DBRS, Inc. (Morningstar DBRS) confirmed the credit ratings of The Goldman Sachs Group, Inc. (Goldman or the Company), including the Company's Long-Term Issuer Rating of A (high) and Short-Term Issuer Rating of R-1 (middle).

The trend for all credit ratings is Stable. The Intrinsic Assessment (IA) for Goldman is AA (low), while its Support Assessment remains SA3. The Company's Long-Term Issuer Rating is positioned one notch below the IA.

KEY CREDIT RATING CONSIDERATIONS

The credit ratings confirmation and Stable trend reflect Goldman's leading market positions across all of its major businesses, as well as its preeminent risk management, global peer-leading returns and strong balance sheet fundamentals. Morningstar DBRS recognizes the steady progress Goldman has made in reducing its historical principal investments, which should result in a better risk profile and less volatile earnings. The credit ratings also consider Goldman's exposure to a wide range of trading and investing activities that are integral to the value of its franchise, but also contribute a notable level of market risk that characterizes the Company's risk profile.

CREDIT RATING DRIVERS

Over the longer term, if Goldman delivers sustained improvement in the stability of its earnings, while maintaining its top-tier profitability metrics and strong credit profile, the credit ratings would be upgraded. Conversely, a sustained deterioration in earnings or balance sheet fundamentals would result in a credit ratings downgrade. Any indications of significant weakening in Goldman's franchise due to reputational issues, risk management deficiencies or operational missteps, would also result in a credit ratings downgrade.

CREDIT RATING RATIONALE

Franchise Combined Building Block (BB) Assessment: Very Strong

Goldman's core franchises remain very strong. The Company's Investment Banking (IB) franchise includes a dominant Financial Advisory business that has generated the most revenue globally for more than 20 years running and a global-leading Equity Underwriting platform. In addition, Goldman has made significant market share gains over the past decade in Debt Underwriting, establishing a top-three position globally.

Goldman has a top-two Sales and Trading franchise in Fixed Income, Currency and Commodities (FICC) and Equities. While these businesses are capital intensive and contribute a notable amount of market risk and revenue volatility, they can still generate a substantial amount of revenue even during adverse market conditions, as evidenced in the Company's results during the pandemic.

Goldman is a top-five global active asset manager, with more than $2.8 trillion in assets under supervision (AUS) and has a leading ultra-high net worth Wealth Management business, with approximately $1.5 trillion in client assets, both of which provide stability to earnings. Consistent with our expectations, Goldman has made significant progress on the majority of its strategic initiatives in its pursuit of steadier revenues, including expanding its AUS in its Asset and Wealth Management segment, increasing firmwide management fees and financing revenues in FICC and Equity.

Earnings Combined Building Block (BB) Assessment: Strong/Good

Goldman's consistent, top-tier through-the-cycle profitability metrics provide key support to the credit ratings. Despite decade low levels of investment banking activity, Goldman generated $46 billion in net revenues during 2023, which was down 2% from the prior year, primarily due to a decline in FICC trading and lower investment banking fees. Excluding the impact of one-time items related to actions taken to narrow the Company's strategic focus, Goldman's return on equity (ROE) was approximately 10% for the full year, which Morningstar DBRS views favorably, particularly given the challenging operating environment. More recently, the Company delivered a strong ROE of 14.8% in 1Q24, reflecting strength across businesses, including standout results in FICC and Equities financing.

Risk Combined Building Block (BB) Assessment: Strong/Good

Given Goldman's extensive exposure to market risk and risks related to its involvement in capital markets activities, Morningstar DBRS views Goldman's effective risk management capabilities and cohesive culture as key underpinnings to the Company's credit ratings. Notably, the Company utilizes just one integrated, flexible technology system for risk management, which has benefited Goldman when adjusting to changes and the evolving environment. These capabilities enable the Company to address the challenges of ensuring effective management, while retaining the streamlined organizational structure that helps keep Goldman efficient and nimble.

Funding and Liquidity Combined Building Block (BB) Assessment: Strong

Goldman has a comprehensive framework in place to manage its funding and liquidity needs. Morningstar DBRS views favorably the Company's efforts to further diversify its funding profile, including continuing to grow its deposit base, which is now its largest source of funding, representing more than a third of its funding mix. Goldman maintains a substantial amount of liquidity, with global core liquid assets averaging $423 billion during 1Q24, representing a quarter of total assets.

Capitalization Combined Building Block (BB) Assessment: Strong

Goldman's capital metrics remain robust even with ongoing capital returns to shareholders. In 2023, the Company returned $9.4 billion of capital to shareholders, including $5.8 billion of share repurchases and $3.6 billion of dividends. At the end of 1Q24, Goldman's Standardized CET1 ratio stood at 14.6%, or about 160 basis points above its regulatory requirement.

Further details on the Scorecard Indicators and Building Block Assessments can be found at https://www.dbrsmorningstar.com/research/433214.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/ Social/ Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

Notes:

All figures are in US Dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (15 April 2024) https://dbrs.morningstar.com/research/431155/global-methodology-for-rating-banks-and-banking-organisations. In addition Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings in its consideration of ESG factors.

The following methodology has also been applied:

Morningstar DBRS Global Corporate Criteria (15 April 2024)

https://dbrs.morningstar.com/research/431186/morningstar-dbrs-global-corporate-criteria

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The primary sources of information used for these credit ratings include Morningstar, Inc. and company documents. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings was of satisfactory quality.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed credit ratings:

The last credit rating action on this issuer took place on May 25, 2023.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS's outlooks and credit ratings are monitored.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Michael McTamney, CFA, Senior Vice President,

Rating Committee Chair: Michael Driscoll, Managing Director,

Initial Rating Date: October 29, 1999

For more information on this credit or on this industry, visit dbrs.morningstar.com.

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