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 first quarter 2023 earnings conference call. This call is being recorded today, April 18th, 2023. Thank you, Ms. Halio. You may begin your conference.

Good morning. This is Carrie Halio, head of investor relations and chief strategy officer at Goldman Sachs. Welcome to our first 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. No 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, everyone. Thank you for joining us. In the first quarter, we delivered solid performance in a challenging environment. We produced net revenues of $12.2 billion and generated earnings per share of $8.79 and an ROE of 11.6% and an ROTE of 12.6%. The first quarter was certainly volatile, particularly for the banking sector. After a fairly benign operating environment at the start of the year, In March, we witnessed the collapse of two regional banks in the United States. Stress quickly spread to a number of institutions across the financial sector, where we saw ratings downgrades and steep valuation declines in very short order. These stresses were not limited to the U.S., as we saw when regulators helped arrange the combination of Switzerland's two largest financial institutions. It's important to appreciate the size of the disruption. Some of the market moves during the period were staggering, particularly in interest rates. To give you a sense of the magnitude, there have been just four days in the past 25 years that have seen two-year yields move by 50 basis points or more intraday. One was in September 2008, and three of them occurred in mid-March this year. Monday, March 13th, was the biggest one-day move in U.S. Treasury two-year yields in over 35 years. As we sit here today, it appears that the worst of the volatility is behind us. Prompt action by regulators was vital in bolstering confidence and stabilizing market sentiment. The events of the first quarter acted as another real-life stress test, and they demonstrated the resilience of the country's largest financial institutions. The GSIBs have been a source of strength for the financial system. We joined a consortium with 10 other large institutions in making a $30 billion uninsured term deposit and to First Republic Bank to send a strong vote of confidence in and commitment to the U.S. banking sector. As for Goldman Sachs, our long-standing and deeply rooted risk management culture helped us navigate this unusual environment. In our 154-year history, we have lived and managed through many periods of disruption, and it's our rigorous processes and planning for tail-risk scenarios before the stress that enable us to react quickly and effectively when they do occur. While it's impossible to predict the exact form a market stress will take, and we won't always execute perfectly, Our risk management culture, strong liquidity, and robust capital position have allowed us to navigate a complex environment while also continuing to actively support our clients. Given this backdrop, it was clear our clients needed help managing the risks and turned to us for our expertise and execution capabilities. Both fit in equities at a strong quarter as we help clients with their intermediation and financing needs. Underwriting activity, however, remained extremely muted and below recent averages, as capital markets were further delayed from reopening in a meaningful way given the market disruption. All-in global banking and markets delivered industry-leading returns of 16.6% in line with our through-the-cycle targets, even while advisory and capital markets activity remained muted. This franchise continues to show impressive resilience in a variety of market environments given our broad and diversified set of businesses. Management fees across asset and wealth management grew sequentially, but segment returns were in the mid-single digits as our on-balance sheet investments remained susceptible to volatility in asset prices. It is a strategic priority to continue to reduce these positions, and while we have made progress, there is still work to do. In platform solutions, we saw positive underlying trends this quarter with revenues greater than provisions, and we remain focused on driving this business towards profitability. We also continue to explore strategic alternatives within our consumer platform businesses. In the first quarter, we sold a portion of our Marcus Loan portfolio and transferred the remainder to held for sale. While this activity is now reflected in our AWM segment, it is an example of our narrowing our focus in the consumer space. Dennis will take you through the financial impact of that momentarily. Additionally, we are now initiating a process to explore the sale of GreenSky. We believe GreenSky is a good business and is performing well with first quarter originations and our core home improvement loans up over 25% year over year and a weighted FICO on total originations of over 780. Given our current strategic priorities, however, we may not be the best long-term holder of this business. We will update you on our progress if and when there are material developments. As I close, I'd like to say a few words about the forward outlook. The recent events in the banking sector are lowering growth expectations, and there is a higher risk of a credit contraction given the environment is limiting banks' appetites to extend credit. This is an acceleration of a trend in a situation we are watching closely. Businesses and consumers continue to adjust to higher interest rates. While the forward trajectory is still unclear, we continue to be cautious about the economic outlook, and we are operating the firm such that we are well prepared in the event that the environment weakens further. Overall, I feel very confident about the state of our client franchise and the long-term opportunity set for Goldman Sachs. As the events of the past quarter have illustrated, we are operating from a position of strength, and we have the people in place around the world to continue serving the broad range of clients' needs with excellence. And while much has transpired since we held our investor day at the end of February, we remain focused on our strategy to strengthen our leading global banking and markets franchise and grow our asset and wealth management business We are committed to delivering for clients and shareholders. I will now turn it over to Dennis to cover our financial results for the quarter in more detail.