Goldman Sachs' Big Wealth Lending Ambitions Revealed – Report

Tom Burroughes Group Editor June 14, 2024

Goldman Sachs' Big Wealth Lending Ambitions Revealed – Report

The bank is reportedly aiming to increase lending to UHNW clients as part of its strategy for competing against a number of its rivals. Lending to wealth management as a share of wealth client assets is said to be below industry averages.

Over the next five years, Goldman Sachs aims to double its lending to ultra-wealthy private bank clients with account sizes exceeding $10 million, the US firm’s private banking chief is quoted as saying yesterday.

The plans, previously unreported, were disclosed to Reuters by Nishi Somaiya, Goldman's global head of private banking, lending and deposits, the newswire said. Goldman Sachs wants to make more loans to wealthy individuals and families for big purchases, ranging from luxury homes to sports teams, as part of its strategy to boost its wealth management operations.

Goldman Sachs declined to comment further on the report when contacted by Family Wealth Report.

Recent wealth results for the group have been positive. In the first three months of 2024, Goldman Sachs said its asset and wealth management arm reported a 43 per cent year-on-year jump in first-quarter 2024 pre-tax earnings, coming in at $877 million.

Wealth management fees rose 7 per cent to $1.339 billion; asset management fees rose 8 per cent to $1.113 billion. Incentive fees surged 66 per cent to $88 million, while private banking and lending net revenues jumped 93 per cent to $682 million. The effect was magnified by the sale last year of the Marcus loans portfolio. Across the whole of the wealth and asset management arm, net revenues rose 18 per cent to $3.789 billion.

Outstanding loans
The newswire report yesterday said Goldman Sachs didn’t quantify the full scope of its lending to wealthy clients, who typically have a net worth of at least $30 million. The private bank's outstanding loans stood at $33 billion in the first quarter. 

"We were not really focused on lending to our private wealth clients – we did a little bit of it, but it wasn't a big focus," CEO David Solomon was quoted telling the newswire in an interview. "They have borrowing needs and we're well positioned to serve them competitively."

The report said this lending push is a “silver lining” from Goldman's “ill-fated consumer business.” 

Goldman's total deposits jumped to $441 billion in the first quarter, with more than 39 per cent coming from consumer accounts, versus $190 billion in total deposits at the end of 2019.

The bank’s wealth management forays have been difficult at times. As FWR's US correspondent, Charles Paikert, argued in this recent opinion column, Goldman’s entry into the mass-affluent RIA segment was a flop and its explanation why was not, in the author's opinion, convincing.

Goldman's lending in wealth management as a percentage of its wealth client assets is 3 per cent, under an average of 9 per cent, the report, citing figures from Autonomous Research, said. 

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