Goldman Sachs Group Inc. 2026 Q3 Earnings Call

Thank 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 $17.01, an ROE of 18.7%, and an ROTE of 20.5%. Our quarterly results included the impact of an accelerated charitable contribution. Excluding that contribution, quarterly EPS would've been approximately $18, and ROE and ROTE would've been approximately 20% and 21.5% respectively. For 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 added 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 U.S., U.K., and Europe. Despite these crosscurrents, the health of the underlying U.S. 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, and intermediation expertise of Goldman Sachs to navigate uncertainty and advance their most important strategic priorities. In global banking and markets, we generated the second highest revenues in our history. Within investment banking, advisory revenues were a record, and we maintained our longstanding number one position in M&A, advising 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, as clients turn to us for advice on significant transactions, including Hugging Face's $13 billion sale to Nvidia and Integer Holdings' $6 billion sale to KKR. As you'll 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. In equities, we delivered our second-best performance after last quarter's record results, with strength across both intermediation and financing. In FICC, 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 FICC and equities revenues year to date. This progress reflects strong client demand, prudent balance sheet deployment, and continued execution against our strategic priorities, including 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 and 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.

In the third quarter, management and other fees increased 22% year over year to a record $3.6 billion and surpassed $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. In 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. In 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 in 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. Given the sustained levels of investment performance for clients, our leading asset and wealth management business remains very well positioned for continued growth amid attractive secular tailwinds. At the same time, we are also inorganically accelerating growth and building a stronger platform with a better product offering for clients. In August, we announced agreements to acquire NEOS, a market leader in derivative income ETFs with approximately $35 billion in AUM 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. While 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 and 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. All in, our 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 harnessed 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 through the cycle, providing Goldman Sachs with an even stronger foundation for growth. Looking 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 strength of our franchise. An ongoing theme has been the growth in AI infrastructure investment.

Recent studies estimate that the U.S. data center build-out could require north of $10 trillion in investment through 2032, averaging roughly 3.6% of U.S. GDP annually. In our 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. This uncertainty reinforces the importance of remaining vigilant around the types of activity we finance and how we manage risk as we support our clients.

We are highly selective about the risk we underwrite and the capital we commit, particularly as client financing needs become larger and more complex. Beyond these financial risks, we also recognize the broader concerns around the accelerating pace of AI technology and the unchecked advancement of frontier models. Like other transformative technologies, AI presents significant opportunities, but also significant risks that must be carefully assessed and managed. However, the choice is not between halting 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, applied in ways that reflect the unique characteristics of AI, can help build the trust and confidence needed to deploy the technology responsibly at scale while 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've 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. With that, I'll turn it over to Denis to walk through our financial results in more detail.

Thank you, David. Good morning, everyone. Let's start with our results on page 1 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 3. 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. Moving to page 4, 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 1 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 1 in equity underwriting, number 2 in leverage loans, and number 3 in high yield debt underwriting. Even 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 and equity underwriting. Year to date, sponsor share of announced M&A remains below historical averages, presenting further upside when activity picks up. FICC net 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 in mortgages and structured financing.