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 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, July 14th, 2026. I will now turn the call over to Chairman and Chief Executive Officer David Solomon and Chief Financial Officer Denis Coleman. Thank you. Mr. Solomon, you may begin your conference.

Thank you, operator. Good morning, everyone. I know it's a busy morning with all the reports and so we appreciate you being on our call. Thank you for joining us. We delivered record results for the second quarter and year to date. In the quarter, we generated record revenues of $20.3 billion, record earnings per share of $20.98, and an ROE of 23.5% and an ROTE of 25.5%. Our performance reflects the strength of our global franchise, the depth of our relationships, and our ability to harness the power of one Goldman Sachs in a very strong operating environment. Momentum across our franchise has accelerated as clients continue to pursue greater scale to invest and compete more effectively. This desire for scale has driven a significant increase in strategic deal-making activity, with large-cap corporate M&A volumes up 90% through the first half of 2026. At the same time, the AI investment cycle is expanding capital needs beyond core technology into infrastructure, energy, and data centers, generating a ripple effect across industries. This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets. Beyond the infrastructure build out, companies large and small are working to integrate AI into their operations, increasing demand for advice and execution capabilities as they adapt to a rapidly evolving competitive landscape. Against this backdrop, The trust we have built with clients over decades continues to position Goldman Sachs at the center of their most strategic and consequential transactions. This includes acting as lead left book runner on the record-breaking IPO for SpaceX and equity raise for Alphabet, as well as advising Dominion Energy's sale to Nextera Energy and Comcast's spinoff of NBC Universal. We've further expanded our lead as the number one M&A advisor and earlier this year became the first bank to cross the $1 trillion in announced volumes over a six-month period. This long-standing leadership combined with our one golden tax operating ethos creates a real multiplier effect. Our advisory relationships are often the genesis of client activity across the franchise. What starts as an advisory mandate in the boardroom increasingly extends into opportunities for our capital solutions group Thank you for joining us. Thank you very much. Thank you. Beyond investment banking, momentum also accelerated across our equities and FIC businesses. Equities produced record revenue amid shifting market dynamics and elevated activity levels, as single stock volatility and dispersion remained high. Client activity was particularly strong in Asia, driven in part by robust AI capital formation and investments. This strength also extended into financing, where we generated another quarter of record revenue as we deployed our balance sheet to support clients with average prime balances rising to another record. We also delivered a very strong performance in FIC with broad-based strength across both intermediation and financing as we supported clients globally. In intermediation, performance was driven by robust activity as clients turned to us for principal liquidity and risk management amid ongoing volatility in rates and commodities. and Financing, we generated record revenues reflecting the continued strong demand for asset-secured financing solutions. Across asset and wealth management, we are relentlessly driving our growth strategy forward with quarterly management and other fees up 20% year-over-year. We delivered our 34th consecutive quarter of long-term net inflows, including $19 billion in wealth management. Our wealth management client assets reached a record of roughly $2 trillion and our total assets under supervision surpassed a record $4 trillion. In this cycle of elevated capital formation and strategic activity, the opportunity set for our ultra-high net worth franchise is also expanding. Our high-crutch wealth management business has never been better positioned to help founders and executives realize and manage newly created wealth with unique capabilities and solutions. Combining trusted advice with access to differentiated investment opportunities Thank you for joining us. We raised $31 billion in private credit this quarter alone, a testament to our strong track record of performance and our clients' continued desire to partner with experienced investors like Goldman Sachs. More broadly, demand for private markets remains robust as clients deploy capital across credit, equity, and real assets, and our ability to originate and structure opportunities continues to differentiate our offering. We continue to scale our solutions platform, and last week we were appointed to manage both Verizon's and Lockheed Martin's retirement plans, which collectively represent $70 billion in assets under supervision. These mandates from large, sophisticated corporate pension sponsors underscore the growing demand for comprehensive, integrated OCIO solutions capable of managing complex portfolios across public and private markets. As a leading provider of OCIO services globally, we are well positioned to capture this attractive secular growth opportunity. We are also further accelerating growth across asset and wealth management through targeted acquisitions that are enhancing and scaling our capabilities. Our recent acquisitions, Industry Ventures and Innovator, are both showing solid momentum in the first few months of integration. We will continue to evaluate opportunities to expand our client offering, strengthen our franchise, and Accelerate Growth. Let me touch on capital and regulation more broadly. We remain very engaged with our regulators to ensure a better alignment of regulatory outcomes with underlying risks and look forward to swift progress towards a more balanced framework. As we again demonstrated this quarter, our robust capital position and disciplined, dynamic resource management enable us to support clients across market conditions and drive accretive returns. This also allows us to return meaningful capital to the shareholders. In line with our priority to sustainably grow our dividend, we recently announced an increase in our quarterly dividend to $5 a share, representing a 25% increase versus a year ago and a 150% increase over the last five years. We also repurchased $4 billion of common stock in the quarter. Looking forward, we know that things rarely move in a straight line. David Solomon, Gardner, We believe this multi-year investment cycle will continue to drive elevated levels of strategic activity, financing, and capital formation across markets. The more expansive and complex this opportunity becomes, the more it plays to our firm's strengths. Very few firms have the global breadth of relationships, the depth of talent, the engineering capabilities, differentiated data, market insights, and financial resources to serve clients and capitalize on this opportunity set. These have been foundational strengths of Goldman Sachs for decades. And just as we are helping clients navigate this period of change, we are also implementing learnings within our own firm. There has been much debate around the broader implications of AI on the workforce. While it will change how work gets done, it will not replace what matters most in driving our business, our extraordinary people. We see AI as a transformational technology that expands the capabilities of our best-in-class talent and our capacity to drive commercial impact for our clients. Reflecting on our record results, I'm proud of our people and our performance. There is no question that a confluence of market tailwinds is supporting client activity, and we will remain disciplined in how we invest and manage risk. I feel very confident about the forward trajectory of Goldman Sachs as a result of years of strategic execution to strengthen our businesses, enhance connectivity across the firm. We are exceptionally well positioned to serve our clients and deliver for our shareholders. With that, I'll turn it over to Denis to walk through our financial results in more detail.

Thank you, David. Good morning, everyone. Let's start with our results on page one of the presentation. In the second quarter, we generated our highest net revenues of $20.3 billion. as well as our highest earnings per share of $20.98, which drove a quarterly ROE of 23.5% and ROTE of 25.5%. Turning to segment performance starting on page 3, global banking and markets revenues were a record $15.5 billion in the second quarter, contributing to a segment ROE of 25% for the first half of the year. Moving to page 4, advisory revenues of $1.4 billion rose 17% year-over-year primarily driven by higher completed volumes. For the year to date, we extended our number one league table position for announced and completed M&A volumes. Through the first half of the year, we advised on $1.2 trillion in announced deal volumes with a lead of approximately $425 billion ahead of our closest peer. In equity underwriting, revenues were $985 million, up 130% year-over-year. supported by robust deal volumes across a broad range of transactions, including the marquee mandates for Alphabet and SpaceX, helping to drive our number one lead table position through the first half of the year. In debt underwriting, revenues were $1 billion, up 75% year-over-year, representing our best quarter on record, driven by stronger performance in leverage finance and asset-backed activity. Year-to-date, we ranked first in leverage lending and second in high-yield debt underwriting. As David noted, our investment banking backlog increased to its highest level in five years, even with the very strong revenue production this quarter. We remain optimistic on the investment banking outlook as strategic dialogue remains robust. While sponsor volumes are still subdued versus historical averages, this represents a meaningful source of potential upside as activity picks up. Thick net revenues were $4.6 billion, up 32% from the prior year. Intermediation revenues were up 39% on stronger performance across interest rate products, commodities, and mortgages. Financing revenues increased 14% to a new record and included strong performance in mortgages and structured lending. Equities net revenues were a record $7.4 billion for the second quarter. Record equities intermediation revenues of $4.2 billion increased 60% year-over-year, reflecting stronger activity across derivatives and cash products. Equity financing was also a record, up 91% year-over-year, driven by continued strength in Asia and another record for average prime balances. Across FIC and equities, financing revenues of $4.5 billion rose 62% versus the prior year and comprised 37% of total FIC and equities revenues. Let's turn to page 5. Asset and wealth management revenues were up 20% year-over-year to $4.6 billion. The year-to-date pre-tax margin was 24%, the ROE was 13.5%. Management and other fees were up 20% year-over-year to a record $3.4 billion, primarily on higher average assets under supervision. Incentive fees were $112 million. We expect these fees to increase materially for the remainder of the year. Private banking and lending revenues were $689 million, and we continue to see strong loan growth, with balances rising to $48 billion. Investments revenues of $441 million were up significantly year-over-year from substantially higher net gains on investments in private equity. Now moving to page 6. Total assets under supervision ended the quarter at a record $4 trillion, supported by $91 billion of long-term net inflows across asset classes, particularly in equity assets. This marks our 34th consecutive quarter of long-term fee-based net inflows. Turning to page 7 on alternatives. Alternative AUS totaled $459 billion at the end of the second quarter, driving $725 million in management and other fees. Gross third-party alternatives fundraising was a record $59 billion for the quarter and $85 billion for the first half of the year. Given the strength we've seen year-to-date, we now expect full-year fundraising to exceed $125 billion. On page 8, platform solution revenues were $221 million in the quarter. We expect quarterly revenues for the remainder of the year to be broadly consistent with the second quarter. On page 9, firm-wide net interest income was $4 billion in the second quarter. Our total loan portfolio increased 3% sequentially to $261 billion, primarily reflecting growth in other collateralized and residential real estate loans. Our provision for credit losses of $102 million primarily reflected impairments related to wholesale loans. Turn to expenses on page 10. Total operating expenses were $11.7 billion for the quarter and $22.1 billion for the year to date. Through the first half of the year, we generated material operating leverage with an efficiency ratio of 58.8%, improving 320 basis points from the prior year period, helped by a decline in our compensation ratio net of provisions to 31%. Quarterly non-compensation expenses increased from the prior year to $5.6 billion, with the increase driven by transaction-based expenses, Tide to robust activity levels, particularly in equities. Even in a stronger revenue backdrop, we remain focused on disciplined expense management and driving efficiencies over time. Our effective tax rate for the year to date was 18.5%. For the full year, we continue to expect an effective tax rate of approximately 20%. Now on to slide 11. Common equity tier one ratio was 12.9% at the end of the second quarter under the standardized approach. 150 basis points above Our current capital requirement of 11.4%. We were pleased with our results in a recent CCAR test which demonstrated the strength of our balance sheet under a severely adverse economic scenario. Our stress capital buffer of 3.4% remains unchanged and is effective through September of 2027. We are encouraged by the direction of the proposed changes to the regulatory framework, including continued efforts to enhance transparency and improve stress test calibration and we look forward to swift progress towards Basel III finalization. A more balanced and risk-sensitive regulatory approach will be supportive of bank lending and capital formation and ultimately constructive for the broader economy. Our capital management priorities remain unchanged, which are to invest in our business and attract returns, sustainably grow our dividend, and return excess capital to shareholders through buybacks. Our capital actions this quarter reflect our continued disciplined approach across each of these priorities to support clients and also enhance shareholder value. We recently announced an increase to our quarterly common stock dividend to $5 per share, and we repurchased $4 billion of our common stock this past quarter. In conclusion, our record results reflect the strength, scale, and diversification of our world-class interconnected client franchises. As we look ahead, the opportunity set remains compelling across the firm. Supported by sustained client engagement, and a backdrop of elevated capital formation and deal-making activity. Importantly, the progress we have made on our strategic priorities has strengthened our platform, enhanced our risk management capabilities and improved our ability to capture this opportunity. With a strong operating environment driving a robust flywheel of activity across our franchise, we're confident in our ability to continue to deliver for clients and generate more durable returns for shareholders. With that, we'll open it up for questions.