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Goldman (GS) Eyes Expansion of Credit Business in India
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Per a Bloomberg article, The Goldman Sachs Group, Inc. (GS - Free Report) is planning to enhance its credit business in India as the country is one of the fastest-growing economies in the world.
Per International Monetary Fund data, India’s gross domestic product is expected to rise 6.3% for the financial year ending March 2024. Also, earlier this month, India’s union home minister stated that the country would become a $5 trillion economy by the end of 2025.
GS conducts business as a non-banking financial company in India. Per Sonjoy Chatterjee, the chairman and chief executive officer (CEO) for Goldman in India, the bank intends to broaden the range of its loan offerings in the country.
Besides this, Goldman desires to obtain a license to boost its currency trading that would permit it to deal with counterparties like financial investors, equity customers or a corporate customer.
Per Reserve Bank of India (RBI) data, India had seven standalone primary dealers as of Apr 1, 2020. Notably, Goldman Sachs (India) Capital Markets Pvt. Ltd. was part of it. Last year, RBI permitted the standalone primary dealers underwriting primary issuances of government bonds to offer all foreign exchange products to its users.
In regard to this, Chatterjee stated, “We couldn’t trade the currency in India because we are not a bank.” He further added, “So that’s another area we want to scale up.”
Apart from opportunities for credit expansion and currency trading in India, GS believes that the deal-making activity in the country is likely to receive a boost. Particularly, Chatterjee stated that private equity firms are considering deploying a substantial portion of their Asia fund capital in India. Per Chatterjee, “When you have a large Asia fund of $8-$10 billion, India is the most obvious destination.” Hence, the company’s efforts to leverage the growing market is a strategic fit.
Goldman has been eyeing growth opportunities of late. Per an internal memo circulated last week, GS had disclosed changes in its senior executives’ positions as it intends to expand its operations in the private credit space. It further aims to double the size of the business targeting assets worth $110 billion under management over the medium term.
Such growth moves by GS are necessary to support its top-line expansion since the bank has been pulling back from its consumer lending business as it proved to be costlier than expected. Hence, Goldman’s CEO, David Solomon, decided to shift the bank’s focus back to its traditional strengths, which are investment banking and trading.
Accordingly, last month, GS made efforts to offload its General Motors Company (GM - Free Report) credit card program. The firm informed its employees within the Platform Solutions division, who worked on GM cards, that the process of searching for a new issuer would be initiated by GM.
In late November, Goldman also received a proposal from Apple Inc. (AAPL - Free Report) to end the credit card partnership in the next 12-15 months. Per a Reuters article, the proposal from AAPL included retreating from the entire consumer partnership with Goldman. This included both credit card and savings account facilities.
Goldman’s shares have gained 11.3% over the past six months compared with the industry’s 10.5% rise.
Image: Bigstock
Goldman (GS) Eyes Expansion of Credit Business in India
Per a Bloomberg article, The Goldman Sachs Group, Inc. (GS - Free Report) is planning to enhance its credit business in India as the country is one of the fastest-growing economies in the world.
Per International Monetary Fund data, India’s gross domestic product is expected to rise 6.3% for the financial year ending March 2024. Also, earlier this month, India’s union home minister stated that the country would become a $5 trillion economy by the end of 2025.
GS conducts business as a non-banking financial company in India. Per Sonjoy Chatterjee, the chairman and chief executive officer (CEO) for Goldman in India, the bank intends to broaden the range of its loan offerings in the country.
Besides this, Goldman desires to obtain a license to boost its currency trading that would permit it to deal with counterparties like financial investors, equity customers or a corporate customer.
Per Reserve Bank of India (RBI) data, India had seven standalone primary dealers as of Apr 1, 2020. Notably, Goldman Sachs (India) Capital Markets Pvt. Ltd. was part of it. Last year, RBI permitted the standalone primary dealers underwriting primary issuances of government bonds to offer all foreign exchange products to its users.
In regard to this, Chatterjee stated, “We couldn’t trade the currency in India because we are not a bank.” He further added, “So that’s another area we want to scale up.”
Apart from opportunities for credit expansion and currency trading in India, GS believes that the deal-making activity in the country is likely to receive a boost. Particularly, Chatterjee stated that private equity firms are considering deploying a substantial portion of their Asia fund capital in India. Per Chatterjee, “When you have a large Asia fund of $8-$10 billion, India is the most obvious destination.” Hence, the company’s efforts to leverage the growing market is a strategic fit.
Goldman has been eyeing growth opportunities of late. Per an internal memo circulated last week, GS had disclosed changes in its senior executives’ positions as it intends to expand its operations in the private credit space. It further aims to double the size of the business targeting assets worth $110 billion under management over the medium term.
Such growth moves by GS are necessary to support its top-line expansion since the bank has been pulling back from its consumer lending business as it proved to be costlier than expected. Hence, Goldman’s CEO, David Solomon, decided to shift the bank’s focus back to its traditional strengths, which are investment banking and trading.
Accordingly, last month, GS made efforts to offload its General Motors Company (GM - Free Report) credit card program. The firm informed its employees within the Platform Solutions division, who worked on GM cards, that the process of searching for a new issuer would be initiated by GM.
In late November, Goldman also received a proposal from Apple Inc. (AAPL - Free Report) to end the credit card partnership in the next 12-15 months. Per a Reuters article, the proposal from AAPL included retreating from the entire consumer partnership with Goldman. This included both credit card and savings account facilities.
Goldman’s shares have gained 11.3% over the past six months compared with the industry’s 10.5% rise.
Image Source: Zacks Investment Research
GS presently carries a Zacks Rank #3 (Hold). You cansee the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.