David Solomon, chief executive officer of Goldman Sachs & Co., speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 29, 2019.
Kyle Grillot | Bloomberg | Getty Images
Goldman Sachs’ shift toward the steadier segments of the banking industry is working, even if that success is not yet reflected in the bank’s stock price, CEO David Solomon told CNBC’s Jim Cramer on Wednesday.
“I think people are concerned that the capital markets environment is going to be less robust going forward in 2022-2023. But … we are extremely confident that we can deliver, over the next three years, mid-teens returns for our shareholders,” Solomon said in an interview aired on “Squawk on the Street.”
“We’re executing our strategy. And our strategy is working,” he added.
Shares of Goldman Sachs have fallen 10% to start the year, a bigger decline than rivals Morgan Stanley and JPMorgan Chase. The stock also trades at a cheaper earnings multiple than some of its peers.
“What we’re really focused on for our shareholders is the consistency of returns over time, the durability of growth over time, and compounding our growth value,” Solomon said.
The consistency of returns is a key theme for investment banks this year, after strong equity returns and the SPAC boom helped drive strong performance for that part of the business last year.
Solomon said that equity activity has come down “meaningfully” but that mergers & acquisitions segment of the business is still strong. Overall, banking activity appears better than 2019 but down from 2021, Solomon said.
Meanwhile, Goldman has invested in the wealth and asset management businesses, which can provide a more predictable revenue stream.
“Capital markets revenues are hard to predict in any given year, and the market is clearly saying that it would like a more diversified Goldman Sachs, and so we’re moving in that direction,” Solomon said.
More of Cramer’s interview with Solomon will be shown on Wednesday’s “Mad Money” at 6 p.m. ET.