Cautionary Note on Forward-Looking Statements Today s presentation may include forward-looking statements. These statements represent the Firm s belief regarding future events that, by their nature, are uncertain and outside of the Firm 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 future results and financial condition, please see the description of Risk Factors in our current annual report on Form 0-K for our fiscal year ended December 202. You should also read the information on the calculation of non-gaap financial measures and the impact of Basel 3 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, May 30, 203. Sanford C. Bernstein Strategic Decisions Conference
Goldman Sachs Presentation to Sanford C. Bernstein Strategic Decisions Conference Gary Cohn President and Chief Operating Officer May 30, 203
Returns Goals Through the Cycle Through the Cycle Generate superior returns Pay for performance Maintain conservative financial profile Return excess capital Grow BVPS Cyclical lows Deliver strong relative returns Expense discipline Protect the client franchise Cyclical highs Capture revenue upside Deliver operating leverage Expand client franchise Pre-Crisis ROE 999-2007 670bps 22.7% 6.0% GS US Peer Average¹ Post-Crisis ROE 2009-202 2.% 870bps 3.4% Pre-Crisis peer group includes MS, JPM, BAC, C, MER, LEH and BSC; Post-crisis peer group includes MS, JPM, BAC and C Sanford C. Bernstein Strategic Decisions Conference 3
Levers to Improve Returns Revenues Sanford C. Bernstein Strategic Decisions Conference 42
Capital Management Balancing Regulatory and Shareholder Requirements Committed to return excess capital to shareholders over time with a primary focus on share repurchases $4.8bn of share repurchases Net reduction in shares outstanding of 50mm or 0% since 2009YE Steadily build capital to achieve longterm regulatory requirements Increased Basel 3 Tier common by ~00bps since 20YE Pushing capital optimization tools down to the business level Targeting a Basel 3 Tier Common ratio of approximately 9.5% 200-202 Share Repurchases $4.8bn of Repurchase ~8.0% 85% Repurchases as a % of Net Income to Common Shareholders Estimated Basel 3 Tier Common Ratio ~9.0% 20 Q3 Sanford C. Bernstein Strategic Decisions Conference 53
Expenses Committed to Shareholder Returns Track record of disciplined expense management Average Compensation Ratio 47.3% Announced $.9bn run-rate cost reduction program Q3 headcount down 0% since 200 870bps Shifted staff to High Value Locations (e.g. Bangalore and Salt Lake City) Initiated plan after posting a relatively strong first quarter in 20 Positioned the firm to generate positive operating leverage, as demonstrated in 202 Remain focused on efficiency and efforts will intensify if revenue environment does not improve 9.% Average Pro- Forma ROE² 848bps 38.9% 2000-2007 2009-202 Benefit of Lower Comp Ratio - 2009-202 ROE 296bps 2.% Average Reported ROE Compensation Ratio is defined as Compensation Expense as a percentage of Total Net Revenues. Compensation Expense includes employee initial public offering and acquisition award expenses, if any, except for nonrecurring employee initial public offering and acquisition expense in 2000 of $290mm 2 Average Pro-Forma ROE is a non-gaap measure, representing the average ROE impact post-crisis (2009-202) of using the 47.3% average compensation ratio pre-crisis (2000-2007) Sanford C. Bernstein Strategic Decisions Conference 64
Levers to Improve Returns Client Confidence Revenues Risk Appetite Market & Business Development Competitive Dynamics Sanford C. Bernstein Strategic Decisions Conference 75
Client Confidence M&A and IPOs Amid challenging backdrop, GS shows continued leadership in worldwide M&A and equity offerings Closing half of the gap to 20-year average activity levels would result in: Global industry M&A volumes rising 33% to over $2.8 trillion 2 Global Announced M&A as % of Global Market Capitalization 6.9% 4.% 20-Yr Average 203 YTD ~40% Below 20- Yr Avg Global IPO Activity as a % of Global Market Capitalization Global industry IPO volumes increasing nearly 50% to over $70 billion 2 40bps 20bps ~50% Below 20- Yr Avg 20-Yr Average 203 YTD M&A volumes per Thomson and IPO volumes per Dealogic; Global Market Cap per FactSet; M&A and IPO volumes are extrapolated as of 5//203 2 Potential increase relative to the extrapolation of 203 year to date activity Sanford C. Bernstein Strategic Decisions Conference 86
Low Interest Rates Driving Investors Up the Risk Spectrum Yield Compression Across Asset Classes Since 2004YE 0-Yr US Treasury Agency MBS A-Rated Corp Bond BBB Corp Bond BB Corp Bond -25% -39% -36% -45% -54% Data from Bloomberg. 2/3/2004 compared to 5/5/203 Sanford C. Bernstein Strategic Decisions Conference 97
Risk Appetite Fund Flows RISK US Fund Flow Trends ($bn) $,079 $83 $74 -$3 -$547 -$56 Money Market Fixed Income Equity 2008 202 203TD Fund Flow Data sourced from ICI, AMG/Lipper Data Services, Goldman Sachs Research; 203 data as of 4/24/203 Sanford C. Bernstein Strategic Decisions Conference 08
Securitization Issuance Financing Markets Are Beginning to Rebound CMBS and CLO Issuance ($bn) 999 2005 CMBS Average: $80bn CLO Average: $20bn $97 $89 $53 $3 $5 $57 $47 $9 $67 $2 $52 $6 $78 $25 $93 $67 $98 $229 $4 $ $4 $2 $3 $2 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 200 20 202 CLO CMBS $2 $33 $55 $48 Source: Securities Industry and Financial Markets Association (SIFMA) and Non-Agency CMBS data from Commercial Mortgage Alert Sanford C. Bernstein Strategic Decisions Conference 9
Global Market Development Secular Growth Opportunities Emerging economies poised for longterm growth and need for financial intermediaries: 202YE Deposits as a Percentage of Total Financial Assets 72% Natural progression for investors from deposits to higher yielding assets 57% Requires further development of available investment products and capital markets Capital markets also provide companies with an attractive alternative for raising financing 7% China Brazil US Total Chinese, Brazilian and US financial assets include fixed income public assets, public equities and bank deposits as available Sanford C. Bernstein Strategic Decisions Conference 2 0
Market Development Global Debt Markets 966 US Funding Mix excluding Financials 202 Other 24% Loans 30% Bonds 46% Loans 7% Other 26% Bonds 67% European Funding Mix excluding Financials 999 Bonds 8% 202 Bonds % Other 38% Other 43% Loans 54% Loans 46% Includes all countries in the European Monetary Union Source: Fed and ECB Sanford C. Bernstein Strategic Decisions Conference 3
Mortgages Evolving US Housing Market Structure US Household Formation (mm) US Mortgage Securitizations: US Government Guaranteed vs. Private Transactions 5 0 2% 05 00 44% 95 90 995 997 999 200 2003 2005 2007 2009 US Housing Starts 2 ( 000) 88% 2,500 2,000 56%,500,000 500 0 995 997 999 200 2003 2005 2007 2009 20 Bureau of Census Report 2 Bloomberg and Inside Mortgage Finance Pre-Crisis 20-Yr Average Govt Post-Crisis 200-202 Private Sanford C. Bernstein Strategic Decisions Conference 4 2
Asset Management Growing Strong Recurring Fee Business Top 0 asset manager with nearly $ trillion of assets under supervision $968bn Assets Under Supervision as of Q3 Asset Management (GSAM) and Private Wealth Management (PWM) offer differentiated solutions and products for our clients Key area of investment for the firm including several recent product enhancing acquisitions: Fixed Income $45 Money Markets $236 Alternatives $46 Equity $7 Fixed Income High Net Third Party Worth 33% 32% Institutional 35% Dwight Asset Management Rising Dividend Growth Fund Benchmark Asset Management Top priority is always consistent, strong investment performance for our clients Strong Investment Performance 8% of client assets ranked in top two quartiles for -year performance, 72% for 3-year, and 56% for 5-year 6+ consecutive quarters of strong investment performance Strong performance in Alternatives GSAM Global mutual fund assets ranked in top 2 quartiles by Morningstar as of 4/30/3 Sanford C. Bernstein Strategic Decisions Conference 5 3
Competitive Dynamics Retrenchment Tougher regulatory requirements and operating environment are pressuring returns and forcing: Total Announced Headcount Reductions for Global Peers in 20 and 202 ~80,000 Significant headcount reductions 7% of 200 Total Headcount Strategic reassessment Retrenchment across variety of businesses Forcing many players to focus inward on domestic markets Creates market share opportunities Range of 202 Reported ROEs for GS and Global Peers 7 banks below: 3 US, 4 European ROEs 2 banks above: 2 US Peers include BAC, BARC, C, CS, DB, JPM, MS and UBS Source: Company Filings and available sources (5.2)% 0.0% 0.8% Sanford C. Bernstein Strategic Decisions Conference 6 4
Closing Remarks Diversity Leaves Us Well Positioned to Capture Opportunities Average Contribution to Net Revenues 200 202 Commissions and Fees Equities Client Execution Securities Services Management & Other Fees Incentive Fees Transaction Revenues Advisory Debt Underwriting Equity Underwriting FICC Client Execution 32% Equities 24% IM 5% I&L 5% IB 4% 200-202 Net Revenues Interest Rates Credit Mortgages Currencies Commodities Equity Debt Other ICBC No business line contributed more than 2% to total net revenues Sanford C. Bernstein Strategic Decisions Conference 7 5
Operating Leverage Well Positioned to Drive Long-Term Earnings Growth Leading client franchise across all of our businesses 20-202 Year-Over-Year Growth 8.7% Diversified set of institutional businesses History of adaptability through various cycles Operational and financial flexibility 8.6% Strong track record of delivering superior long term returns to shareholders Well-positioned for positive operating leverage Net Revenues Pre-Tax Earnings Sanford C. Bernstein Strategic Decisions Conference 6 8
Goldman Sachs Presentation to Sanford C. Bernstein Strategic Decisions Conference Gary Cohn President and Chief Operating Officer May 30, 203