David Solomon
Chairman and Chief Executive Officer at The Goldman Sachs Group
Thank you, operator, and good morning, everyone. Thank you for joining us. 2023 was a dynamic year. The U.S. economy proved to be more resilient than expected, despite a number of headwinds to growth, including a significant tightening of financial conditions, regional bank failures, and an escalation of geopolitical tensions. Against this backdrop, this was the year of execution for Goldman Sachs. In addition to narrowing our strategic focus, we further strengthened our core businesses.
As we enter 2024, the potential for rate cuts in the first half of this year has renewed optimism for a soft landing. We are already seeing signs of potential resurgence in strategic activity, which is reflected in our backlog. I am starting today's presentation with a strategic update, and Denis will provide comments on the financial results. Beginning on page one, we aspire to be the world's most exceptional financial institution, united by our shared value client service, partnership, integrity, and excellence. And over the last 155 years, we have created one of the most aspirational brands in financial services. Goldman Sachs is a preeminent global investment bank and a leader across asset and wealth management. We've continued to simplify our strategy, and today is an opportunity to take stock of our progress, as well as highlight avenues for further growth. Strategic objectives on this page underscore our relentless commitment to serve our clients with excellence and to further strengthen our client franchise.
As we show on page two, we have two world-class and interconnected franchises that are well-positioned to achieve these strategic objectives. First, Global Banking & Markets, which includes our top rank investment bank with an unparalleled merger franchise and a leading capital markets business. It also includes our number one Equities franchise and top three FICC franchise. We are uniquely positioned to serve our clients across geographies and products. And second, our unified Asset & Wealth Management business where we are leading global active asset manager with a top five alternative business and a premier ultra-high net worth wealth management franchise. This is a scaled business with over $2.8 trillion in assets under supervision and where we see significant opportunity for further growth. Across these two businesses, our extraordinary talent and unmatched execution are bolstered by our One Goldman Sachs operating ethos.
On page three, we lay out our progress across a number of key priorities that we discussed at our most recent Investor Day in February 2023. Global Banking & Markets, we've maintained and strengthened our leadership positions across investment banking. In FICC and Equities, we have improved our standing with the top 150 clients. We generated record total financing revenues across these businesses in 2023 and have demonstrated impressive growth over the last four years. In Asset & Wealth Management, we've driven solid investment performance and consistent growth in a more durable revenue base of management, other fees, and private banking and lending revenues. This past year, we reduced our historical principal investments by $13 billion, and also surpassed our five-year alternatives fundraising target one year ahead of schedule. I will talk more about each of these businesses in a moment. Before I do, I would like to speak about how we've narrowed our strategic focus.
We made several important decisions and swiftly executed on them. We exited the Marcus lending business and sold substantially all of our Marcus loan portfolio. We sold our Personal Financial Management business. We announced the sale of GreenSky, which remains on track to close this quarter. We also sold the majority of our GreenSky loan portfolio, which settled in the fourth quarter. We've also reached an agreement with General Motors regarding a process to transition their credit card program to another issuer. We remain committed to supporting the products and servicing customers through the various transition agreements and our consumer activities. I firmly believe companies should innovate and seek out new opportunities for growth.
But it is also important to be nimble and make tough decisions when needed. Our consumer ambitions have produced over $150 billion of deposits, which we expect to grow further from here. These deposits have materially improved the firm's funding profile. Now we are focusing our growth in other areas where we have a proven right to win. We recognize that scale matters as it allows us -- it allows the firm to operate more efficiently and manage incremental regulatory and other costs, making unit economics more favorable. And we need to be measured and focused in our execution. Our narrowed strategy is now focused on our two core businesses where we have a proven right to win with our leadership position, scale, and exceptional talent.
On page four, in Global Banking & Markets, our leading and diversified franchise has produced average revenues of $32 billion over the last four years across a number of different market environments, demonstrating the diversity and relative durability of this business in aggregate. In the last several years, we made a concerted effort to grow our wallet share and financing revenues, which have clearly raised the revenue floor for these businesses. We have also generated attractive returns with an average ROE fully allocated of over 16% over the last four years.
Turning to page five, a key part of enhancing this durability has been executing on our strategic priorities. Our efforts to materially strengthen the client franchise are evidenced by wallet share gains of roughly 350 basis points since 2019. We've maintained our league table rankings of number one in announced and completed M&A, number one in equity and equity-related underwriting, number two in high yield debt. In FICC and Equities, we're in the top three with 117 of our top 150 clients. These competitive positions are a reflection of our One Goldman Sachs approach and our clients' confidence in us. In addition, we have significantly increased more durable financing revenue. FICC and Equity financing together have grown at a 15% CAGR since 2019 to a new record of nearly $8 billion.
Turning to Asset & Wealth Management on page six. We've continued to make progress on bolstering more durable revenue streams. Management and other fees and private banking and lending revenue together have grown at a CAGR of 12% since 2019. We've also made swift progress in reducing our historical principal investments and are already approaching our pre-tax margin target on an adjusted basis.
Turning to page seven. Our solid investment performance across both traditional and alternative channels has driven inflows. Over 75% of our traditional funds performed in the top half of Morningstar funds, while on alternatives, over 90% of our funds were in the top half of Cambridge funds, both over the last five years. The fourth quarter represents our 24th consecutive quarter of long-term fee-based net inflows across our platform. I want to reiterate that we have reached a milestone by raising over $250 billion in alternatives since 2019, surpassing our $225 billion target a year early.
This fundraising success has been the result of our continued innovation and developing new strategy, as well as our ongoing focus on investment products where we have deep expertise and longstanding track records. Fundraising has been broad-based across geographies and asset classes with approximately 40% coming from our ultra-high net worth relationships. I'm very proud of this achievement. When we were preparing for our first Investor Day four years ago, I remember how big a reach our initial target of $150 billion seemed. It surpassed not only that target, but also our increased target of $225 billion one year ahead of schedule demonstrates the power of our platform and the exceptional depth of talent we have in this business.
Putting all this together on page eight, you can see how much we've improved the durability of revenues across the firm. On this slide, baseline revenues are shown in gray, which represent the sum of the trailing 10-year lows for each of the businesses that are considered more cyclical, namely advisory, underwriting, and intermediation. We believe this is a very conservative measurement because it's unlikely that every one of these businesses would ever hit a low point all at the same time. In fact, in all of the years since we became a public company, it has never happened. In dark blue, you can see the more durable revenues from financing, management, and other fees, as well as private banking and lending, which in aggregate have grown at 13% CAGR since 2019. Taken together, these two components make up over 70% of revenues in 2023. On top of that, we consistently generate upside across different market environments because of our diversified franchise. The increase in the consistent baseline and more durable revenue streams, coupled with the diversification of our scaled franchise and our ability to capture upside, demonstrate the revenue-generating power of our firm.
Narrowing our strategic focus, our leadership team spent a significant amount of time in 2023 realigning the firm's priorities with our strategic vision, our values, and our strengths, which we highlighted on page nine. You've heard us talk about many of these elements before, starting with our strategic objectives. First, to harness One Goldman Sachs to serve our clients with excellence. Second, to run world-class, differentiated, and durable businesses. Third, to invest and operate at scale. As you can see on the page, our execution focus areas for 2024 are aligned with these strategic objectives.
Taking one example, investing in our people and culture. Exceptional quality of our people, supported by our unique culture of collaboration and excellence is critical in solving our clients' most consequential problem, and it's imperative that we continue to invest in them. All in these objectives and execution focus areas will result in our desired outcomes, to continue to be a trusted advisor to our clients, to be an employer of choice for our people, and to generate mid-teens returns through the cycle and strong total shareholder return. With everything we achieved in 2023, coupled with our clear and simplified strategy, we have a much stronger platform for 2024. I feel very confident about the future of Goldman Sachs, our ability to continue to serve our clients with excellence, and that we will continue to deliver for shareholders.
And we'll now turn it over to Denis to cover our financial results.
