The Goldman Sachs Group Inc.

We are uncertain whether and when it may also exit its Apple Card program. However, given the challenges and expenses of growing in consumer lending, we view the exit from parts of the consumer business as a prudent move, even if it marks a significant strategic shift. We would look favorably on additional low-risk, stable revenue, most notably from asset and wealth management fees. At the same time, these efforts carry execution risks and even if successful, Goldman's mix of revenue may still have greater risk and volatility than that of most peers. Goldman estimated that its capital requirement would rise by about 25%, which likely would force the company to increase its capital from current levels. We would expect

...We expect The Goldman Sachs Group Inc., one of the world's largest and strongest players in trading and investment banking, to generally generate better profitability than most similarly rated peers after a challenging 2023. We expect Goldman's return on common equity (ROCE) to return to double digits in 2024 and 2025, above those of most similarly rated peers. Weakness in investment banking, declines in the fair value of on-balance-sheet investments, and expenses associated with exiting parts of consumer banking drove down ROCE to 7.5% in 2023. However, the company reported a strong 14.8% return in the first quarter of 2024. Goldman's ongoing exit from parts of consumer banking reflects a major and costly shift in strategy and is, in our view, an acknowledgement that its substantial effort to build a significant and profitable consumer lending business has mostly not worked. Lacking competitive advantage and scale, Goldman has already exited personal lending; sold GreenSky, a consumer...

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