10-K: Goldman Sachs Reports Strong 2025 Earnings, Strategic Shifts

Goldman Sachs Group Inc. reported a significant increase in net earnings and diluted EPS for 2025, driven by strong performance in Global Banking & Markets and strategic divestitures in Platform Solutions.

Summary

• Net earnings for 2025 were $17.18 billion, up from $14.28 billion in 2024.
• Diluted earnings per common share (EPS) increased to $51.32 in 2025 from $40.54 in 2024.
• Return on average common shareholders' equity (ROE) was 15.0% in 2025, compared to 12.7% in 2024.
• Net revenues for 2025 were $58.28 billion, a 9% increase from $53.51 billion in 2024.
• Global Banking & Markets saw significantly higher net revenues, primarily from Equities, Investment banking fees, and Fixed Income, Currency and Commodities (FICC).
• Platform Solutions experienced significantly lower net revenues due to markdowns on the Apple Card loan portfolio ($2.26 billion reduction) and contract termination obligations related to its transition to another issuer, which was largely offset by a $2.48 billion reserve reduction in provision for credit losses.
• Asset & Wealth Management net revenues were slightly higher, driven by increased management and other fees, private banking and lending, and incentive fees, but offset by significantly lower net revenues from investments.
• Provision for credit losses was a net benefit of $1.11 billion in 2025, compared to net provisions of $1.35 billion in 2024, mainly due to the Apple Card loan portfolio reserve reduction.
• Operating expenses rose 11% to $37.54 billion in 2025, reflecting higher compensation and benefits and transaction-based expenses.
• The efficiency ratio was 64.4% in 2025, up from 63.1% in 2024.
• The company returned $16.78 billion to common shareholders in 2025, including $12.36 billion in share repurchases and $4.42 billion in common stock dividends.
• CET1 capital ratio was 14.3% (Standardized) and 15.1% (Advanced) as of December 2025.
• The Board approved an increase in the quarterly common stock dividend from $4.00 to $4.50 per share, effective Q1 2026.
• The company early adopted modified Enhanced Supplementary Leverage Ratio (eSLR) standards on January 1, 2026, decreasing the SLR requirement to 3.75%.
• The G-SIB surcharge (Method 2) increased from 3.0% to 3.5% effective January 1, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with significant increases in earnings and EPS, and strategic moves to streamline operations. The positive capital management actions and clear future targets contribute to a very favorable outlook, despite some operational expense increases and ongoing legal risks.

Positives

• Net earnings increased significantly by 20.3% to $17.18 billion in 2025 from $14.28 billion in 2024.
• Diluted EPS grew by 26.6% to $51.32 in 2025 from $40.54 in 2024.
• ROE improved to 15.0% in 2025 from 12.7% in 2024, nearing the target range of 14%-16%.
• Net revenues increased by 9% to $58.28 billion in 2025.
• Global Banking & Markets showed strong performance with 18% higher net revenues, driven by Equities, Investment Banking fees, and FICC.
• Investment banking fees increased by 21% due to higher advisory, debt underwriting, and equity underwriting activity.
• Asset & Wealth Management saw slightly higher net revenues, with increases in management and other fees, private banking and lending, and incentive fees.
• Provision for credit losses was a net benefit of $1.11 billion in 2025, primarily due to a $2.48 billion reserve reduction related to the Apple Card loan portfolio transfer.
• The company returned a substantial $16.78 billion of capital to common shareholders in 2025, including $12.36 billion in share repurchases and $4.42 billion in common stock dividends.
• The quarterly common stock dividend was increased from $4.00 to $4.50 per share, effective Q1 2026.
• CET1 capital ratios remain strong at 14.3% (Standardized) and 15.1% (Advanced) as of December 2025.
• Early adoption of modified eSLR standards on January 1, 2026, reduced the SLR requirement to 3.75%.
• The firm successfully met its 2019 goal to deploy $750 billion in sustainable financing, investing, and advisory activity by early 2030.
• Management is targeting ROE in the high-teens (approximately 17% to 19%) and a pre-tax margin of approximately 30% for Asset & Wealth Management within the medium term (3-5 years from year-end 2025).
• The firm aims to grow total alternative Assets Under Supervision (AUS) to $750 billion by the end of 2030 and achieve an annual double-digit percentage growth rate for Management and other fees from alternatives.
• Successfully transitioned the GM credit card program to another issuer in 2025 and entered an agreement to transition the Apple Card program, narrowing focus on consumer-related activities.

Negatives

• Platform Solutions experienced significantly lower net revenues in 2025 due to markdowns on the Apple Card loan portfolio and contract termination obligations.
• Operating expenses increased by 11% to $37.54 billion in 2025, primarily due to higher compensation and benefits and transaction-based expenses.
• The efficiency ratio worsened to 64.4% in 2025 from 63.1% in 2024.
• Market making revenues in FICC were 2% lower in 2025, reflecting significantly lower revenues in mortgages and currencies, partially offset by equities and commodities.
• Other principal transactions revenues decreased by 66% in 2025, mainly due to markdowns on the Apple Card portfolio and lower net gains from private equities and funding-related derivatives.
• The G-SIB surcharge (Method 2) increased from 3.0% to 3.5% effective January 1, 2026, increasing capital requirements.
• The firm recognized severance expense of approximately $250 million in 2025 due to headcount reduction initiatives.
• The firm is involved in numerous legal and regulatory proceedings, including class action lawsuits related to 1MDB, mortgage-backed securities, currencies, and underwriting, which could result in significant liabilities and reputational damage.
• The firm is subject to ongoing governmental and regulatory scrutiny across various business practices.

Risks

• Market risk: Businesses are materially affected by global financial markets and economic conditions, including declining asset values, market volatility, and market uncertainty. Inflation could negatively impact business, results, and financial condition.
• Liquidity risk: Inability to access debt capital markets, raise/retain deposits, or sell assets could adversely affect liquidity and profitability. Reductions in credit ratings or increased credit spreads could increase borrowing costs and trigger collateral obligations.
• Credit risk: Potential for loss due to default or deterioration in credit quality of counterparties or issuers. Concentration of risk in market-making, underwriting, investing, and financing activities increases potential for significant losses. Derivative transactions and delayed documentation expose the firm to credit risk.
• Operational risk: Failures in internal or third-party operational systems, human error, malfeasance, or other misconduct could disrupt businesses, lead to confidential information disclosure, reputational damage, and losses. Reliance on cloud technologies and AI introduces new operational risks.
• Cybersecurity risk: Failure to protect computer systems, networks, and information against cyber attacks and similar threats could impair business, result in data disclosure/theft, reputational damage, and losses. Increased use of AI by cybercriminals may heighten these risks.
• Model risk: Potential for adverse consequences from decisions based on incorrect or inappropriately used models, especially in valuation, risk monitoring, and regulatory capital measurement.
• Legal and regulatory risk: Extensive and pervasive regulation worldwide, with potential for significant intervention, fines, sanctions, and limitations on business activities. Changes in laws, regulations, or interpretations could adversely affect profitability and competitive position.
• Competition risk: Intense competition in the financial services industry, including pricing pressure, electronic trading, and new technologies (e.g., cryptocurrencies, AI). Inability to attract and retain qualified employees.
• Geopolitical risk: Unforeseen or catastrophic events, including pandemics, terrorist attacks, wars (e.g., Russia-Ukraine, Middle East conflicts), extreme weather, or natural disasters, could adversely affect business, financial condition, and liquidity. Escalating tensions between the U.S. and China could disrupt trade and financial markets.
• Climate-related risk: Physical risks (extreme weather, climate shifts) and transition risks (changes in public policy, market perceptions) could disrupt operations, affect asset values, and lead to conflicting regulatory requirements.
• Resolution strategy risk: Application of the proposed resolution strategy under OLA could result in greater losses for Group Inc.'s security holders than other resolution strategies or bankruptcy proceedings.
• Commodities activities risk: Extensive regulation and potential environmental, reputational, and other risks, especially from physical commodities activities, could lead to significant liabilities and costs.

Future Outlook

The company expects its 2026 annual effective tax rate to decrease to approximately 20% due to changes from the One Big Beautiful Bill Act (OBBBA) that are expected to reduce the net U.S. tax on international earnings. Management announced targets to achieve ROE in the high-teens (approximately 17% to 19%) and a pre-tax margin of approximately 30% for Asset & Wealth Management within the medium term (three-to five-year time horizon from year-end 2025). The firm also targets growing total alternative Assets Under Supervision (AUS) to $750 billion by the end of 2030 and achieving an annual double-digit percentage growth rate for Management and other fees from alternatives. They expect to raise between $75 billion and $100 billion annually in third-party commitments in their alternatives business, subject to market conditions. The transition of the Apple Card program is expected to be completed in approximately 24 months.

Management Comments

• Our purpose is to advance sustainable economic growth and financial opportunity.
• Our goal, reflected in our One Goldman Sachs initiative, is to deliver the full range of our services and expertise to support our clients in a more accessible, comprehensive and efficient manner, across businesses and product areas.
• Our people are our greatest asset. We believe that a major strength and principal reason for our success is the quality, dedication, determination and collaboration of our people, which enables us to serve our clients, generate long-term value for our shareholders and contribute to the broader community.
• We will continue to develop programs consistent with our fundamental commitment to inclusive, merit-based promotion and in compliance with the law.
• We believe that our people value opportunities to contribute to their communities and that these opportunities enhance their job satisfaction.
• We recognize that for our people to be successful in the workplace they need support in their personal and professional lives, which is why our wellness framework is designed to promote health and fitness, resilience, and work-life balance.
• At Goldman Sachs, our priority is meeting our clients where they are and having the commercial capabilities and insights to help them deliver on their distinct strategic priorities.
• We have a long-standing commitment to sustainability.
• We believe that our liquidity is stronger with greater balances of highly liquid unencumbered securities, even though it increases our total assets and our funding costs.
• Our goal is to ensure that we maintain sufficient liquidity to fund our assets and meet our contractual and contingent obligations in normal times, as well as during periods of market stress.
• Effective risk management is critical to our success.
• We believe the identification and assessment of our risks is a critical step in providing our Board and senior management transparency and insight into the range and materiality of our risks.
• Ultimately, effective risk management requires our people to interpret our risk data on an ongoing and timely basis and adjust risk positions accordingly.
• We will continue prioritizing deployment of capital for our clients where returns are attractive and distribute any excess capital to shareholders through dividends and share repurchases, while targeting a 50 to 100 basis point buffer above our capital requirement.

Industry Context

StockSavvy.ai notes that Goldman Sachs' strong 2025 performance, particularly in Global Banking & Markets, reflects a broader recovery in investment banking and capital markets activity, which aligns with a generally improving global economic environment despite ongoing geopolitical tensions and inflationary pressures. The strategic narrowing of focus in consumer-related activities within Platform Solutions, including the divestiture of the GM credit card program and the planned transition of the Apple Card program, indicates a strategic pivot away from less profitable or higher-risk consumer segments, a trend observed across some large financial institutions seeking to optimize their business mix and capital allocation. The emphasis on growing Asset & Wealth Management, particularly alternative assets, positions Goldman Sachs to capitalize on the increasing demand for diversified investment solutions and higher-fee products, a key growth area in the financial services industry. The firm's proactive approach to sustainability and AI integration also reflects broader industry trends towards ESG considerations and technological innovation.

Comparison to Industry Standards

• Goldman Sachs' 2025 ROE of 15.0% is within its target range of 14%-16% and represents a significant improvement over 2024's 12.7%. This performance is competitive within the investment banking sector, where top-tier firms often aim for mid-to-high teens ROE. For example, while specific 2025 figures for competitors like Morgan Stanley or JPMorgan Chase are not provided, a 15% ROE generally indicates strong profitability relative to equity.
• The Asset & Wealth Management segment's ROE of 12.5% and pre-tax margin of 25% in 2025 are below the firm's medium-term targets of high-teens ROE (17%-19%) and 30% pre-tax margin, suggesting room for improvement and indicating that this segment is still in a growth/optimization phase compared to more mature, higher-margin asset management divisions at peers.
• The increase in the G-SIB surcharge from 3.0% to 3.5% for 2026, and the firm being in the 4.0% G-SIB surcharge threshold range based on 2025 data, indicates its continued systemic importance, placing it among the largest and most interconnected global banks, comparable to institutions like JPMorgan Chase, Bank of America, and HSBC, which face similar stringent capital requirements.
• The early adoption of modified eSLR standards, reducing the SLR requirement to 3.75%, demonstrates proactive capital management, potentially providing a slight competitive advantage or flexibility compared to institutions that might face higher leverage constraints.

Management Changes

Corporate Governance

Legal Proceedings

• 1MDB-Related Matters: Ongoing arbitration with the Government of Malaysia concerning a $1.4 billion asset recovery guarantee, with Malaysia demanding a $1 billion final payment which the firm disputes. A putative securities class action lawsuit alleging anti-fraud violations related to 1MDB disclosures is ongoing, with class certification granted in part and interlocutory review denied.
• Mortgage-Related Matters: Lawsuits filed against Goldman Sachs Mortgage Company and GS Mortgage Securities Corp. by U.S. Bank National Association, as trustee for two residential mortgage-backed securitization trusts, alleging failure to conform to representations and warranties.
• Currencies-Related Litigation: Putative class action against GS&Co. and others alleging conspiracy to manipulate foreign exchange transaction auctions, with certain claims dismissed but federal antitrust claims remaining. A related class action was consolidated.
• Banco Espirito Santo S.A. and Oak Finance: Actions against Novo Banco S.A. and the Bank of Portugal (BoP) in English and Portuguese courts regarding the reversal of an $835 million facility agreement. GSI also commenced an action against BoP seeking nullification of decisions and compensation for losses.
• Financial Advisory Services: Various civil litigation and arbitration proceedings alleging failure to disclose or deal with conflicts of interest.
• Silicon Valley Bank Matters: Putative securities class action against GS&Co. and others related to SVB Financial Group's public offerings, alleging material misstatements and omissions. The court denied dismissal of the consolidated amended complaint and preliminarily approved a settlement in a related federal court action not requiring GS&Co. contribution. The firm is cooperating with governmental investigations regarding its business with SVB.
• Underwriting Litigation: GS&Co. and affiliates are defendants in multiple putative securities class actions related to IPOs (Array Technologies, Inc., ContextLogic Inc., DiDi Global Inc., Zymergen Inc., Rivian Automotive Inc., Natera Inc., Robinhood Markets, Inc., ON24, Inc., MINISO Group Holding Limited, Coupang, Inc., Rent the Runway, Inc., Opendoor Technologies Inc., FIGS, Inc., Venture Global, Inc., Ibotta, Inc., Silvergate Capital Corporation, F45 Training Holdings Inc., StubHub Holding, Inc., Klarna Group plc), alleging material misstatements and omissions in offering documents. Several cases have seen motions to dismiss denied or class certification granted, while others have reached settlements or are in appeal.
• Variable Rate Demand Obligations Antitrust Litigation: Putative class action against GS&Co. alleging conspiracy to manipulate the VRDO market, with federal antitrust claims remaining after partial dismissal. Class certification was affirmed on appeal, and defendants filed a petition for a writ of certiorari with the U.S. Supreme Court.
• Interest Rate Swap Antitrust Litigation: Antitrust actions against Group Inc., GS&Co., GSI, GS Bank USA, and Goldman Sachs Financial Markets, L.P. alleging conspiracy to preclude exchange trading of interest rate swaps.
• Credit Default Swap Antitrust Litigation: Putative antitrust class action against Group Inc., GS&Co., and GSI alleging conspiracy to manipulate benchmark prices for credit default swaps.
• Regulatory Investigations and Reviews: Ongoing investigations and reviews by various governmental and regulatory bodies concerning securities offering processes, investment management, conflicts of interest, research practices, municipal securities, consumer lending, trading activities, FCPA compliance, hiring/compensation practices, risk management, and insider trading.

Related Party Transactions

• The firm invests alongside its clients in certain investment funds that it raises or manages.
• Group Inc. provides substantial amounts of equity and subordinated indebtedness, directly or indirectly, to its regulated subsidiaries (e.g., GS&Co., GSI, GSJCL, GS Bank USA, GSIB).
• Group Inc. provides financing, directly or indirectly, in the form of unsubordinated loans and collateral/cash deposits to these entities.
• The firm effectively provides full and unconditional guarantees for securities issued by trusts (Goldman Sachs Capital I, II, III) that lend proceeds to the firm.
• The firm may provide voluntary financial support to funds it manages, including waiving or deferring management fees and expense reimbursements.
• The firm engages in other activities with affiliated funds, such as securities lending, trade execution, market-making, custody, and warehousing.

Stakeholder Impact

• Shareholders: Positive impact from increased net earnings, EPS, ROE, and increased common stock dividends. Benefit from share repurchase program. Potential negative impact from legal proceedings and regulatory actions, which could lead to significant liabilities and affect share price.
• Employees: Impacted by headcount reduction initiatives (severance expense of $250 million in 2025). Benefit from competitive compensation and benefits, including share-based awards and carried interest. Subject to strict compliance policies and potential forfeiture/repayment of awards for misconduct.
• Customers/Clients: Benefit from a broad range of financial services, including investment banking, asset & wealth management, and platform solutions. Impacted by strategic shifts in consumer-related activities (e.g., Apple Card transition). Potential impact from market volatility and credit market disruptions.
• Regulators: Ongoing engagement and scrutiny from various global regulatory bodies (FRB, SEC, FDIC, NYDFS, CFTC, PRA, FCA, ECB, BaFin, etc.) regarding capital adequacy, liquidity, risk management, business practices, and compliance.
• Creditors: Impacted by the firm's liquidity and credit ratings. Subject to resolution strategies (e.g., OLA) that could affect payment priority in the event of failure.
• Communities: Benefit from the firm's sustainability initiatives and contributions to sustainable economic growth and financial opportunity.

Next Steps

• Complete the transition of the Apple Card program to another issuer (expected in approximately 24 months from December 2025).
• Integrate Industry Ventures acquisition (closed January 2026) to expand venture capital solutions.
• Complete the acquisition of Innovator Capital Management (expected to close in Q2 2026, subject to regulatory approval and customary closing conditions) to expand ETF offerings.
• Continue implementing the multi-year initiative, OneGS 3.0, to transform the operating model, drive expense efficiencies, and create capacity for future growth.
• Focus on achieving annual double-digit percentage growth rate for Management and other fees from alternatives.
• Work towards growing total alternative Assets Under Supervision (AUS) to $750 billion by the end of 2030.
• Aim to achieve annual long-term fee-based net inflows from the wealth management client channel of approximately 5% of the channel's long-term AUS.
• Work towards achieving ROE in the high-teens (approximately 17% to 19%) and a pre-tax margin of approximately 30% for Asset & Wealth Management within the medium term (three-to five-year time horizon from year-end 2025).
• Continue to monitor and adapt to evolving regulatory frameworks, including Basel III Revisions, FRTB rules, and new cybersecurity and sustainability regulations.
• Address the identified shortcoming in the 2023 resolution plan and prepare for the next full resolution plan submission by July 1, 2027.
• Monitor the impact of the U.S. Tax Court's Varian decision, which could result in a material income tax benefit.
• Monitor and respond to ongoing legal and regulatory proceedings.

Key Dates

Recommendation

The company demonstrated strong financial performance in 2025 with significant increases in net earnings and EPS, and an improved ROE that is within its target range. Strategic divestitures in less profitable consumer segments and a focus on high-growth areas like alternative asset management are positive long-term drivers. The increase in common stock dividends and substantial share repurchases indicate a commitment to returning capital to shareholders. While operating expenses increased and legal risks persist, the overall financial health, capital adequacy, and strategic direction suggest continued growth potential.

Keywords

Goldman Sachs, Financial Results, 10-K, Annual Report, Earnings, EPS, ROE, Global Banking & Markets, Asset & Wealth Management, Platform Solutions, Credit Losses, Operating Expenses, Capital Management, Regulatory Capital, G-SIB, Share Repurchases, Dividends, SEC Filing, Investment Banking, Market Making, Risk Management, Cybersecurity, AI, Preferred Stock, Apple Card, GM Credit Card, Sustainable Finance, Liquidity, Credit Ratings, Legal Proceedings, Corporate Governance