Meet the new Goldman Sachs. It should look like the old Goldman Sachs. Some notable differences will exist. But investors should ask how profitable the retro Goldman can be.
On Tuesday, Goldman reported its third-quarter results. These were muddied by extra charges due to its exit from consumer lending along with those from a continuing purge of certain capital-heavy investments. Goldman’s stated annualised return on equity for the quarter was just 7.1 per cent.
But exclude these one-time expenses, said the bank, and its RoE would have hit 10 per cent. Moreover, its two core businesses, institutional securities and money management, should eventually generate mid-teens RoEs “through the cycle”.
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