Goldman Revamps Divisions, Highlighting Consumer Businesses
It eliminated its investing and lending segment, a division investors often discounted because profits were difficult to predict.
(Bloomberg) -- Goldman Sachs Group Inc. revamped the way it breaks down results by division to highlight growth in its consumer business and get more credit from investors.
The firm created a consumer and wealth-management unit that houses the Marcus online lending business and Goldman’s credit-card venture with Apple Inc. The company eliminated its investing and lending segment, a division investors often discounted because profits were difficult to predict.
The moves, outlined in a filing Tuesday, will spread the interest income Goldman receives from its lending efforts across all four of the new segments and make the firm’s divisions more comparable to its competitors. The changes may help with the bank’s effort to show off areas of growth as a long slump in its biggest business -- trading -- has weighed on shares.
Equity investments made with the firm’s own capital will be housed in a renamed asset-management unit. The bank, which is hosting its first investor day on Jan. 29, has said it’s looking to move away from taking stakes with its own money and is trying to raise more client funds.
“The presentation is more consistent with the way the business is run and the way it is presented by peers,” Mike Mayo, an analyst at Wells Fargo & Co., said in a note. “While we view management as focused more on long-term value, this attitude shows that management is aware of an underperforming stock price.”
What Bloomberg Intelligence Says
“Goldman Sachs’ decision to shift its business segment reporting closer to big U.S. bank peers reflects the company’s growing lending businesses. Those businesses produce a steadier stream of net interest income revenue vs. more volatile trading fees.”
Arnold Kakuda, Credit analyst
Click here to read the research.
Goldman climbed 1% at 8:18 a.m. in early New York trading. The stock jumped 38% last year, but it still trades at a lower multiple of its book value than most major U.S. banks.
To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson
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