The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

Good morning. My name is Jamaria, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs First Quarter Fixed Income Conference Call. This call is being recorded today, May 13, 2021. Thank you, Ms. Halio. You may begin your conference.

Good morning. This is Carey Halio, Head of Investor Relations at Goldman Sachs. Welcome to our Fixed Income Investor Conference Call. We have posted presentation materials on the Investor Relations portion of our website at www.gs.com. Please see our cautionary note on forward-looking statements, which can be found on Slide 18. This audio cast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced or rebroadcast without our consent. Today on the call, our Global Treasurer, Beth Hammack, will cover the current economic environment, the firm's financial position, our funding strategy and our continued LIBOR transition efforts. Following the prepared remarks, Beth will be happy to take your questions. Beth?

Thanks, Carey, and thanks to everyone for joining us this morning. Let's start on Slide 1 with an overview of the macroeconomic backdrop. As anticipated, we saw an improvement in the economy during the first quarter, primarily supported by the continued accommodative fiscal and monetary policies of central banks and governments around the world. The capital markets have recovered well, with U.S. equities hovering at or near records and credit spreads tightening across both investment-grade and high yield. The broad-based confidence in the economic recovery has also resulted in healthy levels of inflation and a steepening of the yield curve. During the first quarter, long-end rates continued to march higher, with 10-year U.S. treasury yields rising more than 80 basis points to 1.7%. Through the balance of 2021, our economists expect further increases in yields across major government bonds, including in the U.S., U.K., Japan and Germany. Additionally, they anticipate U.S. core inflation to peak at relatively elevated levels this spring followed by a moderation in 2022 and '23 as the Fed maintains its commitment to price stability over the cycle. We have been encouraged by the recent pace of vaccinations and the reopening of communities across the U.S., leading to a positive trajectory of economic indicators including GDP and unemployment. However, as you would expect, we will remain vigilant to risks across markets, including rising inflation on the back of reopening effects and additional fiscal stimulus as well as potential new COVID surges in certain countries. Overall, the economic backdrop continues to remain supportive, though we are beginning to see moderation in capital markets activity levels from the first quarter. Let's now turn to Slide 2 to discuss our financial position. We have more than doubled the firm's equity base since 2007, cutting our gross leverage roughly in half. Our global core liquid assets, or GCLA, averaged nearly $300 billion during the first quarter. Meanwhile, our standardized CET1 ratio ended the quarter at 14.3%, well above our current capital requirement of 13.6% and 100 basis points higher than our ratio at the end of 2019. The increase in our ratio was driven by strong earnings generation. Throughout the pandemic, our strong financial position has enabled us to support client needs and execute on our strategic priorities while maintaining a robust credit profile. Turning to Slide 3. Let's briefly discuss our financial results. In 2020, our revenues increased by 22% to $45 billion. This momentum carried into the first quarter of this year as we reported record quarterly revenues and EPS, driven by strength across the client franchise, and return on equity of 31%, our highest in over a decade. With this strong performance, we remained prudent in expense management and benefited from the operating leverage embedded in our business model. Our expense discipline is a meaningful driver of the relative earnings stability for Goldman Sachs. As you can see on the right-hand side of Slide 3. So historically, our annual revenue volatility was slightly higher than our peers. Our annual pretax earnings volatility of 17% has been significantly more stable than peers, a testament to our focus on expense control and pay-for-performance culture. Additionally, we continue to execute on our strategy to generate more durable revenues, which is an important credit positive. Moving to Slide 4. We'll decompose the trends in our balance sheet. Since year-end 2019, total assets have grown by over $300 billion to $1.3 trillion. During the pandemic, we've remained close to our clients and help them navigate volatile markets while prudently deploying our balance sheet. Key drivers of this growth include strong activity in our Prime business, which led to record average client balances in the first quarter of 2021; robust repo market activity, which is reflected in higher collateralized agreements and higher cash; and cash equivalents from solid deposit inflows, which bolstered our liquidity goal. Since year-end 2019, we've raised nearly $100 billion of deposits, an increase of more than 50% on the back of our strategic efforts to shift our funding mix. Over that same period, total loans grew $12 billion or 11% as we remained prudent in the pace of deployment and adjusted our underwriting standards to better navigate the uncertainty of the pandemic. While loans are not the only assets that can be funded with deposits, the trend demonstrates our measured approach to credit risk. Let's delve further into our funding profile on Slide 5. As you may recall, the key tenets of our strategy are: first, to further diversify our funding mix by increasing the proportion of deposits versus wholesale debt, thus reducing our cost of funding in the long term; second, to enhance asset liability management to better match our liabilities to the maturity profile of our assets; and third, to recalibrate the size and composition of our liquidity pool as our business mix continues to evolve. The first tenet, diversifying via deposits has been the most pronounced of the three since our Investor Day in January 2020, with deposits growing from 43% of our unsecured funding mix to over 50%. On Slide 6, we dive deeper into the drivers of our deposit growth. As you can see from the charts the increase in deposits has been driven primarily through strategic channels including consumer, private bank and transaction banking deposits. These channels are expected to be less costly than our central channels over the medium term. They also have more favorable maturity and stressed outflow characteristics. Deposit stickiness has been a recurring question since we started to grow our online consumer platform. On the right side of this slide, we show our Marcus U.S. savings rate against the upper end of the federal reserves target range. The Fed started cutting rates gradually in the summer of 2019, followed by more drastic cuts to near 0 early in the pandemic. Over that same cycle, we took our Marcus U.S. savings rate down from 2.25% to 50 basis points, reflecting a deposit beta of roughly 80%. Despite our repricing, we continued to see deposit inflows in our consumer business. These inflows have been further supported by the expansion of our consumer platform capabilities. For instance, we launched Marcus Insights last year, which integrates the best of clarity money capabilities into the Marcus app. And we launched Marcus Invest in the U.S. this year, our digital offering to provide consumers access to diversified investment portfolios with as little as a $1,000 investment. The customer response and uptake on both platforms has been positive, further deepening our customer relationships and enhancing the stickiness of those deposits. Notably, since launch 70% of our Marcus Invest clients were existing customers. On Slide 7, you can see ways in which we're leveraging our growing deposit base. Over the last several years, we have grown our bank assets both on an absolute basis and as a proportion of our firm-wide assets. This growth has been fueled in large part by a greater focus on lending and financing activities and the continued transition of our currencies business into our bank. Of note, 85% of our loans were booked in our banks as of the first quarter. And as a result, we've been better able to capitalize on our lower cost deposit funding. Nonetheless, as of the first quarter of this year, only approximately 25% of our firm-wide assets are in our banks and can be funded with deposits. As noted on Slide 4, a key contributor to the balance sheet growth that we saw in the first quarter was our Prime business, which sits outside of our banks. Therefore, we've remained active in the wholesale debt market. You can see this on Slide 8, where we outlined our year-to-date unsecured benchmark issuance. Thus far, in 2021, we have issued $31 billion of unsecured benchmark debt, including our first 20-year bond since 2018. We continue to focus on diversification in this channel, resulting in almost 40% being executed outside of the U.S. dollar market. Given the accretive deployment opportunities, particularly in Prime Brokerage, our year-to-date benchmark issuance now exceeds maturities and redemptions for 2021. We expect the pace to moderate but will remain dynamic as we navigate the current operating environment. We also continue to evaluate subordinated debt and preferred stock opportunities as we optimize our capital stack. For instance, we recently refinanced $675 million of preferred shares outstanding by issuing our 3.8% Series T to redeem our more expensive 6.3% Series N. Overall, we remain focused on our funding optimization of $1 billion over the medium term, enabled in part by our strong deposit growth. However, we recognize that there may be a trade-off between investing in our franchise and achieving these funding savings. For example, the client activity we saw in the Prime business during the first quarter resulted in more revenues in that business, offset by less funding savings relative to the target we laid out at Investor Day. In the near term, we may face a similar trade-off again and would likely make the same decision to invest in our franchise. Let's now turn to the topic of sustainability on Slide 9. Our purpose at Goldman Sachs is to advance sustainable economic growth and financial opportunity. In 2019, the firm announced a commitment to facilitate $750 billion in financing, investing and advisory activities by 2030 to accelerate climate transition and advance inclusive growth. In just a single year, we reached over 20% of that goal. Building on this tremendous progress, we released a robust sustainability bond issuance framework earlier this year, which will be a guide for our green, social and sustainability issuances. This framework is fully aligned with our broader target and approach in this area. In February, we executed our inaugural $800 million issuance, and our plan is to have programmatic issuances going forward. We were pleased with the strong investor demand as the deal was multiple times oversubscribed, and we were able to allocate over 50% to ESG-focused funds. This transaction was another opportunity to leverage our long-standing diverse broker-dealer program and deepen our relationships with these firms. Our syndicate exclusively included diverse broker-dealers with 4 of them acting as joint lead managers alongside the firm. In addition, we have leveraged our sustainability bond framework to launch our first structured sustainability notes for our primary U.K. broker-dealer subsidiary. With that, let's now review some of our additional funding sources on Slide 10. The largest of the nonbenchmark unsecured channels is our structured notes program, which provides us with diversified funding opportunities across products, issuing entities, currencies and tenors. This program allows the firm to diversify our investor base and access funding across the institutional and retail channels at attractive rates. Through the first quarter, we raised $18 billion from structured notes with approximately 24% in non-U.S. dollar currencies. Another important source of funds for the firm is our secured channel, which offers a valuable tool to support client activity. Consistent with our other funding sources, our secured funding balances have increased, driven by client growth opportunities. This is evidenced through our collateralized financing, which have grown by 27% to $193 billion in the first quarter of 2021 from year-end '19. Like all of our primary funding sources, we consider both diversification and appropriate term when structuring our secured funding portfolio. Let's now discuss net interest income on Slide 11. As it stands today, our balance sheet remains modestly asset sensitive. The vast majority of our loans are floating rate or hedged to floating rates, while our trading assets are high turnover and primarily funded by liabilities that have been hedged at floating rates. Even in the current low rate environment, we expect our NII to gradually increase over time as we continue to maintain pricing discipline on deposits and grow loans. In addition, should the curve steepen further as the economy recovers, we expect NII to expand. With that said, NII still represents a smaller portion of our overall revenue base at 11% in 2020 versus roughly 50% for our U.S. commercial banking peers. This makes us relatively less exposed to interest rate risk for the firm, so increasing NII continues to remain part of our long-term strategy. As such, we are managing our rate risk with a holistic approach to asset liability management, and are keenly focused on how to best position the firm in an economic scenario where rates remain low for some time. While not broadly expected, as good risk managers, we are also analyzing operational preparedness and the impact of potential negative rate scenarios. On Slide 12, I'll provide you with an update on the upcoming LIBOR transition, which is in full swing. Our LIBOR team has been proactively managing towards a seamless transition, and we continue to engage, innovate and partner with our clients, regulators and other market participants across the globe. In March, the FCA announced official cessation dates for 35 IBOR currency and tenor payers with the extension of certain USD LIBOR tenors through June 2023. This extension has not deterred our internal transition plans or readiness efforts. Goldman Sachs has adhered to the ISDA protocol for all our relevant entities, and we support broad adoption to aid with a smooth transition. Additionally, we are encouraged by the New York State Legislation recently signed into law and are hopeful that federal legislation will soon follow. Further, we remain supportive of the proposed legislative solutions in the U.K. and Europe to aid with the transition in a globally coordinated manner. We currently expect to have approximately $29 billion of U.S. dollar LIBOR-linked benchmark debt and preferred stock outstanding following the June 2023 cessation. As you will recall, we were proactive in adopting language in our issuance documents to help navigate the LIBOR transition. Generally, we feel comfortable with our fallback language in our outstanding benchmarks bonds and preferred stock series. Nonetheless, we are evaluating options to manage LIBOR-linked securities including the possibility of liability management actions where appropriate. Turning to Slide 13 on liquidity risk management. We size and allocate our liquidity pool based on our modeled liquidity outflow, or MLO, and our regulatory requirements. The MLO assesses the firm's potential liquidity risk under a combination of conservative market-wide and firm-specific stress scenarios. We have a long track record of prudently managing liquidity risk and are continuously refining our methodologies to reflect changes in markets and our business mix. Given our MLO is specifically tailored to our business model, it has generally been more binding for the firm than regulatory LCR requirements. In the first quarter of 2021, our GCLA averaged nearly $300 billion and the firm's eligible high-quality liquid assets, or HQLA, averaged $210 billion. At these levels, we are comfortably above our MLO requirements, and we reported an average LCR of 138% for the first quarter. Though we will continue to conservatively manage our liquidity, we expect our LCR to decline and move more in line with the peer average. We estimate that our consolidated net stable funding ratio exceeds the minimum requirement of 100% based on our current understanding of the final rule, which becomes effective on July 1. Let's turn to Slide 14 on capital. As mentioned earlier, since the end of 2019, our CET1 ratio increased by 100 basis points to 14.3% as of the end of the first quarter. This growth was driven by earnings generation given our strong performance which more than offset RWA growth as we supported our franchise. Our first quarter ratio remains above our current regulatory requirement of 13.6%, and we remain well positioned to meet client needs. Looking forward, we remain committed to our medium term 13% to 13.5% CET1 target. We were encouraged by the results from CCAR 2.0, and while we cannot predict stress test results, we've continued to execute on our strategy of reducing stress loss intensity of our balance sheet. Based on this progress, we expect our SCB to decline over time. As permitted by the Federal Reserve, we resumed share repurchases last quarter, subject to publicly announced limitations. For the second quarter, we expect to continue share buybacks close to the level of the first quarter, excluding repurchases that offset the impact of share-based compensation. When permitted, we will look to return more capital via dividends, particularly as our business mix continues to evolve into a more durable sources of revenue. On the right side of the slide, we highlight the supplementary leverage ratio, which has received recent focus given the Fed's decision to allow temporary calculation relief to expire at the end of March. For Goldman Sachs, SLR is not currently a binding constraint. As of the first quarter, our group SLR was 6.5% and 80 basis points lower if you exclude the impact of temporary relief, still comfortably above our 5% requirement. While we're closer to the minimum SLR well-capitalized requirement in our U.S. Bank, we recently contributed capital to support growth in the entity and have capacity for further infusions if needed. More broadly, recent comments from the Fed suggest potential modifications to the current design and collaboration of SLR to ensure returns to being a backstop to risk-based capital ratios and not the binding constraints. With that, let me conclude with a few comments on Slide 15. As we navigate this dynamic market environment, we are committed to serving our clients' needs. Our strong 2020 and first quarter '21 results reflect the dedication of our people and strength of our client franchise. Additionally, the resilience of our business model, strong risk management and flexibility of our highly liquid balance sheet further contributed to our strong financial profile. All of this is underpinned by a strategy that emphasizes durability, diversification and efficiency which will further enhance the credit profile of the firm. We've demonstrated meaningful progress on our strategic priorities to generate more durable revenues and higher returns over time. And with that, I'm happy to take your questions.

[Operator Instructions] Your first question comes from the line of Brian Monteleone with Barclays.

Starting where you wrapped up starting on the SLR, you said you have 40 bps buffer. Can you talk about what management buffer above the requirements you want to run? And then within that, you mentioned the capital contribution to the bank? Is that coming from existing resources at the IHC? Or do you need to issue to fund that? And if the buffer on the group SLR comes down, can you talk about what strategies you would use to manage that?

Sure. Thanks for the question, Brian. Currently, as we've talked about, SLR is not a binding constraint for us. So we are happy with our current buffers of about 70 basis points above the requirement at the group level and 40 basis points at bank. As you noted, we did downstream some capital from the IHC into the bank, about $750 million in April, and we have plenty of excess liquidity in the firm to handle those types of infusions should further ones be needed. As we've talked about numerous times, we are expecting, at some point, to see further modifications to this design, which we think would be appropriate and supportive of the growth in client activity and the growth in the Fed's balance sheet.

Okay. And then going back to Slide 8, you guys -- you've always tried to be open about the type of additions that you might need to, but very clear that it would depend on client demand for balance sheet. And obviously, demand has been higher this year than expected. Can you talk a little bit about maybe how to think from the outside about sizing the amount of issuance, a given amount of balance sheet growth needs? So Prime Brokerage has grown more than expected. It looked like it grew about 20% in the quarter. Is there kind of a way to think about how much different types of balance sheet growth will drive incremental issuance needs from a senior perspective?

So we try to be very efficient when we look at the capital and liquidity stack and as we look at our mix of both secured and unsecured debt. So you're right to point out that prime was the largest driver of our growth in the first quarter of the issuances that we needed. Again, our prime business is largely outside of the banks and so can't be funded by deposits. So we did have to lean on both our secured and unsecured channels. We did of the vast majority of what we're expecting to do for the year in the first half of the year, the first 4 months of the year, and that was driven by, one, the strong demand that we saw from the client base, but also a really favorable underlying financing environment. And so with rates selling off 80 basis points, credit spreads staying reasonably contained, we did see really attractive opportunities there. But again, we expect our pace of issuance to moderate for the rest of the year.

Your next question comes from the line of Robert Smalley with UBS.

And thanks very much for doing these calls, always informative. On LIBOR transition, I appreciate your comments there. On the recent preferred issuance that you did, the 380s, you used a treasury reset for post call date. Are we -- can we imply something about transition there? And what was the decision to use that reset reference rate instead of SOFR? And could you talk a little bit about any transition concerns that you might have from LIBOR to SOFR? And why you chose to use that reference rate? And then I have a follow-up on some issuance.

Okay. Okay. Thank you. So great question. We had been issuing with that treasury back end for I think the past 2 years, since the transition moved into higher gear. We were interested in issuing with a SOFR back end, but the feedback that we got from the investor base was investors weren't ready for it yet. And so obviously, there's some push-pull about us wanting to issue what you, all of our investors want to buy, but also being supportive of this transition. We've been very supportive of the transition as we talked about in the derivative space, and in our other borrowings, you'll note that we've done some floaters linked to SOFR and would continue to expect to do that. When the market is ready and when the time is right, we're happy to consider looking at a SOFR back end, for the preferred stock issuances. But to date, the feedback we've gotten was that, that 5-year fixed to fixed, I guess, it's called, was a better structure and more attractive in the market.

Great. Just on issuance quickly for preferred and Tier 2s, according to your Pillar 3 report, you're pretty much at your limit. So can we expect not much issuance there and just to replace anything that's amortizing or calling and recouponing as...

Yes. Again, that's another area where we try to be thoughtful around our capital structure and efficient. And so we're continuously looking at what our needs are and where we are relative to the requirements. We did have a couple of redemptions in the first quarter. Notably, we redeemed $2 billion of preferred stock in January. That was an issue that had become callable, I believe, in May of the prior year, but we were under restrictions from the Fed not to redeem any capital. That was excess that we didn't think we needed relative to our pace of growth and where our balance sheet was. And so we were able to redeem that in the first quarter, and we're happy to do so. And then again, as I referenced in the prepared remarks, the $675 million of the redemption and reissuance, saving 250 basis points on the preferred stock, we love those opportunities when they're available just to be more efficient and help save on interest expense, so we'll continue to look out for those when they present.

Your next question comes from the line of Scott Cavanagh with APG.

Could you just expand upon your commentary of the moderation of the capital markets but looking at trading and investment banking? And then your ability to capture market share in the Prime Brokerage, given the weakness in some of your peers?

Yes. We feel very good about the growth that we saw in Prime Brokerage, and this is an area that we've really invested in over the past several years. As you'll know, this is an area where you're really seeing a lot of consolidation amongst the top 3 players, and we are enjoying our spot as being part of that group. We've invested heavily in both the people, in the risk systems and the technology and analytics to make sure that we're servicing our clients with really the best-in-class content insights and technology they need to do that. My comment around the moderation in activity, it's really just a reflection of the public activity that we're seeing in the market. Obviously, 2020 was a pretty significantly robust year. You saw the first quarter of '21, again, very significant volumes. We can't predict where things are going to go. We're very focused on our clients. I'm just trying to reflect a little bit of the moderation that we've seen in the recent past.

Okay. And then my follow-up question. Going back to the LIBOR transition, I know you've been very supportive of the ARC actions. But given the pushback from both the banks and from investors, have you guys given -- what is your stance on the new Bloomberg Short-Term Bank Yield Index, i.e., your thoughts on it? And then, your operational abilities to begin issuing it. We've seen one of your peers issue, and then there was a large transaction of one swapped asset or one of the big banks. So just trying to think of your interest and where you -- and possibility of issuing off of that?

Yes. We appreciate that there are -- there's room for more than just one index in the marketplace. When we had LIBOR, we also had Fed funds. Back when I actually first started trading in the derivatives market, I traded commercial paper, discount notes, prime, T bills, there were a whole suite of indices that the market traded. But over time, it really converged to find liquidity mainly in that LIBOR index. And I think what we've seen through the prior several years is that you need to have an index that's very robust and reflective of actual transactions in the marketplace. I don't think there's any dispute that SOFR with nearly $1 trillion of volume going through the index is likely the most robust short-dated index that we can see. We do recognize that our mix of business is different from our peers. And that for many of them, they feel the need to have a credit-sensitive rate to use for certain parts of the market, particularly in revolvers or contingent lending. Our book of business, as we've talked about, is much more in the derivative space. That's where more of our exposures are. And I would expect that if Busby or Bixby takes off as a new rate. It's going to be used more in those smaller segments of the market that really need that credit rate. But I would just caution investors to look carefully at how that rate is calculated, how it's generated and make sure you feel comfortable that it's really fit-for-purpose for whatever you're doing. So when we look at our own issuance, we feel very good about the issuance we've done off of LIBOR. We'll look at Disney at and when the time comes. But again, I think it's a very high bar to make sure that we have a fully robust index that we can rely on and feel certain has -- has the number of transactions going through that we would want to see.

Your next question comes from the line of Arnold Kakuda with Bloomberg Intelligence Research.

Great. So solid risk management seems to have allowed you, Goldman, to rid losses with articles and then kind of pick up shares. It seems like an opportunity to pick up share where others kind of recede in terms of extending risk to clients. So from the outside, how can we -- can you make a comment on maybe what makes Goldman risk management a little bit different? Or what went right, I guess, when things went along, perhaps for other firms?

So first of all, any time these market events occur, we take a step back to really review how our risk systems performed and if there's anything we could do better. So I want you to rest assure that there are no victory laps happening inside of Goldman Sachs. We were able to use our long-standing robust culture of risk management, our discipline looking at the clients and going through our book, and we were able to identify our risk early on and take prompt and corrective action. This was a client that had concentrated and very leveraged positions. And so we lean on looking at our regular way, reviews of our book of business and the concentrations and the mix to make sure that we're taking action as appropriate across the peer set. Again, we were able to navigate this incident successfully. We have a history of being able to navigate tail events successfully, but that's not to say that we will always be able to do that, and we were fortunate that in this case, there was no material financial impact to Goldman Sachs.

Got it. And then so in terms of your issuance, it seems like compared to peers, you're the leading issuer, holdco issuer in 1Q and then you've done some more in 2Q and your comments have been that a lot of that was to help kind of fund the growth in prime. But it seems like you had a great first quarter in prime, but then in terms of additional market share opportunity that seems like a lot is coming into play where others kind of receive. When do you think you can get back to kind of the net negative issuance, given the really strong deposit growth? How long do you think of a tail that you might have in this opportunity with prime going forward?

We're very pleased with the consolidation in our prime share and our ability to continue developing and building on our wallet there and our presence. And that client business is one that we've spent a lot of time as I talked about investing in the technology, the relationships to make sure that we're looking at it holistically and really servicing our clients there. Again, on the issuance side, we are trying to be as prudent as we can around our issuance and trying to be disciplined where needed. We're very happy with the deposit growth that we've seen. But as we've discussed, given our prime business isn't in the bank, we can't use that to support the business. And so when we look at the Investor Day strategy we laid out, growing in that prime business is very strategic. It's very client enhancing for us, and it's building in that fee-based, more recurring part of the revenue share that we want to continue leaning into.

Your next question comes from the line of David Jiang with PGIM.

Beth, I had a quick question on capital and leverage, I guess, Slide 14. Can you explain why the targeted level of 13%, 13.5% is below the current requirement? I'm assuming you're going to bake in a higher GSIB buffer in that target.

Thanks for the question, David. So that 13% to 13.5% target we laid out at Investor Day in January of 2020, and that's our medium-term CET1 target. If we build that up, it starts with our 4.5% minimum plus a 3% GSIB buffer and then a 5% to 5.5% SCB, plus a 50 to 100 basis point buffer on top of that. Now as you rightly point out, the SCB that we got in last June's test was 6.6%. So above that 5% to 5.5% that we anticipate over the medium term. We do still believe that, that is the right medium term for the firm as we are focused on increasing our more durable sources of revenues. As we noted, we were very encouraged by the outcome of CCAR 2.0, but we can't predict the Fed's stress test results. By design, they want them to be somewhat unpredictable and how they come forward. So we've taken a lot of action, as we've talked about, in trying to take down the stress loss intensity of our business, and that's happening primarily in our asset management segment. And so we talked about at Investor Day that we had a number of on-balance sheet investments that we were looking to move off the balance sheet. We've been reasonably successful in moving some of those off the balance sheet already. As you'll know, we've announced or closed on dispositions of $4.7 billion since Investor Day, which would have an implied $2.3 billion of capital impact. We have line of sight to another $3 billion of incremental asset sales, and that would imply another $1 billion of capital. So there's a lot of self-help here for us in being able to take this down and manage towards that 13% to 13.5% target.

Great. And then just on the leverage, the bank infusion, what does that do to kind of the pro forma leverage ratio at the bank?

So that $750 million that we put in the bank increased the bank's ratio by about 10 basis points. And again, we'll keep -- we monitor those metrics as you would expect on a daily basis and top-up as needed. We have plenty of capacity for those infusions at the bank.

At this time, there are no further questions. Please continue with any closing remarks.

Since there are no more questions, I'd like to take a moment to thank everyone for joining the call. On behalf of our senior management team, we hope to see many of you in the coming months. If any additional questions arise in the meantime, please don't hesitate to reach out to Carey and the Investor Relations team. Otherwise, enjoy the rest of your day. Please stay safe, and we look forward to speaking with you again.

Ladies and gentlemen, this does conclude the Goldman Sachs First Quarter Fixed Income Conference Call. Thank you for your participation. You may now disconnect.