cautionary note on forward -looking statements - …€¦ · · 2014-05-14what is indicated in...
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TodayToday’’s presentation may include forwards presentation may include forward--looking statements. These looking statements. These statements represent the Firmstatements represent the Firm’’s belief regarding future events that, by s belief regarding future events that, by their nature, are uncertain and outside of the Firmtheir nature, are uncertain and outside of the Firm’’s control. The Firms control. The Firm’’s s actual results and financial condition may differ, possibly mateactual results and financial condition may differ, possibly materially, from rially, from what is indicated in those forwardwhat is indicated in those forward--looking statements. looking statements.
For a discussion of some of the risks and factors that could affFor a discussion of some of the risks and factors that could affect the ect the FirmFirm’’s future results, please see the description of s future results, please see the description of ““Risk FactorsRisk Factors”” in our in our current annual report on Form 10current annual report on Form 10--K for our fiscal year ended November K for our fiscal year ended November 2007. You should also read the information on the calculation o2007. You should also read the information on the calculation of nonf non--GAAP financial measures that is posted on the Investor RelationsGAAP financial measures that is posted on the Investor Relationsportion of our website: www.gs.com. portion of our website: www.gs.com.
The statements in the presentation are current only as of its daThe statements in the presentation are current only as of its date,te,November 11, 2008. November 11, 2008.
Cautionary NoteCautionary Noteon Forwardon Forward --Looking StatementsLooking Statements
Goldman Sachs Presentation toGoldman Sachs Presentation to2008 Merrill Lynch Financial 2008 Merrill Lynch Financial Services ConferenceServices Conference
Lloyd C. BlankfeinLloyd C. BlankfeinChairman & CEOChairman & CEONovember 11, 2008November 11, 2008
2
Goldman SachsGoldman Sachs
““ They still have the Goldman reputation and history, but they wilThey still have the Goldman reputation and history, but they wil l l not be unique anymore.not be unique anymore. ””
“…“… something bolder might be needed, such as a mergersomething bolder might be needed, such as a merger …”…”
““ GoldmanGoldman ’’s earnings have grown more dependent than most s earnings have grown more dependent than most people think on proprietary tradingpeople think on proprietary trading ””
June 6, 1998June 6, 1998
The New York TimesThe New York Times
June 20, 1998June 20, 1998
The EconomistThe Economist
January, 20 1999January, 20 1999Bloomberg NewsBloomberg News
3
Aug-07 Nov-07 Feb-08 May-08 Jul-08 Oct-08
Market DynamicsMarket DynamicsAugust 2007 to PresentAugust 2007 to Present 11
(1)(1) Data through November 7, 2008Data through November 7, 2008
2323
5656(37)%
(42)% (41)%
(88)%
(52)%
(8)%
S&P500
FTSE HangSeng
ABXAA
CMBXAA
LCDX
Global Equity Markets Credit Markets
Asset Price PerformanceAsset Price Performance Volatility (VIX)Volatility (VIX)
4
Bank Holding CompanyBank Holding Company
�� Why now?Why now?
Regulation inevitableRegulation inevitable
Market perceptionMarket perception
−− Safety of the FedSafety of the Fed
−− Funding AvailabilityFunding Availability
�� How will this impact GoldmanHow will this impact Goldman ’’s strategy?s strategy?
No impact on existing strategyNo impact on existing strategy
Provides Provides optionalityoptionality in a dislocated marketin a dislocated market
−− Bank Deposits could lower cost of funding over timeBank Deposits could lower cost of funding over time
�� NearNear--term impactterm impact
New RegulatorNew Regulator
$130bn $130bn -- $150bn of assets being moved into the bank$150bn of assets being moved into the bank
5
Unsecured LongUnsecured Long --Term Term Funding: $176bnFunding: $176bn
Wholesale FundingWholesale Funding3Q083Q08
Liquid Gov'ts,
Agencies, MBS42%
Secured Debt15%
Bank Loans and Whole
Loans7%
Equities23%
ABS / CMBS
5%
CP, Corporates,
Munis8%
Current LTD42%
CP2%
Other14%
Prom Notes13%
Hybrid Debt29%
GBP3%AUD
2%JPY4%
CAD1%
Other2%
EUR30% USD
58%
Unsecured ShortUnsecured Short --Term Term Funding: $65bnFunding: $65bnSecured Funding: $192bnSecured Funding: $192bn
6
Deposit Building AlternativesDeposit Building Alternatives
$10.7
$15.4
$29.1
2006 2007 3Q08
Historic Deposit Growth ($bn)Historic Deposit Growth ($bn)
�� OrganicOrganic
PWMPWM
AycoAyco
�� Third party distributionThird party distribution
Brokered CDsBrokered CDs
�� AcquisitionAcquisition
Distressed Distressed opportunitiesopportunities
Institutional and retailInstitutional and retail
Growth AlternativesGrowth Alternatives
7
Core Attributes That Define GSCore Attributes That Define GS
����������
CultureCulture
FranchiseFranchise
Liquidity/Capital ManagementLiquidity/Capital Management
Risk Management/Fair ValueRisk Management/Fair Value
Revenue DiversificationRevenue Diversification
ValidatedValidated
8
Diversified Revenue MixDiversified Revenue MixAverage Since 1999Average Since 1999
CreditCredit29%29%
MortgagesMortgages5%5%
CommoditiesCommodities23%23%
CurrenciesCurrencies16%16%
Interest RateInterest RateProductsProducts
27%27%
AssetAssetManagementManagement
12%12%
PrincipalPrincipalInvestmentsInvestments
5%5%
SecuritiesSecuritiesServicesServices
6%6%
InvestmentInvestmentBankingBanking
19%19%
FICCFICC32%32%
Equities Equities TradingTrading
13%13%
Equities Equities CommissionsCommissions
13%13%
9
43
23
1919 19
15
10
27
22
1513
17
82%
148%
191%
245%
0
5
10
15
20
25
30
35
40
45
50
4Q07 1Q08 2Q08 3Q08 Pro-Forma
-50%
50%
150%
250%
Lev. Loans Res. RE CRE Total as a % of Tangible
Risk ManagementRisk Management
(1)(1) 3Q08 Tangible Common Equity is pro3Q08 Tangible Common Equity is pro--forma for our recent $20.75bn in capital raisesforma for our recent $20.75bn in capital raises
11
$bn
% of T
angible Com
mon E
quity
10
Liquidity and Capital ManagementLiquidity and Capital Management
$38
$61
$88
$51
$42$46
$61
$102
Nov
-03
Nov
-04
Nov
-05
Nov
-06
Nov
-07
1Q08
2Q08
3Q08
Average Global Core Excess ($bn)Average Global Core Excess ($bn) Prudent Capital ManagementPrudent Capital Management 11
17.1%
11.6%10.8%
20.7%
14.2%
15.2%
2Q08 3Q08 Pro-Forma
Tier 1 Ratio Total Capital Ratio
(1)(1) ProPro--forma for our recent $20.75bn in capital raisesforma for our recent $20.75bn in capital raises
11
Franchise Drives Market Share GainsFranchise Drives Market Share Gains
Equities Commissions ($Equities Commissions ($ bnbn))Investment Banking Investment Banking –– Strength of FIG Strength of FIG
FranchiseFranchise 11
FinancingFinancingAdvisoryAdvisory
$15bn Acquisition$15bn Acquisition
$10bn Acquisition$10bn Acquisition
$8bn Acquisition$8bn Acquisition
$20bn IPO$20bn IPO
$8bn Common and$8bn Common andPref. Stock OfferingPref. Stock Offering
$3bn Common Offering$3bn Common Offering
$3.5
$4.6
$3.7
$2.7$3.0
$2.5
$3.0
$2.6
$2.0
2000 2002 2004 2006 3Q2008YTD
(1)(1) Americas exAmericas ex--self led/advised 2008YTD transactions as of November 4, 2008self led/advised 2008YTD transactions as of November 4, 2008
13
International Expansion StrategyPositioned to Chase GDP GrowthInternational Expansion StrategyInternational Expansion StrategyPositioned to Chase GDP GrowthPositioned to Chase GDP Growth
Real GDP Growth by Region (YoY %)Real GDP Growth by Region (YoY %) Revenue Contribution by RegionRevenue Contribution by Region 11
(1)(1) Average revenue contribution from 2007 through 3Q08Average revenue contribution from 2007 through 3Q08
-2
0
2
4
6
8
10
12
Q107 Q307 Q108 Q308 Q109 Q309
BRICS World Adv. Economies
GS Research GS Research EstimateEstimate
Americas54%EMEA
29%
Asia17%
14
Opportunistic InvestingOpportunistic Investing
Cumulative Funds Raised Over Time ($bn)Cumulative Funds Raised Over Time ($bn)
Total Funds Raised in Total Funds Raised in 2007 and 2008:2007 and 2008:
$55bn$55bn
$28$28$26$26
$15
$24
$40
$52
$93
$107
$0
$20
$40
$60
$80
$100
$120
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
PIA REPIA
15
Assets Under Management ($Assets Under Management ($ bnbn ))
48 72 122 108 89 90 101 118206
26258 57
71 96 112 134 154198
256268
98107
96 91 104133
167
215
255179
5458
62 53 68
95
110
145
151 154
$258$294
$351 $348 $373
$452
$532
$676
$868 $863
1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q08
Money Markets Fixed Income Equity Alternative Investments
16
Returns Over the CycleReturns Over the CycleGS Annual ROTE since IPOGS Annual ROTE since IPO
32%
29%
15%
20%
27%
40%38%
16%
25%
18%
1999 2000 2001 2002 2003 2004 2005 2006 2007 08YTD
Average Since Average Since IPO: 26%IPO: 26%
Target: 20%Target: 20%
17
ROE is SustainableROE is SustainableGS ROE vs. Adjusted Leverage GS ROE vs. Adjusted Leverage –– 2Q99 to 3Q082Q99 to 3Q08
R2 = 0.38
10
12
14
16
18
20
22
0 5 10 15 20 25 30 35 40
ROE (%)
GS
Adj
. Lev
erag
e (x
)
�� Leverage is not a major driver of our ROELeverage is not a major driver of our ROE
18
$20.94
$43.60$50.77
$57.02
$90.43
$38.69$32.18
$99.30
$36.33
$72.62
1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q08
Long Term GrowthLong Term GrowthGrowing Book Value Per Share in a Dislocated Enviro nmentGrowing Book Value Per Share in a Dislocated Enviro nment
CAGR 19%CAGR 19%
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