By Matt Scuffham
NEW YORK (Reuters) – Goldman Sachs Group Inc management is considering whether to scale back financial targets set earlier this year, as the coronavirus pandemic has hindered the bank’s business model revamp, analysts and sources inside the bank told Reuters.
Goldman unveiled plans to boost returns on equity and cut costs during its first-ever investor day in January. To reach its goals, Goldman would squeeze more revenue from existing businesses like wealth management as well as relatively new ones like consumer lending, while launching additional corporate services like cash management.
Since then, the pandemic has slammed into the economy, crippling loan demand and causing widespread unemployment. It has also prevented Goldman bankers from drumming up business with new customers the way they could before coronavirus lockdowns.
Although Goldman’s trading revenue has soared thanks to market volatility, other initiatives have stalled.
“Unless there’s a silver bullet vaccine cure, it looks like Goldman will not hit its targets,” said Viola Risk Advisors bank analyst David Hendler. “It’s behind on wealth management and it’s behind on consumer.”
A spokesman for Goldman referred Reuters to executives’ prior statements but declined to comment further.
Goldman Sachs executives have stood by their targets, stressing that the path to achieving them in the coming years would not be “linear.” They are not expected to move the goalposts on Wednesday when the bank reports third-quarter results.
Instead, the bank may change targets in January, a year after they were set, said the sources, who were not authorized to speak publicly.
As it stands, Goldman pledged to produce a return on tangible common shareholders’ equity (ROTE) of more than 14% by 2023, compared with 10.6% in 2019.
The bank also outlined plans to cut expenses by $1.3 billion over that time frame, producing an efficiency ratio
