There's no question 2021 was an extraordinary year. It was challenging for everyone - our clients, our people, our communities. But even in an incredibly dynamic market environment, our people came together, we stayed true to our strategy, we put our clients first and though we still have a lot of work to do, I'm proud of the fact that we delivered exceptional results to our shareholders.
Net revenues were $59.34 billion, net earnings were $21.64 billion and diluted earnings per common share was $59.45 - all records. Return on average common shareholders' equity (ROE) was 23.0 percent, the highest since 2007, and return on average tangible common shareholders' equity (ROTE) 1 was 24.3 percent.
It's true the surge in capital markets activity was a big tailwind. The economy continued to recover from the short but severe recession that marked the pandemic's early days, and the robust growth that followed put enormous pressure on supply chains, leading to levels of inflation not seen in decades. By year end, rate hikes were widely expected and markets entered a new period of uncertainty.
We don't expect 2022 to look like 2021, especially as monetary policy tightens and fiscal policy becomes less supportive. But our confidence is as strong as it's ever been that our strategy is working and that we can help our clients navigate whatever the future holds.
As we move into 2022, I want to thank the people of Goldman Sachs. Their hard work, dedication, creativity and resilience continue to drive our success. Everywhere I go, when I meet with clients, they talk about the caliber and commitment of our people. As many of our teams have returned to our offices around the world, we have had a chance to reconnect and rediscover what makes Goldman Sachs such an extraordinary firm - in particular our exceptional talent and our collaborative culture.
Goldman Sachs 2021 Annual Report
Letter to Shareholders
Progress is by no means a straight line, and we are staying nimble as we continue to bring our people together as much as possible. But we believe it's important that the next generation of Goldman Sachs colleagues - many
of whom are early in their careers - experience our apprenticeship culture firsthand as we work together to serve our clients.
Building on the enormous progress we have made, I look forward to all that we will accomplish together in the year ahead. It is a great privilege to lead this remarkable organization, and I couldn't be more grateful to our leadership team: our president and chief operating officer, John Waldron; our former chief financial officer (CFO), Stephen Scherr; our new CFO, Denis Coleman; and our entire Management Committee.
Unlocking the power of our franchise for our clients is not only driving growth in our core businesses, but also allowing new initiatives to scale and in the years ahead, we will continue to drive returns for our shareholders.
In 2021, all four of our business segments saw revenue growth year over year. Investment Banking generated record net revenues of $14.88 billion and ranked #1 in worldwide announced and completed M&A, equity and equity-related offerings, common stock offerings and IPOs. 2 Global Markets net revenues of $22.08 billion were the highest in 12 years. Asset Management generated record net revenues of $14.92 billion; with $2.5 trillion in firmwide assets under supervision (AUS), we are one of the largest
Our Strategy to Produce Higher, More Consistent Returns
"Unlocking the power of our franchise for our clients is not only driving growth in our core businesses, but also allowing new initiatives to scale…"
active asset managers in the world. And Consumer & Wealth Management generated record net revenues of $7.47 billion, with over $1 trillion in total client assets. 3
We believe book-value growth underpins the long-term value of any large, diversified financial institution and, in last year's somewhat unique operating environment, we were able to grow our book value per common share by
20.4 percent to $284.39. And though some of our businesses are more cyclical than others, we believe we can deliver returns for our shareholders in almost any environment.
In January 2020, we laid out our three-part strategic plan: We were going to 1) grow and strengthen our existing businesses; 2) diversify our products and services; and
Key to our success has been a renewed focus on clients. Through our One Goldman Sachs initiative, we are unlocking the power of our franchise by providing more comprehensive and integrated service while also using our network of clients to support our growth. For instance, over 90 percent of the clients on our Transaction banking platform already had relationships with the firm. Our progress confirms one of our core beliefs: that if you really take care of your clients, if you invest in those relationships and if you build trust over a long period
of time, good things will happen.
2 Goldman Sachs 2021 Annual Report
Confident in our strategy, we recently unveiled an updated set of financial targets. In the medium term, 4 we believe we can achieve an ROE of 14-16 percent and an ROTE
of 15-17 percent. We also reaffirmed our target efficiency ratio of approximately 60 percent. In addition, we announced that our target is to maintain our Common Equity Tier 1 capital ratio equal to the regulatory requirements plus a buffer of 50 to 100 basis points.
In addition to our firmwide targets, we unveiled an updated set of business-level targets tied to our growth strategy. Our new targets are $350 billion in organic, traditional, long-termfee-based AUS net inflows over the period from 2020 to 2024; 5 $225 billion in gross alternatives fundraising over that same period; more than $10 billion in firmwide management and other fees in 2024, including more than $2 billion from alternative AUS; approximately $750 million in net revenues in Transaction banking in 2024; and over $4 billion in net revenues in Consumer banking in 2024.
Our four segments create a very powerful ecosystem, and in 2021 they continued to grow.
We've been #1 in global completed M&A for 22 of the past 23 years and, in 2021, we were once again the advisor of choice. Net revenues were 58 percent higher than in 2020, driven by record net revenues in both Financial advisory and Underwriting. Corporate lending net revenues were significantly higher as well. In the past two years, we've grown our wallet share by approximately 350 basis
points 6 and we still see ample room for growth: Our backlog was already high, but during 2021, it grew even more, putting us in a strong position for 2022.
Although market volatility declined in 2021, our clients continued to rely on us for risk management, financial intermediation and, increasingly, financing. Net revenues grew by 4 percent to $22.08 billion. In Fixed Income, Currency and Commodities (FICC), net revenues declined, but in Equities they grew by 20 percent. Since 2019, we've grown wallet share by approximately 250 basis points. 7 We're in the top 3 with 72 of the 100 top institutional clients, up from 51 just two years ago. 8 We also ended the year with record average balances in our prime services business.
Net revenues grew by 87 percent, fueled by significantly higher net revenues in Equity investments and Lending and debt investments. Incentive fees rose, and Management and other fees were a record, reflecting higher average AUS. Growing these durable fees is an area of strategic focus. And in August 2021, we announced that we would acquire leading European asset manager NN Investment Partners (NNIP) in early 2022. NNIP's world-class ESG capabilities and strong footprint in Europe will help
us further strengthen what is already one of the leading asset management businesses in the world.
Consumer & Wealth Management
We continue to empower our millions of clients and customers around the world to reach their financial goals. In 2021, net revenues grew by 25 percent to $7.47 billion. Net revenues in Wealth Management grew by 25 percent
Medium-Term 4 Firmwide Targets
Return on Equity
Return on Tangible Equity