GS
Earnings call · Jun 2025 (Q2 FY25)

GOLDMAN SACHS GROUP Q2 FY25 earnings call GS

Jul 16, 2025 Source

Executive summary

The Goldman Sachs Group, Inc. Q2 FY25 — Strong Performance Driven by Investment Banking and Financing Businesses

The Goldman Sachs Group delivered a strong second quarter, driven by robust performance in Investment Banking, particularly advisory, and record revenues in its financing businesses. The firm continues to benefit from its strategic focus on scaling capital-light businesses and enhancing client wallet share, leading to increased resilience and capital flexibility. Management expressed confidence in the firm's forward trajectory and commitment to returning capital to shareholders, while also actively engaging in regulatory discussions for a more balanced financial system.

Highlights

5

  • Net revenues of $14.6 billion, with EPS of $10.91 and ROE of 12.8%.

  • Advisory revenues rose 71% year-over-year to $1.2 billion, with M&A announced volumes up 30% year-over-year.

  • FICC financing revenues reached a record $1 billion, and Equities financing revenues hit a record $1.7 billion, contributing to total financing revenues of $2.8 billion (up 23% YoY).

  • Assets under supervision reached a new record of $3.3 trillion, with $17 billion in long-term net inflows.

  • Board approved a 33% increase in quarterly dividend to $4 per share, reflecting confidence in durability.

Concerns

4

  • EPS reduced by $0.33 and ROE by 40 basis points due to selected items.

  • Debt underwriting revenues fell 5% amid lower leveraged finance activity.

  • Modest net losses in private equity investments, driven by markdowns in certain real estate positions.

  • Expectation for second half 2025 results in equity investments to be more muted due to a challenging harvesting environment.

Guidance & targets

CategoryTargetConfidence
Annual incentive fees
$1 billion
medium materiality
Medium
Full-year effective tax rate
Approximately 22%
medium materiality
High
Alternatives fundraising
In line with recent years
medium materiality
Medium
Common Equity Tier 1 (CET1) requirement
10.9%
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Global Banking and Markets
Strong performance driven by advisory, FICC, and equities.
ROE for H1: nearly 18%
$10.1 billion———
Advisory (within GBM)
Reflecting strength in Americas and EMEA.
$1.2 billion71%——
Equity underwriting (within GBM)
$428 millionessentially flat——
Debt underwriting (within GBM)
Amid lower leveraged finance activity.
$589 million-5%——
FICC (within GBM)
Intermediation driven by higher client activity in currencies, credit, and interest rate products, partially offset by lower results in mortgages and commodities.
$3.5 billion9%——
Equities (within GBM)
Record revenues.
$4.3 billion———
Asset & Wealth Management
Excluding the impact of historical principal investments and its $3.8 billion of average attributed equity, pretax margin and ROE would have been approximately 3 percentage points higher.
Pretax margin (H1, ex-HPI impact): approximately 25%ROE (H1, ex-HPI impact): approximately 12%
$3.8 billion——22% pretax margin (H1), 9% ROE (H1)
Management and other fees (within AWM)
On higher average assets under supervision.
$2.8 billion11%——
Incentive fees (within AWM)
Expect to make further progress on target of $1 billion annual incentive fees over medium term.
$102 million———
Private banking and lending (within AWM)
On higher results from lending and deposits related to ultra-high net worth clients.
$789 million12%——
Equity investments and debt investments (within AWM)
Modest net losses in private portfolio, driven by markdowns in certain real estate positions.
$82 million———

Operational metrics

EPS reduction from selected items
$0.33
Q2 FY25

Selected items reduced EPS by this amount.

ROE reduction from selected items
40
Q2 FY25

Selected items reduced ROE by this amount.

Equities intermediation revenues
$2.6 billion 45% YoY
Q2 FY25

Driven by strong performance across cash and derivatives.

Total financing revenues
$2.8 billion 23% YoY
Q2 FY25

Reached a new record for a sixth consecutive quarter, comprising over 1/3 of overall FICC and equities revenues.

FICC financing revenues
$1 billion
Q2 FY25

Record revenues driven by strong performance in mortgages and structured lending.

Equities financing revenues
$1.7 billion 23% YoY
Q2 FY25

Record revenues on better portfolio financing results and record average prime balances.

More durable revenues (AWM)
$3.6 billion
Q2 FY25

Record revenues across management and other fees and private banking and lending.

Compensation ratio (year-to-date)
33%
YTD FY25

Net of provisions, inclusive of severance costs.

Severance costs (year-to-date)
$140 million
YTD FY25

Included in compensation ratio.

Non-compensation expenses
$4.6 billion 6% YoY
Q2 FY25

Included approximately $100 million of CIE impairments, driven by higher transaction-based expenses.

CIE impairments
$100 million
Q2 FY25

Included in non-compensation expenses.

Net interest income
$3.1 billion sequentially up
Q2 FY25

Up sequentially on an increase in interest-earning assets.

Provision for credit losses
$384 million
Q2 FY25

Primarily reflects charge-offs in credit card portfolio and modest growth across card and wholesale portfolios.

Total loan portfolio
$217 billion up vs Q1
Q2 FY25

Primarily reflecting higher other collateralized lending.

Capital returned to shareholders
$4 billion
Q2 FY25

Includes common stock dividends of $957 million and common stock repurchases of $3 billion.

Common stock dividends
$957 million
Q2 FY25

Part of total capital returned to shareholders.

Common stock repurchases
$3 billion
Q2 FY25

Part of total capital returned to shareholders.

Quarterly dividend per share
$4 33% increase
Q3 FY25 onwards

Approved by Board, effective beginning Q3 FY25.

Quarterly dividend increase since 2018
400%
Since 2018

Cumulative increase in quarterly dividend.

Share repurchase program authorization
$40 billion
Multiyear

Multiyear share repurchase program.

Client wallet share (top 150 clients)
125 up from 77 in 2019
Q2 FY25

Number of top 150 clients where GS ranks in the top 3.

Alternatives fundraising (gross third-party)
$18 billion
Q2 FY25

Driven by demand for flagship funds across strategies.

Alternatives fundraising (YTD)
$37 billion
YTD FY25

Year-to-date fundraising.

Wealth management client assets
$1.7 trillion record
Q2 FY25

Reached a record level.

Ultra-high net worth client loan balances
$42 billion
Q2 FY25

Solid progress on increasing lending.

Assets under supervision
$3.3 trillion new record
Q2 FY25

Representing 30th consecutive quarter of long-term fee-based net inflows.

Market appreciation (AUM)
$115 billion
Q2 FY25

Contributed to sequential increase in assets under supervision.

Long-term net inflows (AUM)
$17 billion
Q2 FY25

In alternatives and equity, contributing to assets under supervision.

Alternatives assets under supervision
$355 billion
Q2 FY25

At the end of the second quarter.

Historical principal investments portfolio
$8 billion reduced by 10% in the quarter
Q2 FY25

Firm committed to aggressively reducing this portfolio.

M&A announced volumes (YTD)
30% YoY
YTD FY25

Also 15% greater than comparable 5-year average.

M&A announced volumes (YTD vs 5-year average)
15% greater
YTD FY25

Compared to comparable 5-year average.

IPOs priced
11
Q2 FY25

Priced for clients around the globe.

M&A league table lead (announced volume)
$85 billion
YTD FY25

Lead versus next closest peer in announced M&A volume.

M&A league table lead (completed volume)
$145 billion
YTD FY25

Lead versus next closest peer in completed M&A volume.

Industry KPIs

MetricValueDetails
Cet1 ratio14.5% %
Net interest income$3.1 billion USD

Product announcements

ProductTypeDetails
GS AI Assistantlaunch
Devin (autonomous generative AI agent)milestone

Deals & partnerships

NRG Energy NRG Energy's $12 billion portfolio acquisition from LS Power. $12 billion

Example of strategic client activity.

Salesforce Salesforce's $8 billion acquisition of Informatica. $8 billion

Example of strategic client activity.

Cognition Labs Collaboration to pilot Devin, an autonomous generative AI agent.

Piloting the usage of Devin for prioritized use cases in software development.

Risks & headwinds

Geopolitical concerns

intensified in many regions, most notably in the Middle East

Mitigation:Remain very focused on risk discipline; harnessing "One Goldman Sachs" to help clients navigate.

Trade policy uncertainty

Number of trade agreements have yet to materialize and that the ultimate impact on growth from higher tariffs is yet unknown.

Mitigation:Remain very focused on risk discipline; harnessing "One Goldman Sachs" to help clients navigate.

Challenging harvesting environment for principal investments second half 2025

modest net losses in our private portfolio, driven by markdowns in relation to certain real estate positions

Mitigation:Expect results in 2H 2025 to be more muted; committed to aggressively reducing the historical principal investments portfolio (now $8 billion).

Ongoing market uncertainty

much remains uncertain

Mitigation:Vigilant risk management; focused on clients and helping them navigate.

What to watch in Q3 FY25

M&A activity and backlog conversion

Next quarter
Current Backlog rose for fifth consecutive quarter, significantly higher vs 2024 year-end. Announced M&A up 30% YoY.
Target Continued strong M&A activity and realization of backlog into revenue.

Why it matters

Sustained M&A activity is a key driver for Investment Banking revenue, which showed strong performance this quarter.

Across Investment Banking, our backlog rose sequentially for a fifth quarter, even with strong realizations and remains notably higher versus 2024 year-end levels.

Q&A highlights

With increased capital flexibility from regulatory changes and strong earnings, how will Goldman Sachs deploy its excess capital, specifically for organic growth opportunities?

Management prioritizes deploying capital to support the client franchise for accretive returns and client activity, especially in M&A and financing. After organic deployment, returning capital to shareholders through sustainable dividend increases and buybacks remains a focus.

“if we've got capital available to deploy toward our client franchise to produce accretive returns and to support client activity, that's going to be the first place that we're going to go.”

asked by Glenn Schorr · answered by David Solomon

2 min read 6 chapters

Detailed narrative

M&A and Capital Markets Momentum

The deal-making environment has shown resilience, with announced M&A volumes up 30% year-over-year and 15% above the 5-year average. This momentum is attributed to increased CEO confidence and a narrowed range of economic outcomes. Capital markets activity also accelerated, with 11 IPOs priced globally during the quarter, performing well in the secondary market.

Strategic Priorities and Wallet Share Gains

Goldman Sachs continues to execute on strategic priorities, driving growth in financing and prudently maximizing wallet share. The firm now ranks in the top 3 with 125 of the top 150 global clients, a significant increase from 77 in 2019, demonstrating the success of its multiyear efforts.

Asset & Wealth Management Growth

The Asset & Wealth Management segment continues to build momentum, particularly in alternatives, raising $18 billion in the quarter. Wealth management client assets reached a record $1.7 trillion, with loan balances to ultra-high net worth clients growing to $42 billion. Total assets under supervision hit a new record of $3.3 trillion, marking 30 consecutive quarters of long-term fee-based net inflows.

AI Integration and Efficiency

The firm is actively investing in AI use cases to transform operations and enhance productivity. This includes the rollout of the natural language GS AI Assistant firm-wide and piloting Devin, an autonomous generative AI agent, for software development. These initiatives are expected to significantly enhance velocity, transform capabilities, and drive efficiency, supporting the strategic objective of operating efficiently.

Capital Flexibility and Shareholder Returns

The firm's CCAR stress test results led to a significant improvement in its expected stress capital buffer to 3.4%, providing increased capital flexibility. This flexibility supports client needs and business growth, alongside a commitment to returning capital to shareholders, evidenced by a 33% increase in the quarterly dividend to $4 per share and a multiyear $40 billion share repurchase program.

Regulatory Environment and Advocacy

Management is encouraged by recent statements from regulators regarding a holistic review of the financial services industry's regulatory and capital regime. The proposal on recalibrating the enhanced SLR is viewed as a constructive step towards a more balanced regulatory backdrop, which is expected to foster a more efficient financial system and support economic growth.

AI-generated summary of the company's earnings call. Not investment advice.