Goldman Sachs Group Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning. I guess, just first question Denis to follow up on capital. I think, the 10.9% versus 14.5% CET1, there is a sense that maybe there could be some give back on the SCB next year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, GS.N - Q2 2025 Goldman Sachs Group Inc Earnings Call Give us a sense of like is there a CET1 ratio you're targeting against as we think about go-forward basis? And obviously it has implications for ROE. So how are you thinking about potential for SCB moving higher because of trading losses next year and what's the right CET1 target that we think about for Goldman going forward? Thanks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. And in just following up on capital deployment opportunities, where does, if at all, inorganic acquisitions rank when you think about a use of capital?

Question: Betsy Graseck - Morgan Stanley - Analyst : Hi, good morning. David, I just -- question for me on this topic is how do you think about the sizing of the dividend? Very impressive increase for sure. And I just wondered how do you think about how high to -- what drove that decisioning as to where to set it and how should we think about how high it could go going forward?

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. Great. So payout ratio could inch up from here is what I'm hearing. And then separately on your expectations for how AI is going to impact your overall efficiency. I'm just thinking about drivers of revenue growth and expense saves. I know it's both sides of the equations with AI -- the equation with AI. How should we think about how much efficiency this can unlock over time? How are you thinking about it?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Hi, you said earlier in the call you expect a lot of M&A for the rest of the year. And, I guess, we've been hearing that forecast for two to three years now and so is it really happening now? Are these big strategic deals? What kind of deals, what geographies, and what gives you the extra confidence given that there's still some uncertainty out there? Thanks.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And then coming full circle, as it relates to Goldman pursuing acquisitions, what would be the hurdle rate? What would -- if you dream the dream, what would you ideally like to pursue? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, GS.N - Q2 2025 Goldman Sachs Group Inc Earnings Call

Question: Devin Ryan - Citizens JMP Securities LLC - Analyst : Thanks. Good morning, David. Good morning, Denis. How are you? Good. First of all, I'm not sure how I feel about having an AI named after me, but excited to see this evolve. (laughter) But we already touched on that. So I want to ask a question just about, David, you hit on ranking in the top three now with 125 of your top 150 clients. And that's up from 77 in 2019. So you're really making nice progress on that that strategy that you laid out years ago. So just remind us on some of the structural differences and how you're covering these clients today compared to the past? And how important is just increasing capital to those clients versus just the way you cover them? And then I know there's a focus on the top 150 clients, but just these evolution and coverage and how that's resonating the opportunity to employ that more broadly just across the franchise and just take more client wallet more broadly? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, GS.N - Q2 2025 Goldman Sachs Group Inc Earnings Call

Question: Devin Ryan - Citizens JMP Securities LLC - Analyst : That's great, David. Thank you. And then just a quick follow up on just the broader theme of tokenization. I know we're still waiting for some regulatory clarity here. But would just love to get some quick thoughts on how Goldman is thinking about this as an opportunity? How you're thinking about implications on market structure? And just even how you may look to participate once we do get the green light? Thanks.

Question: Erika Najarian - UBS AG - Analyst : Hi, good morning. My first question is a follow up. You mentioned that the ideal buffer to your CET1 minimums is 50 to 100 basis points, but looking at your current standardized of 14.5% and clearly your potential new minimum of 10.9%, that implies a pretty significant buffer still. Implicit in David's earlier remarks is that transparency in the stress test is needed. But I guess what do you need to see either from the regulatory construct or anything else in order to work down that buffer even more significantly?

Question: Erika Najarian - UBS AG - Analyst : Got it. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2025 / 1:30PM, GS.N - Q2 2025 Goldman Sachs Group Inc Earnings Call

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Great. Thanks for the question. In your prepared remarks, you talked a lot about building sustainable revenue model, less volatility. If we kind of step back and think about the medium-term ROE that you've talked about 15% to 17%, is that -- I guess, first part of the question, is that still the right level given what's going on in the environment and then the regulatory environment? And two, if that is the case, what's going to be the driver, numerator or denominator from here Thank you.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Thank you.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : No. I'm just saying thank you. Appreciate it.

Question: Saul Martinez - HSBC Securities (USA) Inc - Analyst : Hi, thanks for taking my questions. I just wanted to follow up on maybe Betsy's question on the dividend and ask it a slightly different way. It obviously suggests greater confidence in how you're thinking about the durability of your revenue and earnings power, but is there -- how do we think about it or what does it imply about how you be your own core earnings power? If we were to assume for example a one-third dividend payout ratio would imply $12 a share or $48 annualized and earnings power. And obviously then, over time, you grow from that. But I mean is that an overly simplistic way of thinking about it or does it -- is the dividend -- can we draw conclusions about what it implies about how you're thinking about your own core earnings power today?

Question: Saul Martinez - HSBC Securities (USA) Inc - Analyst : Okay. That's fair and that's helpful. Maybe I can just quickly follow up on Advisory. I get the reasons to be optimistic and now M&A's up 30% and the potential for that to translate into higher revenue. But this quarter, you did -- I think Denis you mentioned that you widened the gap versus your peers. And the revenue number, the fee number this quarter was well above, what your next closest competitor reported. And I'm just curious that if there's anything in additional that you can comment on there. What drove that and what's driving the much better results and the durability of that gap relative to your competitor?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Hi, Denis. Hi, David. David, you mentioned in your comments about inorganic growth, and I apologize if you addressed this and I missed it. But you talk about the high bar that it would have to meet for you guys to maybe to pursue something, if something comes up that you can look at. Can you frame out what that high bar -- do you look at it from a dilution of earnings or tangible book value or return on that investment? Can you frame that out for us?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Got it. No, thank you. And then as a follow up question, your results speak for themselves on the strength of Investment Banking and Trading. And in the environment that's -- has a lot of uncertainty and risk, geopolitical risk is at the top of the list, what do you worry about as you go forward in view of putting up very good results with all the risks that we're currently seeing? What could -- what concern -- is there anything that concerns you as you look forward?