Goldman Sachs has vowed to dramatically increase its returns to catch up with Wall Street rivals that have been more agile in their approach to shifts in capital markets that followed the 2008-09 financial crisis.
The New York bank said it is planning to achieve a return on tangible equity — a key metric for investors in financial firms — of 14 per cent for the next three years.
The announcement came in a presentation published ahead of its first ever investor day. The company posted a return on tangible equity of 10.6 per cent last year, and an average return on tangible equity of 9.9 per cent over the past decade.
In the “longer term” Goldman said it will “seek to achieve returns in the mid-teens or higher” as newer business like transaction banking and consumer banking “mature” and Goldman attracts more private money into its alternatives investing business and grows wealth management.
JPMorgan Chase has a medium term goal of a return on tangible equity of around 17 per cent, Morgan Stanley’s is set in the 13 to 15 per cent range for this year and next, with a “longer term aspiration” of 15-17 per cent.
“We are taking real and significant steps to make Goldman Sachs more transparent and easier to understand,” chief executive David Solomon said.
“This investor day reflects our ongoing commitment to providing the market with a clear articulation of our efforts and objectives, with targets against which we will be held accountable. We are committed to being open and accessible as we seek to evolve our firm, invest for growth and execute to deliver on our financial targets.”
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