- Goldman Sachs chairman & CEO David M. Solomon revealed the company’s plan for growing its consumer unit
Goldman Sachs chairman & CEO David M. Solomon has revealed the company’s plan for building its consumer unit along with driving greater efficiencies. However, this process will require patience from shareholders. Solomon made this announcement at the company’s first-ever investor day event.
“We are planting seeds that will take time to mature and grow,” said Solomon at the event via Reuters.
At the event, a number of Goldman Sachs executives presented their plans for growing its consumer deposit balances to $125 billion or more in the next five years. This includes the traction of the Marcus checking accounts. Plus Goldman Sachs is also planning to increase consumer loans and card balances to over $20 billion for the same period.
Currently, the company’s consumer bank division generates 2.4% of annual revenue for Goldman Sachs. But many Goldman Sachs investors have been clamoring for the financial giant to reduce its dependence on a volatile trading model. Shares of Goldman Sachs have not been growing as much as its rivals. Currently, trading revenues generate about 40% of revenue for the company.
Goldman Sachs also revealed it is planning to hit a 60% efficiency ratio over the next 3 years while it projected an over 13% return on equity and over 14% return on tangible equity.
In about five years or longer, Goldman Sachs is planning to hit mid-teen returns for newer businesses like transaction banking and the consumer bank. And Goldman Sachs is also planning to hit $1 billion in revenue through lower interest expenses.
At the event, Goldman Sachs chief operating officer and president John Waldron said that the company is taking a “long term approach.”
For the year ended December 31, the company’s consumer deposits were at $60 billion. And the company issued $7 billion in loans and credit card balances for the fourth quarter.
