ROTE of 16% Against a 15-17% TargetNarrow moat

Goldman Sachs (GS) — moat facet

Goldman's return on tangible equity doubled in two years, but it has cleared its own target in only a few years of the past decade.

For a bank the test of a moat is the return on tangible equity, and Goldman's has risen sharply. Its return on tangible equity was 8.1% in 2023, 13.5% in 2024 and 16.0% in 20251. In the second quarter of 2026 it was 25.5%, and 23.4% for the first half2.

Return on tangible equity (%)5.2%201710.6%201924.3%202111.0%20228.1%202316.0%2025Goldman Sachs Forms 10-K FY2019, FY2022 and FY2025
A volatile record, now at the top of it.

The firm has set its own bar. Its 10-K says: "Our target (through-the-cycle) is to achieve ROE within a range of 14% to 16% and ROTE within a range of 15% to 17%"3. It reached the middle of that range in 2025 and far above it in the first half of 2026.

The history shows why the target is set through the cycle. Return on tangible equity was 5.2% in 2017, 14.1% in 2018, 10.6% in 2019, 11.8% in 2020, 24.3% in 2021 and 11.0% in 202245. Only two of those six years cleared 15%.

The improvement came from three sources: record trading, the exit from consumer lending, and a smaller pile of the firm's own principal investments. Pre-tax earnings rose from $10,739 million in 2023 to $21,852 million in 20256, about double7.

The fourth quarter of 2025 already ran above the range, with return on tangible equity of 17.1% and return on equity of 16.0%8. The committee that set the chief executive's pay cited a 230 basis point improvement in return on equity in 20259.

Tangible common equity was $103,028 million at the end of 2025, against $102,043 million a year earlier10, and tangible book value per share $336.61 in June 202611. The equity base has barely grown; the return on it has.

The return that counts is the one earned through a bad year. The 2025 figure of 16.0%12 clears the 10% cost of equity this app assumes for banks; a year back below 12% would put Goldman where it was in 2019 and 2022.

Moat trajectory: Widening

ROTE 8.1% (2023) to 16.0% (2025); 25.5% in Q2 2026.

The number that tests this moat
Reported
Return on tangible equity, latest quarter
25.5% (Q2 2026) vs 16.0% for 2025

The bank moat test; a full year back below 12% would put Goldman where it was in 2019 and 2022.

Source: Goldman Sachs Q2 2026 earnings presentation ↗
⚠ Threats to the moat
⚠ THREAT 01
A Tax Benefit in the First-Half Return
A tax benefit from share awards added almost two points to Goldman's first-half return.
References
  1. ReportedIts return on tangible equity was 8.1% in 2023, 13.5% in 2024 and 16.0% in 2025.
    Goldman Sachs Form 10-K for fiscal 2025 - financial targets, capital, returns, funding and capital returned. — FY2025 · publ. 25 February 2026 · source ↗
  2. ReportedIn the second quarter of 2026 it was 25.5%, and 23.4% for the first half.
    Goldman Sachs second-quarter 2026 earnings presentation, Form 8-K exhibit 99.2 - ROE, ROTE, efficiency ratio, Dealogic rankings, AUS by channel, alternatives fundraising and wealth figures. — Q2 2026 · publ. 14 July 2026 · source ↗
  3. ReportedIts 10-K says: "Our target (through-the-cycle) is to achieve ROE within a range of 14% to 16% and ROTE within a range of 15% to 17%".
    Goldman Sachs Form 10-K for fiscal 2025 - financial targets, capital, returns, funding and capital returned. — FY2025 · publ. 25 February 2026 · source ↗
  4. ReportedReturn on tangible equity was 5.2% in 2017, 14.1% in 2018, 10.6% in 2019, 11.8% in 2020, 24.3% in 2021 and 11.0% in 2022.
    Goldman Sachs Form 10-K for fiscal 2019 - ROE and ROTE for 2017-2019 and net revenues and net earnings for 2019. — FY2019 · publ. February 2020 · source ↗
  5. ReportedReturn on tangible equity was 5.2% in 2017, 14.1% in 2018, 10.6% in 2019, 11.8% in 2020, 24.3% in 2021 and 11.0% in 2022.
    Goldman Sachs Form 10-K for fiscal 2022 - net revenues, net earnings, ROE and ROTE for 2020-2022, segment results on the basis then used, and the GreenSky and NNIP acquisitions. — FY2022 · publ. February 2023 · source ↗
  6. ReportedPre-tax earnings rose from $10,739 million in 2023 to $21,852 million in 2025, about double.
    Goldman Sachs Form 10-K for fiscal 2025 - consolidated results of operations and financial statements. — FY2025 · publ. 25 February 2026 · source ↗
  7. Moat Explorer calcPre-tax earnings rose from $10,739 million in 2023 to $21,852 million in 2025, about double.
    Moat Explorer calculation from Goldman Sachs' reported figures ($ millions unless stated; calendar years). Growth: net revenues 2025 58,283 / 53,512 - 1 = 8.9%, about 9%; 2022 47,365 / 59,339 - 1 = -20.2%; net earnings 2022 11,261 / 21,635 - 1 = -47.9%, nearly half; pre-tax earnings 21,852 / 10,739 = 2.03 times, about double; compensation 18,906 / 16,706 - 1 = 13.2%; total operating expenses 37,544 / 33,767 - 1 = 11.2%; preferred dividends 876 / 751 - 1 = 16.6%; CEO pay 47 / 39 - 1 = 20.5%; equities 16,535 / 11,549 - 1 = 43.2%; FICC 14,522 / 12,150 - 1 = 19.5%; FICC intermediation 10,271 / 9,318 - 1 = 10.2%; FICC financing 4,251 / 2,832 - 1 = 50.1%; Global Banking & Markets 41,453 / 29,994 - 1 = 38.2%; GBM pre-tax 17,574 / 11,000 - 1 = 59.8%; advisory 4,726 / 3,299 - 1 = 43.3%; underwriting (1,784 + 2,829) / (1,153 + 1,763) = 4,613 / 2,916 - 1 = 58.2%; investment banking fees 9,339 / 6,215 - 1 = 50.3%; 9,339 - 6,215 = 3,124, about $3.1 billion; Q2 2026 pace 3,395 x 4 = 13,580, 13,580 / 9,339 = 1.45; financing 11.45 / 6.03 = 1.90, close to double; intermediation best/worst 19.6 / 15.8 = 1.24; equity underwriting Q2 985 / 428 - 1 = 130%; H1 2026 equities 12,742 / 8,493 - 1 = 50%. Assets under supervision: 4,041 / 3,606 - 1 = 12.1% (six months); 3,606 / 3,137 - 1 = 15.0%; Q2 2026 rise 4,041 - 3,650 = 391 = inflows 230 + appreciation 161; management and other fees 11,538 / 10,415 - 1 = 10.8%; historical principal investments 9.4 - 6.0 = 3.4 billion; alternatives target 750 - 459 = 291 billion, 291 / 4.5 = 64.7, about 65 a year; 291 x 0.58% = 1.69 billion, about 1.7 billion; Shell mandate 40 / 4,041 = 1.0%; AWM ROE 12.5 + 2.3 = 14.8, near 15%. Shares of revenue: GBM 15,520 / 20,338 = 76.3% (Q2 2026), 41,453 / 58,283 = 71.1% (2025), 29,994 / 46,254 = 64.8% (2023); AWM 16,679 / 58,283 = 28.6% (2025), 16,316 / 53,512 = 30.5% (2024), 14,202 / 46,254 = 30.7% (2023), 4,597 / 20,338 = 22.6% (Q2 2026); equities 7,416 / 15,520 = 47.8% of the segment in Q2 2026; advisory 4,726 / 58,283 = 8.1%; GBM pre-tax 17,574 / 21,852 = 80.4%; FICC plus equities 14,522 + 16,535 = 31,057; Q2 2026 financing 1,216 + 3,259 = 4,475; durable revenues 26.3 / 58.283 = 45.1% (2025), 12.2 / 36.546 = 33.4% (2019); GBM assets 1,582,670 / 1,809,320 = 87.5%; brokered and sweep deposits (47 + 34) / 501 = 16.2%; compensation 18,906 / 37,544 = 50.4% of operating expenses; preferred dividends 876 / 17,176 = 5.1% of net earnings; financing against alternatives fees 11.45 / 2.37 = 4.8, about five times. Margins: GBM pre-tax margin 17,574 / 41,453 = 42.4% (2025), 11,000 / 29,994 = 36.7% (2023); AWM 4,127 / 16,679 = 24.7% (2025), 4,865 / 16,316 = 29.8% (2024), 1,763 / 14,202 = 12.4% (2023). Balance sheet and capital: total assets 2,128 / 1,675.972 - 1 = 27.0% (end-2024 to June 2026); equity 121,996 to about 123,000, almost unchanged; deposits 558 / 433 - 1 = 28.9%, about 29%; loans to deposits 261 / 558 = 46.8%, about 47%; JPMorgan deposits 2,559,320 / 501,000 = 5.1 times; CET1 headroom 12.9 - 11.4 = 1.5 points, about 150 basis points; a repeat of the first-half fall 12.9 - (14.3 - 12.9) = 11.5%; basic shares 298.4 / 322.9 - 1 = -7.6%, about 8% fewer; TBVPS 335.49 / 316.02 - 1 = 6.2%; buyback price 935.45 / 984.57 - 1 = -5.0%; first-half ROE 21.7 - 1.7 = 20.0%; Platform Solutions pre-tax losses 783 + 1,047 + 1,989 + 2,175 + 1,075 = 7,069, about $7.1 billion. Valuation: trailing twelve months to June 2026 net revenues 58,283 - 29,645 + 37,565 = 66,203; net earnings 17,176 - 8,461 + 12,258 = 20,973; diluted EPS 51.32 - 25.07 + 38.51 = 64.76; P/E 283,220 / 20,973 = 13.5; P/S 283,220 / 66,203 = 4.28; year-end P/E 263.64 / 17.176 = 15.35 (2025), 179.75 / 14.276 = 12.59 (2024), 125.80 / 8.516 = 14.77 (2023), 128.08 / 21.635 = 5.92 (2021); 52-week high 935.45 / 1,153.99 - 1 = -18.9%, about 19% below; Morgan Stanley gap 308.32 - 283.22 = 25.1 billion; market value on basic shares 298.4 x 935.45 = 279.1 billion. Further: Platform Solutions provisions against revenue (old basis) 1,728 / 1,502 = 115% (2022), 1,135 / 2,378 = 47.7%, about 48% (2023), 1,540 / 2,427 = 63.5%, about 63% (2024); 2021 to 2022 revenue fall 59,339 - 47,365 = 11,974, about $12 billion; Q2 2026 equities less Q1 7,416 - 5,326 = 2,090; AWM revenue 2025 16,679 / 16,316 - 1 = 2.2%; liquidity products 1,065 / 4,041 = 26.4%, about a quarter; AUS year on year 4,041 / 3,293 - 1 = 22.7%, about 23%; alternatives 459 / 2,976 = 15.4% of long-term AUS; private banking and lending H1 2026 638 + 689 = 1,327, x 2 = 2,654, near $2.7 billion; VaR factors before diversification 82 + 65 + 19 + 30 = 196; GBM Q1 2026 12,738 / 17,227 = 73.9%, about 74%; transaction banking and private bank deposits (70 + 101) / 501 = 34.1%, about a third; GBM assets share 87.5%, nearly nine-tenths; EMEA 2025 14,155 / 12,250 - 1 = 15.6%, about 16%; unsecured long-term borrowings 285,500 / 242,634 - 1 = 17.7%, about 18%; JPMorgan deposits 2,559,320 / 2,406,032 - 1 = 6.4%; Goldman deposits 501 / 433 - 1 = 15.7%, about 16%; H1 2026 financing 2,278 + 5,867 = 8,145; Q2 2026 compensation 6,104 / 4,685 - 1 = 30.3%; diluted shares 321.4 / 306.5 - 1 = 4.9%, about 5%; advisory 2025 4,726 / 3,534 - 1 = 33.7%, about 34%; underwriting 2025 (1,784 + 2,829) / (1,677 + 2,521) = 4,613 / 4,198 - 1 = 9.9%, about 10%; debt share of underwriting 2,829 / 4,613 = 61.3%, about three-fifths; wealth channel 1,041 / 862 - 1 = 20.8%, about 21%; CET1 ratio 101,657 / 790,640 = 12.86%; 101,657 / 800,640 = 12.70%, so 10 billion of RWAs costs about 16 basis points; GBM pre-tax Q2 2026 7,499 / 4,075 - 1 = 84.0%; market value 2025 263.64 / 179.75 - 1 = 46.7% - valuation, balance sheet, capital and cost arithmetic. — FY2019-Q2 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Goldman Sachs' Forms 10-K and 10-Q, its earnings releases and presentations, JPMorgan's Form 10-K and market data; operands shown in the source line.
  8. ReportedThe fourth quarter of 2025 already ran above the range, with return on tangible equity of 17.1% and return on equity of 16.0%.
    Goldman Sachs fourth-quarter 2025 earnings presentation and strategy update, Form 8-K exhibit 99.2 - Global Banking & Markets: league tables, wallet share, clients, financing and intermediation. — FY2025 · publ. 15 January 2026 · source ↗
  9. ReportedThe committee that set the chief executive's pay cited a 230 basis point improvement in return on equity in 2025.
    Goldman Sachs Form 8-K - 2025 total annual compensation for David Solomon of $47 million against $39 million for 2024, and the factors the Compensation Committee considered. — January 2026 · publ. 23 January 2026 · source ↗
  10. ReportedTangible common equity was $103,028 million at the end of 2025, against $102,043 million a year earlier, and tangible book value per share $336.61 in June 2026.
    Goldman Sachs Form 10-K for fiscal 2025 - financial targets, capital, returns, funding and capital returned. — FY2025 · publ. 25 February 2026 · source ↗
  11. ReportedTangible common equity was $103,028 million at the end of 2025, against $102,043 million a year earlier, and tangible book value per share $336.61 in June 2026.
    Goldman Sachs second-quarter 2026 earnings presentation, Form 8-K exhibit 99.2 - ROE, ROTE, efficiency ratio, Dealogic rankings, AUS by channel, alternatives fundraising and wealth figures. — Q2 2026 · publ. 14 July 2026 · source ↗
  12. ReportedThe 2025 figure of 16.0% clears the 10% cost of equity this app assumes for banks; a year back below 12% would put Goldman where it was in 2019 and 2022.
    Goldman Sachs Form 10-K for fiscal 2025 - financial targets, capital, returns, funding and capital returned. — FY2025 · publ. 25 February 2026 · source ↗
Sources
Generated September 28, 2026