicly, we expect
Speaker 3: to drive top line revenue growth high single digits across
Speaker 3: the durable revenue streams of management, fees, private banking, and lending,
Speaker 3: and our optimism for that is is unchanged, and we
Speaker 3: continue to drive margin improvement towards our mid twenties targets
Speaker 3: and unlock better returns.
Speaker 1: How much how.
Speaker 2: Much will lighter regulation make a difference for you with
Speaker 2: the expectation that things would be lighter under a Trumpe administration.
Speaker 3: Should we have lighter regulation, which I think is our expectation.
Speaker 3: I think it's the expectation of the markets that can
Speaker 3: just reduce stand in the gears of activity across industries
Speaker 3: across the.
Speaker 1: Globe, give people more confidence that.
Speaker 3: They can actually go out and try to affect strategic
Speaker 3: change that they need to grow their business. That should
Speaker 3: catalyze more activity across our franchise.
Speaker 1: We in the whole.
Speaker 3: Sector should be beneficiaries of that.
Speaker 2: Environment, Dennis, thank you so much for joining us here
Speaker 2: at your conference. Of course, this is the Golden SAX
Speaker 2: Financial Services Conference, that is GOLDENZAC CFO Dennis Coleman