Jeenah Moon/Bloomberg via Getty Images
- Goldman Sachs reported strong second-quarter revenue on Wednesday.One especially strong area was IB advisory, where revenue was up 71% year-over-year.CEO David Solomon told shareholders he was bullish about dealmaking and AI.
For David Solomon, the CEO of Goldman Sachs, the last few years haven't always been smooth sailing.
Since he took over the bank about seven years ago, he's faced a volley of challenges: Questions over his leadership, an unsuccessful consumer banking push, and a post-COVID dealmaking downturn that never really thawed.
Through it all, he's pushed ahead with his vision for a leaner and more efficient bank that could provide a return for investors in any environment — rain or shine.
On Wednesday, he appeared to have gotten his wish. The bank posted strong results across its business lines, including 71% jumps in M&A advice, even as overall deal volumes slumped.
Solomon's optimism was evident as he spoke on a conference call about the bank's plans to become even more efficient while continuing to grow returns for investors. He said the bank has grown the stock dividend by 400% since he took over in 2018, including a recent increase of 33%. When asked whether that would continue, he sounded optimistic.
"I do think given what's going on with the capital stack and the capital regime and given the way we're executing on our strategy, which is allowing the firm to grow, there is room for us to continue to drive that dividend higher," he said.
Here are four key areas that Solomon was eager to tout for shareholders.
Big deals are back
M&A activity is still down from last year, but large deals are making a comeback, which benefits Goldman. The bank's advisory revenue jumped 71% year-over-year to $1.17 billion. Overall investment banking fees rose 26% from a year ago.
Solomon used the conference call to tout a string of deal wins, including the bank's work on Salesforce's $8 billion purchase of Informatica and 11 stock listings the bank managed for clients like Circle, Chime, and eToro.
"Though uncertainty could persist in some pockets, particularly in industries highly sensitive to trade policy, we are optimistic on the overall investment banking outlook," Solomon said.
Focus on efficiency
Efficiency has been a driving theme of Solomon's tenure, including plans to eliminate duplicative roles and move people to lower-cost centers like Dallas and Salt Lake City.
On Tuesday, Solomon said the bank is taking its efficiency efforts to the next level with the rollout of an artificial intelligence tool called Devin.
The tool, created in conjunction with Cognition Labs, is geared at helping its software engineers work faster and more efficiently, he said.
"Operating efficiently is one of our key strategic objectives, and these efforts will allow us to continue to enhance the client experience while improving productivity," he said.
Regulatory changes
Solomon sounded upbeat on the regulatory environment under President Donald Trump and said optimism over looser oversight is already boosting the firm's dealmaking prospects.
When talking about the bump in M&A advice, he said one reason is regulatory.
"There's a confidence level on the part of CEOs that significant scaled industry consolidation is possible," he said, adding, "And so people are very engaged in that across a range of industries. Scale continues to be incredibly important to businesses broadly."
"We are encouraged by recent statements from regulators that a holistic review of the regulatory and capital regime for the financial services industry is warranted," he added.
Uncertainty
Investors don't love uncertainty — but Goldman certainly benefits from it. Recent uncertainty rattles investors and financial sponsors — but who do they call when they feel the jitters? The banker.
On Wednesday, the bank posted its best trading result ever, with equities revenues of $4.3 billion for the second quarter (up 36% year over year) and revenue from fixed income, currencies, and commodities of almost $3.5 billion (up 9% over last year).
This quarter, clients forged ahead with deals and repositioned their portfolios, some actually spurred by the volatility, Solomon said. "Our global client franchise has never been stronger," he said, "and I'm proud of how we've helped our clients navigate periods of heightened uncertainty."
