David Solomon, chief government officer of Goldman Sachs & Co., speaks in the course of the Milken Institute World Convention in Beverly Hills, California, U.S., on Monday, April 29, 2019.
Kyle Grillot | Bloomberg | Getty Pictures
Goldman Sachs‘ shift towards the steadier segments of the banking trade is working, even when that success shouldn’t be but mirrored within the financial institution’s inventory worth, CEO David Solomon instructed CNBC’s Jim Cramer.
“I feel individuals are involved that the capital markets atmosphere goes to be much less strong going ahead in 2022-2023. However … we’re extraordinarily assured that we are able to ship, over the following three years, mid-teens returns for our shareholders,” Solomon mentioned in an interview that aired Wednesday on “Squawk on the Road.”
“We’re executing our technique. And our technique is working,” he added.
Shares of Goldman Sachs have fallen 10% to begin the yr, a much bigger decline than rivals Morgan Stanley and JPMorgan Chase. The inventory additionally trades at a less expensive earnings a number of than a few of its friends.
“What we’re actually centered on for our shareholders is the consistency of returns over time, the sturdiness of development over time, and compounding our development worth,” Solomon mentioned.
The consistency of returns is a key theme for funding banks this yr, after robust fairness returns and a growth in particular objective acquisition corporations — or SPACs — helped drive a stable efficiency for that a part of the enterprise final yr.
Solomon mentioned that fairness exercise has come down “meaningfully” however that the mergers and acquisitions section of the enterprise continues to be robust. General, banking exercise seems higher than 2019 however down from 2021, he mentioned.
In the meantime, Goldman has invested within the wealth and asset administration companies, which may present a extra predictable income stream.
“Capital markets revenues are arduous to foretell in any given yr, and the market is clearly saying that it might like a extra diversified Goldman Sachs, and so we’re shifting in that course,” Solomon mentioned.
Extra of Cramer’s interview with Solomon can be proven on Wednesday’s “Mad Cash” at 6 p.m. ET.