Goldman Sachs Group, Inc. (The)

Good morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs second quarter 2022 earnings conference call. This call is being recorded today, July 18th, 2022. Thank you. Ms. Halio, you may begin your conference.

Good morning. This is Carrie Halio, head of investor relations at Goldman Sachs. Welcome to our second quarter earnings conference call. Today we will reference our earnings presentation, which can be found on the investor relations page of our website at www.gs.com. Note information on forward-looking statements and non-GAAP measures appear on the earnings release and presentation. This audio cast is copyrighted material of the Goldman Sachs Group, Inc., and may not be duplicated, reproduced, or rebroadcast without our consent. I'm joined today by our Chairman and Chief Executive Officer, David Solomon, and our Chief Financial Officer, Dennis Coleman. Let me pass the call to David.

Thanks, Carrie, and good morning, everybody. Thank you all for joining us. I'm pleased with our performance this quarter. There's no question that the market environment has gotten more complicated, and a combination of macroeconomic conditions and geopolitics is having a material impact on asset prices, market activity, and confidence. We see inflation deeply entrenched in the economy, and what's unusual about this particular period is that both demand and supply are being affected by exogenous events, namely the pandemic and the war in Ukraine. In my dialogue with CEOs operating big global businesses, they tell me that they continue to see persistent inflation in their supply chains. Our economists, meanwhile, say there are signs that inflation will move lower in the second half of the year. The answer is uncertain, and we will all be watching it very closely. Given all of this, we are seeing shifts in monetary policy, and those shifts will continue to tighten economic conditions. I expect there's going to be more volatility and there's going to be more uncertainty. And in light of the current environment, we will manage all our resources cautiously and dynamically. Our risk management culture and capabilities should help us navigate this environment for our clients and for the firm. That said, there is nothing about this environment that changes our strategy, and we are committed to our medium-term targets. We have a strong client franchise, and we remain focused on providing differentiated service. We benefit from the diversity of our businesses and their global footprint. In light of the environment, we are certainly taking deliberate action on capital and expenses, but we will also continue to invest to strengthen and grow our firm. Let me now turn to our financial results. In the second quarter, we produced net revenues of $11.9 billion and generated earnings per share of $7.73, an ROE of 10.6%, and an ROTE of 11.4%. Our book value per share finished the quarter at $302, up 14% year-over-year and 3% quarter-over-quarter. In investment banking, we remain the number one advisor in M&A and equity capital markets. And though capital markets activity has declined, our client dialogue and engagement continues to be strong. This quarter, again, reaffirmed our strategy to be global, broad, and deep in our leading global markets franchise. Each week, clients turn to us for our market expertise and execution in a dynamic and uncertain environment. Our strong performance this quarter demonstrates the diversification of our businesses across this segment. I'm very proud of the fact that we have consistently executed on our strategy to improve our market share as we help our clients manage risk and meet their financing needs. In this environment, our on-balance sheet investments face significant headwinds after achieving record high net revenues in 2021. Our management and other fees were resilient as we remain focused on growing fee-based revenue streams across our asset management and wealth management segments, and further reducing our on-balance sheet investments as markets allow. And in consumer, we are prudently expanding our platform to serve individuals digitally, both organically and through partnerships. Before turning it over to Dennis, let me spend a minute on capital. particularly in light of the recent Federal Reserve stress test results. I was glad to see the improvement in our stress capital buffer, especially because the test this year was more challenging than in the past. This is a reflection of the progress we are making in our strategic evolution. That said, we will advance our efforts to improve the capital density of our businesses in order to reduce our capital requirements over time. Following the stress test results, our board of directors also declared a 25% increase in our quarterly dividend to $2.50 per share. This follows an increase of 60% in 2021 and over 50% in 2019. In addition, with regard to our GSIB buffer, while we made a conscious decision to grow our balance sheet to support client activity over the last three years, it is our current plan to target a 3% GSIB surcharge. This intention is driven by the recent operating environment as well as client needs. Should these change, we will naturally reevaluate. In closing, I remain confident in our ability to navigate the market environment, serve our clients, and create long-term value for shareholders. Despite the uncertainty we face, we continue to drive this organization forward by executing our client-oriented strategy and delivering accretive returns consistent with our targets over time. I'll now turn it over to Dennis to cover our financial results for the quarter in more detail.