The conference call begins with a disclaimer about forward-looking statements and non-GAAP measures. The call is led by Chairman and CEO David Solomon and CFO Dennis Coleman. Solomon addresses the recent violence against former President Trump and urges unity and respect. The company's second quarter results show strong growth in global banking and asset wealth management, with a 10.9% ROE for the quarter and a 12.8% ROE for the first half of the year.

Goldman Sachs continues to use their One Goldman Sachs approach to execute their strategy and serve clients in dynamic environments. They maintained their top rankings in M&A and equity underwriting and have seen growth in their investment banking backlog. The capital markets and M&A recovery is still in its early stages, but Goldman Sachs is well positioned to benefit from this resurgence. They have also seen revenue growth in both FIC and equities, and are focused on maximizing their wallet share with top clients. In asset wealth management, they have achieved record management and other fees, and have seen growth in their Assets Under Supervision and total wealth management client assets. They have also raised $36 billion in alternatives and expect to exceed $50 billion in fundraising this year, thanks to their investment performance and client focus.

The company is optimistic about the growth opportunities for their asset management platform and the operating environment, despite geopolitical instability and inflation. The U.S. market remains positive and the company is encouraged by advancements in artificial intelligence. The recent stress test results have shown an increase in stress capital buffer, but the company is confident in their ability to serve clients and will work with regulators to understand the determination.

In the second quarter, the company repurchased $3.5 billion of shares and increased their quarterly dividend by 9%. Their common equity Tier 1 ratio ended the quarter strong and above regulatory minimums. They also celebrated their 25th anniversary as a public company and have persevered through various global events. The company's culture has remained true to their core values and is essential to their success. The CEO is confident in the company's client franchise and believes they are effectively serving clients in a complicated operating environment. The CFO will now cover the financial results in more detail.

In the second quarter, the company generated $12.7 billion in net revenues and $3 billion in net earnings, resulting in earnings per share of $8.62, an ROE of 10.9%, and an ROTE of 11.6%. Global banking and markets saw a 14% increase in revenues, with advisory revenues up 7% and equity underwriting revenues up 25%. FIC net revenues were up 17%, driven by better performance in rates and currencies, and FIC financing revenues were up 37%. Equity net revenues were up 7%, with financing revenues reaching a near record. Asset wealth management revenues were up 27% year-over-year. Overall, the company's strategic priority to grow financing across both FIC and equities has resulted in record financing revenues for the second quarter and first half of the year.

The company's management and other fees and private banking and lending revenues reached a record high in the second quarter, driven by higher assets under supervision and strong demand for alternative products. The company's ultra-high net worth wealth management franchise has contributed significantly to this success. Total assets under supervision also reached a record high, with long-term net inflows for the 26th consecutive quarter. The company's alternative assets under supervision and third-party fundraising also saw strong growth. The company has reduced its historical principal investment portfolio and saw an increase in net interest income due to higher yielding assets and a shift towards non-interest bearing liabilities.

In the second quarter, the company had a provision for credit losses of $282 million, mostly due to credit card charge-offs. Expenses for the quarter were $8.5 billion, with a compensation ratio of 33.5%. The company returned $4.4 billion to shareholders and plans to moderate buybacks. The board approved a 9% increase in quarterly dividends. The company is confident in its ability to generate strong returns for shareholders while supporting clients. The line is now open for questions.

Goldman Sachs CEO David Solomon discusses the current state of the investment banking industry and the firm's outlook for the future. He mentions that they are seeing an increase in momentum in the IBC pipeline and demand for committed acquisition financing is high. However, he also notes that overall M&A activity is still below 10-year averages and there is still room for growth. He believes that sponsor activity will pick up in the next few quarters and Goldman Sachs is well positioned with its leading position in both private credit and DCM.

The speaker discusses the company's strong position in the leverage-financed activity and direct lending private credit platform. They expect to see more activity in the next few years, driven by the need for refinancing, recapitalization, and sales of companies. The speaker also mentions that the equity investment gains were driven by real estate gains. In response to a question about the recent SCB increase, the speaker explains that the increase does not change the firm's business strategy in the financing business.

The speaker asks how the current economic situation will affect the business and if buybacks will continue at the same level as in the first quarter. Dennis Coleman responds that they have enough capital to invest in the client franchise and return capital to shareholders, but they will be moderating buybacks in the second quarter. He also mentions that there is potential for new acquisition financing and support for clients. The speaker then asks about the lack of sponsor-led activity and if this is a sign of inflated valuations. David Solomon does not see it as a troubling sign.

The speaker discusses the current state of sponsor assets and their ability to monetize them. There is pressure from LPs to continue turning over funds, but the speaker believes there will be a pickup in activity in the future. The speaker also mentions managing expenses in the current environment and how compensation and benefit expenses are tracking ahead of the change in reviews net of provision.

The company is following their usual protocol for estimating their compensation expenses and will continue to monitor it closely. They hope to see positive operating leverage as the business grows, especially in their record financing revenue. The growth is driven by stable rates and a focus on more durable revenue streams in global banking and markets. The company has set up infrastructure and has relationships with clients who frequently use their products.

The business is diversified and they are looking to grow in a disciplined manner. They have been able to generate attractive returns and will continue to support the growth their clients are witnessing. The efficiency ratio has improved but is still not at their target of 60%. As they continue to grow revenue, they should see improvement in the efficiency ratio. They are also working on reducing expenses and making structural improvements to drive efficiencies while also focusing on driving top line revenues.

The operator introduces Mike Mayo from Wells Fargo Securities who asks about the discrepancy between Goldman Sachs' positive comments and their returns being below target. David Solomon explains that they are on a journey and their returns for the first half of the year were at 12.8%, with a slight drag from enterprise platforms. He also mentions that they are operating below 10-year averages in investment banking activity, but are focused on improving returns and making progress in AWM.

The speaker discusses the performance of global banking and markets over the past few years, specifically focusing on the AWM, ROE which is currently at 10%. They believe they can continue to grow the business and improve the margin, ultimately increasing the AWM, ROE. They also mention the potential multiplier effect of mergers and acquisitions on their business and the impact of the Fed on their returns. Overall, they feel good about their progress but acknowledge that there is still work to be done.

During a recent conference call, Goldman Sachs CEO David Solomon addressed concerns about the Federal Reserve's stress test results. He stated that while the company supports stress testing as a means of ensuring the safety and soundness of the banking system, there are elements of the process that are opaque and lack transparency. He also mentioned that the results do not reflect the significant changes the company has made in its business and that they will continue to work towards reducing the amount of capital they are required to hold. The call also included a question about the company's consumer platform fees, which were down slightly despite not including contributions from Green Sky.

Dennis Coleman explains that the resiliency in consumer revenues is due to the absence of the Green Sky contribution. While there has been growth in the card portfolio, it has slowed due to underwriting adjustments. When asked about the uncertainty surrounding the SEB and Basel III endgame, Coleman notes that they are operating at the wider end of their range to address this uncertainty.

Goldman Sachs CEO David Solomon and CFO Dennis Coleman discussed the company's plans for maintaining a cushion of funds for future opportunities and regulatory uncertainty. They also addressed the progress of their alternative asset management business, which has exceeded fundraising targets and is expected to be a significant contributor in the future. However, the current contribution has not met internal expectations.

The company has disclosed that the balance of unrealized incentive fees at the end of the last quarter was $3.8 billion, and they expect this to be an important contributor to the return profile of asset wealth management in the future. They also expect ongoing alts fundraising to help feed future investments and generate potential incentive fees. At a recent conference, the company highlighted the margin profile of their standalone businesses compared to public peers, with alts having a 35% plus margin. With the potential for alts AUM to accelerate and generate even more fees, there may be an impact on the segment margins, which are already at 23% in ‘24.

The company expects to see significant improvements in margin and overall growth in their alts business, as well as a continued reduction in their on-balance sheet investments. They have a target to sell down the majority of their on-balance sheet exposures by the end of next year and are committed to achieving this goal. The company has also seen success in fundraising for their private credit fund in the first half of the year.

The speaker discusses the competitive landscape in banking and markets, noting that while it has always been competitive, there has been an increase in competition from larger banks and regional banks. The speaker emphasizes that Goldman Sachs is an industry leader in these areas and is well-positioned to compete.

The One GS approach is a top competitor in the industry, with leading M&A and capital raising shares. The bank has also invested in debt franchises and has a strong ability to intermediate risk. The CEO believes the franchise will continue to be a leader in a competitive industry, despite always having competitors. The interviewer then asks about activity levels during uncertain times like the current presidential election period. The CEO responds by saying that external factors can affect corporate and institutional client activity.

David Solomon, CEO of Goldman Sachs, discussed the potential of artificial intelligence during a recent conference call. He mentioned how the company is focused on using AI to increase productivity and efficiency, especially in areas like equity research. By automating certain tasks, employees can spend more time serving clients and interacting in markets. This could have a significant impact on the company's success.

The speaker discusses the potential uses of their investment banking business's data and information for clients, as well as the impact of technology on their engineering productivity. They are also excited about the potential for increased activity and opportunities in their business due to the changing landscape. In addition, they mention that their wholesale segment had no charge-offs and has been able to release some provisions due to improved models.

The bank saw a 20 bps increase in its CET1 ratio despite buying back $3.5 billion of stock and reducing RWA by $16 billion. This reduction was due to lower exposure in derivatives and equity investments, as well as strategic efforts to reduce balance sheet exposure. The bank remains committed to optimizing its capital and managing risk.

The speaker states that they will remain focused on financing due to the constraints they face. They also mention that they have seen growth in equity financing and believe there is still room for more growth. They are committed to supporting clients in both FIC and equities and see these activities as interconnected.

The speaker announces that there are no more questions and thanks the participants for joining the Goldman Sachs earnings call. They can now disconnect.

This summary was generated with AI and may contain some inaccuracies.