NEW YORK, Feb 17 (Reuters) – Goldman Sachs (GS.N) on Thursday upgraded its key profitability target and set new goals for its asset management, transaction banking and consumer businesses as it laid out its strategy for the next three years.
Wall Street’s premier investment bank is reshaping itself after a turbulent decade during which profit at its core trading businesses was crimped by tougher regulations brought in after the 2007-09 financial crisis.
Chief Executive David Solomon pointed to progress made over the past two years and said the bank would build on that over the next three years despite headwinds such as inflation and an anticipated slowdown in investment banking and trading activity.
“We believe we have the right plan in place that will enable us to serve clients, drive returns and unlock significant value for our shareholders,” Solomon said in a presentation at the Credit Suisse Financial Services Forum in Florida.
The bank said it expects to a achieve return on tangible equity (RoTE) of 15-17% over the next three years compared with its previous mid-term guidance of 14%. It said it expects a return on equity of 14-16% compared with 13% previously.
The bank reiterated its efficiency ratio goal of 60%, which effectively means it is running the business at a 40% operating margin.
Goldman also set new deposit goals for transaction and consumer banking.
It said it expects transaction banking deposits of more than $100 billion by 2024 compared with $54 billion last year. Consumer banking deposits are expected to grow to more than $150 billion by 2024 compared with $110 billion last year.Reporting by Matt Scuffham Editing by Will Dunham, David Goodman and Nick Zieminski