Goldman Sachs seen unveiling medium-term goals at investor day

Goldman Sachs Group Inc (GS.N) Chief Executive David Solomon and his top executives are expected to unveil the company’s medium-term financial goals on Tuesday, according to analysts.

As it gears up for the second investor day in its 154-year history, the Wall Street powerhouse is expected to provide an update on its medium-term target for return on tangible equity (ROTE) from a current range of 15% to 17%. Its ROTE was 11% last year, missing analyst estimates, as rising interest rates prompted a sharp slowdown in dealmaking. 

Investors are awaiting a roadmap to profits for the bank’s fintech unit, called Platform Solutions, formed after Goldman lost billions on its foray into consumer banking and reined in its ambitions. The pullback on costs could help the bank to meet its efficiency targets.

Solomon’s performance, and his plans for growth, will be scrutinized by investors and analysts. Observers will also focus on the CEO’s plans to decrease Goldman’s reliance on trading and investment banking, which can be whipsawed by market volatility.

The bank has said it plans to slim down some alternative investments that weighed on profits last year.

“Earnings could continue to be subdued for the next year or more, as the economic environment remains uncertain, which should pressure investment banking and asset management revenue,” said Michael Wong, an analyst at Morningstar Inc.

After a solid performance in recent years, Goldman’s markets division could weaken in the short to medium term because “trading is a wild card,” he said.