Cautionary Note on Forward-Looking Statements

Transcription

1 Cautionary Note on Forward-Looking Statements Today s s presentation may include forward-looking statements. These statements represent the Firm s s belief regarding future events that, by their nature, are uncertain and outside of the Firm s s control. The Firm s actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the Firm s s future results, please see the description of Risk Factors in our current annual report on Form 10-K K for our fiscal year ended November You should also read the information on the calculation of non- GAAP financial measures that is posted on the Investor Relations portion of our website: The statements in the presentation are current only as of its date, November 11, 2008.

2 Goldman Sachs Presentation to 2008 Merrill Lynch Financial Services Conference Lloyd C. Blankfein Chairman & CEO November 11, 2008

3 Goldman Sachs They still have the Goldman reputation and history, but they will not be unique anymore. Bloomberg News January, something bolder might be needed, such as a merger The Economist June 20, 1998 Goldman s s earnings have grown more dependent than most people think on proprietary trading The New York Times June 6,

4 Market Dynamics August 2007 to Present 1 Asset Price Performance Volatility (VIX) Global Equity Markets Credit Markets (8)% (37)% (42)% (41)% (52)% (88)% S&P 500 FTSE Hang Seng ABX AA CMBX AA LCDX Aug-07 Nov-07 Feb-08 May-08 Jul-08 Oct-08 (1) Data through November 7,

5 Bank Holding Company Why now? Regulation inevitable Market perception Safety of the Fed Funding Availability How will this impact Goldman s s strategy? No impact on existing strategy Provides optionality in a dislocated market Bank Deposits could lower cost of funding over time Near-term impact New Regulator $130bn - $150bn of assets being moved into the bank 4

6 Wholesale Funding 3Q08 Secured Funding: $192bn Unsecured Short-Term Funding: $65bn Unsecured Long-Term Funding: $176bn Bank Loans and Whole Loans 7% Equities 23% Secured Debt 15% Liquid Gov'ts, Agencies, MBS 42% Other 14% Prom Notes 13% CP 2% Hybrid Debt 29% Current LTD 42% GBP 3% AUD 2% JPY 4% CAD 1% Other 2% EUR 30% USD 58% ABS / CMBS 5% CP, Corporates, Munis 8% 5

7 Deposit Building Alternatives Historic Deposit Growth ($bn) $29.1 Growth Alternatives Organic PWM Ayco $10.7 $15.4 Third party distribution Brokered CDs Acquisition Distressed opportunities Institutional and retail Q08 6

8 Core Attributes That Define GS Validated Revenue Diversification Risk Management/Fair Value Liquidity/Capital Management Franchise Culture 7

9 Diversified Revenue Mix Average Since 1999 Mortgages 5% Securities Services 6% Investment Banking 19% Commodities 23% Asset Management 12% Equities Commissions 13% Equities Trading 13% FICC 32% Credit 29% Interest Rate Products 27% Currencies 16% Principal Investments 5% 8

10 Risk Management % 250% $bn % % % % 50% % of Tangible Common Equity 5 0 4Q07 1Q08 2Q08 3Q08 Pro-Forma 1-50% Lev. Loans Res. RE CRE Total as a % of Tangible (1) 3Q08 Tangible Common Equity is pro-forma for our recent $20.75bn in capital raises 9

11 Liquidity and Capital Management Average Global Core Excess ($bn) $102 Prudent Capital Management % $88 $61 $ % $38 $42 $46 $ % 15.2% 10.8% 11.6% Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 1Q08 2Q08 3Q08 2Q08 3Q08 Pro-Forma Tier 1 Ratio Total Capital Ratio (1) Pro-forma for our recent $20.75bn in capital raises 10

12 Franchise Drives Market Share Gains Investment Banking Strength of FIG Franchise 1 Advisory Financing Equities Commissions ($bn bn) $4.6 $15bn Acquisition $20bn IPO $2.6 $3.0 $2.5 $2.7 $3.0 $3.5 $3.7 $10bn Acquisition $8bn Common and Pref. Stock Offering $2.0 $8bn Acquisition $3bn Common Offering Q 2008 YTD (1) Americas ex-self led/advised 2008YTD transactions as of November 4,

13 Culture 12

14 International Expansion Strategy Positioned to Chase GDP Growth Real GDP Growth by Region (YoY %) Revenue Contribution by Region GS Research Estimate Asia 17% 6 4 EMEA 29% Americas 54% 2 0 Q107 Q307 Q108 Q308 Q109 Q309-2 BRICS World Adv. Economies (1) Average revenue contribution from 2007 through 3Q08 13

15 Opportunistic Investing Cumulative Funds Raised Over Time ($bn) $120 $100 Total Funds Raised in 2007 and 2008: $55bn $93 $107 $80 $60 $52 $40 $20 $15 $24 $26 $26 $28 $28 $40 $ PIA REPIA 14

16 Assets Under Management ($bn bn) $868 $863 $ $ $294 $ $ $351 $373 $ Q08 Money Markets Fixed Income Equity Alternative Investments 15

17 Returns Over the Cycle GS Annual ROTE since IPO 40% 38% 32% 29% 25% 27% Average Since IPO: 26% 18% 15% 20% 16% Target: 20% YTD 16

18 ROE is Sustainable GS ROE vs. Adjusted Leverage 2Q99 to 3Q08 Leverage is not a major driver of our ROE GS Adj. Leverage (x) R 2 = ROE (%) 17

19 Long Term Growth Growing Book Value Per Share in a Dislocated Environment CAGR 19% $90.43 $99.30 $72.62 $32.18 $36.33 $38.69 $43.60 $50.77 $57.02 $ Q08 18

20 Goldman Sachs Presentation to 2008 Merrill Lynch Financial Services Conference Lloyd C. Blankfein Chairman & CEO November 11, 2008