'While we have generated good relative returns in the last five years, they are hardly aspirational', Blankfein, 59, said Tuesday at an investor conference in New York. 'We are committed to improving them regardless of the challenges presented in the current environment'.
Bloomberg reports that Goldman Sachs has earned a return on equity of 10% so far this year, compared with 11% in 2012 and more than 30% before the financial crisis. The shares trade at 1.06 times book value, indicating that investors estimate the firm’s cost of equity at around 10%, a figure that Blankfein said the company is focused on.
'People throw out that number, 10%, I happen to think that’s a pretty high number given that the risk-free rate of return is zero', Blankfein said at a separate conference in New York Tuesday. 'But the market seems to have focused on that, so we’ve kind of focused on that number. Not for the long-term, but for this part of the cycle, I think that looks OK'.
Goldman Sachs, which before the financial crisis targeted a long-term ROE of 20%, has declined to set a goal since then, saying it wanted to see the effects of new rules. Recent international regulations have required banks to hold more equity capital, pushing down ROE.
To access the complete Bloomberg article hit the link below: