Goldman Sachs’s Schwartz Restrains Optimism, Hintz Says

Harvey M. Schwartz, Goldman Sachs Group Inc.’s new chief financial officer, is muting his optimism about the firm’s prospects in 2013, according to Brad Hintz, an analyst at Sanford C. Bernstein & Co.

“Mr. Schwartz is confident in the firm’s business strategy and competition position, as well as its ability to adapt to regulatory challenges,” Hintz wrote in a research note after a meeting with Schwartz. He “believes it is much too early to forecast the earnings trajectory of the coming year, but he is cautiously optimistic about the 2013 operating environment.”

Goldman Sachs, the fifth-biggest U.S. bank by assets, turned over the CFO job to Schwartz, 48, at the end of January as David A. Viniar, 57, retired after 12 years in the role. Hintz, who rates the stock outperform, wrote in his note that he’s more optimistic about Goldman Sachs than Schwartz.

Schwartz said that investors shouldn’t expect that the leveraged buyout of Dell Inc., announced yesterday, will initiate another boom in mergers and acquisitions, Hintz wrote. The economy and interest rates will determine whether strong activity in debt and equity capital markets so far this year can continue, Schwartz said.

Competitors are cutting their fixed-income trading divisions after over-investing when the market soared in 2009, while Goldman Sachs remains committed, Schwartz said, according to Hintz.

Investing in private equity and debt remains an important business at the firm and “we are very satisfied with the returns from these businesses,” Schwartz said, according to Hintz’s note. The bank’s asset management business “remains a work in progress,” Hintz wrote.

The firm isn’t likely to make a major acquisition, while there is potential for “modest, targeted asset-management and technology purchases,” according to Hintz’s account of Schwartz’s comments. “Any large acquisition would require ‘significant consideration’ given the partnership culture of the firm,” Hintz wrote.