Ebrahim Poonawala: Thank you.
Operator: We’ll go next to Brennan Hawken with UBS. Mr. Hawken, please go ahead. Your line is open. Please check your mute function.
Brennan Hawken: Sorry about that. Thanks for taking my questions this morning. So just curious about the impact that we should be thinking about around the potential exit from the Apple relationship. I know it’s an ongoing thing, but maybe is there anything that you could provide that might help us think about how that impact could flow through?
David Solomon: Denis said in his comments, we’ve got no other updates on the credit card partnerships other than what he stated. We continue to work with Apple on a partnership with them to serve our customers and to continue to reduce the drag from the partnership, and we continue to make good progress. And the drag in 2024 will be materially less.
Brennan Hawken: Okay. Appreciate that. And then when you think about the deposit platform, Marcus, that’s been a pretty bright spot on the consumer front and definitely seems to have worked well. What has been your views or how has the beta on that deposit base played out versus your expectations? And do you have any plans to adjust your thoughts around, you know, earlier you talked about wanting to be in the top decile of payouts for that product. Is that still the goal or has that adjusted as the platform has matured?
Denis Coleman: Sure, Brennan, and thank you for that question. Our Marcus, deposit platform, has been a real strategic advantage to us in terms of overall firm-wide funding. We did set out a strategy to set our pricing at the higher-end of the pricing envelope to maintain, sustain, and grow our balances across that platform. We haven’t adjusted our strategy at this point. We saw good growth across our various strategic deposit funding channels last year, not just Marcus. Overall, deposits are up over $40 billion on the year. And I would just say, as we move into 2024, we continue to focus on driving growth across the strategic channels and be thoughtful about our overall funding mix.
Operator: Thank you. We’ll go next to Mike Mayo with Wells Fargo Securities.
Mike Mayo: Hey, David. You started off the call saying that 2023 was the year of execution and that’s the year when you had an ROE of 8%, and if we throw in some of the charges, it’s 10%, and that’s not really executing at your 15% or so desired return. So can you give us a kind of waterfall chart in words on how you get from that core 10% ROE to 15%, and if you could define medium-term?
David Solomon: Sure. So I appreciate the question, Mike, and obviously, we’re very focused on it. It wasn’t an A environment for our core business. In fact, I don’t even think it was a B environment. When investment banking is operating at low levels, that is an impact overall. I do think that it’s important to look at our core business of banking and markets, which is a very significant portion of the firm and do note, on a fully allocated basis in this environment, which was not a B-plus or an A environment, given the investment banking activity, it had a 12% ROE. We continue to believe through the cycle that that business is a mid-teens business. And so I don’t think we’re going to see — stay at the level of activities that we’ve been at.
We have that business positioned very well. And so you’ll get some upside returns there in a better environment. And then secondarily, on Asset & Wealth Management, we continue to reduce the balance sheet. The balance sheet has been a drag on returns, but I think we’ve been pretty clear that we can drive the Asset & Wealth Management with a smaller balance sheet to mid-teens returns or better with a 25% margin. We’re on that journey. We’re making progress. I think we’ll make very good progress over the next two years. And if you look at those two businesses, that’s the vast, vast majority of the firm, and I think they can operate mid-teens. We’ve significantly reduced the other drags. We got a lot of it behind us in this year. That doesn’t mean there won’t be anything, but the drag from platforms in 2024 will be materially reduced from what it’s been.
And so I think we’re making good progress in the medium-term is over the next couple of years, provided it’s — provided that it’s a reasonable environment. And so I think you’ll see good progress on the overall positioning of the firm over the next three to five years.
Mike Mayo: And then just to follow-up that other drag, you said would be a lot less than 2024 from Platform Solutions. And can you dimension that a little bit? And also, as it relates to principal investments, do the higher stock markets help the disposition or not so much?
David Solomon: They absolutely do. I mean, when markets improve, they help the disposition. There’s no question. I also — when you look at the last two years, we’ve had real headwinds in terms of revenue against the balance sheet that we could have more of that, but on a much smaller balance sheet in 2024. With a better market, you actually might have some benefit to revenue performance, but we’re focused on reducing that broadly. You see you have more transparency now in the platforms as we continue to close on GreenSky, move GM to held for sale. And so you have more transparency on that. We think the drag will be significantly reduced in 2024. When we’re comfortable providing more specific color on that, we will provide it.
Mike Mayo: All right. Thank you.
David Solomon: But small in the overall context of the firm and the firm’s performance.
Denis Coleman: Yeah.
Mike Mayo: Okay. Thanks.
David Solomon: Thank you.
Operator: We’ll go next to Devin Ryan with JMP Securities.
Devin Ryan: Thanks so much. Morning, David and Denis. Question just on kind of interplay between a recovery in investment banking versus trading intermediation. And I know there’s probably a lot of assumptions that need to go in here. But if you think about kind of the environment with macro conditions settling down, which would likely support investment banking, I’m assuming some areas of trading could also slow down and then maybe other areas could pick up as well. So just love to maybe hear a little bit about kind of the puts and takes, kind of what you’ve seen historically there, if easier. And just really kind of the key question is, just whether you can grow investment banking revenues and trading ex-financing at the same time. Thanks.
