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EXCLUSIVE-Goldman Sachs planning new medium-term profitability targets early next year -sources

Credit: REUTERS/ANDREW KELLY

Goldman Sachs Group Inc plans to issue new profitability targets for the next three years, consistent with longer-term goals it set in 2020, thanks in part to the investment banking and trading boom during the pandemic, three sources at the bank told Reuters.

By Matt Scuffham

NEW YORK, Dec 2 (Reuters) - Goldman Sachs Group Inc GS.N plans to issue new profitability targets for the next three years, consistent with longer-term goals it set in 2020, thanks in part to the investment banking and trading boom during the pandemic, three sources at the bank told Reuters.

At its last investor day in January 2020, Goldman set three- and five-year targets for return-on-equity (RoE) and return-on-tangible-equity (RoTE), two measures of profitability, that analysts at the time said were ambitious.

Goldman has since benefited from the U.S. Federal Reserve's stimulus measures pumping liquidity into capital markets, while the subsequent boom in the Wall Street firm's main businesses has meant progress has been faster than anticipated, the three sources said.

Still, the sources said executives understand that the favorable environment is likely to recede as the central bank tightens monetary policy. The bank is considering issuing a new set of profitability targets for the period through 2025 that would be in line with longer-term targets it set in 2020.

Specifically, the sources said the bank is planning to set new medium term return-on-equity (RoE) and return-on-tangible-equity (RoTE) targets of at least 15%. They cautioned that decisions relating to targets could still change between now and next year.

Asked for comment on the expected target, a spokesman for Goldman said: "At our Investor Day in January 2020, we disclosed a medium-term ROE target of 13 percent and longer-term ROE target of mid-teens." The spokesman declined further comment.

(Reporting by Matt Scuffham; Editing by Megan Davies and Nick Zieminski)

((matthew.scuffham@thomsonreuters.com; +1-416-687-7591; Reuters Messaging: matthew.scuffham.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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