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

Good morning. My name is Erica, 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 10, 2022. 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. Today, we will reference our fixed income presentation, which can be found on the Investor Relations page of our website at www.gs.com. Note information on forward-looking statements appears on the fixed income presentation. This audiocast is copyrighted material of the Goldman Sachs Group, Inc. and may not be duplicated, reproduced or rebroadcast without our consent. Today, I'm joined by our Chief Risk Officer, Brian Lee; and our Global Treasurer, Philip Berlinski. Let me pass the call to Brian.

Thanks, Carey, and thanks to everyone for joining us this morning. Let's start on Slide 1 with an overview of the macroeconomic backdrop. It's safe to say that 2022 has been quite volatile thus far. The invasion of Ukraine by Russia and resulting economic sanctions, coupled with high inflation and tightening of monetary policy, has created significant volatility in the market. These macro trends have impacted the strong economic momentum we witnessed in 2021, lowering forward growth expectations. During the first quarter, we saw equity markets decline, and credit spreads widened across both investment-grade and high-yield products. In the first quarter, the 2-year and 10-year U.S. treasury yield curve flattened and in early April, briefly inverted. Since then, long-end rates have continued to march higher with 10-year U.S. treasury yields rising more than 50 basis points to 2.9% at the end of April. As noted, we've also seen tighter fiscal and monetary policies in the U.S. and U.K. in the face of rising inflation. In the U.S., our economists anticipate that the Fed will move aggressively to curb inflation with 5 remaining rate hikes expected in 2022 and 3 more expected in 2023. Against this backdrop, we have demonstrated our steadfast commitment to serving our clients during this challenging environment while maintaining robust levels of capital and liquidity, which we will discuss further during this call. Moving to Slide 2. This operating environment has reinforced the importance of our strategy, which is helping us build a more resilient and more diversified franchise. We are building more stable, durable revenues and earnings by growing fee-based revenue streams across asset management and wealth management. We are increasing the diversification of our businesses via more traditional bank activities by offering value-added products and services such as Transaction Banking, which will contribute to a more stable revenue profile over time. We are strengthening our client franchise by enhancing deep and long-standing corporate and institutional relationships. And we are improving our capital efficiency by optimizing capital utilization across the firm and reducing the capital footprint of our asset management investing activities. We are also diversifying our funding profile by increasing the relative proportion of more stable deposits compared to unsecured funding and growing assets in our bank entities that can be funded with these deposits. Turning to Slide 3. Our deep-rooted risk management culture underpins our long-term strategy. This strong risk foundation has been built through years of dedication and focus. There are 3 key elements of our risk management philosophy: our strong risk culture, robust processes and commitment to continuous improvement. Our culture is differentiated by our disciplined risk-reward approach and is reinforced by our deeply experienced talent and consensus-driven decision-making. Our risk management structure includes 3 lines of defense, ensuring accountability for risk-generating activities and employing independent oversight. From a process perspective, we employ extensive scenario analysis and stress testing as well as limit structures and rigorous approvals. This has bolstered by our long-standing mark-to-market discipline, which provides helpful transparency to both our business leaders and risk managers. We remain committed to constant improvement of our processes, incorporating learnings from our experience manning through volatile dynamic environments, and we aim to prepare for new and emerging risks. As mentioned before and as you can see on Slide 4, there are various cross-currents in this environment, including inflation, rising rates, elevated valuations and ongoing market volatility, amongst others. On Slide 5, I'll focus on 2 recent examples of where we have prudently managed risks across a number of dimensions, the Russian-Ukraine war and commodity price volatility. These types of situations are complex and multifaceted from a risk point of view as we need to balance clients' needs with prudent risk management. We have been monitoring and managing our exposure to Russia counterparties and clients throughout the conflict. Even before the recent events, we had taken actions that positioned us prudently for the swift onset of current economic sanctions. We also focused on the directionality of our exposure and our contractual rights preemptively. We managed closeouts of business with sanctioned Russian clients, and we acted quickly to rebalance hedges to mitigate exposure. During the first quarter, we marked down Russia- and Ukraine-related instruments within our equity and debt investments portfolio. Total net losses across the firm were approximately $300 million. Our ability to effectively navigate this major geopolitical event to date demonstrates that our risk processes, including the exemplary communication and coordination of our risk teams and control systems, have worked as intended so far. But we remain vigilant and continue to closely evaluate and monitor second and third order impacts of this war, including nonfinancial risks. Recent commodity price volatility provides another example of our interrelated risk management practices and culture. For a number of years, we have regularly conducted commodity-related stress tests, incorporating a comprehensive range of scenarios that allow us to identify pockets of concentration or where we otherwise have portfolio concerns. As a result, we were able to focus risk management on certain names, regions, subsectors and risk factors. This resulted in tight management of funding limits, escalations and portfolio rebalancing. It's important to emphasize that when these types of market events occur, we take a step back to review how our risk systems performed and look for any opportunities to continuously refine and improve our risk management practices. Moving to Slide 6. This is a good moment to touch upon our approach to managing climate risk as it's an increasingly important topic, one which many of you are interested in. We have begun integrating climate into the firm's broader risk management processes as well as into our credit risk underwriting processes. Climate-related risks can manifest in different ways across our businesses, including through the disruption of operations, impact to the value of our investments and increases to the potential for credit losses in our portfolio. Additionally, we remain focused on reputational risks related to the involvement in certain industries that may come under increased scrutiny. Climate risk is now one of the many types of risks that we identify and classify into our comprehensive inventory of firm-wide risks. We then conduct climate risk stress tests to further quantify the physical and transition risks. We proactively manage and report the material impact of sustainability-related risks to our firm in our environmental and social risk management framework, which can be found on our Task Force on Climate-related Financial Disclosures report on our website. Turning to Slide 7, where I'll cover our lending portfolio. At the end of the first quarter, we had $166 billion of net funded loans. $58 billion or nearly 35% of our book is comprised of corporate lending, which largely includes funded relationship loans and strategic lending activity such as acquisition financing. Over 25% relates to wealth management loans that are highly collateralized, substantially all of which are secured by securities, residential and commercial real estate or other assets. Another 25% relates to residential and commercial real estate loans, largely the clients of our Global Markets business, which is well structured, highly diversified by property type and where substantially all is secured. The remainder is comprised of consumer and auto loans. At quarter end, our allowance for funded loan losses totaled $4.1 billion or 2.7% of total gross loans under accrual accounting with a year-to-date annualized net charge-off rate at 0.4%. Taking a closer look at selected credit exposures. Certain industries remain in focus in light of the recent volatility in commodity prices, including natural resources and utilities. Our total funded exposure to this sector is roughly $5.4 billion. Specifically on Consumer, our credit performance has remained resilient across our unsecured lending products year-to-date. Yet we do expect that inflation, geopolitical events, waning COVID cash surpluses and fiscal tightening could create headwinds for consumers through the remainder of 2022 and into 2023. More broadly for the industry, we have observed a gradual increase in some pockets of delinquencies in the first quarter of this year versus the lows experienced in 2021. To prepare, we are taking a cautious approach to building our portfolio, and we are closely monitoring for any potential weaknesses across all risk dimensions. For example, we closely monitor an extensive set of internal customer performance indicators across our unsecured lending products, including payment rates, usage patterns and delinquencies. Before I turn it over to Philip, I want to conclude by saying that our strong risk management culture remains incredibly important to the firm. We recognize the necessity of proactive risk management and effective mitigation, and we will continue to promote a culture of collaboration and partnership as well as to invest resources to maintain and improve our risk processes going forward. With that, Philip will walk you through the rest of the presentation.

Thank you, Brian. Good morning. Let's turn to Slide 8 on capital. We have managed capital dynamically while supporting our clients during the current environment. We remain committed to maintaining a robust financial position while focusing on improving the capital intensity of our business profile by harvesting on-balance sheet asset management investments and reducing our equity in this segment over time. As Dennis mentioned on our first quarter earnings call, we have line of sight on another roughly $1 billion of incremental private asset sales, corresponding to approximately $750 million of capital reduction. Of note, our GSIB score will increase to 3% in 2023. And due to the significant opportunities to help our clients navigate the current environment, we're currently above the threshold for the 3.5% surcharge, which would go into effect in January of 2024 provided that we remain above that threshold. As it relates to the second quarter to date, we deployed capital to close the NNIP transaction, and we will remain nimble in managing our capital levels. Turning to Slide 9 on liquidity risk management. We have a long track record of prudently managing liquidity risk, and we are continuously refining our methodologies to reflect changes in markets and our business mix and our modeled liquidity outflow, or MLO, for short. Given our MLO is specifically tailored to our business mix and model, it has historically been more binding for the firm than regulatory LCR requirements. In the first quarter of 2022, our GCLA averaged $375 billion, and the firm's eligible high-quality liquid assets, or HQLA, averaged $255 billion. At these levels, we are comfortably above our MLO requirements. We reported an average LCR of 126% for the first quarter, which was up 4 percentage points since the fourth quarter of 2021. However, as you can see on the slide, our LCR has generally declined since the first quarter of 2021 and is more in line with the peer average. This is expected given our business mix is evolving. I want to emphasize that despite this decline, we'll continue to conservatively manage our liquidity requirements. Moving to Slide 10. Since year-end 2019, total firm-wide assets have grown by approximately $600 billion to nearly $1.6 trillion as we've remained close to our clients and helped them navigate the changing markets. Key drivers of this growth include: strong activity in our prime business with solid average client balances at the end of first quarter 2022; broad-based loan growth across all channels; robust repo market activity, which is reflected in higher collateralized agreements; and higher cash and cash equivalents, which bolstered our liquidity pool. We also continue to utilize our bank entities through strategic asset growth and entity organization to leverage our growing deposit base. As of the first quarter, approximately 30% of the firm's assets were in bank entities. This growth has been fueled by our focus on prudent lending and financing activities. And further to this point, over 85% of our held-for-investment loans were booked in our banks as of the first quarter. Let's further discuss our funding profile on Slide 11. Our funding strategy is to have a diversified funding mix across channel, tenor and currency in order to appropriately fund our assets. We will continue to increase the proportion of deposits versus wholesale debt and expect to reduce our cost of funding over time. Since our Investor Day in January 2020, deposits have grown from 43% to 55% of our unsecured funding mix. We expect to continue this trend as we grow deposits across our platforms. On Slide 12, we can see that the majority of this robust deposit growth has been in our strategic channels, including Consumer, Transaction Banking and Private Bank deposits. These channels are expected to be less costly than our central channels over time, and they have a more favorable maturity and stressed outflow characteristics in addition to being more scalable than central channels. We remain confident in our ability to continue growing deposits, and thus, recently raised our targets in 2 of our strategic growth businesses, Consumer and Transaction Banking, to greater than $150 billion and over $100 billion in 2024, respectively. Regarding the stickiness of these deposits, we are pleased with the performance throughout the recent market environment. Though we closely monitor our deposit rates and peer actions relative to the Fed's interest rate decisions, we place more emphasis on our beta through the cycle. Therefore, we see our recent actions as informative but not entirely indicative of our long-term betas. In April, we increased our rate on savings accounts by 10 basis points to 60 basis points for Marcus U.S. As we noted before, we are piloting a checking product with our employees and plan to launch it to our customers later this year. This new capability should help us continue to increase the stickiness of our deposits, driving our deposit betas lower over time. In Transaction Banking, we have been proactive with clients in communicating rate actions and retaining or growing balances. We remain focused on operationalizing our Transaction Banking deposits. Building a history of how our clients use other Transaction Banking products and services such as payments and FX will help us better understand the stickiness of these deposits. We have made great progress in the past year, growing operational and fully insured deposits to over 30% as of the first quarter. Turning to Slide 13. I'll walk you through our unsecured funding, starting with our year-to-date unsecured benchmark issuance. Through the end of April, we have issued approximately $22 billion of unsecured benchmark debt. This debt is diversified across tenor, channel and structure with 15% executed outside of the U.S. dollar market. Given the continued presence of accretive opportunities for deployment to support our clients, we expect our full year 2022 issuance to outpace maturities and redemptions but our net issuance to be significantly lower in 2022 versus last year. We remain dynamic as we navigate the current operating environment and support our client needs. Let's now review some of our additional funding sources, which you can see on the right side of the page. The largest of our non-benchmark unsecured funding source is our global structured notes program, which provides us with diversified funding opportunities across products, issuing entities, regions, currencies and tenors. This program allows us to diversify our investor base and access funding across both the institutional and retail channels. Through April, we raised $25 billion from this program with nearly 1/4 of our issuances in non-U.S. dollar currencies. Moving to Slide 14. Another important source of funding for the firm is our secured channel, which is a valuable source of funding used to support client activity. While our secured funding balances have increased since year-end 2020, they have remained relatively stable since the third quarter of 2021 as we revolve our funding mix towards deposits. Like all our primary funding sources, we consider both diversification and appropriate term when structuring our secured funding portfolio, and we conduct daily stress testing to ensure that we have sufficient liquidity to support client activity that uses secured funding. Turning to Slide 15. In 2019, we 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 2 years, we have reached 40% of that goal or approximately $300 billion as of year-end 2021. And last year, we released our sustainability bond issuance framework, which is aligned with its broader commitment and integrated in the firm's business framework. We made significant progress in 2021 with 6 sustainability issuances totaling approximately $1 billion. Over 90% of the sustainability-linked funding raised has been allocated to new investments and loans across a number of impact themes, including clean energy, communities, financial inclusion and accessible and affordable education, and we will programmatically issue under this framework. With that, let me conclude with a few comments on Slide 16. As we navigate the current macroeconomic uncertainty and geopolitical complexity, we are committed to serving our clients' needs. We place strong emphasis on our risk management practices in order to be dynamic allocators of capital and maintain a highly liquid balance sheet. Our strong financial profile helped drive record full year 2021 results and strong first quarter 2022 results, reflecting the resilience of our client franchise and the dedication of our people. Additionally, it is a testament to the progress we made on our long-term strategic plan to diversify our business mix, deliver the firm to our clients and improve the durability of our results. We will continue towards this path and are confident in the forward momentum of this organization. With that, Brian and I are happy to take your questions.

[Operator Instructions] Your first question comes from the line of Scott Cavanagh with APG.

I just wanted to delve further into the issuance expectations. And I appreciate that Clarity will be lower than last year and greater than the outflow to maturities and redemptions. But there's a significant change within what the elevated issuance of last year and this. And given what's happened with the performance for money centers this year, I think it's front and center for all of us that are trying to kind of gauge what pipeline might be going forward. And I acknowledge the asset growth and the rising interest rates, but could you just narrow down the range of what you're thinking for potential unsecured issuance? Then on the sub debt, could you give us your thoughts on the upcoming 25s if you're going to be thinking about tapping the submarket?

Scott, thanks for the question. I'm going to reiterate what I said on the -- what I said previously in the call and talk to what Dennis said on the first quarter earnings call. So we opportunistically issued $22 billion year-to-date. We used that to prefund maturities and redemptions and also to prefund some of the growth for 2022 and to support client activity. We also -- given the macroeconomic environment, we thought it was a prudent measure to front-load some of those issuances. We still expect the issuance to outpace maturities this year, but the plan is to issue significantly less benchmark versus full year 2021. And then in terms of the second part of your question, I think we will evaluate specific redemptions across a wide range of factors, including market conditions, broader funding profile, liquidity, capital needs, regulatory considerations. And so we do that on a case-by-case basis, and we continue to monitor.

And last one, if I can sneak it in. On the sustainability/green issuance, should we be expecting another issuance of this type before the end of the year?

Yes. So we are considering an issuance of similar size to last year's sustainability benchmark bond. We are actually operationally ready to do that. It could come as early as this quarter, but it really depends on market conditions. And so as I said, we're going to expect to programmatically issue sustainability bonds going forward, and it obviously depends on market conditions.

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

A couple of questions. First, following up on the call that was done post earnings, there's a question about the intermediation business. And in the answer, it was said that a larger proportion of the intermediation business is financing revenue, and that financing revenue is more durable. Could you talk about that in terms of its proportion? And why is it more durable? And as we're going through a market dislocation that we're seeing, what are you doing around that financing business should it grow, should it shrink? That's my first question. My second question is following up on Scott and the large range in terms of the unsecured debt issuance. Can you give us some kind of order of magnitude as to what you're going to be this year versus last year? Because it is quite a wide range, and you're really leaving people guessing here. I understand you have to be responsive to market opportunities, but you're trading at the back of the pack for the money centers. And I'm sure you'd like to see that spread tighten up. And any comments along these lines would be helpful.

Robert, it's Brian. Why don't I try taking the first part of your question there. And so I'll focus on FICC, which although we certainly had strong results in FICC financing, it's still meaningfully smaller relative to the size of our intermediation business within FICC. But as we've been laying out for the last couple of years, it's certainly a core element of our FICC and [ GMD ] growth strategy is to continue to build out and grow those financing income streams. Now to your question about why is it more durable, like many things in certainly my day, it comes back to underwriting and underwriting standards and asset quality. And what you'll see is the sort of the main theme over time of where the opportunity is, particularly within that fixed financing, tends to be across a multitude of different asset classes of providing financing that is indirect. By that, I mean it's loan on loan. So if it happened to be CRE, it's somebody who bought a CRE loan and is then looking for some financing. So our [ India ] look through LTV is actually much lower as a result. And to your point about the current environment, clearly, that's an area where we're incredibly in tune day in and day out to monitor, particularly for new activities. And as we do look at new underwriting opportunities, the key continues to be, is it resilient? Is it consistent with our risk appetite, particularly to the extent that there is any deterioration in the overall economic environment? And as a risk manager, it can be a bit depressing, but I kind of look at it as recession is always coming tomorrow. So we're always underwriting from that perspective. And that doesn't mean when times get tough that you don't take losses. It just means that it's consistent with our risk appetite and our overall strategy and the returns that we're targeting through a cycle, including a downturn. I hope that answered it.

And I'll take the second part of your question. So look, I mean, I'll put some numbers to it. So it's clearly greater -- we expect to raise greater than $24.4 billion, which is what we have this year as redemptions. We've currently issued $22 billion. We expect significantly less than $62 billion. And I would also -- and I'll just kind of give you some numbers because as you think about us growing our deposit base and deposit uses, to give you one statistic, around roughly 88% of our held-for-investment loans are in our bank entities. We continue to expand assets and activities that we do in the bank -- in our bank entities. And so we just hope to issue significantly less than we did last year.

Your next question comes from the line of Keven Maloney with BlackRock.

Could you just talk quickly about the German bank, how it's performing? Because that obviously has been a vehicle to potentially take some pressure off of the issuance of unsecured debt because you can fund, obviously, equity businesses through that institution.

Yes. Thanks for the question. So that's correct. So the GS -- I mean we've integrated GSBE or a subsidiary of the U.S. Bank. It actually -- there's a few things that's very advantageous for us. So the first one, it helps expand our activities in the European Union more broadly, including the launch of our European Transaction Banking business. You're right that it allows a broader set of assets to be in our European bank subsidiary. And so as we grow our footprint in Europe and our footprint of our asset businesses, it should help through time reduce our reliance on unsecured issuance. I also should just say given there's been 2 questions and this alluded to as well, I obviously -- I would love to be able to share more information around kind of specifically what we think we're going to issue. And so hopefully, through time, we can increase that transparency. But I think at this time of the year, given the macroeconomic uncertainty, I think I'll just give that range. But you're correct. So we're very excited about our European subsidiary, and we continue to grow deposits and with that, assets around the globe.

Okay. Great. And another question on deposits. You had a target a few years ago, I think, 45% of funding in deposits, and you're above that now. Is there a new target? Is there a new level that you're thinking of? Or should we also look at that differently than in the past?

Look, we -- it's a great question. So we now -- we put out the number where we currently are, which is roughly 55% of the secure-unsecured funding mix. And so we continue to make great strides on being less dependent on unsecured and increase the percentage of deposits. Obviously, it's not a straight line. I would expect that it really depends on client appetite both in the bank and outside of the bank. But I think that in terms of -- we're a very small part of the U.S. deposit market. We're around 1.6%. So we continue to hope to gain share, put more businesses into the bank. And so through time, we would really expect those numbers to keep going up, but there's no specific target for that.

Your next question comes from the line of Peter Troisi with Barclays.

Just 2 questions for me. The first one is maybe just wondering if, Philip, you or Brian could just provide some perspectives on how you expect quantitative tightening Fed to affect the company. Any material changes that we should expect in terms of the size of the company's balance sheet or your securities portfolio?

So I don't -- so as I said, in terms of deposits, there's clearly a lot of discussion in the markets of how QT and the Fed hikes will impact the overall deposit base. I think there was a small decrease in the last 4 weeks for kind of system-wide deposits. I mean, as I mentioned before, we are a very small player with less than 2%, so we continue to hope to gain share. And even in what will be a potentially slower growth for deposits, if you look back over the past 30 to 50 years, deposits have really shrunk. And so we would expect the growth rate to be slower. For the overall system deposits, we still think given our low market share, we'll be able to continue to expand. And so we don't see, for the time being, a significant impact in terms of our deposit-raising ambitions.

Okay. And then my other question is just on the cost of funding, particularly in the front end. I think we've seen some banks not elect to call TLAC structures 1 year prior to their maturity. And I think this did occur with the Goldman Sachs bond maturing in March of next year. So maybe could you just help us think about how you evaluate the trade-off between losing TLAC credit for security versus keeping the funding in place and if it's just purely a cost decision.

Okay. So I should start to say that we generally have called our notes. You're right to mention the note in Q1 that we did not call. So I think there are both economic and noneconomic factors that go into it. So there's a wide range. It's market conditions, it's the broader funding profile, it's liquidity and capital needs, the regulatory considerations. So we continue to evaluate on a case-by-case basis. We are economic actors when it comes to calling. But I would say, in general, we have generally called most of the notes that we have. I think I'll leave it there. I think that was also specific. That was a fixed to fixed that ended up having a coupon below 50 basis points in what was a much higher rate environment. But I think generally, we will call these. And we can, as I said, continue to evaluate on a case by case both on economic and noneconomic factors.

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

My question is on expected balance sheet and RWA growth. Obviously, 60% balance sheet growth through the pandemic, I think unique to Goldman, I think, has expanded opportunities in prime as well as the initiative to grow lending. But how about going forward, how should we think about some of these activities and kind of the balance sheet growth as well as RWA?

So in terms of balance sheet growth, obviously, it's a function of client demand and our risk appetite in the overall markets. And so as we continue to grow in areas of lending and financing as we grow prime, scale the Consumer business and grow other finance part of the firm, you would expect that part of the firm to grow. In terms of on-balance sheet private equity investments, we continue to reduce there and then drive the firm for a lower capital intensity as we raise more third-party funds. And so yes, I think that kind of answers your question.

Okay. Great. And then switching gears to, I guess, a hybrid. There's a hybrid 4% floor that has been tendered twice. It's trading kind of near that level. But I'm not going to ask you about kind of potentially tendering for that. Can you just kind of talk about the framework for why you would do that type of activity? What is the thought process that goes into it? Is it -- what are your preferred levels? What is your preferred levels as a percentage of RWA? Is it the need to maintain SLR? If you could explain some of that decision-making process, that would be great.

So you mentioned SLR. So for the group, we're currently not -- it's not a binding constraint. And given that it's a very slow-moving ratio with a very large denominator, we don't expect that to be binding in the short term. I mean I'm going to probably just be slightly more general, which is we try to be as efficient as possible when it comes to our capital and our funding structure. And so when it comes to specific redemption or issuance, we kind of evaluate across a wide range of factors: market conditions, broader funding profile, liquidity capital needs, regulatory considerations. So I think we want to be efficient with our capital, and we want to be good shepherds of our capital and our funding structure. And so I think with that in mind, there are lots of things that go into the equation.

Your next question comes from the line of Michael Habib with Capital Group.

Can you talk about how much of the fixed financing business that you do can be shifted to the bank entities versus having to be funded out of the nonbank entities?

Thanks, Michael. I think the fact that where we're growing currently, and Philip can add to this, is primarily within bank entities. There are some structures that don't fit in for an assortment of reasons, but the majority of that growth does fit into our bank entities.

Yes. I think the number that we -- that I mentioned before was roughly 88% of our held-for-investment loans are in our bank entities. So as Brian said, that's the majority of them.

Your next question comes from the line of Mark Kehoe with MacKay Shields.

I wonder whether you could provide any details around the aggregate lending exposure to alternative and private credit vehicles. And how has that exposure changed over the last 3 years, indeed at the kind of the growth in that lending vertical driven term issuance funding? And should we -- because what we're trying to get here is where the bond proceeds are going into and trying to track how we can expect further supply of bonds going forward. So as you grow kind of the alternative lending vehicles, will that kind of engender more growth of term issuance?

Thanks, Mark. Yes. Maybe going back to Slide 7 in the materials that we walked through, you can actually see sort of the breakdown by sort of underlying type of lending activity, where there's the -- that kind of flow in activity is showing up across a handful of lines. Some of it's in corporate, some of it's in commercial, some of it's in residential. As you look back in that disclosure, this disclosure is also in our 10-Qs and our 10-Ks, where you can readily see then the history of it, that's where one of the driving elements of the growth in that portfolio over time is coming through those lines. The -- a lot of our focus is actually on the underlying assets and the asset quality. So that's why we're much more focused from an underwriting perspective rather than the specific nature of the sponsor. Obviously, the sponsor and our relationship with our client matters, but our credit risk is really being driven by the quality of the structure and the quality of the assets and the LTV that we underwrote at. But that is certainly incorporated into mainly those 3 lines across that disclosure.

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 and for your continued support and engagement. In my new role, I will continue to promote transparency and communication. And I look forward to meeting many of you in the coming months, hopefully, in person. 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, and we look forward to speaking with you again.

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