The Goldman Sachs Group, Inc.

Operator: Good morning. My name is Katie and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs second quarter 2026 earnings conference call. On behalf of Goldman Sachs, I will begin the call with the following disclaimer. The earnings presentation can be found on the investor relations page of the Goldman Sachs website and contains information on forward-looking statements and non-GAAP measures. This audiocast is copyrighted material of The Goldman Sachs Group Inc., and may not be duplicated, reproduced or rebroadcast without consent. This call is being recorded today, July 14th, 2026. I will now turn the call over to Chairman and Chief Executive Officer, David Solomon, and Chief Financial Officer, Denis Coleman. Thank you. Mr. Solomon, you may begin your conference. David Solomon: Thank you, operator. Good morning, everyone. I know it's a busy morning with all the reports. We appreciate you being on our call. Thank you for joining us. We delivered record results for the second quarter and year to date. In the quarter, we generated record revenues of $20.3 billion, record earnings per share of $20.98, and an ROE of 23.5% and an ROTE of 25.5%. Our performance reflects the strength of our global franchise, the depth of our relationships, and our ability to harness the power of One Goldman Sachs in a very strong operating environment. Momentum across our franchise has accelerated as clients continue to pursue greater scale to invest and compete more effectively. This desire for scale has driven a significant increase in strategic deal-making activity with large cap corporate M&A volumes up 90% through the first half of 2026. At the same time, the AI investment cycle is expanding capital needs beyond core technology into infrastructure, energy and data centers, generating a ripple effect across industries. This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets. Beyond the infrastructure buildout, companies large and small are working to integrate AI into their operations, increasing demand for advice and execution capabilities as they adapt to a rapidly evolving competitive landscape. Against this backdrop, the trust we have built with clients over decades continues to position Goldman Sachs at the center of their most strategic and consequential transactions. This includes acting as lead left bookrunner on the record-breaking IPO for SpaceX and equity raise for Alphabet, as well as advising Dominion Energy's sale to NextEra Energy and Comcast spinoff of NBCUniversal. We have further expanded our lead as the number one M&A advisor and earlier this year became the first bank to cross the $1 trillion in announced volumes over a six-month period. This longstanding leadership, combined with our One Goldman Sachs operating ethos, creates a real multiplier effect. Our advisory relationships are often the genesis of client activity across the franchise. What starts as an advisory mandate in the boardroom increasingly extends into opportunities for our Capital Solutions Group, including financing, risk management, capital markets execution, and distribution, as well as investment opportunities for Asset Wealth Management clients. While we have made considerable progress strengthening connectivity across the firm, we continue to see opportunities to further collaborate across our Global Banking & Markets and Asset Wealth Management franchise. We believe there is substantial runway to deepen the connectivity between advisory financing and capital markets, investing and wealth management in ways that will enhance value for our clients and drive long-term growth. Given our progress and what we see in our pipelines, we expect this flywheel of activity to continue. Even with very strong investment banking revenues this quarter, our backlog increased to its highest level in 5 years and its second highest level on record, underpinned by a record advisory backlog and reflecting the strength and breadth of our client engagement. Beyond investment banking, momentum also accelerated across our equities and FICC businesses. Equities produced record revenues amid shifting market dynamics and elevated activity levels as single stock volatility and dispersion remained high. Client activity was particularly strong in Asia, driven in part by robust AI capital formation and investment. This strength also extended into financing, where we generated another quarter of record revenues as we deployed our balance sheet to support clients with average prime balances rising to another record. We also delivered a very strong performance in FICC with broad-based strength across both intermediation and financing as we supported clients globally. In intermediation, performance was driven by robust activity as clients turned to us for principal liquidity and risk management amid ongoing volatility in rates and commodities. In financing, we generated record revenues reflecting the continued strong demand for asset secured financing solutions. Across asset and wealth management, we are relentlessly driving our growth strategy forward with quarterly management and other fees up 20% year-over-year. We delivered our 34th consecutive quarter of long-term net inflows, including $19 billion in wealth management. Our wealth management client assets reached a record of roughly 2 trillion, and our total assets under supervision surpassed a record 4 trillion. In this cycle of elevated capital formation and strategic activity, the opportunity set for our ultra-high net worth franchise is also expanding. Our high touch wealth management business has never been better positioned to help founders and executives realize and manage newly created wealth with unique capabilities and solutions. Combining trusted advice with access to differentiated investment opportunities across our platform. Since the start of 2025, we've seen nearly 900 referrals to wealth management from investment banking, demonstrating the benefits of our One Goldman Sachs operating approach. Within alternatives, despite some pressure in segments of the industry, investor interest across our platform remained incredibly strong, driving a record $59 billion of fundraising in the second quarter and $85 billion of fundraising year to date. We raised $31 billion in private credit this quarter alone, a testament to our strong track record of performance and our clients' continued desire to partner with experienced investors like Goldman Sachs. More broadly, demand for private markets remains robust as clients deploy capital across credit, equity, and real assets, and our ability to originate and structure opportunities continues to differentiate our offering. We continue to scale our solutions platform, and last week we were appointed to manage both Verizon's and Lockheed Martin's retirement plans, which collectively represent $70 billion in assets under supervision. These mandates from large, sophisticated corporate pension sponsors underscore the growing demand for comprehensive, integrated OCIO solutions capable of managing complex portfolios across public and private markets. As a leading provider of OCIO services globally, we are well-positioned to capture this attractive secular growth opportunity. We are also further accelerating growth across Asset & Wealth Management through targeted acquisitions that are enhancing and scaling our capabilities. Our recent acquisitions, Industry Ventures and Innovator, are both showing solid momentum in the first few months of integration. We will continue to evaluate opportunities to expand our client offering, strengthen our franchise, and accelerate growth. Let me touch on capital and regulation more broadly. We remain very engaged with our regulators to ensure better alignment of regulatory outcomes with underlying risk and look forward to swift progress towards a more balanced framework. As we again demonstrated this quarter, our robust capital position and disciplined dynamic resource management enable us to support clients across market conditions and drive accretive returns. This also allows us to return meaningful capital to shareholders. In line with our priority to sustainably grow our dividend, we recently announced an increase in our quarterly dividend to $5 a share, representing a 25% increase versus a year ago and 150% increase over the last five years. We also repurchased $4 billion of common stock in the quarter. Looking forward, we know that things rarely move in a straight line. We continue to see a largely resilient economic backdrop in the U.S., risks can emerge quickly and drive periods of disruption and volatility across markets. A keen focus on risk management remains paramount as we support clients across a range of market conditions. It's also clear that we are seeing broad-based momentum across the franchise and a very strong environment for client activity. The build-out of AI infrastructure remains in its early stages. We believe this multi-year investment cycle will continue to drive elevated levels of strategic activity, financing, and capital formation across markets. The more expansive and complex this opportunity becomes, the more it plays to our firm's strengths. Very few firms have the global breadth of relationships, the depth of talent, the engineering capabilities, differentiated data, market insights, and financial resources to serve clients and capitalize on this opportunity set. These have been foundational strengths of Goldman Sachs for decades. Just as we are helping clients navigate this period of change, we are also implementing learnings within our own firm. There has been much debate around the broader implications of AI on the workforce. It will change how work gets done, it will not replace what matters most in driving our business, our extraordinary people. We see AI as a transformational technology that expands the capabilities of our best-in-class talent. Our capacity to drive commercial impact for our clients. Reflecting on our record results, I'm proud of our people and our performance. There is no question that a confluence of market tailwinds is supporting client activity. We will remain disciplined in how we invest and manage risk. I feel very confident about the forward trajectory of Goldman Sachs as a result of years of strategic execution to strengthen our businesses, enhance connectivity across the firm. We are exceptionally well-positioned to serve our clients and deliver for our shareholders. With that, I'll turn it over to Denis to walk through our financial results in more detail. Denis Coleman: Thank you, David. Good morning, everyone. Let's start with our results on page one of the presentation. In the second quarter, we generated our highest net revenues of $20.3 billion, as well as our highest earnings per share of $20.98, which drove a quarterly ROE of 23.5% and ROTE of 25.5%. Turning to segment performance, starting on page three. Global Banking & Markets revenues were a record $15.5 billion in the second quarter, contributing to a segment ROE of 25% for the first half of the year. Moving to page four, advisory revenues of $1.4 billion rose 17% year-over-year, primarily driven by higher completed volumes. For the year to date, we extended our number one league table position for announced and completed M&A volume. Through the first half of the year, we advised on $1.2 trillion in announced deal volumes with a lead of approximately $425 billion ahead of our closest peer. In equity underwriting, revenues were $985 million, up 130% year-over-year, supported by robust deal volumes across a broad range of transactions, including the marquee mandates for Alphabet and SpaceX, helping to drive our number one league table position through the first half of the year. In debt underwriting, revenues were $1 billion, up 75% year-over-year, representing our best quarter on record, driven by stronger performance in leveraged finance and asset-backed activity. Year to date, we ranked first in leveraged lending and second in high-yield debt underwriting. As David noted, our investment banking backlog increased to its highest level in five years, even with the very strong revenue production this quarter. We remain optimistic on the investment banking outlook as strategic dialogue remains robust. While sponsor volumes are still subdued versus historical averages, this represents a meaningful source of potential upside as activity picks up. FICC net revenues were $4.6 billion, up 32% from the prior year. Intermediation revenues were up 39% on stronger performance across interest rate products, commodities, and mortgages. Financing revenues increased 14% to a new record and included strong performance in mortgages and structured lending. Equities net revenues were a record $7.4 billion for the second quarter. Record equities intermediation revenues of $4.2 billion increased 60% year-over-year, reflecting stronger activity across derivatives and cash products. Equity financing was also a record, up 91% year-over-year, driven by continued strength in Asia and another record for average prime balances. Across FICC and equities, financing revenues of $4.5 billion rose 62% versus the prior year and comprised 37% of total FICC and equities revenues. Let's turn to page five. Asset and Wealth Management revenues were up 20% year-over-year to $4.6 billion. Year-to-date pre-tax margin was 24%, and the ROE was 13.5%. Management and other fees were up 20% year-over-year to a record $3.4 billion, primarily on higher average assets under supervision. Incentive fees were $112 million. We expect these fees to increase materially for the remainder of the year. Private banking and lending revenues were $689 million, and we continue to see strong loan growth with balances rising to $48 billion. Investments revenues of $441 million were up significantly year-over-year from substantially higher net gains on investments in private equity. Now moving to page six. Total assets under supervision ended the quarter at a record $4 trillion, supported by $91 billion of long-term net inflows across asset classes, particularly in equity assets. This marks our 34th consecutive quarter of long-term fee-based net inflows. Turning to page seven on alternatives. Alternative AUM totaled $459 billion at the end of the second quarter, driving $725 million in management and other fees. Gross third-party alternatives fundraising was a record $59 billion for the quarter and $85 billion for the first half of the year. Given the strength we've seen year to date, we now expect full-year fundraising to exceed $125 billion. On page eight, Platform Solutions revenues were $221 million in the quarter. We expect quarterly revenues for the remainder of the year to be broadly consistent with the second quarter. On page nine, firm-wide net interest income was $4 billion in the second quarter. Our total loan portfolio increased 3% sequentially to $261 billion, primarily reflecting growth in other collateralized and residential real estate loans. Our provision for credit losses of $102 million primarily reflected impairments related to wholesale loans. Turn to expenses on page 10. Total operating expenses were $11.7 billion for the quarter and $22.1 billion for the year to date. Through the first half of the year, we generated material operating leverage with an efficiency ratio of 58.8%, improving 320 basis points from the prior year period, helped by a decline in our compensation ratio net of provisions to 31%. Quarterly non-compensation expenses increased from the prior year to $5.6 billion, with the increase driven by transaction-based expenses tied to robust activity levels, particularly in equities. Even in a stronger revenue backdrop, we remain focused on disciplined expense management and driving efficiencies over time. Our effective tax rate for the year to date was 18.5%. For the full year, we continue to expect an effective tax rate of approximately 20%. Now on to slide 11. Common equity tier-one ratio was 12.9% at the end of the second quarter under the standardized approach, 150 basis points above our current capital requirement of 11.4%. We were pleased with our results in the recent CCAR test, which demonstrated the strength of our balance sheet under a severely adverse economic scenario. Our stress capital buffer of 3.4% remains unchanged and is effective through September 2027. We are encouraged by the direction of the proposed changes to the regulatory framework, including continued efforts to enhance transparency and improve stress test calibration. We look forward to swift progress towards Basel III finalization. A more balanced and risk-sensitive regulatory approach will be supportive of bank lending and capital formation and ultimately constructive for the broader economy. Our capital management priorities remain unchanged, which are to invest in our business at attractive returns, sustainably grow our dividend, and return excess capital to shareholders through buybacks. Our capital actions this quarter reflect our continued disciplined approach across each of these priorities to support clients and also enhance shareholder value. We recently announced an increase to our quarterly common stock dividend to $5 per share. We repurchased $4 billion of our common stock this past quarter. In conclusion, our record results reflect the strength, scale, and diversification of our world-class interconnected client franchises. As we look ahead, the opportunity set remains compelling across the firm, supported by sustained client engagement and a backdrop of elevated capital formation and deal-making activity. Importantly, the progress we have made on our strategic priorities has strengthened our platform, enhanced our risk management capabilities, and improved our ability to capture this opportunity. With a strong operating environment driving a robust flywheel of activity across our franchise, we're confident in our ability to continue to deliver for clients and generate more durable returns for shareholders. With that, we'll open it up for questions. Operator: Thank you. Please stand by as we assemble the queue. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, press star then two on your telephone keypad. If you're asking a question and you are on a hands-free unit or a speakerphone, we'd like to ask that you use your handset when asking your question. Please limit yourself to one question and one follow-up question. We will take our first question from Glenn Schorr with Evercore. Glenn Schorr: Hi. Thank you. All right, many good things in there. I'm going to try to pick on one here in equities. I know it's hard to comment on sustainability. The environment's good. A lot went right this quarter. Maybe we could talk about wallet share gains and any concentration we should think about, because I saw overall market volume's up 9%, but margin was up 50%, and your revenue was up like 86% or whatever. Yet somehow RWA is down. Those are all great trends, but maybe you could talk about wallet share gains and what you're seeing in that backdrop. Denis Coleman: Sure, Glenn. Thank you. Thank you for the question. I appreciate that. Obviously, the performance of our equities business in the last quarter is the result of a number of multi-year investments. We obviously identified a long time ago, particularly on the equity financing piece of the equation, a commitment to grow that as a component of our GBM public business, and we've been putting in place the talent, the risk management capabilities. We're making multiple years of technological investments to underpin our capabilities, particularly in international jurisdictions such as Asia. We, on the heels of some of the regulatory capital relief that we received at the turn of the year, identified the people that we were going to deploy more by way of financial resources and try and capture what we viewed as a competitive shortcoming in Asia, where we wanted to, in particular, improve our market share and capture more share in that part of the world. It required the investment across the board in terms of people and technology and resources. We've made those investments. We've sustained our commitment to those activities, and over the balance of the first half of this year, we've had a very favorable operating environment that's enabled us to capture that. We remain very focused around the world for the equities business, frankly, for all of our activities across the firm, trying to identify pockets where we have bigger opportunities to grow our share with clients, improve our performance, and we'll try to strategically invest in and feed those areas so we can improve our overall leadership positions. Glenn Schorr: Instead of a different follow-up, can I just drill down on that and ask, can you talk a little bit about the client composition? I ask because parts of the business have had bursts of growth across Asia, and then things cool down. Maybe you could talk about what kind of clients we're talking about, and then if we should be thinking about any concentration risk, because at times there's a handful of big clients that drive that. I appreciate all that color. Denis Coleman: Sure. No, thank you, and I appreciate that. The business has different characteristics globally, it has different client sub-components. There are many types of clients that sit within the equities franchise. You could, among other forms of characterization, include long-short investors, more quant-oriented investors, and their performance and their consequence to the overall wallet and activity changes over time. We have been undertaking an effort to expand our overall share across the client base, deploying, as I said, the human capital technology and financial resources to do that, and being thoughtful about the overall portfolio composition as we grow. We make choices across a number of different areas where we allocate resources to try and optimize portfolio concentration. We have very big clients in a lot of our businesses, they are very influential, this is a highly diversified suite of clients across the world. We are intermediating equity asset flows in cash, derivative format, financing format for a multitude of clients all over the world. David Solomon: Yeah, I just think the only thing I'd add, Glenn, that I just think is an important thing to recognize, we really have global scale advantages in that we really have scale and leadership positions across every region of the world in this context. I think we're in an environment where that's really providing a benefit. The real strength of our global footprint and our ability to really connect our activities globally and manage our activities globally is an advantage that we're feeling more directly at this moment. Operator: Thank you. We will take our next question from Ebrahim Poonawala with Bank of America. Ebrahim Poonawala: Hey, good morning. I guess maybe just sticking with that, David, around the global strength, just If you take a step back, talk to us in terms of this capital allocation when you're looking through the businesses and through markets, where are the best opportunities? Yes, it's competitive, but in terms of how you're thinking about capital allocation across your markets business in Asia versus Europe versus the United States, market financing versus all the CapEx AI activity that's going on, and then how you think about all of that relative to the buybacks that we did this quarter. David Solomon: Yeah. I'm happy to comment on it, Ebrahim, but I'd start by pointing you back to what Denis said and articulated, I think, very clearly in his prepared remarks. It is always our desire, we think about our client franchise. It is always our desire to take our capital and allocate it toward supporting our clients and their activities when we can do so in a way that produces benefit for our clients and accretive returns for our shareholders. That would always be our preference. In fact, if we could do that and have no excess capital, we would, obviously with a buffer, but no excess capital for buybacks if it's generating accretive returns. First and foremost, we'd like to get the capital into the business to support our client franchise. We also generate a lot of capital, we are extremely disciplined about looking for places where we can invest in the client franchise. I think Denis highlighted one where over the last six to 12 months, we saw a real opportunity, and that was around our business in Asia and Asian equities. We've benefited from that. If we don't see opportunities or we're generating capital and we don't see opportunities to deploy it, we're going to nimbly get it back to shareholders as quickly as possible. I think we've been quite disciplined about that. This was a quarter, given the performance, where we actually created more cushion and more buffer. We delivered a bunch of capital back to shareholders, but you also saw we deployed more into client resources out of accretive returns. We always start where are the opportunities. We're always looking broadly. We have good discipline processes, nimble processes to look at that, change directions quickly, if we don't see ways to deploy it, we're going to consistently work to get it back to you. Ebrahim Poonawala: Got it. Very clear. I guess I just wanted to focus on the durability benefit. There's durability for your shareholder returns. Talk to us about the durability of the AI CapEx cycle. I'm sure you spend a lot of time thinking through that. I think, David, you were quoted in the press during the quarter about there's more greed than fear in the market. As investors think about the risk of maybe an investment bubble around AI, you all have used AI at Goldman Sachs. You have your own experiences. When you look at that, when you look at kind of what the investment outlay is for the next few years, just maybe give us a sense of comfort that you have around how durable this cycle could be when we think about the financing business and what that means for Goldman and Goldman's earnings outlook. Thanks. David Solomon: Sure. I think we've tried to, in a balanced way, if you listen to the prepared remarks, we've talked about the fact that the environment at the moment remains extremely active with our clients. Our expectation, Ebrahim, is certainly that's going to continue. All the indicators we have is that we are in the relative early innings of a very, very significant, when you're talking about the AI build-out cycle, of an AI build-out cycle. We all know, because we've all been around for a long time, that these things don't go in a straight line, and they can ebb and flow. I'm not smart enough to tell you whether or not there can be recalibrations, in the short term, sometime in the next six months, the next 18 months. I will tell you that when you look over a three-year period or a five-year period, we're investing in long-term growth to support this. We're going to continue to be very consistent about that. We see lots of opportunities to deploy capital to our clients to finance this infrastructure build-out. We're very disciplined about the returns we expect for deploying that capital. It feels like that will continue, I know that it won't be a straight line, and there'll be bumps and there'll be recalibrations because there's a lot of uncertainty around how not only is the infrastructure going to be built, but once the infrastructure is built, how enterprises will buy that infrastructure, how it will be priced, how greater efficiencies will come from chips, then the pricing, ultimately of the technology. There's a lot of talk about token spend and the cost of the technology. I think we're early in the cycle to build out, but it won't be without bumps and recalibrations as people can understand just what the ultimate demand is for this technology and enterprises. We're excited about it. We see lots of opportunities. Those opportunities are very correlated to Goldman Sachs. That cycle is contributing to our earnings momentum, but also just highlights the breadth, depth and diversity of the firm, its franchise, the scale of our management fees across the firm of our more durable revenues. Those are all things we've been investing in over the last seven or eight years that have made the firm broadly much more diverse. This management team is not focused so much on next quarter. We're focused on how we're going to grow earnings from here over the next three to five years. We have a high level of confidence that we can deliver on that. Operator: Thank you. We'll take our next question from Erika Najarian with UBS. Erika Najarian: Yes. Thank you. I wanted to just unpack the equities number more. It was such a big number. I think there was a collective chuckle across the street given the outperformance here. Two-part question. Number 1, how much is the Asia hyperscale trade driving the equities revenues at Goldman? Does the recent correction, is that any cause for concern? Secondarily, we've also heard that given the balance sheet demand, in Asia, that prime capacity has been more limited. I'm wondering, given your financing number, how that played out for Goldman Sachs and whether or not in prime you're starting to see a little bit of pricing power, given the global demand for balance sheet. Denis Coleman: Sure, Erica. Thank you. The activity for our equities business has been very broad-based. It's across intermediation and financing. In intermediation, it's across cash activities and derivative activities. There's a dynamic in the marketplace right now where we're seeing single name equity dispersion relative to index, and we're seeing that dispersion relative to index while the market's going up. That sort of concoction is very supportive for the activity that clients are undertaking to manage their own portfolios and their own returns. It is causing them to come to us to assist them in managing that dynamic. On the prime side of the equation, it is always the case that we try to grow that in a strategic, disciplined fashion, and think about where the best opportunities are to support our most important clients and also grow our franchise. We identified Asia. We identified it a while ago. We made the decision to start ramping that up in the first quarter, gave rise to questions as to could we sustain that investment. You obviously see we're at the end of the second quarter, and we have revenues that are resulting from those investments that we made, and we're entering the second half with a capital cushion that's even larger. We feel like we're on plan to support clients and help them take advantage of that. We do see opportunities for pricing leverage. There are some participants in the market that are also, I'll say, being more disciplined, and there's a lot of desire from our clients to engage. We're going to remain selective and careful about how we grow the business. There's a big demand from clients. There's a secular growth opportunity that, given the multi-year set of investments we've made, it's something that we can capture. Erika Najarian: Thank you. Operator: Thank you. We'll take our next question from Christian Bolu with Autonomous Research. Christian Bolu: Good morning, David and Denis. Just on capital ratios, it probably ties into the financing question earlier on. Hear you on the CET1 rising, SLR did fall 40 basis points to 4.3%. Clearly there's a lot of growth in sort of low RWA leverage-intensive financing like prime. Your SLR ratio is now the lowest among peers. How much does SLR govern constraints on growing the financing business? Then maybe give us a sense of how low you're willing to run that ratio. Denis Coleman: As you've heard us say multiple times before, we have a number of different, often oscillating, binding constraints as a firm. We manage to all of them. We're managing the CET1, we're managing the SLR. You're right that we have facilitated some balance sheet expansion to facilitate client activity. Ultimately, there will be a limit to our appetite to expand that. I think as we've proven over time, we have the word David used is nimble, which I think is appropriate. We will look at the opportunity set that our clients are presenting to us and then make choices about the relative resource allocation to try to continue to drive sustained franchise, and performance for the firm. We'll look at all of those various constraints on a very dynamic basis. Christian Bolu: Okay. Thank you. On expenses, pretty impressive. Your, I think, efficiency ratio for the first half was under your 60% target. I think you're still investing in kind of cloud and AI under OneGS 3.0. Just curious about how much of the expense or efficiency gains you've had so far is a function of just a strength in the markets business versus what you've already taken out from a structural cost perspective. Denis Coleman: Sure. I appreciate that question, we'll continue to have this discussion over the ensuing number of quarters. Obviously we've just developed a tremendous amount of operating leverage, given the performance of the firm. We've been able to grow our revs at about 40%, revs net of PCL slightly higher. Comp expense is only growing at 30% and non-comp at 22%. There's been disciplined growth on the expense side relative to top line. We expect that we will have the capacity to continue to invest and fuel productivity opportunities that arise from AI and from general firm process rewiring. I think one of the greatest benefits from our launching our 3.0 Initiative is that we have galvanized the entire firm to understand that making efforts to scale our company and build more resilient, more automated platforms that can help us capture David Solomon: The significant growth in client activity that we've seen, that has been an enormous benefit. We're developing marginal levels of revenue production, and sort of not growing our human capital footprint quite the same way, but recognizing instead that we need to have sort of the quality of capabilities and technology to scale. That's been a learning that I think is one of the big pieces of the driver to our efficiency ratio. I would not say that there's been any structural change in our expense base at this point. Operator: Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities. Mike Mayo: Hi. One simple question. I guess you said your merger lead in advising on announced deals is 50% higher than the next largest, and that you have record advisory backlogs. What is the multiplier effect? For every $1 of merger fee that you generate, how much more do you get in all those other activities from the financing and risk management and execution and all those other things that you say? What's the multiplier effect? Is it like 10% elsewhere, 20%, 50%? David Solomon: I appreciate the question, Mike, it's something we think a lot about. I'm not going to give you a specific percentage, and to be honest, I don't know if I could give you an exact percentage that I could underwrite on a public call. Let me try to give you a framework for how to think about it, because I do think this is one of the most powerful things about our franchise. It starts with the fact that the advisor relationships and the position of the advisory franchise is really rooted in an extraordinary number of senior people that have deep, deep trusted relationships with CEOs and boards across the corporate infrastructure. When you get an environment like this where there's a lot of strategic activity, you obviously get benefit in the advisory line, and you see our market share performance in the advisory line. You get it spilling through in so many other things because that advice and that trust leads them when they think about financing, they think about hedging, they think about how it all integrates. We're finding ourselves in these discussions earlier and alone and without other banks, that allows us to command more of the wallet structurally. I think it also spills over given our One GS approach into asset wealth management. We get it by giving asset management and our clients in asset management the opportunity to invest in a lot of this stuff, and we get earlier looks. In addition, as people trust the firm, they more and more want to leave their wealth with the firm, and there's a lot of wealth being created. The multiplier effect is across the firm. It's significant. It's a very, very virtuous flywheel. When we step back as a leadership team and we look strategically at some of the things we've been focused on for a number of years and we continue to focus on, the amplification of this coordination over the firm, taking these trusted relationships and really levering different ways we can serve these clients is kind of core to what we're doing. It's something I think we're getting right, so it's leading to benefits. That flywheel is powerful. I can't give you a percentage, but it's a meaningful part of the integrated performance of the firm and our One GS operating ethos. Mike Mayo: Your prime finance is up a gargantuan amount year-over-year. What's your capacity versus the demand? David Solomon: In the case of prime, also in the case of FICC financing, as has been the case, there continues to be far more demand across the client segment than we're willing to engage when we sort of balance our objectives of serving our clients, driving market share, also being balanced, diversified, and focusing on risk management. We're at a moment in time where the demands for the provision of financing are outstripping what we think is the appropriate quantum. That should come as no surprise. We are in the middle of an AI CapEx super cycle where there are demands on financing into every single financing instrument, in every region of the world and across every single industry. It's a function of deploying our resources as efficiently as we can, to serve our clients as best we can. We're at a moment in time where there's more demand right now. Operator: Thank you. We'll take our next question from Manan Gosalia with Morgan Stanley. Manan Gosalia: Hey, thank you. Maybe just on a related question. Can you just talk about the strength in loan growth in the Global Banking & Markets business? I guess how much of that is from the FICC financing side that you're calling out? How much of that is from just general deal-related financing? And I guess what is the outlook for how much balance sheet you can allocate there, just given the strength we've seen on the M&A side in the second quarter? David Solomon: Sure. Thanks, Manan. Yeah, there's a couple areas across GBM that we have been fueling. One area that we called out in the first quarter, is we called out deploying capital into our deals book. That obviously dovetails with some of the advisory comments that David was talking about. In addition to, call it, regular way financing of investing client activities, and provision of clients to our wealth franchise, there's event-driven demand for financing, M&A-linked demand for financing. That's an activity we've historically been one of the leaders in. We are prioritizing deployment of capital into our deals book. Denis Coleman: As you talk about the growth that you're recognizing in terms of loans on a sequential basis, the other collateralized largely relates to what we report as FICC financing, which connects to the prior question where we're growing that. We continue to be disciplined in terms of how we grow that. Increasingly, with the formation of our Capital Solutions Group, again, to this point that there's sort of more demand than necessarily availability. We are using our origination capabilities, where we can originate and structure very high-quality investments in fixed income space, and we're routing it to our asset and wealth management business. Because there are clients that we have in asset and wealth management that are very interested in getting exposure and investing in the same kinds of products that we used to invest only for ourselves on our balance sheet. We're harnessing the same origination capabilities facing off against all the clients around the world and helping source opportunities and serve clients, some of which will go to the balance sheet and show up in FICC financing. Some will now get routed to AWM and help drive some of the growth in that business. Some of it we'll underwrite and distribute to institutional clients who are also interested in the exposure. We have a different sourcing, origination, and distribution strategy for different types of instruments and different client bases.