Goldman Sachs Presentation to Bank of America Merrill Lynch Banking and Financial Services Conference
Harvey M. Schwartz Chief Financial Officer
November 17, 2015
Cautionary Note on Forward-Looking Statements
Today’s presentation and any presentation summary on our website may include forward-looking statements. These statements are not historical facts, but instead represent only the Firm’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Firm’s control. It is possible that the Firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.
For a discussion of some of the risks and important factors that could affect the Firm’s future results and financial condition, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014. You should also read the forward-looking disclaimers in our Form 10-Q for the quarterly period ended September 30, 2015, particularly as it relates to capital and leverage ratios, and information on the calculation of non-GAAP financial measures that is posted on the Investor Relations portion of our website: www.gs.com.
The statements in the presentation are current only as of its date, November 17, 2015.
Investing & Lending Segment Debt and Equity Forward Overview Loans Investments Outlook
Average Firmwide Net Revenues 2010 to 2015YTD1 Investing & Lending
Includes lending to clients across the firm as well as Equities 23% investing activities, which supports economic growth FICC 28% Investing & Reported separately to provide greater transparency Lending and enable improved understanding of the firm’s 17% businesses Investment Investment Banking Management 16% 16% Synergistic and supportive of core franchise businesses 3Q15 Balance Sheet Allocation Revenues derived across a diverse range of asset Other Assets classes Institutional 3% Client Investing & Services Lending Responsive to client financing needs and return 37% 10% opportunities
Secured GCLA and Client Cash 50% Financing 23% 27%
1 Through 3Q15 1
Balance Sheet Evolution Debt and Equity Forward Overview Loans Investments Outlook
I&L Balance Sheet Growth ($bn) $ 91.2 Our I&L portfolio reflects capital committing activities across our core businesses — Lending has grown due to client demand from $ 57.9 corporate and PWM clients — Our equity portfolio has remained relatively stable (excluding ICBC) as sales have been offset by market appreciation and new opportunities
4Q10 3Q15 4Q10 I&L Portfolio 3Q15 I&L Portfolio
Public Other Receivables Equity 5% and Other 4% 6%
Equity ex. Private ICBC Debt, Equity HFI Debt, 40% Loans & 21% Loans Loans & Debt and Other: 46% Other: FV Loans 41% 47% Debt 75% and FV ICBC Loans 13% 24%
2
Debt Securities and Loans Debt and Equity Forward Overview Loans Investments Outlook Debt Securities and Loans: $64.2bn1 Corporate Loans by Sector1 Other Loans2 Debt Securities 5% 9% Other Real Estate Financials 10% TMT Loans 10% 23% 14%
Natural Resources Consumer 10% Corporate Loans Retail/ PWM Loans 41% Real Estate Healthcare 31% 11% 21% Industrials 15%
Funded Loan Portfolio ($bn) Funded loans comprise 91% of Debt Securities & Loans, $58.3 balanced across Corporate, PWM, Real Estate and Other Private Wealth Management lending benefits from highly 72% credit-worthy borrowers and collateral $23.0 Real estate loans are diversified across geographies 28% Corporate loans are diversified by size, sector and geography 72% 28% Net interest income in I&L from debt securities and loans has 4Q12 3Q15 increased at a ~15% annualized pace since 2012 Fair Value Loans Held for Investment
1 As of 3Q15 2 Primarily reflects loans secured by consumer loans and other assets 3
Private Wealth Management Lending Debt and Equity Forward Overview Loans Investments Outlook
Funded Private Wealth Management Loans ($bn)1 Key Details
$19.6 Growth in PWM loans has been a driver of net interest income growth
The ability to lend makes us a more attractive $6.2 advisor to both existing and potential clients
4Q12 3Q15 Given the nature of our high-net-worth client base, PWM loans enjoy strong credit quality and are generally over-collateralized 3Q15 Private Wealth Management Loans by Type
Our PWM loans are diversified across collateral types including securities, residential real estate Other and other assets 31% Security Based Loans 41%
Residential Mortgages 28%
1 Includes loans to PWM clients held for investment and at fair value 4
Equity Investments Debt and Equity Forward Overview Loans Investments Outlook
Equity Investments by Type ($22.2bn)1 Overview
Our equity investments provide essential capital to Public entrepreneurs, companies and real estate ventures globally 15% Investment process seeks to create long-term value, leveraging our intellectual and financial capital
Private Investment opportunities are evaluated using risk-adjusted 85% return on capital requirements
Private Equity Balance Sheet ($18.8bn)1 Balance Sheet Composition
Other Corporate private equity investments held directly on 8% balance sheet and fund investments Real Estate Public equity holdings primarily from IPOs of private 18% investments held during initial lock-up periods
Corporate Firmwide real estate investments have increased recently 74% due to a more favorable risk/reward profile
1 As of 3Q15 5
Equity Investments Debt and Equity Forward Overview Loans Investments Outlook
$18.8bn private equity investment portfolio is well-diversified across sector and geographies
— Global portfolio comprised of over 800 investments across the Americas, EMEA and Asia
— Diversified with no sector more than 22% of the portfolio
The ability to provide equity capital to clients complements our industry-leading advisory practice
— Co-investors are often clients in other areas of the firm
Private Equity Investments by Geography1 Private Equity Investments by Sector1 Japan China 5% Healthcare 6% 3% Natural Other Asia ex Japan Resources/ 7% & China Energy Real Estate 7% 5% 22% Consumer/ Retail 10% EMEA Insurance/ Americas 21% Industrials Other 61% 13% Financials 21% TMT 19%
1 As of 3Q15 – Excludes consolidated minority interests 6
Revenues Debt and Equity Forward Overview Loans Investments Outlook
Revenues by Product 2012 to 2015YTD1 ($bn) Approximate Revenues by Type 2012 to 2015YTD1
Equity Securities Debt Securities and Loans CIEs
NII on Debt $ 7.0 Event $ 6.8 Securities & Driven Loans $ 5.9 29% Public 33% Equities Non-Event 33% Driven $ 4.1
Event Gains or losses based on events such as sales, 33% Driven IPOs, restructurings or financings Non-Event Gains or losses driven by other factors, e.g. company 71% 67% Driven operating performance 67% Public Gains or losses from equity market price changes 67% Equities on our public holdings Net Interest Interest income from funded loans and debt, net of Income funding costs Operating income from investments consolidated on 2012 2013 2014 2015YTD CIEs our balance sheet
I&L revenues are diversified across the capital structure Strong contributor to both returns and book value growth over the last 5 years
1 Through 3Q15 7
Investing & Lending Debt and Equity Forward Overview Loans Investments Outlook
Our Investing & Lending segment is a critical component of the Goldman Sachs franchise
Diversified across asset classes and within each asset class Diversified Designed to perform well across a wide variety of market conditions
Complement our best-in-class advice with provisioning of capital to clients Synergistic Co-investors are typically clients in other areas of the firm Source opportunities via global client franchises
Contributed 17% of firm revenues, on average, since 2010 Return Focused ROAE framework optimizes return profile against variety of constraints Low net charge-off rate within loan portfolio
Funded loan portfolio more than doubled in two years Adaptable Effectively allocating capital within I&L, can redeploy or return to shareholders
8 Goldman Sachs Presentation to Bank of America Merrill Lynch Banking and Financial Services Conference
Harvey M. Schwartz Chief Financial Officer
November 17, 2015