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 2026 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the investor relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without consent. This call is being recorded today, April 13th, 2026. I will now turn the call over to Chairman and Chief Executive Officer David Solomon and Chief Financial Officer Dennis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Thank you, operator, and good morning, everyone. Thank you all for joining us. In the first quarter, we delivered a very strong performance, generating net revenues of $17.2 billion, net earnings of $5.6 billion, and earnings per share of $17.55, all three of which were the second highest in the history of Goldman Sachs. As a result, we delivered a return on equity of 19.8% and an ROTE of 21.3%. These results reflect the strength of our global franchise and the depth of our relationships and our ability to execute for clients while maintaining a strong focus on risk management in a highly dynamic environment. 2026 began with a degree of optimism. Markets hit record highs. Confidence continued to build, with most clients focused on growth, strategic activity, and capital deployments. As we've said, things were only moving a straight line. And as the quarter progressed, the macro environment started to weigh on sentiment. Volatility increased meaningfully, and the concerns around AI-driven disruption in sectors like software, heightened uncertainty in parts of private credit, and the conflict in the Middle East. Against this backdrop, our performance underscores the importance of having a scaled, diversified, and global franchise that can support clients across a wide range of market conditions. Operating as a leading global financial institution requires deep expertise, long-term investment, and a culture grounded in risk discipline. This is what differentiates Goldman Sachs and what clients rely on, particularly in periods of uncertainty. We pride ourselves in being a trusted advisor providing timely and differentiated insights. This quarter, we held large-scale calls and events reaching tens of thousands of clients across the firm. We also saw elevated engagement with our digital channels, including Marquee, with monthly average users up over 30% year-over-year, and our global investment research portal, which saw its second-highest single day of client activity in early March. Beyond analysis and insight are people operating as one golden sacks delivered for clients in real time as conditions evolved quickly. In global banking and markets, we delivered record quarterly revenues, reflecting strong client engagement across our franchise. Elevated uncertainty led clients to actively reposition portfolios, driving strong flows across FIT and equities. We supported our clients' intermediation and financing needs across asset classes, deploying our balance sheet in response to demand. In our commodities franchise, we acted as an intermediary for our clients of the significant moves in energy markets, including a record monthly increase for Breck crude in March and price surges of 60% in European gas markets. Importantly, the growth of our financing business has added further balance to our performance, reinforcing our ability to perform consistently across cycles. In investment banking, we remain the number one M&A advisor globally, clients continue to turn to Goldman Sachs for advice and expertise regarding their most important strategic transactions amid a backdrop of accelerating technological change and industry disruption. This includes the announced $43 billion merger of Unilever's food business with McCormick, Cisco's $29 billion acquisition of Jethro Restaurant Depot, and Cotera Energy's $26 billion sale to Devon Energy. While market conditions tempered execution for IPOs and sponsor activity broadly, we believe that activity levels will rebound once conditions stabilize. As you remember, our backlog closed 2025 at its highest level in four years. Even with exceptionally strong revenue production, our quarter-end backlog remained extraordinarily robust. In asset and wealth management, clients continue to choose Goldman Sachs for the quality of our advice and our longstanding investment track record. we generated $62 billion in long-term fee-based inflows, including $22 billion in wealth management flows. The consistent inflow momentum throughout the quarter, including during the heightened volatility in March, underscores the strength of our client relationships built on trust and long-term performance. We are pleased to have closed the acquisition of Innovator in the second quarter, which adds an additional $31 billion in assets under supervision. across a suite of over 170 ETFs focused on defined outcome strategy, putting us in the top 10 of global active ETF providers. In alternatives, we raised $26 billion across asset classes with private credit strategies generating $10 billion. We recognize that the private credit industry has been an area of increased focus in recent months. Our 30-year track record of performance in private credit is characterized by rigorous underwriting, selective deployment, and disciplined portfolio construction. In our largest non-traded BDC, as an example, we saw net inflows of over 7% this quarter, reflecting investor demand for experienced investment managers who have navigated multiple rate and credit cycles. Looking forward, our predominantly institutional drawdown structures, as well as the breadth of our origination funnel, give us the flexibility to continue to patiently and selectively invest capital. Overall, we feel good about the long-term opportunity of private credit and our ability to deliver attractive, risk-adjusted returns for clients. Let me spend a moment on capital and regulation more broadly. We've been consistent in our view that a strong, well-capitalized banking system in the U.S. is essential and that strength has been clearly demonstrated across multiple stress periods. At the same time, We have also been clear that the regulatory framework needs to be transparent and calibrated appropriately to achieve its objectives. Getting this right matters for the real economy. A well-calibrated framework enables banks to provide liquidity, support lending and capital formation, and serve clients more effectively. Ultimately, a strong U.S. banking system supports growth, competitiveness, and economic resilience. Against that backdrop, we're encouraged by the direction of regulatory reform, including the recent Basel III finalization and GSIB surcharge re-proposal. While the rulemaking process is still underway and we plan to participate in the comment period, we believe this direction is positive for the banking system as a whole, better aligning regulatory outcomes with actual risk. All in, we continue to see the potential for more constructive backdrop this year. The combined effects of fiscal stimulus in developed economies, ongoing AI-related capital investment, and a more balanced regulatory agenda in the U.S. are powerful forces. At the same time, the geopolitical landscape remains very complex, and the ultimate impact of higher energy prices on inflation and growth is yet to be determined. We believe Goldman Sachs is extremely well positioned to navigate this current environment. Beyond the short term, we are also investing for long-term growth, including through One Golden Facts 3.0. As I mentioned, clients seek our views and analysis around a range of topics, including AI, and we were able to speak to these trends from firsthand experience as we thoughtfully implemented new technologies across our six initial work streams and around the firm more broadly. We remain confident that over time, 1GS 3.0 will drive stronger operating leverage, greater resilience, and improved efficiency in returns and allow us to continually elevate service to our clients. These efforts build on the strengths that differentiate Goldman Sachs. As we demonstrated this quarter, our deep client relationships, global platform, and strong risk culture position us to serve clients with excellence while creating long-term value for shareholders. With that, I'll turn it over to Dennis to walk through our financial results in more detail.

Thank you, David, and good morning. Let's start with our results on page one of the presentation. In the first quarter, we generated our second-highest net revenues of $17.2 billion, as well as our second-highest earnings per share of $17.55, which drove an ROE of 19.8% and an ROTE of 21.3%. Let's turn to performance by segment, starting on page three. Global banking markets produced record revenues of $12.7 billion in the first quarter and generated an ROE of over 22%. Turning to page four, advisory revenues of $1.5 billion rose 89% year-over-year on higher completed volumes. We remain number one in the lead tables for M&A with a lead of $150 billion in announced volumes versus our closest peer. Equity underwriting revenues of $535 million were up 45% year-over-year on better convertibles results, while debt underwriting revenues of $811 million rose 8%, driven by better investment grade and asset-backed activity. We ranked first in equity and equity-related underwriting and ranked second in high-yield debt underwriting and leveraged lending. Pick net revenues were $4 billion. Within intermediation, revenues in rates and mortgages were significantly lower versus the first quarter of last year, as results were impacted by a tougher market-making backdrop. This was partially offset by significantly better results in currencies and commodities, illustrating the benefits of having a global, diversified franchise. We produced fixed financing revenues of $1.1 billion, remaining confident in our ability to prudently grow this business over time. Equities net revenues were a record, $5.3 billion. Equities intermediation revenues of $2.7 billion rose 7%. even versus very strong results last year, driven by better performance in cash products. Record equities financing revenues of $2.6 billion were 59% higher year-over-year, with particular strength in Asia, amid another record for average prime balances in the quarter. As we highlighted in last quarter's strategic update, Asia is one of the key growth opportunities for our FIC and equities businesses, and while there's still work to do, we're pleased by the progress to date. Across FIC and equities, financing revenues of $3.7 billion rose 36% versus the prior year and comprised nearly 40% of total FIC and equities revenues. Let's turn to page five. Asset and wealth management revenues were $4.1 billion. Management and other fees were up 14% year-over-year to $3.1 billion, primarily on higher average assets under supervision. Incentive fees were $183 million, up year-over-year despite the volatile environment during the quarter. Private banking and lending revenues were $638 million. Higher lending results were more than offset by the impact of NIN compression as we grew deposits in a more competitive rate environment in order to fund broader firm activity. Consistent with our growth strategy, we also expanded our lending to ultra-high net worth clients, with balances rising to a record $46 billion. Now moving to page six. Total assets under supervision ended the quarter at a record $3.7 trillion. We saw $62 billion of long-term net inflows across asset classes, representing our 33rd consecutive quarter of long-term fee-based net inflows. Turning to page 7 on alternatives. Alternative AUS totaled $429 billion at the end of the first quarter, driving $597 million in management and other fees. Gross third-party alternatives fundraising was $26 billion in the quarter, putting us on track towards our annual fundraising expectations. On page eight, platform solutions revenues were $411 million in the quarter, down year over year, reflecting the move of the Apple portfolio to help for sale. We expect revenues for the rest of the year to run lower, in line with seasonal trends in the business. On page nine, firm-wide net interest income was $3.7 billion in the first quarter. Our total loan portfolio at quarter end was $253 billion, up versus the fourth quarter, primarily reflecting growth in corporate and other collateralized loans. Our provision for credit losses of $315 million reflected growth and impairments in our wholesale lending portfolio. Turning to expenses on page 10. Total quarterly operating expenses were $10.4 billion, resulting in an efficiency ratio of 60.5%. Our compensation ratio net of provisions was 32%. Non-compensation expenses were $5 billion, with the vast majority of the year-over-year increase driven by higher transaction-based expenses tied to robust activity levels, particularly in equities. As David referenced, we are thoughtfully building out our one Goldman Sachs 3.0 work streams, and our early learnings have reinforced the need to double down on the foundational elements of our infrastructure. We are therefore accelerating our investments in cloud migration and in the accuracy, completeness, and timeliness of our data. These investments are critical to optimizing the deployment of AI solutions across the firm, which will allow us to unlock greater productivity and efficiency opportunities over time. Our effective tax rate for the quarter of 13.2% benefited from the impact of employee stock-based compensation. For the full year, we expect a tax rate of approximately 20%. Now on to slide 11. Our common equity Tier 1 ratio was 12.5% at the end of the first quarter under the standardized approach, 110 basis points above our current capital requirement of 11.4%. We saw attractive opportunities to deploy capital across the firm, including in prime brokerage and acquisition financing. These activities, in addition to the increase in market risk RWAs amid higher market volatility, consume the portion of our excess capital. Additionally, we return $6.4 billion to common shareholders, including record common stock repurchases of $5 billion and common stock dividends of $1.4 billion. We will continue to dynamically deploy capital to support our client franchise, while also returning capital to shareholders. As David mentioned, we're encouraged by the direction of the recent Basel III finalization and G-SIB Search R3 proposals, which reflect a more balanced and risk-sensitive approach than earlier iterations. In conclusion, our performance reflects the diversification and strength of our leading client franchises, which enable us to serve clients in a volatile market. We are confident in our ability to continue to support our clients as they navigate this dynamic operating environment. With that, we'll now open up the line for questions.