Goldman CEO insists bank can close valuation gap with rivals

Goldman CEO insists bank can close valuation gap with rivals

Goldman Sachs chief executive David Solomon has insisted the bank can persuade investors to assign a higher value to its stock, although he warned it may take time and the Wall Street firm will not always perform as strongly as it did in its most recent blowout quarter.

In an interview with the Financial Times, Solomon declined to give a timeframe for closing the valuation gap versus its megabank peers. He insisted, though, that the market would eventually re-rate Goldman’s stock if it delivered on a strategy to diversify from investment banking and trading and grow in more predictable businesses such as consumer banking and asset management.

“I don’t focus on what the time period will be. I just know that if we keep growing the firm and delivering on our plan over time, the stock and the valuation will take care of itself and we’ll get rewarded if we perform,” Solomon said.

Under Solomon, Goldman’s stock is up about 80 per cent and recently hit an all-time high, benefiting from an unprecedented boom in dealmaking and stock market volatility during the coronavirus pandemic. However, it still trades at about 1.5 times the bank’s book value, lagging peers JPMorgan Chase and Morgan Stanley,