# Goldman Sachs (GS) Financial Model

Free Excel 3-statement financial model and company analysis for Goldman Sachs.

- Canonical: https://finamodel.com/companies/goldman-sachs
- Industry: Banking
- Downloadable model: Yes
- Excel download: https://finamodel.com/company-models/GS.xlsx

## Model Purpose

This model projects Goldman Sachs' future earnings, capital generation, and regulatory capital ratios to determine equity valuation (via a Dividend Discount Model / Residual Income approach) and assess the firm's capacity for share repurchases and dividend growth.

## Company Overview

- Goldman Sachs is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management, and consumer banking to a large and diversified client base.
- **Business Segments:**
  - Global Banking & Markets (~71% of 2025 net revenues)
  - Asset & Wealth Management (~28% of 2025 net revenues)
  - Platform Solutions (~1% of 2025 net revenues, significantly reduced due to consumer exit)
- **Key Geographies:** Americas (~60%), EMEA (~25%), Asia (~15%).
- **Business Model Type:** Capital-heavy (trading, principal investments, lending) and fee-based (advisory, underwriting, asset management).
- **Competitive Position:** Tier 1 global investment bank, consistently ranking #1 in worldwide announced and completed M&A, with top-tier market share in FICC and Equities trading. Key competitors include Morgan Stanley, JPMorgan Chase, Bank of America, and Citigroup.
- **Recent Major Events:** In 2024/2025, the firm aggressively unwound its consumer banking ambitions, resulting in the transfer of the Apple Card and General Motors credit card portfolios to held-for-sale. This caused massive markdowns in Platform Solutions revenues ($2.26 billion reduction in 2025) offset by a $2.48 billion reserve release in provision for credit losses.

## Revenue Deep Dive



### Global Banking & Markets (GB&M)

- **Segment Name:** Global Banking & Markets
- **Revenue Driver Formula:** (Advisory Volume x Fee %) + (Underwriting Volume x Margin) + (FICC/Equities Client Activity x Spread/Commission) + (Financing Balances x Net Interest Spread)
- **Historical Growth Rate:** 5-10% CAGR (highly cyclical, $41.45 billion in 2025, up from $34.94 billion in 2024).
- **Key Growth Levers and Headwinds:** M&A cycle recovery, debt issuance volumes, market volatility (drives trading volumes), and prime brokerage balance growth.
- **Pricing Dynamics:** Highly competitive, institutional pricing; advisory fees are contractual but success-based.
- **Revenue Recognition Notes:** Advisory fees recognized upon deal closing; trading revenues recognized on a mark-to-market basis daily.
- **Seasonality:** Q1 is typically the strongest quarter for trading and capital markets activity.

### Asset & Wealth Management (AWM)

- **Segment Name:** Asset & Wealth Management
- **Revenue Driver Formula:** (Assets Under Supervision [AUS] x Average Management Fee Rate) + Incentive Fees + (Private Banking Balances x Net Interest Margin) + Principal Investment Gains/Losses
- **Historical Growth Rate:** 8-12% CAGR for management fees; principal investments are highly volatile.
- **Key Growth Levers and Headwinds:** Market appreciation of AUM, net inflows into alternative investments, and private wealth client acquisition.
- **Pricing Dynamics:** Fee compression in liquid markets, offset by higher-margin alternative asset management fees.
- **Revenue Recognition Notes:** Management fees billed quarterly based on AUS; incentive fees recognized when performance hurdles are met and clawback risk is resolved.
- **Seasonality:** Q4 often sees a spike in incentive fees as annual performance periods conclude.

### Platform Solutions

- **Segment Name:** Platform Solutions
- **Revenue Driver Formula:** Transaction Banking Volumes x Fee/Spread + Consumer Balances x Net Interest Margin
- **Historical Growth Rate:** N/A (Segment revenues collapsed to $151 million in 2025 from $2.43 billion in 2024 due to portfolio sales).
- **Key Growth Levers and Headwinds:** The segment is in run-off/restructuring following the exit of the Apple and GM card partnerships.
- **Pricing Dynamics:** Contractual net interest margins and transaction fees.
- **Revenue Recognition Notes:** Interest income recognized over the life of the loan; markdowns taken immediately upon transfer to held-for-sale.
- **Seasonality:** Minimal going forward.

## Cost Structure



### Variable Costs / COGS

*Note: As a bank, Goldman Sachs does not report traditional COGS. Its primary variable cost is Compensation and Benefits.*
- **Line-by-line breakdown:** Compensation and benefits (salaries, discretionary bonuses, stock-based compensation).
- **Gross margin range:** N/A for banks.
- **Key input costs:** Human capital.
- **How COGS scales with revenue:** Highly correlated. The firm manages to a target "Compensation Ratio" (Compensation & Benefits / Net Revenues), historically ranging from 30% to 35%.

### Operating Expenses (Non-Compensation)

- **Brokerage, clearing, exchange and distribution fees:** Scales directly with trading volumes.
- **Technology and communications:** Fixed/step-function cost, heavily driven by cloud migration and trading infrastructure.
- **Depreciation and amortization:** Relates to capitalized software and real estate.
- **Provision for credit losses:** Highly volatile. Was a net benefit of $1.11 billion in 2025 (due to Apple Card reserve release) compared to a $1.35 billion expense in 2024.
- **Restructuring / one-time charges:** Frequent in 2023-2025 due to the consumer banking exit and real estate footprint optimization.

### Margin Profile

- **Efficiency Ratio (Total Operating Expenses / Net Revenues):** 60% to 65% (64.4% in 2025, 63.1% in 2024).
- **Pre-Tax Margin:** 35% to 40%.
- **Return on Equity (ROE):** 12% to 16% (15.0% in 2025).
- **Margin trend:** Expanding slightly as the drag from consumer banking losses is eliminated and higher-margin AWM management fees grow.

## Balance Sheet Structure

- **Total assets:** Approximately $1.6 trillion.
- **Key asset categories:** Cash and cash equivalents, Collateralized agreements (reverse repos), Financial instruments owned (trading assets), Receivables, and Loans.
- **Goodwill & intangibles:** Minimal as a % of total assets (<1%), as growth is largely organic.
- **Working capital profile:** N/A for banks. Liquidity is measured by Global Core Liquid Assets (GCLA), typically averaging ~$400-$450 billion.
- **PP&E:** Minimal relative to total assets; mostly leasehold improvements and capitalized technology.
- **Right-of-use assets / operating leases:** Material for office space, but insignificant relative to the $1.6 trillion financial balance sheet.

## Capital Expenditure & Investment

- **Capex as % of revenue:** 2-4% (primarily capitalized software and technology infrastructure).
- **Maintenance capex vs. growth capex:** Heavily skewed toward growth/efficiency (trading algorithms, risk management systems).
- **Major capex programmes underway:** "One Goldman Sachs" digital integration, wealth management platform enhancements.
- **M&A pattern:** Bolt-on acquirer (e.g., NN Investment Partners, GreenSky [subsequently divested], boutique wealth managers).
- **Typical acquisition multiple paid:** 10-15x P/E for wealth/asset management bolt-ons.

## Debt & Capital Structure

- **Total debt:** Unsecured borrowings of ~$300+ billion.
- **Capital Ratios:** Common Equity Tier 1 (CET1) ratio of 14.3% (Standardized) as of year-end 2025.
- **Credit rating:** A-tier (S&P: BBB+ / A- equivalent at holding company, higher at bank level).
- **Key debt instruments:** Senior unsecured notes, subordinated debt, preferred stock.
- **Maturity profile:** Laddered maturities with heavy reliance on long-term debt to fund less liquid assets.
- **Interest rate profile:** Actively managed via interest rate swaps; the firm runs a matched book where possible.
- **Share repurchase programme:** Highly active. $12.36 billion repurchased in 2025.
- **Dividend policy:** Progressive dividend. $4.42 billion paid in 2025 (~$12.00 per share annualized).

## Cash Flow Characteristics

*Note: Traditional Free Cash Flow is not a relevant valuation metric for banks. Capital generation is the key metric.*
- **Operating cash flow conversion:** N/A. Cash flow from operations is distorted by trading asset inventory changes.
- **Free cash flow margin:** N/A.
- **Major non-cash items:** Provision for credit losses, depreciation, stock-based compensation, unrealized gains/losses on principal investments.
- **Capital Generation:** Net Income minus RWA growth requirements equals Free Capital available for distribution.
- **Cash tax rate vs. GAAP effective tax rate:** Effective tax rate typically runs 20-22%.

## Sheet Structure

1. **Assumptions**: Hardcoded inputs for macroeconomic drivers, segment growth rates, fee margins, comp ratios, tax rates, and capital return targets.
2. **Summary & Valuation**: Dashboard showing EPS, ROE, ROTE, CET1, and a Dividend Discount Model (DDM) / Residual Income valuation.
3. **Revenues**: Segment-by-segment build.
   - *GB&M*: Investment banking fees, FICC intermediation, FICC financing, Equities intermediation, Equities financing.
   - *AWM*: Management and other fees, Incentive fees, Private banking and lending, Equity investments, Debt investments.
   - *Platform Solutions*: Consumer platforms, Transaction banking.
4. **Income Statement**: Net revenues, Compensation and benefits, Non-compensation expenses, Provision for credit losses, Pre-tax earnings, Taxes, Net earnings, Preferred dividends, Net earnings to common.
5. **Balance Sheet**: Assets (Cash, Collateralized agreements, Financial instruments owned, Loans), Liabilities (Deposits, Collateralized financings, Financial instruments sold, Unsecured borrowings), Equity (Preferred, Common).
6. **Capital & RWA**: Risk-Weighted Assets build (Credit, Market, Operational risk), CET1 Capital roll-forward, CET1 Ratio calculation.
7. **Capital Returns**: Dividend per share projections, Share repurchase schedule, Ending share count calculation.

## Key Financial Relationships

1. `Total Net Revenues = GB&M Revenues + AWM Revenues + Platform Solutions Revenues`
2. `Compensation Expense = Total Net Revenues x Compensation Ratio (Target ~33%)`
3. `Non-Compensation Expense = Total Net Revenues x Non-Comp Ratio (Target ~31%)`
4. `Pre-Tax Earnings = Total Net Revenues - Compensation Expense - Non-Compensation Expense - Provision for Credit Losses`
5. `Net Earnings to Common = Pre-Tax Earnings x (1 - Effective Tax Rate) - Preferred Dividends`
6. `EPS = Net Earnings to Common / Weighted Average Diluted Shares Outstanding`
7. `ROE = Net Earnings to Common / Average Common Shareholders' Equity`
8. `AWM Management Fees = Average Assets Under Supervision (AUS) x Blended Fee Rate`
9. `CET1 Capital (End of Period) = CET1 Capital (Beginning) + Net Earnings to Common - Common Dividends - Share Repurchases - OCI Adjustments`
10. `CET1 Ratio = CET1 Capital / Risk-Weighted Assets (RWA)`
11. `Ending Share Count = Beginning Share Count - (Share Repurchases / Average Share Price)`

## Cross-Sheet Dependencies

- **Assumptions** feeds all other sheets.
- **Revenues** feeds the top line of the **Income Statement**.
- **Income Statement** generates Net Earnings to Common, which feeds Retained Earnings on the **Balance Sheet** and organic capital generation on the **Capital & RWA** sheet.
- **Capital & RWA** determines the excess capital available above the 13.0%+ target, which feeds the buyback capacity on the **Capital Returns** sheet.
- **Capital Returns** calculates share repurchases, which feeds back into the **Income Statement** (to calculate EPS via lower share count) and **Balance Sheet** (reducing common equity). *Note: This creates a circularity between share price, buybacks, and EPS that must be broken with a toggle or iteration.*

## Sign Convention

- **Revenues:** Positive.
- **Expenses (Comp, Non-Comp, Taxes):** Positive inputs, subtracted in subtotal formulas.
- **Provision for Credit Losses:** Positive when an expense (adding to reserves), Negative when a benefit (releasing reserves, as seen in 2025).
- **Dividends and Share Repurchases:** Positive inputs, subtracted from Equity and Cash balances.
- **Contra-revenues (e.g., markdowns):** Negative.

## Things Most Likely to Go Wrong

- **Platform Solutions Base Effect:** The segment reported $151 million in 2025 due to a $2.26 billion markdown on the Apple Card. Projecting growth off this depressed base will result in massive errors; the model must normalize this segment or run it off completely.
- **Provision Volatility:** The $1.11 billion net benefit in 2025 was a one-off reserve release tied to the Apple Card. The model must revert to a normalized provision expense based on the remaining loan book.
- **Principal Investments:** Equity and Debt investments in AWM are mark-to-market and highly volatile. Assuming a smooth CAGR for these lines will misrepresent the reality of GS's earnings volatility.
- **Circularity in Buybacks:** Calculating share repurchases based on excess capital, which reduces share count, which changes EPS, which changes the share price, which changes the number of shares repurchased. Use a hardcoded share price assumption for buybacks to break the loop.
- **Compensation Ratio Rigidity:** Analysts often model comp as a fixed percentage, but management will adjust the comp ratio dynamically to protect ROE in down years.
- **RWA Inflation:** Failing to grow Risk-Weighted Assets alongside balance sheet growth will artificially inflate the CET1 ratio and overstate buyback capacity.
- **Preferred Dividends:** Forgetting to subtract preferred dividends from Net Income before calculating EPS and ROE (a common error that overstates profitability).
- **Tax Rate:** Using the statutory 21% rate ignores state/local taxes and tax benefits from stock-based compensation. Use the historical effective rate.

## Validation Checks

- "CET1 Ratio must remain above 13.5% (regulatory minimum + management buffer); flag if it drops below."
- "Efficiency ratio should remain in the 60-65% range; flag if outside this band."
- "ROE should be in the 14-16% range based on management's medium-term targets."
- "Compensation ratio should not exceed 35% without a specific margin compression flag."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Share count must not drop below zero; buybacks must be capped by available excess CET1 capital."
- "Provision for credit losses must revert to a positive expense in 2026+ (the 2025 benefit was a one-off)."

## Key Assumptions (Default Values)

| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| GB&M Revenue Growth | 4.0 | % | Normalized growth reflecting market share gains and GDP growth. |
| AWM Revenue Growth | 7.0 | % | Driven by management fee growth and alternative asset fundraising. |
| Platform Solutions Revenue | 500 | $ Millions | Normalized run-rate post-consumer exit. |
| Compensation Ratio | 33.0 | % | Historical average and management target range. |
| Non-Compensation Ratio | 31.0 | % | Reflects efficiency initiatives and lower consumer banking costs. |
| Provision for Credit Losses | 500 | $ Millions | Normalized annual provision for remaining wholesale/private banking loans. |
| Effective Tax Rate | 21.0 | % | Blended federal, state, and international tax rate. |
| RWA Growth Rate | 3.0 | % | Aligned with general balance sheet and lending growth. |
| Target CET1 Ratio | 14.0 | % | Management buffer above regulatory minimums. |
| Annual Share Repurchases | 10,000 | $ Millions | Based on historical capital return capacity and 2025 actuals ($12.36B). |
| Annual Dividend per Share | 12.00 | $ | Based on Q4 2025 run-rate ($3.00/quarter). |
| Cost of Equity (Ke) | 10.5 | % | Standard CAPM assumption for a global systemically important bank (G-SIB). |
| Terminal ROE | 14.0 | % | Long-term profitability assumption for Residual Income valuation. |
| Terminal Growth Rate | 2.0 | % | Long-term macroeconomic growth rate. |

## Data Sources & Benchmarks

- **Filings:** SEC EDGAR (Form 10-K, 10-Q), Goldman Sachs Investor Relations website (Earnings Presentations, Financial Supplements).
- **Key Peers:** Morgan Stanley (MS) for wealth/asset management benchmarking; JPMorgan Chase (JPM) and Bank of America (BAC) for FICC/Equities trading market share.
- **Industry Data:** Dealogic for M&A and underwriting league tables; Coalition Greenwich for institutional client analytics and trading wallet share.
- **Consensus Estimates:** Bloomberg, FactSet, or Visible Alpha for forward-looking EPS and segment revenue consensus.

## Sources

- Goldman Sachs Group, Inc. Form 10-K for the fiscal year ended December 31, 2024.
- Goldman Sachs Group, Inc. Full Year and Fourth Quarter 2025 Earnings Results Press Release (January 15, 2026).
- Goldman Sachs Group, Inc. Full Year and Fourth Quarter 2024 Earnings Results Press Release (January 15, 2025).
- SEC.gov EDGAR Database (GS Filings).

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## Frequently asked questions

### What services does Goldman Sachs provide, and how does it generate revenue?

Goldman Sachs is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management, and consumer banking. Its revenue is primarily generated through its Global Banking & Markets and Asset & Wealth Management segments, with a smaller contribution from Platform Solutions. The firm operates with both a capital-heavy model (trading, principal investments) and a fee-based model (advisory, underwriting, asset management).

### What is the assumed revenue growth rate for Goldman Sachs in the financial model?

The financial model for Goldman Sachs assumes a revenue growth rate of approximately 6.07%. This projection is used to forecast the firm's future earnings and capital generation over the FY2026–FY2030 forecast horizon.

### What valuation methodologies are used in the Goldman Sachs financial model?

The Goldman Sachs financial model determines equity valuation primarily through a Dividend Discount Model (DDM) and a Residual Income approach. These methodologies are used to assess the firm's capacity for share repurchases and dividend growth.

### What is Goldman Sachs' capital expenditure strategy and its assumed percentage of revenue in the model?

Goldman Sachs' capital expenditure is primarily focused on capitalized software and technology infrastructure, heavily skewed towards growth and efficiency initiatives like trading algorithms. The financial model assumes Capex as approximately 11.61% of revenue.

### Can I download an Excel financial model for Goldman Sachs (GS)?

Yes, an Excel financial model for Goldman Sachs (GS) is available for download. This model projects the company's future earnings, capital generation, and regulatory capital ratios from FY2026 through FY2030.

### How have recent strategic changes impacted Goldman Sachs' business segments?

In 2024/2025, Goldman Sachs aggressively unwound its consumer banking ambitions, transferring credit card portfolios and causing significant markdowns in its Platform Solutions segment. This strategic shift has substantially reduced Platform Solutions' contribution to net revenues, while Global Banking & Markets and Asset & Wealth Management remain the dominant segments.

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