David Solomon, CEO of Goldman Sachs & Co., speaks at the Milken Institute Global Conference in Beverly Hills, California, U.S., Monday, April 29, 2019.
Kyle Grillot | Bloomberg | Getty Images
Goldman Sachs’ shift to the more stable segments of the banking industry is working, even if that success is not yet reflected in the bank’s share price, CEO David Solomon told CNBC’s Jim Cramer on Wednesday.
“I think people are concerned that the capital markets environment will be less robust going forward in 2022-2023. But … we are extremely confident that we can deliver, over the next three years, returns in the middle teenage years for our shareholders,” Solomon said in an interview that aired on “Squawk on the Street.”
“We are executing our strategy. And our strategy is working,” he added.
Goldman Sachs shares fell 10% to start the year, a bigger drop than rivals Morgan Stanley and JPMorgan Chase. The stock also trades at a lower earnings multiple than some of its peers.
“What we’re really focused on for our shareholders is consistency of returns over time, sustainability of growth over time, and accumulation of our growth value,” Solomon said.
Return consistency is a key theme for investment banks this year, after strong equity returns and the SPAC boom helped drive strong performance for this part of the business last year.
Solomon said stock activity declined “significantly” but the company’s mergers and acquisitions segment was still strong. Overall, banking activity looks better than 2019 but down from 2021, Solomon said.
Meanwhile, Goldman has invested in the wealth and asset management businesses, which can provide a more predictable income stream.
“Capital markets earnings are difficult to predict in any given year, and the market is clearly saying it would like a more diversified Goldman Sachs, and so we are moving in that direction,” Solomon said.
More of Cramer’s interview with Solomon will air on Wednesday’s “Mad Money” at 6 p.m. ET.