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Exclusive: Goldman Sachs financial targets jeopardized as pandemic slows revamp

Exclusive: Goldman Sachs financial targets jeopardized as pandemic slows revamp

NEW YORK (Reuters) – Goldman Sachs Group Inc management is considering whether to scale back financial targets set earlier this year, as the coronavirus pandemic has hindered the bank’s business model revamp, analysts and sources inside the bank told Reuters.

The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., December 18, 2018. REUTERS/Brendan McDermid/File Photo

Goldman unveiled plans to boost returns on equity and cut costs during its first-ever investor day in January. To reach its goals, Goldman would squeeze more revenue from existing businesses like wealth management as well as relatively new ones like consumer lending, while launching additional corporate services like cash management.

Since then, the pandemic has slammed into the economy, crippling loan demand and causing widespread unemployment. It has also prevented Goldman bankers from drumming up business with new customers the way they could before coronavirus lockdowns.

Although Goldman’s trading revenue has soared thanks to market volatility, other initiatives have stalled.

“Unless there’s a silver bullet vaccine cure, it looks like Goldman will not hit its targets,” said Viola Risk Advisors bank analyst David Hendler. “It’s behind on wealth management and it’s behind on consumer.”

A spokesman for Goldman referred Reuters to executives’ prior statements but declined to comment further.

Goldman Sachs executives have stood by their targets, stressing that the path to achieving them in the coming years would not be “linear.” They are not expected to move the goalposts on Wednesday when the bank reports third-quarter results.

Instead, the bank may change targets in January, a year after they were set, said the sources, who were not authorized to speak publicly.

As it stands, Goldman pledged to produce a return on tangible common shareholders’ equity (ROTE)

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Exclusive: Goldman Sachs Financial Targets Jeopardized as Pandemic Slows Revamp | Investing News

Exclusive: Goldman Sachs Financial Targets Jeopardized as Pandemic Slows Revamp | Investing News

NEW YORK (Reuters) – Goldman Sachs Group Inc management is considering whether to scale back financial targets set earlier this year, as the coronavirus pandemic has hindered the bank’s business model revamp, analysts and sources inside the bank told Reuters.

Goldman unveiled plans to boost returns on equity and cut costs during its first-ever investor day in January. To reach its goals, Goldman would squeeze more revenue from existing businesses like wealth management as well as relatively new ones like consumer lending, while launching additional corporate services like cash management.

Since then, the pandemic has slammed into the economy, crippling loan demand and causing widespread unemployment. It has also prevented Goldman bankers from drumming up business with new customers the way they could before coronavirus lockdowns.

Although Goldman’s trading revenue has soared thanks to market volatility, other initiatives have stalled.

“Unless there’s a silver bullet vaccine cure, it looks like Goldman will not hit its targets,” said Viola Risk Advisors bank analyst David Hendler. “It’s behind on wealth management and it’s behind on consumer.”

A spokesman for Goldman referred Reuters to executives’ prior statements but declined to comment further.

Goldman Sachs executives have stood by their targets, stressing that the path to achieving them in the coming years would not be “linear.” They are not expected to move the goalposts on Wednesday when the bank reports third-quarter results.

Instead, the bank may change targets in January, a year after they were set, said the sources, who were not authorized to speak publicly.

As it stands, Goldman pledged to produce a return on tangible common shareholders’ equity (ROTE) of more than 14% by 2023, compared with 10.6% in 2019.

The bank also outlined plans to cut expenses by $1.3 billion over that time frame, producing an efficiency ratio of 60% compared

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Car insurance decline slows as COVID-19 restrictions ease

Car insurance decline slows as COVID-19 restrictions ease

The average price of fully-comprehensive car insurance now stands at £473. Photo: Oliur/Unsplash
The average price of fully-comprehensive car insurance now stands at £473. Photo: Oliur/Unsplash

Car insurance premiums fell throughout 2020 – thought to be a result of the national COVID-19 lockdown, which at it’s height caused road traffic to plummet by 73% but the rate of decline may be slowing.

Car insurance prices dropped by 3.6% in the first quarter of the year and then by a massive 4.7% in the second quarter, when they hit their lowest price in five years – £462 ($603) for fully-comprehensive cover.

However, a modest price drop of 0.3% in the third quarter suggests the fall may be starting to taper off, MoneySuperMarket data shows.

The average price of fully-comprehensive car insurance now stands at £473, the data shows.

What’s more, despite prices falling in 2020, annual comparisons show a slight increase, with fully-comprehensive cover costing about £473 during Q3 2019.

The study found drivers in east London pay most for premiums, at £950 – more than double the UK average.

READ MORE: UK drivers ‘unaware’ of government’s electric car grant

Meanwhile, London as a whole paid about £679 during the third quarter of the year.

On the other hand, drivers on the Isle of Lewis have the cheapest premiums in the country, at just £293.

Looking at age, premiums have fallen the most year-on-year for those aged 17 to 19, with fully comprehensive cover now costing these drivers about £823 – down 21% from £1,037 in 2019.

However, premiums for this age group did see a quarterly price increase of £46 from £777 to £823.

Drivers aged between 40 and 49 have seen the biggest price rise, with premiums up 5% year-on-year to £422, from £402.

The 20 to 24 demographic pays the most on average, with third-quarter premiums costing £917.

READ MORE: Over

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UK economic growth slows despite restaurant boost

UK economic growth slows despite restaurant boost

Related Topics
  • Coronavirus pandemic

Restaurant

image copyrightReuters

The UK economy continued its recovery in August, growing by 2.1%, as the Eat Out to Help Out scheme boosted restaurants.

But the figure was below expectations and the economy is still 9.2% smaller than before the pandemic struck.

It marked the fourth consecutive month of expansion following the slump induced by the coronavirus lockdown.

However, growth in August was slower than the expansion seen in both June and July.

In June, the economy grew by 8.7% and in July, by 6.6%.

  • Eat Out to Help Out drives UK inflation to five-year low

Eat Out to Help Out, which ran from Monday to Wednesday during August, offered 50% off food up to the value of £10.

Discounts for more than 100 million meals were claimed through the scheme.

What is likely to happen next?

Analysts said the coming months were likely to see growth slackening further because of new Covid restrictions, the end of the furlough scheme in October and concern over a no-deal Brexit.

“We have been clear that we stand ready to do more as necessary,” a Treasury spokesperson said. “Some firms will be affected by coronavirus for longer than others, and we will continue to seek to support these firms appropriately.”

Chancellor Rishi Sunak is expected to announce further coronavirus support measures later on Friday, including an extension to the Job Support Scheme for business affected by local lockdowns.

Should we be worried?

The economy’s bounce back from the pandemic shutdowns slowed in August, despite the boost from Eat Out to Help Out at a time when there were few social restrictions.

The official technical recession – two consecutive quarters of shrinking GDP – has certainly ended and that will be

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UK economic growth slows unexpectedly in August

UK economic growth slows unexpectedly in August

The UK economy grew by less than expected in August despite a boost from the hospitality sector with output remaining well below pre-pandemic levels.

UK gross domestic product increased by 2.1 per cent from July, but the expansion fell short of the 4.6 per cent consensus forecast by economists polled by Reuters, pointing to a long path to a full recovery.

The unexpected slowdown in growth, reported by the Office for National Statistics, followed strong monthly expansions earlier in the summer.

One bright spot in August was the food and beverage service sector, where activity grew by 69.7 per cent thanks to the impact of easing lockdown restrictions and the government’s “eat out to help out” subsidised meals.

The accommodation industry also grew by 76 per cent as international travel restrictions boosted domestic “staycations”.

Services as a whole, which account for about 80 per cent of the economy, expanded at a monthly rate of 2.4 per cent in August.

Overall, August’s output growth was slower than a revised down 6.4 per cent expansion in July, when the economy benefited from the reopening of the hospitality sector.

Monthly economic output in August remained 9.2 per cent below pre-pandemic levels in February, signalling that a full recovery, which is key for the survival of many jobs and businesses, was still distant.

The UK pound barely moved at $1.2939 after the figures were released early on Friday.

In the industrial sector in August growth nearly halted as the rate slowed to 0.3 per cent from 5.3 per cent in July.

Before the resurgence in coronavirus infections and a rise in Brexit uncertainty, the Bank of England calculated that GDP was not projected to exceed its level in the final quarter of 2019 until the end of 2021.

The UK is only a

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