The Goldman Sachs Group, Inc. (GS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights strong financial performance, particularly in asset and wealth management, positive market trends, and strategic initiatives like AI integration. The Q&A session provides additional confidence, with management addressing concerns about efficiency, growth, and regulatory impacts. Although there are some uncertainties, such as the slower-than-expected pace of tokenization, the overall sentiment is positive. The focus on AI and operational efficiency, combined with a constructive investment banking outlook and strong asset growth, suggests a positive stock price movement over the next two weeks.
Key Financial Performance
Earnings Per Share (EPS) $14.01 for Q4 2025, $51.32 for the full year, a 27% increase year-over-year. The increase is attributed to strong performance across various business segments and strategic initiatives.
Return on Equity (ROE) 16% for Q4 2025, 15% for the full year, an improvement of 230 basis points year-over-year. This improvement is due to enhanced operational efficiency and strategic focus.
Return on Tangible Equity (ROTE) 17.1% for Q4 2025, 16% for the full year, an improvement of 250 basis points year-over-year. The improvement is driven by strong earnings growth and strategic initiatives.
Global Banking & Markets Revenues $41.5 billion for 2025, up 18% year-over-year. Growth was driven by broad-based strength, including record revenues in equities and FICC financing.
Investment Banking Fees $2.6 billion for Q4 2025, up 25% year-over-year. The increase is attributed to higher advisory, debt underwriting, and equity underwriting activities.
FICC Net Revenues $3.1 billion for Q4 2025, up 12% year-over-year. Growth was driven by strong performance in rates and commodities intermediation and record financing revenues.
Equities Net Revenues $4.3 billion for Q4 2025, up 11% year-over-year. Growth was driven by better performance in derivatives and record financing results.
Asset & Wealth Management Revenues $16.7 billion for 2025, with a pretax margin of 25%. Management and other fees reached a record $3.1 billion in Q4 2025, up 10% year-over-year. Growth was driven by higher lending and deposits related to wealth management clients.
Assets Under Supervision (AUS) $3.6 trillion at the end of Q4 2025, driven by $66 billion of long-term fee-based net inflows and $50 billion of liquidity inflows.
Alternative Assets Under Supervision (AUS) $420 billion at the end of Q4 2025, driving $645 million in management and other fees. Gross third-party fundraising was $115 billion for the year.
Loan Portfolio $238 billion at the end of Q4 2025, up sequentially due to higher collateralized lending balances.
Operating Expenses $37.5 billion for 2025, with compensation expenses of $18.9 billion and non-compensation costs of $18.6 billion, up 9% year-over-year due to higher transaction-based activity.
Common Equity Tier 1 Ratio 14.4% at the end of Q4 2025 under the standardized approach.
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Operating Highlights
Apple Card Portfolio Transition: Goldman Sachs announced the transition of the Apple Card portfolio, completing its strategic focus narrowing.
Innovator Acquisition: Acquired Innovator, scaling its business to be among the top 10 active ETF providers globally.
M&A Advisory Leadership: Maintained #1 position as M&A adviser for 23 consecutive years, advising on $1.6 trillion of announced M&A transaction volumes in 2025.
Global Banking & Markets (GBM) Growth: Achieved record revenues of $41.5 billion in GBM, with strong performance in investment banking and equities.
One Goldman Sachs 3.0: Launched a new operating model propelled by AI, focusing on efficiency and process reengineering.
Capital Management: Increased quarterly dividend by $0.50 to $4.50 and announced $32 billion in remaining buyback capacity.
Asset & Wealth Management Expansion: Set new targets for pretax margin (30%) and high-teen returns, with a focus on wealth management and alternatives.
Strategic Partnerships: Collaborated with T. Rowe Price and acquired Industry Ventures to enhance capabilities in retirement solutions and venture capital.
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Risk or Challenges
Economic growth and policy uncertainty: The operating environment can shift quickly due to economic growth, policy uncertainty, geopolitical developments, and market volatility, which are factors that could adversely impact the firm's operations and financial performance.
Regulatory and compliance risks: The firm must navigate a more balanced regulatory regime, which could pose challenges in maintaining compliance and adapting to regulatory changes.
Market volatility: Market volatility remains a concern, as it can impact client activity levels and the firm's ability to generate consistent revenues across asset classes.
Strategic execution risks: The firm is undergoing strategic transitions, such as narrowing its focus and implementing the One Goldman Sachs 3.0 operating model, which could face execution challenges.
Geographic and client segment gaps: The firm is working to close share gaps in Asia and with key client segments, including insurers, wealth managers, and RIAs, which could limit growth if not addressed effectively.
Funding and liquidity risks: While the firm has diversified its funding footprint, maintaining a robust funding structure and managing liquidity remain critical to its financial stability.
Competition in asset and wealth management: The firm faces competitive pressures in scaling its Asset & Wealth Management business, particularly in alternatives and solutions, which could impact its ability to achieve growth targets.
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Guidance & Outlook
Investment Banking Outlook: High levels of client engagement and backlog at a 4-year high. Expectation of accelerated activity in 2026 driven by corporate focus on strategic positioning, growth in AI, and increased sponsor activity. Positioned to capitalize on $1 trillion of sponsor dry powder and $4 trillion in portfolio company value.
Capital Solutions Group: Optimistic about equity and debt underwriting amid IPO market resurgence and higher acquisition finance activity. Focus on asset-backed financings in infrastructure, transportation, and data centers.
FICC and Equities Intermediation: Plans to invest in market-making capabilities and broaden offerings for ETF issuers. Targeting share growth in Asia and among insurers, wealth managers, and RIAs.
Asset & Wealth Management (AWM): Setting new pretax margin target of 30% to drive high-teen returns over the medium term. Expecting 5% long-term fee-based net inflows annually. Targeting $750 billion in fee-paying alternative assets under supervision by 2030 and $1 billion in annual incentive fees.
Wealth Management: Broadening client base by increasing advisers and expanding loan product offerings. Enhancing alternative investment offerings and digital client experiences. Introducing a 5% long-term fee-based net inflow target annually.
Alternatives and Solutions: Raising $75-$100 billion annually in alternatives. Expecting double-digit growth in alternative management fees and targeting $1 billion in annual incentive fees. Expanding capabilities in retirement channels and institutional client offerings.
Strategic Partnerships and Acquisitions: Recent acquisitions and partnerships, including T. Rowe Price and Innovator, aim to scale active ETF offerings and enhance retirement and wealth investor solutions.
Capital Management: Plans to deploy capital in acquisition financing, equities and FICC financing, and ultra-high net worth client lending. Announced a $0.50 increase in quarterly dividend and $32 billion in remaining buyback capacity.
One Goldman Sachs 3.0: New operating model propelled by AI, focusing on efficiency and reengineering processes. Updates on metrics to be provided over the coming year.
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Shareholder Return Plan
Quarterly Dividend Increase: Goldman Sachs announced a $0.50 increase in its quarterly dividend, raising it to $4.50. This represents a 50% increase from the previous year.
Share Repurchase Authorization: Goldman Sachs has $32 billion of remaining buyback capacity under its current share repurchase authorization. The company plans to dynamically execute repurchases while being mindful of its current stock price.
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Key Q&A
Q:How do you plan to scale wealth from here, including aspirations for broader wealth access?
A:David Solomon emphasized the firm's strong ultra-high net worth franchise in the U.S., Europe, and Asia. The business scales with people and technology, and they are investing in expanding their ultra-high net worth footprint. For broader wealth access, they concluded that third-party wealth channels, including partnerships with RIAs, are the best approach. They aim to grow long-term fee-based wealth assets by 5% annually.
Q:What is your confidence level in raising the floor for returns given past market pullbacks?
A:David Solomon stated that the firm has significantly raised the floor for returns due to growth in durable revenues and diversification. He noted that the firm's returns averaged 9% in the decade before their Investor Day, and now they aim for mid-teens returns through the cycle, with potential for higher returns in favorable environments.
Q:Can shareholders expect returns to move closer to high teens rather than mid-teens?
A:David Solomon reaffirmed the mid-teens target but acknowledged the potential to exceed it in favorable environments. He highlighted the firm's confidence in achieving a 30% margin in Asset & Wealth Management, which would elevate overall performance. He also noted that regulatory changes provide flexibility for growth investments.
Q:Is this the right time for transformational M&A to shift the mix of the AWM business?
A:David Solomon stated that the bar for transformational M&A is very high due to the scarcity of great large businesses and the importance of maintaining Goldman Sachs' unique culture. He emphasized that smaller acquisitions and partnerships, like those in 2025, are more likely to accelerate their journey in Asset & Wealth Management.
Q:What inning are we in for the capital market cycle, and how does 2026 compare to 2021?
A:David Solomon believes 2021 is not the ceiling for capital markets activity and expects 2026 to be very constructive for M&A and capital markets. He noted that industry-wide M&A volumes could approach or exceed 2021 levels in a base or bull scenario, driven by fiscal, monetary, and deregulatory stimulus.
Q:How does issuance activity impact equities and fixed income revenues?
A:Denis Coleman explained that primary market activity enhances liquidity and secondary market opportunities. He expects increased capital markets activity to catalyze incremental levels of intermediation activity, benefiting both equities and fixed income revenues.
Q:What is the outlook for the Apple Card deal and its impact on Platform Solutions?
A:Denis Coleman noted that the Apple Card business and savings program are the main components of Platform Solutions. The segment is expected to have a small pretax loss in 2026. David Solomon added that there are no current plans to transition the Apple Savings program, and it will continue to offer competitive rates.
Q:Why did the efficiency ratio appear weaker year-over-year in Q4?
A:Denis Coleman attributed the weaker efficiency ratio to the accounting impact of the Apple Card transition, which reduced revenues. He emphasized looking at the full-year performance, which showed significant operating leverage with revenue growth of 9%, pretax growth of 19%, and EPS growth of 27%.
Q:What are the expected outcomes from AI and One GS 3.0 initiatives?
A:David Solomon highlighted AI's potential to drive productivity and efficiency, enabling more investment in growth areas like wealth management. The firm is focused on reimagining six specific processes to create operating efficiency. He promised more transparency on progress in future quarters.
Q:What is Goldman Sachs' approach to emerging opportunities in market structure and tokenization?
A:David Solomon stated that the firm is actively exploring tokenization, stablecoins, and prediction markets. They are assessing how these technologies can enhance existing businesses and create new opportunities. He noted that the pace of change might be slower than anticipated but sees these as important areas for future growth.
Q:How large can the financing piece of trading revenue grow, and how is risk managed?
A:David Solomon noted that Goldman Sachs has aligned its financing revenue with peers, reaching approximately 40% of trading revenue. The firm plans to grow this further by leveraging its asset management business to offload some activities, reducing balance sheet risk while serving clients.
Q:What is the outlook for noncomp expenses in 2026?
A:Denis Coleman stated that noncomp expenses are managed tightly, with a focus on transaction-based expenses and market development. The firm aims to constrain growth in fees and other controllable expenses while supporting client activity and growth.
Q:What is the outlook for private banking and lending in 2026?
A:Denis Coleman expects growth in lending activities and deposit levels but anticipates some net interest margin compression due to the rate cycle. The firm aims to expand lending penetration as part of its wealth management strategy.
Q:How will Goldman Sachs achieve its 5% long-term asset flow target in wealth management?
A:Denis Coleman emphasized the firm's focus on growing adviser numbers, enhancing technology, and increasing lending penetration. David Solomon noted the fragmented nature of the business and the firm's ability to grow market share by adding advisers and broadening client coverage.
Q:What is the outlook for the IPO market in 2026?
A:David Solomon expects increased IPO activity in 2026, driven by sponsor momentum and large private companies going public. However, equity capital markets levels are unlikely to reach the 2021 peak due to the absence of phenomena like SPACs.
Q:How does the current regulatory environment impact M&A activity?
A:David Solomon noted that the current administration is more supportive of large-scale consolidation, leading to increased CEO and board activity in exploring strategic opportunities. He expects this to drive significant M&A activity, provided there are no exogenous events.
Q:What is the potential impact of deregulation on expenses and capital deployment?
A:Denis Coleman and David Solomon highlighted that deregulation reduces costs and capital requirements, freeing up resources for growth investments. They noted changes in stress capital buffers, Basel III, and G-SIB recalibration as key factors.
Q:What is the desired revenue mix for Goldman Sachs in the future?
A:David Solomon aims to continue growing Asset & Wealth Management to shift the revenue mix gradually. However, the growth of Global Banking & Markets has made this shift slower than expected. The firm is focused on both organic and inorganic growth in AWM.
Q:What is the outlook for investment banking fees in 2026?
A:David Solomon clarified that advisory volumes, not total investment banking fees, could approach 2021 levels in a base case. He expects equity capital markets activity to increase but remain below 2021 peaks.
Q:Review of Unclear Management Responses
A:Management avoided providing specific metrics or targets for AI-driven efficiency gains, stating that they are still in the early stages of implementation. They also did not quantify the potential cost savings from deregulation, emphasizing qualitative benefits instead.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ETF
GBM
Goldman Sachs
Investor Day
Page firm
ROE ROTE
Today
Wealth asset
acquisition financing
addition
adviser
alternative solution
breadth
capital position
catalyst
channel
client Page
client franchise
engagement
financing activity
franchise acquisition
funding
globe
individual
insurer
investment banking
model
offering client
opportunity wealth
origination structuring
partnership
premier
product offering
provider
relationship
resilience
share gap
sponsor
success
suite
target
wealth manager
GS Transcript
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The earnings call highlighted strong financial results with record high revenues, net earnings, and EPS, which are positive indicators. However, the absence of discussion on operational updates, strategic initiatives, risk, and return leaves a gap in understanding future prospects. The lack of Q&A insights further adds uncertainty. Without information on market cap or additional context, the strong financial performance is balanced by the absence of strategic outlook, resulting in a neutral sentiment.
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The Goldman Sachs Group, Inc. (GS) Q4 2025 Earnings Call Transcript
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The earnings call summary highlights strong financial performance, particularly in asset and wealth management, positive market trends, and strategic initiatives like AI integration. The Q&A session provides additional confidence, with management addressing concerns about efficiency, growth, and regulatory impacts. Although there are some uncertainties, such as the slower-than-expected pace of tokenization, the overall sentiment is positive. The focus on AI and operational efficiency, combined with a constructive investment banking outlook and strong asset growth, suggests a positive stock price movement over the next two weeks.
GS Slides
GS Report
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