The Goldman Sachs Group, Inc. Q3 FY2025 earnings call

• Investment banking: Saw increased momentum in M&A franchise, with advising on over $1 trillion in announced M&A volumes year to date. Notable examples include advising Electronic Arts in its $55 billion sale, being lead advisor to Baker Hughes on its $14 billion acquisition, and advising Thoma Bravo on its $12 billion leveraged buyout. - Asset and wealth management: Assets under supervision hit a record $3.5 trillion, with management and other fees at a record $2.9 billion. Private banking and lending revenues were $1.1 billion. Announced acquisition of Industry Ventures, a leading venture capital platform, and strategic collaboration with T. Rowe Price. - One Goldman Sachs 3.0: Launch of a new operating model propelled by AI to drive efficiencies across six goals: enhancing client experience, improving profitability, etc., with initial focus on front-to-back work streams like sales enablement and client onboarding.

In the third quarter, Global Banking & Markets generated revenues of $10.1 billion. Advisory revenues were $1.4 billion, up 60% year over year. Equity underwriting revenues were $465 million, up 21% year over year. Debt underwriting revenues were $788 million, up 30% year over year. FICC net revenues were $3.5 billion, up 17% year over year. Equities net revenues were $3.7 billion, with equities intermediation revenues of $2 billion down 9% year over year but record equities financing revenues of $1.7 billion. Asset and wealth management revenues in the quarter were $4.4 billion, with management and other fees up 12% year over year to a record $2.9 billion. Total assets under supervision ended the quarter at a record $3.5 trillion, with alternative assets under supervision totaling $374 billion and gross third-party alternatives fundraising reaching a record $33 billion in the quarter.

• Investment banking: Optimistic outlook with continued M&A momentum and sponsor activity tracking 40% higher, expecting strong activity through the end of 2026 into 2027. - Asset and wealth management: Expect growth in the high single digits annually over the medium term. - One Goldman Sachs 3.0: Multi-year effort with progress to be updated in January, focusing on leveraging AI for process reengineering and growth capacity.

• Market volatility risks due to investor exuberance and potential cycles. - Credit risks related to lending, including exposure to NDFIs and need for prudent underwriting. - Regulatory changes and their impact on the firm's competitive position and capital planning.

Q: Hi, wanted to follow up on your question about remaining especially vigilant and actively manage risk at times like these. I did notice some more news stories lately that you and others in the industry have been more active on the SRT front and synthetic risk transfer. I wonder if we could talk about how you're executing that. Especially vigilant on managing risk and what loans are moving off, potentially off balance sheet on these risk transfers. Just curious what's driving that other than just we're 17 years into a good cycle and it's evaluations are high and things like that.

A: Sure, Glenn, thanks. Thanks for the question. Look, there have been a number of articles on those transfers, including naming us. I would say that our practice is pretty unchanged and that we are constantly looking to dynamically risk manage our portfolio of credit exposures. We have a variety of different tools that we use to risk manage and hedge that risk. SRT is one of those tools that's available to us. We're basically trying to ensure that the firm's in a position to continue to be able to support ongoing levels of client activity, and prudently risk managing the existing portfolios we think gives us the capacity to do that. There are no flashing warning signs. It's just prudent risk management. It just so happens to be year end. You know, Fed cutting balance sheets, things like that, just keeping clean, good hygiene. This is ordinary course risk management for us.

Q: The other clarifier I wanted to get was the messaging behind the One Goldman Sachs 3.0. Meaning, normally you see some companies go through strong iterations of that when they're having some revenue issues. You're not having any revenue issues. You've been putting up great numbers, and you talked about a great banking pipeline next 12 to 24 months. Is technology enabling this heightened awareness on efficiency in some of your AI investments? I'm just curious a little bit more about the why behind the One Goldman Sachs 3.0.

A: Yeah, thanks Glenn. I appreciate the question and you know, you've got it right. I think we're at a place where the evolution of the technology is allowing enterprises broadly. I find this as I'm talking to CEOs all over the world, all businesses are focused on this because the technology actually allows you to take a fresh look front to back at certain operating processes and really reimagine. This has nothing to do, obviously, the firm's performing, the firm's growing, we feel very good about the execution, but we see this as an opportunity to use technology to automate, drive scale, create efficiency, and actually give us the capacity to invest more in the growth of our business. Our responsibility to shareholders is to grow earnings. The goal is to run the firm the best that we can, that doesn't matter whether it's good times or bad. In order to execute on something like this at scale in the organization, you have to bring the organization along, too. Part of the purpose, we've been working on this for a while, we've been talking about it as a leadership team. Part of the purpose of putting this out is it now allows us to talk more broadly and create a framework for the organization to understand the process that we're going to go through. I think there's enormous upside for our business here to allow further investment in growth. By the way, I think you're going to hear this from lots of companies in lots of industries that people are very focused on taking advantage of this acceleration in technology to really allow automation, efficiency, and therefore investment. By the way, this is one of the reasons why we're optimistic about the forward, the productivity gains in the economy from enterprises finding ways to do this, I think are going to be very meaningful over the next few years. That creates a good tailwind that will balance other macro factors that may or may not come into play.