GS Q3 '26

Moments, ranked

1. 110:08 ETQ&A▲ +0.58%

   “That doesn't mean there won't be bumps, you know, in the quarter ahead.”

   Analyst asked: Got it. And I guess one other question. Improving and durable learning has been a big focus for you. Help me solve for this. Like when we look at the growth in prime and equity financing, you could make the argument that it's adding to the cyclicality of the business if there's like deleveraging among hedge funds, et cetera. And sure, like I'm not talking about quarter to quarter volatility. But h

   Management, 2.1x volume, adj. next 5 min: +0.92% raw vs +0.34% sector

   New

   low confidence

2. 209:57 ETQ&A▼ -0.60%

   “You know, we talk about running with a 50 to 100 basis point buffer or 100 basis point buffer.”

3. 310:20 ETQ&A▲ +0.64%

   “But I wouldn't expect a significant movement from here.”

4. 409:36 ETprepared▲ +0.56%

   “Establishing Goldman Sachs among the top eight providers by assets under supervision and top six by revenue.”

5. 510:27 ETQ&A▼ -0.28%

   “But we are focused over the longer term on sustainably delivering operating leverage to our shareholders as we grow the firm.”

1. -0.97%0:00ManagementGood morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs third 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 gap measures. This audio cast is copyrighted material of the Goldman Sachs group Inc. and may not be duplicated reproduce or rebroadcast without consent. This call is being recorded today October 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.
2. -0.97%0:44ManagementThank you, operator. Good morning, everybody. Thank you for joining us. We delivered very strong performance in the third quarter generating net revenues of 18.7 billion, the second highest in our history. Earnings per share of $17 and one cent and ROE of 18.7% and an ROT of 20.5%. Our quarterly results included the impact of an accelerated charitable contribution excluding that contribution quarterly EPS would have been approximately $18 And ROE and ROTE would have been approximately 20% and 21.5% respectively.
3. -1.26%1:25ManagementFor the year to date, we delivered record revenues driving an ROE of 20.7% and an ROTE of 22.4%. While the third quarter began with optimism around a potential resolution of the conflict in the Middle East renewed geopolitical tensions and continued disruption of energy flows. The US market had a complexity to the outlook, increasing oil prices, reigniting inflation concerns and driving bond yields higher. Against this backdrop, the Fed raised rates in September for the first time in three years with markets pricing in approximately 75 basis points of additional tightening in this cycle across the US, UK and Europe.
4. -1.91%2:05ManagementDespite these cross currents, the health of the underlying US economy has remained solid with strong corporate earnings growth GDP growth of 2.2% and a very resilient labor market. In complex environments such as these clients rely on the advice, execution, energy mediation expertise of Goldman Sachs to navigate uncertainty and advance the most important strategic priorities. In global banking and markets, we generated the second highest revenues in our history. With an investment banking advisory revenues or record and we maintained our long standing number one position in M&A.
5. -1.91%2:43ManagementAdvising on 1.5 trillion of announced transactions for the year. We maintained our year to date lead over our closest peer of approximately $430 billion. The largest lead we've ever had is clients turn to us for advice on significant transactions, including Huggy Faces $13 billion sale to Nvidia and integer holding $6 billion sale to KKR. As you remember, we entered the quarter with our highest backlog in five years and even with exceptionally strong revenue production in the quarter. Our backlog remains very robust, reflecting the strength and breadth of client engagement across our leading investment banking franchise.
6. -1.28%3:24ManagementIn equities, we delivered our second best performance after last quarter's record results with strength across both intermediation and financing. In FIP, we remain steadfast in supporting our clients global risk intermediation needs across asset classes amid sharp moves in rates and increased volatility in commodities. Importantly, financing activities have become a larger and more durable component of our markets businesses representing over 40% of FIC and equities revenues year to date. This progress reflects strong client demand, prudent balance sheet deployment and continued execution against our strategic priorities.
7. -0.76%4:02ManagementIncluding deliberate multi-year investments in Asia, which we highlighted earlier this year as an opportunity to drive further share gains. This dynamic market backdrop has also reinforced the importance of trusted advice and diversified investment solutions for asset wealth management clients. Our scaled and durable platform brings together leading investment capabilities across public and private markets and delivers them through deep institutional relationships. Our ultra premier high net worth wealth management franchise and our expanding third party distribution network. The strength of this platform continues to drive exceptional growth at scale.
8. -0.76%4:45ManagementIn the third quarter management and other fees increased 22% year over year to a record 3.6 billion and surpass 10 billion for the year to date. Our assets under supervision reached another record of 4.1 trillion supported by 97 billion of long term net inflows representing our 35th consecutive quarter of inflows. And wealth management 47 billion of long term net inflows contributed to record client assets of 2.1 trillion. For 2026 wealth management long term net inflows are annualizing at 12% well ahead of our 5% target which underscores the strength of our client relationships built on trust and long term performance.
9. +0.19%5:30ManagementIn alternatives, we are driving strong growth with alternative assets under supervision up 26% year over year to a record 491 billion. We continue to see strong momentum and fundraising with 37 billion raised in the quarter driving a total of 122 billion in fundraising for the year to date. Reflecting investor demand for experienced investment managers considering the strength we now expect full year fundraising of roughly 150 billion dollars. Given the sustained levels of investment performance for clients are leading asset wealth management business remains very well positioned for continued growth amid attractive secular tailwinds.
10. +0.56%6:12ManagementAt the same time, we are also in organically accelerating growth and building a stronger platform with a better product offering for clients. In August, we announced agreements to acquire a market leading in derivative income ETFs with approximately 35 billion in AUS at quarter end and LCN capital partners a leading triple net lease investment manager. The NEOs acquisition would bring our global active ETF assets under supervision to over 90 billion. Establishing Goldman Sachs among the top eight providers by assets under supervision and top six by revenue.
11. +0.56%6:50ManagementWhile LCN broadens the range of private real estate investment solutions we can offer. Importantly, these acquisitions also bring talented and entrepreneurial teams to Goldman Sachs. We remain focused on opportunities that enhance distribution deepen investment capabilities and add products to strengthen asset wealth management. Our bar for strategic financial and cultural fit remains very high and we will continue to allocate capital dynamically and with discipline as we drive growth.
12. +0.33%7:23ManagementAll in a record year to date revenues are the result of years of focused execution that have strengthened our market leading businesses and increased connectivity across the firm as we harness the power of one Goldman Sachs. Importantly, we have created a higher revenue base with our more durable revenues having more than doubled since 2020 investor day and now representing approximately 45% of revenues for the year to date. The increased durability coupled with our expense discipline and prudent capital management enhances the resilience of our earnings and supports higher returns to the cycle providing Goldman Sachs with an even stronger foundation for growth.
13. -0.37%8:04ManagementLooking forward though uncertainty persists, corporates and investors recognize that standing still can be a competitive disadvantage. Clients are taking action to modernize operations, secure critical capabilities and reallocate capital towards their highest return opportunities. All of this is driving demand for M&A, capital formation, financing, risk management and advice playing directly to the strengths of our franchise. An ongoing theme has been the growth in AI infrastructure investment. Recent studies estimate that the US data set of build out could require north of 10 trillion investment through 2032 averaging roughly 3.6% of US GDP annually.
14. -0.37%8:48ManagementOur conversations with clients demand for compute significantly exceeds supply at the moment, creating opportunities to help develop financing structures to meet that capacity shortfall. Our differentiated financing, distribution and investing capabilities position us to play a meaningful role in the mobilization of capital and supporting client activity. While we are proud of the privileged position we play in the AI investment cycle, no one knows how the demands for capital and compute will evolve as the broader AI ecosystem matures. That will only become clearer as technology and markets continue to develop.
15. -0.35%9:28ManagementThis uncertainty reinforces the importance of remaining vigilant around the types of activity we finance and how we can make the most of it possible. Beyond these financial risks, we also recognize the broader concerns around the accelerated pace of AI technology and the unchecked advancement of frontier models. Like other transformative technologies, we recognize the broad range of potential potential risks and potential potential risks. Beyond these financial risks, we also recognize the broader concerns around the accelerated pace of AI technology and the unchecked advancement of frontier models.
16. -0.68%10:05ManagementLike other transformative technologies, AI presents significant opportunities, but also significant risks that must be carefully assessed and managed. However, the choice is not between hoping progress and moving forward without guardrails. We must enable innovation and also demand responsibility. The experience of the financial services industry has demonstrated the value of rigorous testing, independent review, and continuous monitoring and clear human accountability. These principles, implied in ways that reflect the unique characteristics of AI, can help build the trust and confidence needed to deploy the technology responsibly at scale,
17. -0.68%10:50Managementwhile companies, developers, and governments work together to establish appropriate safeguards. All in, we continue to see meaningful opportunities ahead of us. We are incredibly well positioned, given our relentless focus on serving our clients while remaining vigilant to emerging risks in this dynamic environment. Our culture of teamwork, excellence, and partnership remains a key differentiator that has enabled us to adapt, innovate, and execute through a range of environments. I have never been more confident in our ability to create long-term value for shareholders by making the right investments to grow the firm and generate sustainable earnings growth.
18. +0.28%11:32ManagementWith that, I'll turn it over to Dennis 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 third quarter, we generated net revenues of $18.7 billion, earnings per share of $17.01, which drove a quarterly ROE of 18.7% and ROTE of 20.5%. Turning to segment performance starting on page three, global banking and markets revenues were $13.5 billion in the third quarter, our second highest quarterly revenues, contributing to a segment ROE of 23.5% for the year to date.
19. +0.50%12:09ManagementMoving to page four, advisory revenues of $1.7 billion reached a quarterly record and rose 18% year over year driven by higher volumes. For the year to date, we maintained our number one league table position for announced and completed M&A volumes. In equity underwriting, revenues of $666 million rose 43% year over year on strong IPO and secondary offerings activity. In debt underwriting, revenues were $904 million, up 15% year over year, driven primarily by stronger investment grade activity. Year to date, we ranked number one in equity underwriting, number two in leverage loans, and number three in high yield debt underwriting.
20. +0.50%12:47ManagementEven amid very strong accruals in the quarter, our investment banking backlog remains very robust as strong revenue realizations and advisory were largely offset by solid replenishment in equity underwriting. Year to date sponsor share of announced M&A remains below historical averages, presenting further upside when activity picks up. FICnet revenues were essentially unchanged year over year. Intermediation revenues declined 7% as lower results in mortgages rates and credit were largely offset by strong performance in currencies and commodities. Financing revenues increased 14% to their second highest level driven by strength and mortgages and structured financing.
21. +0.66%13:26ManagementEquities net revenues were $6.4 billion, up 72% year over year, representing our second best quarter driven by strong performance in both intermediation and financing. Equities intermediation revenues rose 52% to their second highest level driven by strength and derivatives. Equities financing revenues rose 96% to a record driven primarily by elevated average prime balances and strong activity across Asia. Demand for equity financing continues to exceed available industry capacity, supporting attractive pricing and allowing us to remain selective in deploying resources.
22. +0.63%14:01ManagementFollowing significant multi-year investment, our focus is increasingly on optimizing and diversify global portfolio, guided by our risk management framework, client relationships, and returns. More broadly, we continue to see structural tailwinds for the growth and tradeable assets and the increasing financing needs associated with those assets. Which have helped to support sustained industry growth and equities financing over time. Year to date total financing revenues of $12.7 billion were a record and represented over 40% of combined FIC and equities revenues.
23. +0.63%14:34ManagementAs David mentioned, growth and financing revenues has contributed to greater durability in FIC and equities and is underpinned by a robust risk framework that includes diversified exposures, limits, concentration management, and comprehensive stress testing. Let's turn to page five. Asset wealth management revenues were $5.1 billion, up 14% year over year. Management and other fees rose 22% year over year to a record $3.6 billion, reflecting the impact of higher average assets under supervision. Incentive fees were $587 million. Through our ultra high net worth wealth management franchise, we provided clients early access to a high growth investment opportunity and recognized incentive fees following the company's IPO.
24. +0.49%15:17ManagementBased on our current outlook, we expect incentive fees to remain elevated in the fourth quarter. Private banking and lending revenues were $827 million, up 20% sequentially driven by higher net interest from consumer deposits. Loan balances were up 6% to $51 billion. Investments revenues were $50 million, given the timing of certain monetizations following a strong second quarter and certain markdowns. Now moving to page six. Total assets under supervision ended the quarter at a record $4.1 trillion, supported by $97 billion of long term fee based net inflows, marking our 35th consecutive quarter of long term fee based net inflows.
25. +0.49%15:56ManagementWealth management client assets reached another record of $2.1 trillion, with $47 billion of long term net inflows. Turning to page seven. Alternative assets under supervision totaled $491 billion at the end of the third quarter, driving $860 million in management and other fees, the best performance since our 2020 investment day. Gross third party alternatives fundraising was $37 billion for the quarter and $122 billion for the year to date. On page nine, firm wide net interest income was $3.8 billion. Our total loan portfolio increased 6% from the prior quarter to $276 billion, reflecting broad based growth across the portfolio.
26. -0.15%16:35ManagementOur provision for credit losses was $368 million. While overall credit quality and portfolio performance have remained strong, our provisions reflected certain impairments across our portfolio, as well as overall growth and lending. Turning to expenses on page 10. Total operating expenses were $11.3 billion for the quarter. For the year to date, total operating expenses were $33.4 billion for an efficiency ratio of 59.4%, improving 270 basis points from the prior year and in line with our target. Our year to date compensation ratio net of provisions was reduced to 30%. We remain committed to paying for performance and delivering operating leverage for shareholders.
27. -0.09%17:13ManagementQuarterly non compensation expenses were $6.2 billion, 30% higher year over year, driven largely by higher transaction based expenses. Additionally, given the strong pull through of incentive fees this quarter, we made a tax efficient charitable contribution of approximately $450 million as part of a planned acceleration of our philanthropic efforts. We also expect to make a meaningful contribution the fourth quarter. Together, these actions will pull forward at least five years of planned charitable giving. The impact of our charitable contributions on quarterly EPS was approximately $1, while the impact on ROE and ROT was approximately 1.1 percentage points each. Our effective tax rate for the year to date was 20.4%, and for the full year we continue to expect an effective tax rate of approximately 20%.
28. -0.09%17:58ManagementNow onto slide 11. Our common equity tier one ratio was 12.4% at the end of the third quarter under the standardized approach, 100 basis points above our current capital requirement of 11.4%. Regarding recent regulatory developments, we welcome the Federal Reserve's rule finalization to enhance the transparency and accountability of the CCAR stress test and reduce the volatility of capital requirements. We also recognize the progress of the Basel III endgame and GCEP reproposals and are hopeful for finalization by the end of the year. Collectively, these developments represent meaningful progress towards a more balanced and risk-sensitive regulatory capital framework that preserves the strength and resilience of the banking system.
29. -0.01%18:36ManagementAs the rules are finalized, we support appropriately calibrated requirements that are aligned with the risks firms actually take and look forward to the timely completion of these reforms. We expect regulatory focus to soon shift towards liquidity regulation reform. We currently have over $570 billion in average global core liquid assets representing approximately 25% of our total assets, and our liquidity coverage ratio is among the highest in our peer group. In the quarter, we repurchased $3 billion of our common stock and paid $1.5 billion in dividends. We continue to have significant capacity to deploy capital prudently in service of clients while maintaining an appropriate buffer. In conclusion, our third quarter performance reflects the strength of our client franchise, which has been bolstered by years of strategic execution.
30. -0.30%19:19ManagementWe have built market-leading franchises, deep relationships, and a higher and more durable revenue base. We remain focused on delivering strong returns while continuing to invest in our people, technology, and client franchises to drive long-term earnings growth and deliver for our shareholders. With that, we'll now open up the line for questions. Thank you. Please stand by as we assemble our queue. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then two on your telephone keypad. If you're asking a question and are on a hands-free unit or a speakerphone, we would like to ask that you use your telephone keypad.
31. -0.30%20:00ManagementIf you're asking a question and are on a hands-free unit or a speakerphone, we would like to ask that you use your handset when asking your question. Please limit yourself to one question and one follow-up question. We'll take our first question from Glenn Shore with Evercore ISI. Hi there. Thank you. First one on trading and markets, the results are nothing short of awesome. There's a short-term and long-term question. The short-term is just simple. Is there anything unique in the quarter like related situational awareness or anything like that would contribute to the quarter such that we don't overmodel in the fourth quarter? But the bigger picture question I want to ask you is there's so many developments going on, tokenization, agentic trading, DeFi vaults, prediction markets.
32. -0.12%20:46ManagementAll these theoretically would nip at the core of your great markets business, but obviously you're not standing still. So maybe you could talk about where you're making investments and how you see some of those things, how we should think about that in conjunction with your markets platform. Thank you. Sure. Thanks, Glenn, and good morning. On the first point, I don't see anything that I would call out. Dennis, do you? I agree with that. I don't see anything I'd call out just on the first thing, just to put that aside. On your second question, obviously we've seen market structure evolve with technological advancements over long periods of time.
33. +0.19%21:27ManagementWe've talked about that for a long time, and as leading market maker and risk intermediary, we have to continue to invest in technologies, infrastructure, capabilities to make sure we're supporting our clients at the cutting edge. And I think we'll continue to do that. You know, I know you'll remember, Glenn, that it was not too long ago that people were concerned about electronification and equities trading and its impact on our business. But as we sit here today, the opportunity set for us is greater than what anyone could have contemplated when you look at our equity revenues and the way we adjusted and the way the business has evolved. Today, tokenization is obviously an important trend. You know, we see it across asset classes. We were publicly supportive of clarity passing.
34. +0.13%22:10ManagementWasn't perfect, but we thought it would be good to give the market more clarity, no pun intended, and ensure investor protection. But in the absence of that, we're already seeing agencies take steps to provide clear rules to market, and we're very engaged in those dialogues. We continue to invest and closely monitor the developments both for opportunities, but also for risks. The developments are obviously creating more products, greater activity, potentially new clients, broader distribution channels. And naturally, when you look at these things, they expand the TAM for our business. And that's one of the things that's interesting and exciting. At the same point, we remain very focused on ensuring that we're well positioned to serve our clients as these markets evolve.
35. +0.13%22:56ManagementWe've been investing in companies and the digital asset broader market infrastructure space for years, and we remain very focused on that. We've been building capabilities such as the GS DAP, where we were early in building our own rails for digital assets. We've tokenized bonds. We have a number of money market funds that are tokenized real estate, you know, for certain clients. And so we've been focused on trying to be at the edge of some of those activities, although I'd say broadly those activities are very small at this point. And we're participating in a range of market developments. In July, we participated in the launch of DTCC's tokenization service. And we're now actively assessing scalable use cases that we could put within it.
36. -0.27%23:41ManagementWe expect over time, the underlying technology can drive greater efficiency, automation, streamlined processes, reduce costs, take away friction, improve liquidity across asset classes. And so we're going to remain focused on this. I think you're right to raise it as something that requires attention. But I'd say the activity so far is small and at the margin. But we're going to continue to have real resources thinking about how these changes can evolve over time. And I think it's one of the reasons when you think about, for example, electronification, you know, we've managed to manage disruption or change in the equity business so well. And so we use that as a little bit of a guideline. So I hope that's I hope that's some helpful color. Yeah, you haven't put any thought into it.
37. +0.05%24:25ManagementI'm kidding. Thank you. That was very helpful. You know, so I've covered you guys since I guess the IPO. I've seen some transitions, you know, in management and Goldman just get stronger each step of the way. You know, this one seems to be being managed pretty methodically. There was just some articles recently that talking about an acceleration. So I don't know, David, if you want to address any of that, just to keep the record straight. I appreciate it. Thanks. Well, no, sure. And I appreciate the question because, you know, some of the articles, the articles create noise. I just start with Glenn. I'm super pleased with the progress the firm has made since we laid out our strategy and our investor day. You know, the execution.
38. -0.16%25:08ManagementThis team has worked to really grow the firm significantly. And I think we've really made it increasingly durable. And I have to say, you know, at the point right now where we see the benefits of the effort that the broad team has made, I'm really enjoying the job. But more importantly, as a team, we're super excited about what's in front of us in the coming years and how we can continue to grow the franchise and really accelerate the earnings potential of the firm. So, you know, I just want to be clear. There is no succession transition or timeline underway at Goldman Sachs. The board and I are singularly focused on our strategy to grow the firm and continue to serve our clients with excellence.
39. -0.16%25:48OperatorThank you. We will take our next question from Erica Najarian with UBS.
40. -0.16%25:59AnalystThank you. David, you answered this question in your prepared remarks. And maybe the more nuanced way to ask it is, you know, there has been a lot of fears in the investor community that the bond market route globally was going to have a chilling effect on activity levels. And, you know, given sort of how you framed, you know, the pipeline, maybe talk about how, you know, discussions have evolved or, you know, taking into account, you know, higher, you know, long end rates and if that's a factor and, you know, just a compound question. I have to be on TV in five seconds. If we think about the capital consumption in the fourth quarter, you know, clearly, you know, capital came in 50 basis points lighter.
41. -0.42%26:43AnalystYou still have plenty of excess. You know, JP Morgan mentioned the fourth quarter should be super active in trading and should not have a seasonal slowdown. You know, how should we think about, you know, capital consumption going forward? Thank you.
42. -0.42%26:59ManagementWell, just quickly on capital consumption. You know, we talk about running with a 50 to 100 basis point buffer or 100 basis point buffer. The firm has very good earnings momentum. So we generate capital. You know, we feel comfortable with the fact that we have adequate capital to deploy in an active quarter in the fourth quarter. And so, you know, we feel like we're managing that well. We continue to feel, you know, very nimble about our ability, you know, to manage, you know, our capital allocation effectively clients first. Then when we can't deploy, you know, back to shareholders on the first topic, you know, you know, just around rates and the effect and activity. We did see in the quarter a very meaningful move in rates.
43. -0.60%27:41ManagementI think from, you know, the beginning of July to, you know, to now, you know, we've seen a 75 basis point move on the 10 year, you know, approximately. Don't hold me exactly to that. But a 75 basis point move on the 10 year. But I think, you know, one of the things that's lost is a historical perspective, you know, on term treasury premium because we've really operated since the financial crisis and a rate and an environment rates are fundamentally low. You know, as a 64 year old guy, I kind of look back at the last 64 years and a 5% 10 year treasury, you know, doesn't scare me in terms of an operating environment. It's the overwhelming periods of time in my life. The 10 year treasury has been, you know, has been higher than the level that it's in. And so, you know, we can have very, very effective capital markets with that.
44. -0.21%28:25ManagementWhat, you know, what creates headwinds for markets is when you have very, very abrupt moves. Yes, we had a meaningful move in the quarter or probably some days when it was abrupt. But you've got a lot of other things going on that are very, very important. We have a very, very strong underlying economy. The economy continues to be very, very resilient despite some of the headwinds. We have an extraordinary tech super cycle. I think we have a regulatory environment that is really encouraging strategic activity to continue to grow scale. And you put these things all together and you balance it. And I think it's a pretty good environment. So, you know, I know people looked at the quarter and felt that it felt a little different than it did in the second quarter. And I think that's fair.
45. -0.50%29:07ManagementI would say that if I go back to the end of May or June, I would call it like a top, top decile environment for kind of market activity and capital markets activity. But now we're in a top quartile environment. And that's still really, really good when you think about long periods of time. So we feel quite good about the activity levels. Obviously, if there was a lot more interest rate volatility, that could create headwinds. But we'll watch markets carefully. And, you know, at the moment, as we look at activity levels, they feel they feel good.
46. -0.50%29:39OperatorRight. Thank you so much. We will take our next question from Ibrahim Poonawalla with Bank of America. Good morning.
47. -0.50%29:46AnalystI guess first question, first question, David, I think, Hawk Tan from Broadcom, I think he was speaking overnight and he kind of questioned the sustainability of like the AI CAPEX financing. And just you were obviously part of the group with Jensen during the quarter. One, do you share that concern that the real choke point for AI CAPEX will be the financials? Especially given rates moving higher, it's unclear what the returns look like. Same that for us, given you probably have one of the best visibilities on what the appetite looks like. Thanks. Well, I think, Christian, it's a very, very good question. Oh, Ibrahim, I'm sorry.
48. -0.34%30:30ManagementIbrahim, I apologize. I'm looking at a screen here. I've been called a lot worse in life, so it's OK. I apologize. I apologize.
49. -0.34%30:39AnalystI'm looking at a screen here.
50. -0.34%30:41ManagementI've been called a lot worse in life, so it's OK. I apologize because Christian's next. So I looked at the screen quickly. I apologize. So Ibrahim, it's a really good question. And I'm probably going to disappoint you on my answer, which is I don't know and nobody knows. You know, what I would say, and you saw it in our remarks, we are extremely conscious of the fact that the expectations for the quantum of financing that is necessary to build out the data infrastructure in the United States based on what people are predicting is quite significant. And over time, there is risk. There is risk to pressure on crowding out the size, the scale. Not every project is going to be received as well.
51. -0.58%31:26ManagementAnd so we feel very lucky. And I said this in the prepared remarks. We sit in the center of that ecosystem, but we also recognize we have an extraordinary obligation to be very disciplined about what we underwrite. And I just I think generalized, generalized comments about the direction of travel and what will happen. I think we've got to be very cautious about that. There is going to be a lot of financing to do, and we're going to be in the middle of that. It may be over time as the financing needs grow that there's pressure on rates and that will affect the returns and the viability of certain projects. You know, it's our job as an intermediary, as an asset manager, as a capital provider to sort through that and make prudent decisions. And I think we're very good at that. And we will. But one thing's for clear.
52. -0.33%32:10ManagementThere's a lot of demand for compute at the moment. The supply is not coming to balance. More is going to get built. More financing is going to be necessary. There will be a point in time when this recalibrates, resets for sure. And, you know, when that does happen, of course, there'll be some bumps. But it's very, very hard to predict that. And I think, you know, broad assertions that any of us know the direction of travel, how the technology will be evolved, how it will be deployed. You know, that's just an unknown we have to live with. But it's an exciting time because there's going to be a lot of really interesting things to do around that.
53. -0.33%32:46AnalystGot it. And I guess one other question. Improving and durable learning has been a big focus for you. Help me solve for this. Like when we look at the growth in prime and equity financing, you could make the argument that it's adding to the cyclicality of the business if there's like deleveraging among hedge funds, et cetera. And sure, like I'm not talking about quarter to quarter volatility. But how should we think about equity financing actually making these earnings more durable versus adding to the cyclicality? Like how would you sort of think through if you could help us?
54. -0.41%33:23ManagementYeah, sure, Christian. I mean, Abraham again. You must love Christian, I guess. I actually love Abraham and Christian. I love everybody. So, you know, I think the way I think the way to think about I think the way to think about this is we all have to this is the way we think about it running the firm. You have to step out of quarter to quarter. Okay, none of us here as we risk manage in our prime business are confused. Equity markets go up. Equity markets come down. Okay, when equity markets come down, okay, there's a deleveraging. Okay. And the size of the prime business because of the needs that our clients have to be financed with a smaller equity market, a smaller market cap.
55. -0.19%34:08ManagementThere's going to be some cyclicality to that. However, if you step back and you get out of quarter to quarter movements and you fundamentally believe in growth in the world and therefore GDP growth in the world and therefore growth in market cap and technology innovation over any three to five year period, the durability of the growth of that business at some baseline is going to be very attractive for Goldman Sachs. And so when you step out of the quarter and you think over three, five, seven years and you've really seen this, you know, look, we've grown our we've grown our revenues over the last five years since 2022 by 11% compounded on the top line. I do not believe we're going to grow our revenues by 11% compounded on the top line for the next five years. There will be stops and starts as equity markets move around.
56. -0.19%34:53ManagementBut what we're trying to prove out is that the durable base is much bigger. It's a much more diverse business. And fundamentally, it's very correlated to GDP growth and equity market cap growth over time. And if we stop looking quarter to quarter and stop looking and start looking at three to five year periods and look at the earnings growth that's driven, you get a very, very constructive result. Thank you. We'll take our next question from Christian Ballou with Autonomous Research. Good morning, David. Good morning, Dennis. And feel free to call me Ibrahim. I was going to call you Ibrahim just to level the playing field.
57. -0.13%35:35ManagementYes. All right. I guess first one, David, this is an IB cycle here. I'd love to get some color on where you think we are in the cycle. The macro seems to be marginally more challenging, higher rates. We see a bunch of IPOs get pulled. We probably get a change in the political climate post-U.S. midterm elections. Your backlogs seem impressive, but they did pull back a little bit. So just give me a sense of where you think we are in the cycle. Have we peaked or is there more to go? You know, I know everybody wants to call the peak. It's hard to call the peak, but let's just step back.
58. +0.39%36:18ManagementAnd I want to go back to something I said just a little bit earlier. You know, I still think for capital markets activity, it's a top quartile environment. For strategic M&A, there's an enormous amount of dialogue that continues. Our backlog is incredibly robust. It's fair to say that we had enormous accruals in the quarter, but if you listen to our prepared remarks, we were very forward about how robust the backlog remains. Capital markets activity is still good. I think one of the things that gets lost, there are obviously a handful of IPOs that didn't move forward, but when you look at ECM revenues for the quarter and for the last few quarters,
59. +0.39%37:00Managementthey're running meaningfully above both five-year and 10-year averages. So that's a good environment. You know, five-year and 10-year averages would be, you know, a 50% kind of capital markets environment. Running meaningfully above five- and 10-year averages, you know, is a better environment. So I think we're still in a very good capital markets environment. I think one of the things that happened with a handful of the IPOs, you know, when people do IPOs, they make a decision months in advance to move forward, and they have a discussion around what the valuation expectation is. And the investors have an expectation. And so IPOs that came in September were really the result of conversations in May and June around valuation expectations. Things got a little bit softer in September.
60. +0.71%37:44ManagementThe IPO market was wide open. It's just if you expected a valuation and you got something 10 to 15% less, you might choose not to go forward. You might choose to wait. But the IPO market is still in pretty good shape. I'd say capital markets activities are strong. There's no question the overall macro environment is a little bit more complicated. The rates environment a little bit more complicated. But the activity levels that we're seeing are still pretty good, but we'll obviously have to watch, you know, through the quarter. I think all the technology innovation and the AI infrastructure activity is a real good balance for capital markets activity on a go-forward basis. That doesn't mean there won't be bumps, you know, in the quarter ahead.
61. +0.58%38:26ManagementBut when I look, you know, we're certainly operating, you know, in a very good environment for capital markets and investment banking activity at the moment. Okay, very helpful. Maybe just on balance sheet and capital management. Clearly you're seeing tremendous balance sheet demand as evidenced by the robust growth in your financing business. I am a little bit surprised that you are still buying back a ton of stock at three times tangible, especially as your SLR is lower than peers. So maybe just talk through how we should think about capital management priorities as you move into 2027. So, Ibrahim, thank you. Thank you for the question.
62. +0.61%39:11ManagementTimes two. That's a good CFO. So, this is all taken against the backdrop that David's outlined. You know, we're optimistic about the opportunity set. We made decisions over the course of this year following some of the regulatory capital relief, you know, to expand our deployment into the client franchise. We also happen to buy a bunch of stock as well. We're generating, you know, significant earnings that enable us both to buy back the stock, buy down our share count, give us capacity to continuously and sort of systematically buy down our shares outstanding over time. It gives us more capacity on the follow,
63. +0.61%39:56Managementbut we were also able to make decisions to fuel the client franchise, which ultimately is delivering the results that we're talking about here in the third quarter. And I think as we head forward into 2027, I think you should expect our approach to be similar. We will deploy into the franchise as a matter of priority. We do expect to continue to invest in the sustainable growth of our dividend. It's obviously up 25% year over year. It's now $5 a share. It was $4 a year ago. Five years ago it was $2 a share. So, we've been consistently investing in the growth of our dividend. That remains important. And obviously with access, we'll return it to shareholders and make sure we have the right buffer to operate the firm.
64. +0.42%40:38ManagementWe're going to continue to make the best of our approach to our deployment, including into 2027. We will take our next question from Mike Mayo with Wells Fargo Securities. Hi. I guess there's been more talk about a headwind to what you described as an extraordinary tech super cycle as relates to power, labor, race. You know, CapEx has gone from billions to trillions. And so, is funding a constraint for this tech super cycle? And is your conviction as strong as it was, say, three or six months ago?
65. +0.17%41:18ManagementAnd then on the positive side, you talk about the growth in tradable assets globally. You're expanding in Asia. What has been that growth? What are your numbers around that? Thank you. So, on the first part, Mike, you're talking about just enough capital in the markets to fund the growth of all this technology expansion, or are we talking about our funding? I assume you're talking about just general capital availability to fund the significant AI infrastructure growth? Yeah. I mean, if bond markets go on strike or if rates go up too much or just the political hiccups, the pushback against data centers,
66. -0.01%42:02ManagementI know it's not a straight line up, but you still describe it as a tech super cycle. Do you think this is as strong a tech super cycle as you did six months ago, for example, given just some of the headlines that we see and the reaction from the technology companies? Yeah. I do think it's a very strong technology super cycle, Mike, and there's no way to step away from that. The things that you highlight, obviously, if there are other factors that create significant interest rate volatility and push rates higher, that will have an impact on the pace of build out and what projects get done and how they get done. If there's more geopolitical volatility in the world, that can have an impact.
67. -0.01%42:47ManagementLocalized political volatility around data centers, we've got an election coming up. It'll be interesting to see. Obviously, there's a lot of political discussion coming into an election, but then you also have to see how states and localities act coming out of elections. All these things can create volatility and there's uncertainty around them. No one knows the exact line of travel, but at its base, this technology is real. It's going to accelerate in terms of its deployment. There's going to be infrastructure built around it that's going to be quite significant. Hopefully, also, and I think this is the case, there's going to be guardrails and governor processes that help build trust around it. There is a lot of responsibility that goes to enterprises that are deploying it
68. +0.02%43:30Managementaround making sure it's deployed correctly, but all of that is generally constructive for our business. Now, I can tell you lots of things that can go wrong and slow it down, but there's uncertainty around that, but that's part of our job and the market's job is to kind of intermediate that and decide as time goes on the trajectory of that line, but this is real and it's significant and it's not going to wait, in my opinion. Then, Mike, I think on the second part of your question, as the world continues to expand, as we expand our opportunity set in Asia, something we've been strategically getting after for a number of years, you're seeing some of the results of that investment and the expansion of clients and markets
69. -0.08%44:14Managementand places that we can actually trade and finance different assets. If you look in our earnings release, you can see the geographic mix of our revenues. You can look back a year. You can look at the second. You can look at the year over year. You can look at the sequential for the firm, and there's very meaningful change in Asia's representation of aggregate firm-wide revenues, and I think it's fair to say a lot of that change in the geographic mix of revenues in the firm is being driven by equity's activity, equity financing activity. So those numbers give you a decent picture for the expansion of that opportunity set. And then completely separately, just there are a lot of articles, headlines written about you, David, and succession, and clearly there's nothing that came out from Goldman Sachs,
70. -0.08%44:58Managementbut what are your plans for staying around at Goldman as CEO? I think you might not have been on earlier when Glenn Schor asked that question, Mike, and the way I answered it, I'll just repeat what I said. I mean, I talked a little bit about the work we've done, the progress we've made, how much I'm enjoying it, and also the excitement of the leadership team we have about the years ahead, and I said to be clear, there's no succession, transition, or timeline underway at Goldman Sachs. The board and I are singly focused on growing the firm, growing our earnings, serving our clients. So that's what I said earlier on the call.
71. -0.03%45:33OperatorWe will take our next question from Stephen Chubak with Wolf Research.
72. -0.03%45:39AnalystHi, good morning, and thanks for taking my questions. So, David, I wanted to double-click a little bit further into the revenue opportunity tied to the financing of the digital infrastructure build-out. You know, your firm is actually uniquely positioned to underwrite financing activity, both in the private IG market as well as the public debt market. As we get deeper into the AI CapEx cycle, I wanted to get your perspective as to how you see activity migrating from the public to private markets, how you're positioned competitively to compete in that private IG space, and how does that impact some of the revenue considerations or economics if that activity does in fact migrate away from the public debt space and into the private sphere?
73. +0.16%46:23ManagementYeah, I mean, I'll make a couple of comments, and Dennis might have a couple of comments here too, but again, I know everyone wants an absolutely clear answer on the direction of travel of all of this. The capital demands are significant, and it's going to require significant capital deployment from the public markets, both equity and debt, and from the private markets, both equity and debt. And, you know, we're seeing that. I think one of the things that makes Goldman Sachs so unique is we're the only firm that sits kind of at the epicenter of having an ability to advise on these projects and the financings and how they should come together,
74. -0.10%47:03Managementan ability to be an originator and a structure of these transactions and distribute them to other institutional sources of capital, and in addition have a very broad asset management platform that includes both public and private pools of capital that can be coordinated into these transactions. And there's nobody else that has that positioning. So we feel as a firm that we're seeing a lot, and we sit in a very privileged place in the ecosystem. There's a significant amount of activity. You know, it's different for different entities. You know, it depends on who the customers and the offtakes are on a lot of the projects, which has a significant impact on the financing rates as to where you can go.
75. -0.10%47:48ManagementThere's a big difference from something that's really generated to serve a hyperscaler, you know, versus some of the neoclouds. And so all of this goes into the equation, but we feel very well positioned to bring the full range of services and participate actively. And we still see an enormous amount of activity. Dennis, do you want to add to that at all? No, I think so, also. The only thing I would add is if you step back and you also think about, you know, our banking franchise, the coverage footprint that we have, this cycle is different from prior cycles, and that the largest, biggest, you know, companies driving the cycle have significant capacity to use free cash flow to finance this.
76. +0.26%48:29ManagementAnd so there's lots of discussions with how you advise those large companies themselves, how much debt they should issue, how much equity they should issue, what's their rating appetite, what are the structures of the financing facilities. So you have to start with those people that are actually driving the investment supercycle. Then you move into the public and private debt and equity markets. We obviously through Capital Solutions have the capacity to underwrite and distribute, to also put certain types of financing structures on our own balance sheet. And then we've been growing our AWM business, our private IG business, as you reference quite substantially, that also can participate in the overall growth. And then if you think about the entire ecosystem, the supply chain is super complicated. There are a tremendous number of different companies that operate,
77. +0.51%49:14Managementand you can finance the different companies at each point in the supply chain across different markets around the world and given the scale of capability well positioned. I appreciate really all that detail and the perspective that you offer.
78. +0.51%49:35AnalystMaybe just a quick follow up on the SLR. Given financing activity is much more leverage intensive, you guys have obviously seen outsized gains on the financing side. Speak to where you're comfortable running under the SLR constraint while supporting continued balance sheet expansion. And specifically your appetite to grow in more nascent financing areas such as tax aware strategies. Just given your leading position in wealth and the RIA custody space would be a natural extension of your current financing capabilities.
79. +0.64%50:06ManagementSure. So you've obviously seen the change in how we've run our SLR ratio on a year to date basis. I think it's fair to say that the biggest delta, the largest sort of balance sheet extension is behind us. We're now migrating to a zone where we run a buffer in SLR much like we run in CET1 ratio. So we feel like we have the requisite capital we need to support the growth and client activity as we head into the fourth quarter. But I wouldn't expect a significant movement from here. And then in terms of other strategies that we have across the overall AWM franchise, we're exploring and working on a number of those different strategies that you referenced.
80. +0.64%50:49ManagementWe'll take our next question from Manan Gasalia with Morgan Stanley. Hi. Good morning. Earlier in the call you spoke about the year to date sponsor share for announced M&A being below the historical average. I guess what's your outlook for that business given the uptick in rates? You know, you seeing any pullback, any reluctance for some of those deals to come through into the market? Yeah, appreciate the question Manan. You know, the sponsors have been slow to monetize and turn over the capital portfolios from the 2020 and 2021 vintages. You know, I think we all feel we would have seen more activity by now.
81. +0.48%51:33ManagementYou know, I know there's a lot of questions around the fact that a higher rate environment is that more constraining. I think the bigger constraint is that a lot of this stuff is still marked higher than where it can be monetized, you know, in the market. And the sponsors are taking the optionality, you know, to wait longer because that's the way the incentive system works. They obviously have tools such as continuation funds and other vehicles, you know, to extend life and funds. And so they're taking advantage of those. This will come out though. This activity will come. And I think the thing I'd look at, I'd look at the M&A levels and just, you know, recognize the capital markets levels and just recognize it's been very light on sponsor activity. That sponsor activity is going to come. And when it comes, that'll be a tailwind.
82. +0.41%52:18ManagementBut it has been slower than we would have expected at this point. But I'm not overly concerned with how the interest rate environment affects it in the short term. Got it. And other midterms factoring into your conversations with clients at all, like our clients waiting on the sidelines to get more clarity on that or maybe on the flip side, if there's a greater sense of urgency to get deals done. I don't sense that people are sitting on the sidelines because of the midterms. I think from a strategic M&A perspective, the window is, you know, we have an administration, you know, for two and a quarter more years.
83. +0.41%52:55ManagementAnd, you know, this is an administration where strategically to achieve scale, there's a general point of view that unlike in the prior administration where whatever the question was, the answer was no. In this administration, whatever the question is, the answer is, you know, very significant maybe. And so, you know, strategically companies are very front footed. And I think, you know, they feel comfortable that they've got a window, regardless of the midterms, kind of got a window that, you know, the presses through the administration. You know, I think people are watching the midterms carefully, you know, to see what happens and what that means, you know, kind of for activity and government over the course of the next couple of years. But I don't see it at the moment affecting activity significantly.
84. +0.18%53:35OperatorWe will take our next question from Brennan Hawken with BMO.
85. +0.18%53:41AnalystGood morning. Thanks for taking my question. I have one on financing. You've spoken to both pricing and strength in Asia. You said that there's no one-timers there. But the third quarter was perceived as a bit of a de-grossing period. So curious whether or not you saw that. And is it possible to break down some of the growth that you've seen in those trading revenues between how much is tied to average balances growing versus the pricing benefits that you've highlighted? Thanks.
86. +0.05%54:17ManagementSo, Brennan, I appreciate the question. I mean, the growth rate for financing in particular on a sequential basis was about 3%. So I think there was the leveraging in the quarter. I think there was some disruption over the course of the quarter. And so, you know, the trajectory did not sustain substantial growth. It's still very healthy. And as we pointed out in the prepared remarks, it does remain an environment that's sort of supply of financing constrained.
87. +0.05%54:47ManagementAnd so one of the levers that we have in terms of driving sustainable growth in that activity is as there can be pullbacks, you know, we can assess expanding the funnel of activity that we take on board with existing clients and or new clients as a bit of a valve as aggregate market levels adjust. But I think most of what would explain the sequential performance does relate to the overall backdrop of the market. There was not significant change in the composition of the volume.
88. -0.07%55:22AnalystAnd then you spoke to the year to date comp ratio 30%. Is that the best way we should be thinking about your expectations for the full year? And have we seen a few investors noted this morning about the strong performance on the comp ratio? Is there something to do with like revenue mix? Equities revenue has been really, really strong. That's generally considered a lower comp ratio business. Has that so has it been like business mix that has helped the comp ratio or are you just seeing lower competition for talent? Thanks for taking my questions.
89. -0.11%56:04ManagementSure. So I'd say there's a couple of things in terms of how we think about the comp ratio. First, it is our best estimate at the moment for what we expect for the year. But I'd say that we are applying a strategic lens to it. And your question does get after this. As we look at ways that we can invest to grow the firm, grow the earnings of the firm, scale the firm, we are building durable platform connected types of businesses. And over time, we should not have the same degree of headcount related expenses that we might have historically to grow and scale the firm. And certain of the more durable activities, including the financing activities, we're using a lot of the firm's financial resources and risk appetite to drive that activity.
90. -0.11%56:47ManagementAnd so there can be favorable compensation ratio benefits with respect to the growth of those activities. I would not say that we're seeing any diminution in terms of the market for talent. Frankly, quite the opposite, I think, for the very, very best people in this environment, business professionals, engineering professionals across the firm. There's a very, very strong bid for the very, very best people. And we make sure that we're in a position to compensate them appropriately. But we are focused over the longer term on sustainably delivering operating leverage to our shareholders as we grow the firm. And this is one step in that direction.
91. -0.28%57:22OperatorWe will take our next question from Dan Fannin with Jefferies.
92. -0.28%57:30AnalystThanks. Good morning. Good morning. So one more on expenses, Dennis, and shifting to non-comp, obviously excluding the charitable numbers in this quarter and I think next quarter, as you highlighted. Can you just talk about the growth rate or outlook for non-comp expenses? You think about the AI benefits you might be seeing in other areas of investment that could be growing or shrinking as we look ahead.
93. -0.28%57:51ManagementSure. So, you know, first and foremost, you can see it in the numbers, both aggregate and the deltas. By far the biggest component is transaction-based expenses. That story remains the same. For so long as we continue to see strong levels of client activity, particularly in equities and particularly in Asia, we'd expect that we'll continue to see growth in the transaction-based expenses. You're right. By the end of this year, based on our current expectations, we'll have made contributions to support go-forward charitable giving that hopefully should carry us through about five years or so on our best estimate. So you won't see that. You're unlikely to see that in the future periods as a result.
94. -0.11%58:35ManagementYou know, the other area of strategic growth is across technology, generally speaking, comms and tech. We're going to continue to make sure that we have our people have access to the cutting edge technology. We're making investments in our data infrastructure, our migrations to cloud. We're obviously making investments with respect to the models. And we're also making talent investments all to make sure that we can support the firm's scaled growth over time. So I would call those out as understood.
95. -0.09%59:06AnalystAnd then just as a follow-up, wealth management, organic growth, more than accelerated, 47 billion in the quarter in terms of net inflows. Anything one time in there or chunky that you would call out or maybe just talk to the kind of components, whether it was new advisor ads, recruiting, same stores, sales with existing clients, what was the driver there?
96. -0.09%59:27ManagementSo I would not call out a particular one time. I would say that we have now a multi-year sustained investment in expanding our advisor footprint. That's a decision that was made a number of years ago. We continue to ramp up. Advisors continue to expand our geographic footprint and our reach around the world. And we continue to have very, very strong investment performance, which is really important. And we continue to invest in the overall quality of our people and in terms of the client experience that our clients have with our people. It's a big area of strategic focus for the firm. It is performing substantially ahead of the targets that we put out earlier this year of 5 percent.
97. -0.19%60:12ManagementBut we're very pleased. And it's a huge opportunity for the firm.
98. -0.19%60:15OperatorWe will take our next question from Devin Ryan with Citizens Bank.
99. -0.19%60:21AnalystThanks. Good morning, David and Dennis. Hi, Dennis. A couple here on asset management and really on the alt business. It's been incredibly impressive fundraising. You started the year at a $75 to $100 billion target. Now you're targeting $150 billion. So clearly a lot of incremental capital coming in here. Just curious if you could give us a little more color around how much of that is just being kind of opportunistic in the market with some of these themes like the volatility and private credit, or whether there's something bigger structurally that's been changing around your ability to distribute or even add capacity to that business.
100. -0.19%60:59ManagementYeah, I mean, just appreciate the question, Devin, but there's nothing opportunistic about it. This is a this is a concerted strategy that started six plus years ago to really scale the platform. And, you know, when you look across the platform at the scale platform, we've got managers across a variety of the different categories of private capital raising that have a lot of experience, good performance. And, you know, we've been very, very good to institutional allocators at, you know, customizing solutions that work for them with a long term view. And in addition, you know, we have very, very good demand for these products and services from our ultra high net worth channel, which is a very, very important component.
101. 0.00%61:44ManagementAnd so, you know, this has been a strategic decision that we've made real scaled progress on over a period of time that has meaningfully increased, you know, our, you know, our capacity, you know, to compete at the highest level in the space. And I think we've got good runway. You know, when you look at private credit, for example, one of the things we've benefited from is we've been in this business for 40 years and institutional allocators despite the noise in the media around private credit as spreads have normalized to more attractive levels. Institutional allocators have thought this is a more attractive time in the last three to six months to bring capital into experienced private credit managers. And we've benefited from that. So there's nothing opportunistic.
102. +0.37%62:29ManagementThis is a long term strategy to have one of the largest and broadest private alts platforms. And you're seeing the benefit of our scale position, you know, start to come through. I appreciate that, David.
103. +0.37%62:44AnalystAnd then just to follow up just on the acquisition front in asset management to clearly been an area. Yes. Yes. Are there any other areas you feel like yourself subscale and asset management or where a few additional capabilities or investments could kind of like you just said on the outside. Similarly, really kind of improve the capacity or make you more relevant with institutional or retail clients. Thanks.
104. +0.19%63:08ManagementThere's no questions. We, you know, we still have gaps, you know, across the platform. We we have a presence, you know, across, you know, all the variety of private assets broadly. But there's some places where we're not as scaled as we'd like to be. That doesn't mean that we'll take a, you know, we'll make an acquisition in that space because there's, you know, there's got to be fit. There's got to be, you know, the right team. But we continue to look for places where we're not scaled with our opportunities, both across privates and the public side of our asset management business to increase our scale. And I, you know, I think there'll be other opportunities. I'm not going to call it something specifically, but we're not at scale everywhere. And if we see an opportunity that fits and accelerates our scale position, we're certainly going to consider it.
105. +0.19%63:49ManagementBut always with a very high bar around culture fit and the specific people we're bringing into the firm.
106. +0.19%63:55OperatorThank you. We'll take our next question from Gerard Cassidy with RBC.
107. -0.01%64:03AnalystHi, David. Hi, Dennis. Dennis, you touched on in your comments about the provision being higher than you gave us guidance earlier in the quarter about it being higher. So there's no real surprise in the outlook for credit from your comments still is strong. But can you elaborate a little bit on the marks that you took to that drove that provision?
108. -0.01%64:26ManagementSure. So, you know, there's two drivers this quarter that are worth taking note of. One, which is the secondary driver, but yet it's important, which is overall growth in the portfolio. So we continue to deploy capital to expand the opportunities to lend to more clients. And frankly, that's an outgrowth of a strategic decision earlier in the year when we found ourselves with more excess capital that we wanted to fuel growth in our overall investment banking coverage suite of relationships. So a component of the of the provision numbers is aggregate growth in the portfolio. But it is the case as well that the impairment numbers were elevated. We looked very carefully, as we always do with the entire complexion of the portfolio.
109. -0.13%65:09ManagementOur conclusion is they're highly idiosyncratic, the non-correlated set of names. But we had a couple of different names that we ended up taking incremental impairments against in the quarter. We don't think it's necessarily the signal of something else to come. But it was appropriate for those individual names. And so we took the impairments and put it through in the third quarter.
110. -0.13%65:28AnalystVery good. And as a follow up, you talked about it earlier in the year about the leaning into Asia and the success that you've had. And you touched on it again today, the Asian markets and the equity finance, equity execution. You guys obviously benefit benefit from are there any other opportunities globally where you can lean into new markets and get the benefits that you're seeing similar to what you do with Asia?
111. -0.13%65:56ManagementSo I think there are opportunities all over the world where we continue to lean in. What what we found particularly attractive about Asia is that we felt that we were quite under scale. And the opportunity was available with clients on attractive economic and risk terms. And so it was the most place, a most attractive place geographically to drive incremental penetration and scale. And that's why we made it a priority. But there are plenty of other places around the world that we could continue to choose to drive incremental growth as well.
112. -0.46%66:34OperatorThank you. We'll take our next question from Chris McGrady with KBW.
113. -0.46%66:41AnalystOh, great. Thanks for squeezing me in. David, more of a high level question. Your outperformance on your ROE to targets. Maybe a comment or two on your views on how much is cyclical versus structural?
114. -0.46%66:54ManagementI appreciate the question, Chris. You know, I think a lot of it is we're structurally running the firm as a broader, more durable franchise with higher fundamental returns. You know, I'm not going to speculate on, you know, through the cycle as to how the returns balance out. But what I will say when I go back over the last five years, I remember sitting on this call, you know, for multiple years, including as recently as a couple of years ago when we were very confident that we could get the firm, you know, running through our targets through the cycle. And there was a lot of skepticism, you know, about that.
115. -0.46%67:37ManagementThe reason the returns are significantly elevated is because we've significantly grown the breadth and the base of the firm. We've significantly, you know, changed the operational structure and the durability of the firm. And that's led to higher structural returns. And so there's a big strategic result of an investment over a long period of time. You know, I will say, you know, at the moment, and I said it on the call three times, we're in a very good environment. We're in a top quartile environment. And so does that flatter the what will be the average returns through the cycle? Absolutely. But structurally, the base returns of the firm have been meaningfully uplifted over the last five years.
116. -0.32%68:19AnalystPerfect. And then second, second follow up would be the midterms. I think there's a divided view of whether it's a divided government and is good for activity or perhaps a headwind. Where do you stand on if the futures markets are right about a divided government, how that could play into your capital markets business?
117. -0.32%68:41ManagementThanks. I don't really. First of all, the election doesn't occur for another month. And in politics, a month is an eternity. So, you know, we'll see how the election plays out. And, you know, I'm not a good pundit, nor are, you know, the the, you know, the prediction markets and the futures markets a good pundit of exactly, you know, what the environment will bring after the election as we head into twenty seven. So, you know, we'll watch that be prepared for whatever comes our way. Thank you. At this time, there are no additional questions. Ladies and gentlemen, this concludes the Goldman Sachs third quarter twenty twenty six earnings conference call. Thank you for your participation. We now disconnect.