Denis Coleman: Yeah, so at a high level, Devin, appreciate the question. I think we can continue to grow our financing activity given the scale and the size of the market, the way market activity is growing, and we will normalize investment banking activity. And obviously, over time, given our position, and if you assume growth in the world, growth in market capital world, we will continue, as we have for the last 25, 35 years, grow our investment banking activity. When there’s real disruption in the world, we find that FICC can be a little bit countercyclical in some way, shape or form. But that’s not the same as saying a normalization of investment banking activity means a slowdown in intermediation or market activity. I think there’s a lot going on in the world.
The trajectory of rates, there’s a point of view on rates and inflation, but it’s certainly not certain to me. I think people are going to be active as they adjust to the environment. There’s debates about how the Fed continues on its quantitative tightening or doesn’t continue on its quantitative tightening. And so all of this, I think, will continue to play into people being active in markets. So I do think just at a high level, look, this is a high level. I think the environment in 2024 feels like it will be better for our mix of businesses than it was in 2023. But I’m not a good predictor, and we’re prepared to operate whatever environment we have to operate in.
Devin Ryan: Understood. I appreciate that, David. Maybe a quick follow up for Denis. Just commercial real estate, clearly big headwind in 2023. Appreciate all the disclosure. Their office on-balance sheet is only $1 billion now. So when you think about just the environment relative to current marks, how do you feel about kind of the pain being behind the Company and just characterize the environment where maybe there still could be material marks? And then just more broadly kind of expectations for marks as you exit the historical CRE on-balance sheet principal investments. Thanks.
Denis Coleman: Sure, Devin. Thank you. And as you know, we have new disclosure the last couple of quarters on CRE in particular on the nature of the loans in that sector. And then as well as the on-balance sheet, both CRE and office in particular. You can obviously see from those disclosures, we’ve made substantial progress moving down the positions over the course of 2023, gave disclosure on the number of CIE positions that we moved down recently, and we’ve made really significant progress. We disclosed on prior calls and our office exposures from an impairment and marks perspective, we’re sitting at roughly 50%. So we think that based on the visibility that we had and the activity that we had over the course of 2023 that that portfolio, and the broader portfolio for that matter, sits at the right place.
As we move into 2024, there should be opportunities for further dispositions and we’ll remain very focused on what the mix of that disposition activity is. When David was reviewing our expectations with respect to HPI sell-down on the forward, in addition to moving towards our medium-term target, we’re also mindful of what the long-term franchise impact of those sell-down activities are. So just to give you a sense for why we may have cautioned on pace, we have some meaningful credit exposures where we enjoy a position of incumbency. And for the long-term benefit of the franchise, we very much hope that we’ll remain as a lender and a supporter of those clients to exit those positions in advance of a potential refinancing would be to surrender our incumbency position.
And so we’re being thoughtful so that we can continue to reduce our risk while continuing to grow the third-party fund management business while supporting clients in the process.
Devin Ryan: Great. Thanks so much.
Operator: Thank you. We’ll go next to Ryan Kenny with Morgan Stanley.
Ryan Kenny: Hi. Good morning and thanks for taking my question. So you highlighted in the prepared remarks that Goldman surpassed your fundraising target in alternatives. And so as we look forward, can you give some more color on your strategy to grow, particularly in private credit? Any update on how big you expect to get in private credit, how it complements your DCM and wealth franchises, and maybe any risks that we should be thinking about would be helpful? Thanks.
Denis Coleman: Sure. Appreciate the question. It’s, obviously, something, Ryan, we’re very, very focused on. We feel good about the fundraising progress we’ve made. I think when you look forward in 2024, you could expect us to raise another $40 billion to $50 billion of alternatives. We’re, obviously, very focused on private credit. We do operate at scale on private credit. We have over $110 billion of private credit. But I think the opportunity for us to continue to grow and scale on private credit, especially given the way our franchise is positioned and the origination connection we have with our broad banking business gives us a unique platform and a unique competitive advantage. So we’re going to continue to keep this focus.
It doesn’t stop because we met our goal. Our goal was meant to flame the opportunity set three-and-a-half years ago, but you’ll see us continue to raise money on a year-to-year basis. And we’ve got some big funds that we’re going to be in the market with in 2024, and we’ll continue to build the partnerships with that client base. And both myself, John Waldron, and the broad team across our Asset Management division are spending a lot of time with the big capital allocators all over the world and continuing to invest in those relationships.
Ryan Kenny: And then Basel endgame comment letters are due today. So now that you and other GSIBs have had time to digest the proposal, could you give us an update on how Goldman might plan to adapt if the potential final rule comes through and how the proposal is written might impact your 15% to 17% through the cycle RoTCE target?
Denis Coleman: Sure. Well, obviously, today marks the end of the comment period, and what I would say, it’s certainly not the end of the process. In fact, I would say, it’s the end of the beginning of the process. And so we’re moving into the next phase and continue to be highly engaged with regulators and the broad set of government stakeholders, given our significant concern with the proposed rules. You’ll see comment letters from us, from our peers. You’ll also see many letters from end users, including pension funds, insurance companies, corporates who are particularly concerned about how this rule could affect their access to capital and their ability to ensure and mitigate risks in their business. And I think this is really rooted in the fact that the magnitude of these proposed changes would be felt well beyond the banking industry, and also I think disadvantages the US from a competitive perspective.
So to be clear, my view is the rule was not proposed appropriately and it should be withdrawn and reproposed. I don’t think speculating on the impact of the rule as proposed, I think there’s a pretty significant view out there that the Fed is listening carefully, they’re taking in the feedback, and I don’t think there’s anyone that’s looking at a base case that this is going to move forward as proposed. We’re very flexible with our capital, as I’ve said before. If the rules put certain changes in place, we’ll also adjust businesses or pricing in businesses and certain activity to adapt. I think to speculate as to how we’ll talk about this once it’s in place before we have any idea what the rule is going to look like is premature. But we’ve got a lot of capital flexibility and we’ve proven over time we can be particularly nimble.
