Goldman Sachs lifts key profit target in strategy update

[NEW YORK] Goldman Sachs on Thursday (Feb 17) upgraded its key profitability target and set new goals for its asset management, transaction banking and consumer businesses as it laid out its strategy for the next 3 years.

Wall Street's premier investment bank is reshaping itself after a turbulent decade during which profit at its core trading businesses was crimped by tougher regulations brought in after the 2007-09 financial crisis.

Chief executive David Solomon pointed to progress made over the past 2 years and said the bank would build on that over the next 3 years despite headwinds such as inflation and an anticipated slowdown in investment banking and trading activity.

"We believe we have the right plan in place that will enable us to serve clients, drive returns and unlock significant value for our shareholders," Solomon said in a presentation at the Credit Suisse Financial Services Forum in Florida.

The bank said it expects to a achieve return on tangible equity (RoTE) of 15-17 per cent over the next 3 years compared with its previous mid-term guidance of 14 per cent. It said it expects a return on equity of 14-16 per cent compared with 13 per cent previously.

The bank reiterated its efficiency ratio goal of 60 per cent, which effectively means it is running the business at a 40 per cent operating margin.

Goldman also set new deposit goals for transaction and consumer banking.

It said it expects transaction banking deposits of more than US$100 billion by 2024 compared with US$54 billion last year.

Consumer banking deposits are expected to grow to more than US$150 billion by 2024 compared with US$110 billion last year. REUTERS