EX-99.1 2 d801918dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

 

Third Quarter

 

2019 Earnings

 

Results

 

    Media Relations: Jake Siewert  212-902-5400

    Investor Relations: Heather Kennedy  Miner 212-902-0300    

 

   

 

The Goldman Sachs Group, Inc.              

200 West Street | New York, NY 10282              

 

   

Third Quarter 2019 Earnings Results

Goldman Sachs Reports Third Quarter Earnings Per Common Share of $4.79

 

 

 

“Our results through the third quarter reflect the underlying strength of our global client franchise and its ability to produce solid results in the context of a mixed operating environment. We continue to execute on our strategic priorities, including investing in important  growth opportunities in our existing and new businesses and in delivering for our clients in the most  efficient  and  effective manner possible. We believe that this focus will best position the firm to generate long-term, industry-leading returns for our shareholders.”

 

 

- David M. Solomon, Chairman and Chief Executive Officer     

 

 

 

Financial Summary

 

 

 

     

    

     

  

 

Net Revenues

 

  

 

Net Earnings

 

  

 

EPS

 

 

3Q                     $8.32 billion

 

3Q YTD          $26.59 billion

 

  

 

3Q                    $1.88 billion

 

3Q YTD           $6.55 billion

 

  

 

3Q                              $4.79

 

3Q YTD                    $16.32

 

       

 

Annualized ROE 1

 

    

 

Annualized ROTE  1

 

    

 

Book Value Per Share

 

 

3Q                                  9.0%

 

3Q YTD                        10.4%

 

    

 

3Q                                  9.5%

 

3Q YTD                        11.0%

 

    

 

3Q                            $218.82

 

3Q Growth                    2.2%

 

       

NEW YORK, October 15, 2019 – The Goldman Sachs Group, Inc. (NYSE: GS)  today reported net revenues of $8.32 billion and net earnings of $1.88 billion for the third quarter ended September 30, 2019. Net revenues were $26.59 billion and net earnings were $6.55 billion for the first nine months of 2019.

Diluted  earnings per common share (EPS) was  $4.79  for the third quarter of 2019  compared with $6.28 for the third quarter of 2018 and $5.81 for the second quarter of 2019, and was $16.32 for the first nine months of 2019 compared with $19.21 for the first nine months of 2018.

Annualized return on average common shareholders’ equity (ROE)1 was 9.0% for the third quarter of 2019 and 10.4% for the first nine months of 2019. Annualized return on average  tangible common shareholders’  equity (ROTE)1 was 9.5% for the third quarter of 2019 and 11.0% for the first nine months of 2019.

1      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

Highlights

 

 

 

◾

  

The firm ranked #1 in worldwide announced and completed mergers and acquisitions for the year-to-date2. The firm also ranked  #1  in worldwide equity and equity-related offerings,  common stock offerings  and initial public  offerings for the year- to-date2.

 

 

 

◾

  

Investing & Lending net  revenues included record  quarterly net interest income in debt securities and loans of $891 million.

 

 

 

◾

  

Investment Management net revenues included record quarterly management and other fees of $1.46 billion. Assets under supervision3,4 increased $102 billion5 during the quarter to a record $1.76 trillion.

 

 

 

◾

  

Book value per common share was $218.82, 2.2% higher compared with the end of the second quarter of 2019 and 10.9% higher compared with the end of the third quarter of 2018.

 

 

 

Quarterly Net Revenue Mix by Segment

 

LOGO

   LOGO       

2      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

Net Revenues

 

    

 

Net revenues were $8.32 billion for the third quarter of 2019, 6% lower than the third quarter of 2018 and 12% lower than the second quarter of 2019. The decrease compared with the third quarter of 2018 primarily reflected lower net revenues in Investing & Lending and Investment Banking, partially offset by higher net revenues in Institutional Client Services.

  

  

  

 

Net Revenues

 

   

 

$8.32 billion

 

   
   

 

 

 

  

 

   Investment Banking  

 

  

 

  

 

Net revenues in Investment Banking were $1.69 billion for the third quarter of 2019, 15% lower than the third quarter of 2018 and 9% lower than the second quarter of 2019.

 

Net revenues in Financial Advisory were $716 million, 22% lower compared with a strong third quarter of 2018, reflecting a decrease in completed mergers and acquisitions transactions.

 

Net revenues in Underwriting were $971 million, 9% lower than the third quarter of 2018,  due  to lower  net revenues in equity underwriting, reflecting a significant decline in industry-wide initial public offerings, and in debt underwriting, reflecting a decrease in industry-wide leveraged finance transactions.

 

The firm’s investment banking transaction backlog3 increased compared with the end of the second quarter of 2019.

    

 

Investment Banking

 

   

 

$1.69 billion

 

 

  

  

Financial Advisory

  

$716 million  

   

Underwriting

 

  

$971 million  

 

     
     
     
     
     
     
     
     
     

 

 

 

  

 

   Institutional Client Services  

 

  

 

  

 

Net revenues in Institutional Client Services were $3.29 billion for the third quarter of 2019, 6% higher than the third quarter of 2018 and 5% lower than the second quarter of 2019.

 

Net revenues in Fixed Income, Currency and Commodities (FICC) Client Execution were $1.41 billion, 8% higher than the third quarter of 2018, reflecting higher net revenues in commodities, credit products, mortgages and interest rate products, partially offset by lower net revenues in currencies. During the quarter, FICC Client Execution operated in an environment generally characterized by solid client activity.

 

Net revenues in Equities were $1.88 billion, 5% higher than the third quarter of 2018, primarily due to higher commissions and fees, reflecting increased client activity, and higher net revenues in securities services, reflecting improved spreads. Net revenues in equities client execution were unchanged, reflecting significantly higher net revenues in cash products, offset by significantly lower net revenues in derivatives. During the quarter, Equities operated in an environment generally characterized by lower client activity compared with the second quarter of 2019.

  

  

  

 

Institutional Client Services

 

   

 

$3.29 billion

 

   

FICC

  

$1.41 billion  

   

Equities

 

  

$1.88 billion  

 

     
     
     
     
     
     
     
     
     
     
     
     
     

3      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

      

 

   Investing & Lending  

 

       

 

Net revenues in Investing & Lending were $1.68 billion for the third quarter of 2019, 17%  lower than the third quarter of 2018 and 34% lower than the second quarter of 2019.

 

Net  revenues in equity securities were  $662 million, 40% lower than the third  quarter of 2018, reflecting significantly lower net gains from investments in private equities as well as net losses from investments in public equities.

 

Net revenues in debt securities and loans were $1.02 billion, 10% higher than the third quarter of 2018, driven by significantly higher net interest income. The third quarter of 2019 included net interest income of $891 million.

    

 

Investing & Lending

   

 

$1.68 billion

 

   

Equity Securities

   $662 million  
   

Debt Securities   and Loans

  

$1.02 billion  

 

     
 

  

    
     
     
     

 

      

 

   Investment Management  

 

       

 

Net revenues in Investment Management  were $1.67  billion for the third quarter of 2019,  2% lower than the third quarter of 2018 and  5% higher than the second quarter of 2019.

 

The decrease in net revenues compared with the third quarter of 2018 was due to significantly lower incentive fees. This decrease was partially offset by higher management and other fees (including the impact of the acquisition of United Capital Financial Partners, Inc. (United Capital)), reflecting higher average assets under supervision, partially offset by shifts in the mix of client assets and strategies.

 

During the quarter, total assets under supervision3,4 increased $102 billion to $1.76 trillion. Long-term  assets under supervision increased $85  billion, including net inflows of  $69  billion5, primarily in equity and fixed income  assets, and net  market appreciation of  $16  billion, primarily in  fixed income  assets. Liquidity products increased $17 billion5.

    

 

Investment Management

 

   

 

$1.67 billion

 

   

Management and   Other Fees

   $ 1.46  billion  
   

Incentive Fees

   $  45 million  
   

Transaction   Revenues

   $166  million  
     
     
     
     
     
     

 

 

Provision for Credit Losses

 

Provision for credit losses was $291 million for the third quarter of 2019, 67% higher than the third quarter of 2018 and 36% higher than the second quarter of 2019. The increase  compared  with  the third  quarter of 2018 primarily reflected higher impairments.

       
 

 

Provision for Credit Losses

 

 

 

$291 million

 

 
   

4      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

Operating Expenses

 

 

Operating expenses were $5.62 billion for the third quarter of 2019, essentially unchanged compared with the third quarter of 2018 and 8% lower than the second quarter of 2019. The firm’s efficiency ratio3 for the first nine months of 2019 was 66.2%, compared with 64.2% for the first nine months of 2018.

  

 

  

 

Operating Expenses

 

 

 

$5.62 billion

 

 

 

Operating expenses, compared with the third quarter of 2018, reflected higher expenses for consolidated investments (increase was primarily in depreciation and amortization, occupancy and other expenses) and higher brokerage, clearing, exchange and distribution fees, reflecting an increase in activity levels. In addition, the third quarter of 2019 included higher expenses related to technology and the firm’s credit card activities (increases were primarily in depreciation and amortization, communications and technology, professional fees and other expenses) and also included expenses related to United Capital. These increases were offset by lower compensation and benefits expenses and lower net provisions for litigation and regulatory proceedings.

 

Net provisions for litigation and regulatory proceedings for the third quarter of 2019 were $47 million compared with $136 million for the third quarter of 2018.

 

Headcount increased 6% during the third quarter of 2019, primarily reflecting the timing of campus hires and the acquisition of United Capital.

 

  

 

YTD Efficiency Ratio

 

 

 

66.2%

 

 
 
   
   
   
   
   
   
   
   
   

 

Provision for Taxes

 

 

The effective income tax rate for the first nine months of 2019 increased to 20.7% from 20.1% for the first half of 2019, primarily due to a decrease in the impact of permanent tax benefits in the first nine months of 2019 compared with the first half of 2019.

      

 

YTD Effective Tax Rate

 

   

 

20.7%

 

   

 

 

Other Matters

 

 

◾ On October 14, 2019, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $1.25 per common share to be paid on December 30, 2019 to common shareholders of record on December 2, 2019.

 

◾ During the quarter, the firm returned $1.14 billion of capital to common shareholders, including $673 million of share repurchases (3.1 million shares at an average cost of $217.66) and $466 million of common stock dividends.3

 

◾ Global core liquid assets3 averaged $238 billion4 for the third quarter of 2019, compared with an average of $225 billion for the second quarter of 2019.

      

 

Declared Quarterly

Dividend Per Common Share

 

 

 

$1.25

 

 
 

 

Common Share Repurchases

 

 

 

3.1 million shares

for $673 million

 

   
   

 

Average GCLA

 

   

 

$238 billion

 

5      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.

 

          

 

   Cautionary Note Regarding Forward-Looking Statements  

 

            

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the firm’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the firm’s control. It is possible that the firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For information about some of the risks and important factors that could affect the firm’s future results and financial condition, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2018.

Information regarding the firm’s assets under supervision, capital ratios, risk-weighted assets, supplementary leverage ratio, balance sheet data, global core liquid assets and VaR consists of preliminary estimates. These estimates are forward-looking statements and are subject to change, possibly materially, as the firm completes its financial statements.

Statements about the firm’s investment banking transaction backlog also may constitute forward-looking statements. Such statements are subject to the risk that transactions may be modified or not completed at all and associated net revenues may not be realized or may be materially less than those currently expected. Important factors that could have such a result include, for underwriting transactions, a decline or weakness in general economic conditions, outbreak of hostilities, volatility in the securities markets or an adverse development with respect to the issuer of the securities and, for financial advisory transactions, a decline in the securities markets, an inability to obtain adequate financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval. For information about other important factors that could adversely affect the firm’s investment banking transactions, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

          

 

   Conference Call  

 

             

A conference call to discuss the firm’s financial results, outlook and related matters will be held at 11:00 am (ET). The call will be open to the public. Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (in the U.S.) or 1-706-679-5627 (outside the U.S.). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the firm’s website, www.goldmansachs.com/investor-relations. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the firm’s website or by dialing 1-855-859-2056 (in the U.S.) or 1-404-537- 3406 (outside the U.S.) passcode number 64774224 beginning approximately three hours after the event. Please direct any questions regarding obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at gs-investor- relations@gs.com.

6      

 

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)6

$ in millions

 

     
     THREE MONTHS ENDED            % CHANGE FROM  
       
     SEPTEMBER 30,
2019		    

JUNE 30,

2019

     SEPTEMBER 30,
2018		             

JUNE 30,

2019

     SEPTEMBER 30,
2018		  

 

INVESTMENT BANKING

 

                                          

 

Financial Advisory

     $               716        $             776        $             916          (8) %       (22) %  
                 

Equity underwriting

     385        482        432          (20)           (11)      

 

Debt underwriting

 

    

 

 586 

 

  

 

    

 

 605 

 

  

 

    

 

 632 

 

  

 

      

 

 (3)    

 

  

 

    

 

 (7)    

 

  

 

 

Total Underwriting

 

    

 

 971 

 

  

 

    

 

 1,087 

 

  

 

    

 

 1,064 

 

  

 

      

 

 (11)    

 

  

 

    

 

 (9)    

 

  

 

                 

 

Total Investment Banking

 

    

 

 1,687 

 

  

 

    

 

 1,863 

 

  

 

    

 

 1,980 

 

  

 

      

 

 (9)    

 

  

 

    

 

 (15)    

 

  

 

                 

 

INSTITUTIONAL CLIENT SERVICES

 

                                          

 

FICC Client Execution

     1,410        1,469        1,307          (4)           8       
                 

Equities client execution

     681        772        681          (12)           –       

 

Commissions and fees

     728        777        674          (6)           8       

 

Securities services

 

    

 

 468 

 

  

 

    

 

 458 

 

  

 

    

 

 439 

 

  

 

      

 

 2     

 

  

 

    

 

 7     

 

  

 

 

Total Equities

 

    

 

 1,877 

 

  

 

    

 

 2,007 

 

  

 

    

 

 1,794 

 

  

 

      

 

 (6)    

 

  

 

    

 

 5     

 

  

 

                 

 

Total Institutional Client Services

 

    

 

 3,287 

 

  

 

    

 

 3,476 

 

  

 

    

 

 3,101 

 

  

 

      

 

 (5)    

 

  

 

    

 

 6     

 

  

 

                 

 

INVESTING & LENDING

 

                                          

 

Equity securities

     662        1,541        1,111          (57)           (40)      

 

Debt securities and loans

 

    

 

 1,019 

 

  

 

    

 

 989 

 

  

 

    

 

 924 

 

  

 

      

 

 3     

 

  

 

    

 

 10     

 

  

 

 

Total Investing & Lending

 

    

 

 1,681 

 

  

 

    

 

 2,530 

 

  

 

    

 

 2,035 

 

  

 

      

 

 (34)    

 

  

 

    

 

 (17)    

 

  

 

                 

 

INVESTMENT MANAGEMENT

 

                                          

 

Management and other fees

     1,457        1,395        1,382          4            5       

 

Incentive fees

     45        44        148          2            (70)      

 

Transaction revenues

 

    

 

 166 

 

  

 

    

 

 153 

 

  

 

    

 

 174 

 

  

 

      

 

 8     

 

  

 

    

 

 (5)    

 

  

 

 

Total Investment Management

 

    

 

 1,668 

 

  

 

    

 

 1,592 

 

  

 

    

 

 1,704 

 

  

 

      

 

 5     

 

  

 

    

 

 (2)    

 

  

 

                 

 

Total net revenues

 

    

 

 $             8,323 

 

  

 

    

 

 $          9,461 

 

  

 

    

 

 $            8,820 

 

  

 

      

 

 (12)    

 

  

 

    

 

 (6)    

 

  

 

 

Geographic Net Revenues (unaudited)3,6

 

          

$ in millions

 

            
   
     THREE MONTHS ENDED                       
   
     SEPTEMBER 30,
2019		    

JUNE 30,

2019

     SEPTEMBER 30,
2018		                    

 

Americas

     $            4,941        $          5,652        $            5,351         

 

EMEA

     2,329        2,689        2,254         

 

Asia

 

    

 

 1,053 

 

  

 

    

 

 1,120 

 

  

 

    

 

 1,215 

 

  

 

      

 

Total net revenues

 

    

 

 $            8,323 

 

  

 

    

 

 $          9,461 

 

  

 

    

 

 $            8,820 

 

  

 

      
               

Americas

     59%       60%       61%        

 

EMEA

     28%       28%       25%        

 

Asia

 

    

 

 13%

 

  

 

    

 

 12%

 

  

 

    

 

 14%

 

  

 

      

 

Total

 

    

 

 100%

 

  

 

    

 

 100%

 

  

 

    

 

 100%

 

  

 

      

 

7

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)6

$ in millions

 

     
     NINE MONTHS ENDED           % CHANGE FROM                                   
     
    

SEPTEMBER 30,

2019

    

SEPTEMBER 30,

2018

             

SEPTEMBER 30,

2018

        

 

INVESTMENT BANKING

 

                            

 

Financial Advisory

     $           2,379         $           2,306           3 %    
               

Equity underwriting

     1,138         1,331           (15)        

 

Debt underwriting

 

    

 

 1,843  

 

  

 

    

 

 2,181  

 

  

 

      

 

 (15)    

 

  

 

  

 

Total Underwriting

 

    

 

 2,981  

 

  

 

    

 

 3,512  

 

  

 

      

 

 (15)    

 

  

 

  
               

 

Total Investment Banking

 

    

 

 5,360  

 

  

 

    

 

 5,818  

 

  

 

      

 

 (8)    

 

  

 

  
               

 

INSTITUTIONAL CLIENT SERVICES

 

                            

FICC Client Execution

     4,718         5,060           (7)        
               

Equities client execution

     2,135         2,434           (12)        

 

Commissions and fees

     2,219         2,254           (2)        

 

Securities services

 

    

 

 1,296  

 

  

 

    

 

 1,308  

 

  

 

      

 

 (1)    

 

  

 

  

 

Total Equities

 

    

 

 5,650  

 

  

 

    

 

 5,996  

 

  

 

      

 

 (6)    

 

  

 

  
               

 

Total Institutional Client Services

 

    

 

 10,368  

 

  

 

    

 

 11,056  

 

  

 

      

 

 (6)    

 

  

 

  
               

 

INVESTING & LENDING

 

                            

 

Equity securities

     3,050         3,461           (12)        

 

Debt securities and loans

 

    

 

 2,998  

 

  

 

    

 

 2,883  

 

  

 

      

 

 4     

 

  

 

  

 

Total Investing & Lending

 

    

 

 6,048  

 

  

 

    

 

 6,344  

 

  

 

      

 

 (5)    

 

  

 

  
               

 

INVESTMENT MANAGEMENT

 

                            

 

Management and other fees

     4,184         4,073           3         

 

Incentive fees

     147         677           (78)        

 

Transaction revenues

 

    

 

 484  

 

  

 

    

 

 568  

 

  

 

      

 

 (15)    

 

  

 

  

 

Total Investment Management

 

    

 

 4,815  

 

  

 

    

 

 5,318  

 

  

 

      

 

 (9)    

 

  

 

  
               

 

Total net revenues

 

    

 

 $         26,591  

 

  

 

    

 

 $         28,536  

 

  

 

      

 

 (7)    

 

  

 

  

 

Geographic Net Revenues (unaudited)3,6

$ in millions

 

 

 

        
   
     NINE MONTHS ENDED                    
   
    

SEPTEMBER 30,

2019

    

SEPTEMBER 30,

2018

                    

Americas

     $         15,838         $         17,161          

 

EMEA

     7,477         7,478          

 

Asia

 

    

 

 3,276  

 

  

 

    

 

 3,897  

 

  

 

      

 

Total net revenues

 

    

 

 $         26,591  

 

  

 

    

 

 $         28,536  

 

  

 

      
             

Americas

     60%       60%        

 

EMEA

     28%       26%        

 

Asia

 

    

 

 12%

 

  

 

    

 

 14%

 

  

 

      

 

Total

 

    

 

 100%

 

  

 

    

 

 100%

 

  

 

      

 

8

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)6

In millions, except per share amounts and headcount

 

     
     THREE MONTHS ENDED         % CHANGE FROM           
       
     SEPTEMBER 30,
2019		      JUNE 30, 
2019		     SEPTEMBER 30,
2018		             JUNE 30, 
2019		     SEPTEMBER 30,
2018		        

 

REVENUES

 

                                            

 

Investment banking

     $           1,687       $         1,863       $         1,980           (9) %       (15) %    

 

Investment management

     1,556       1,480       1,580           5            (2)        

 

Commissions and fees

     758       807       704           (6)           8         

 

Market making

     2,384       2,423       2,281           (2)           5         

 

Other principal transactions

 

    

 

 930

 

  

 

    

 

 1,817

 

  

 

    

 

 1,419  

 

  

 

      

 

 (49)    

 

  

 

    

 

 (34)    

 

  

 

  

 

Total non-interest revenues

 

    

 

 7,315

 

  

 

    

 

 8,390

 

  

 

    

 

 7,964  

 

  

 

      

 

 (13)    

 

  

 

    

 

 (8)    

 

  

 

  
                   

Interest income

     5,459       5,760       5,061           (5)           8         

 

Interest expense

 

    

 

 4,451

 

  

 

    

 

 4,689

 

  

 

    

 

 4,205  

 

  

 

      

 

 (5)    

 

  

 

     6         

 

Net interest income

 

    

 

 1,008

 

  

 

    

 

 1,071

 

  

 

    

 

 856  

 

  

 

      

 

 (6)    

 

  

 

  

 

 

 

 

18     

 

 

 

 

  
                   

 

Total net revenues

 

    

 

 8,323

 

  

 

    

 

 9,461

 

  

 

    

 

 8,820  

 

  

 

      

 

 (12)    

 

  

 

    

 

 (6)    

 

  

 

  
                   

 

Provision for credit losses

 

    

 

 291

 

  

 

    

 

 214

 

  

 

    

 

 174  

 

  

 

      

 

 36     

 

  

 

    

 

 67     

 

  

 

  
                   

 

OPERATING EXPENSES

 

                                            

 

Compensation and benefits

     2,731       3,317       3,019           (18)           (10)        

 

Brokerage, clearing, exchange and distribution fees

     853       823       714           4            19         

 

Market development

     169       186       167           (9)           1         

 

Communications and technology

     283       290       250           (2)           13         

 

Depreciation and amortization

     473       399       317           19            49         

 

Occupancy

     252       234       203           8            24         

 

Professional fees

     350       302       310           16            13         

 

Other expenses

 

    

 

 505

 

  

 

    

 

 569

 

  

 

    

 

 588  

 

  

 

      

 

 (11)    

 

  

 

    

 

 (14)    

 

  

 

  

 

Total operating expenses

 

    

 

 5,616

 

  

 

    

 

 6,120

 

  

 

    

 

 5,568  

 

  

 

      

 

 (8)    

 

  

 

    

 

 1     

 

  

 

  
                   

Pre-tax earnings

     2,416       3,127       3,078           (23)           (22)        

 

Provision for taxes

 

    

 

 539

 

  

 

    

 

 706

 

  

 

    

 

 554  

 

  

 

      

 

 (24)    

 

  

 

    

 

 (3)    

 

  

 

  

 

Net earnings

 

    

 

 1,877

 

  

 

    

 

 2,421

 

  

 

    

 

 2,524  

 

  

 

      

 

 (22)    

 

  

 

    

 

 (26)    

 

  

 

  

Preferred stock dividends

 

    

 

 84

 

  

 

    

 

 223

 

  

 

    

 

 71  

 

  

 

      

 

 (62)    

 

  

 

    

 

 18     

 

  

 

  

 

Net earnings applicable to common shareholders

 

    

 

 $           1,793

 

  

 

    

 

 $         2,198

 

  

 

    

 

 $         2,453  

 

  

 

      

 

 (18)    

 

  

 

    

 

 (27)    

 

  

 

  
                   

 

EARNINGS PER COMMON SHARE

 

                                            

 

Basic3

     $             4.83       $           5.86       $           6.35           (18) %       (24) %    

 

Diluted

     $             4.79       $           5.81       $           6.28           (18)           (24)        
                   

 

AVERAGE COMMON SHARES

 

                                            

 

Basic

     370.0       374.5       385.4           (1)           (4)        

 

Diluted

     374.3       378.0       390.5           (1)           (4)        
                   

 

SELECTED DATA AT PERIOD-END

 

                                            

 

Common shareholders’ equity

     $         80,809       $       79,689       $       75,559           1            7         

 

Basic shares3

     369.3       372.2       382.9           (1)           (4)        

 

Book value per common share

     $         218.82       $       214.10       $       197.33           2            11         
                   

Headcount

 

    

 

 37,800

 

  

 

    

 

 35,600

 

  

 

    

 

 36,300  

 

  

 

      

 

 6     

 

  

 

    

 

 4     

 

  

 

  

 

9

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)6

In millions, except per share amounts

 

     
     NINE MONTHS ENDED          % CHANGE FROM            
     
     SEPTEMBER 30,
2019		       SEPTEMBER 30,  
  2018  		            SEPTEMBER 30,
2018		                                                        

 

REVENUES

 

                              

 

Investment banking

     $            5,360       $            5,818           (8) %      

 

Investment management

     4,469       4,947           (10)          

 

Commissions and fees

     2,308       2,361           (2)          

 

Market making

     7,346       8,031           (9)          

 

Other principal transactions

 

    

 

 3,811

 

  

 

    

 

 4,603  

 

  

 

      

 

 (17)    

 

  

 

    

 

Total non-interest revenues

 

    

 

 23,294

 

  

 

    

 

 25,760  

 

  

 

      

 

 (10)    

 

  

 

    
                 

Interest income

     16,816       14,211           18           

 

Interest expense

 

    

 

 13,519

 

  

 

    

 

 11,435  

 

  

 

      

 

 18     

 

  

 

    

 

Net interest income

 

    

 

 3,297

 

  

 

    

 

 2,776  

 

  

 

      

 

 19     

 

  

 

    
                 

 

Total net revenues

 

    

 

 26,591

 

  

 

    

 

 28,536  

 

  

 

      

 

 (7)    

 

  

 

    
                 

 

Provision for credit losses

 

    

 

 729

 

  

 

    

 

 452  

 

  

 

      

 

 61     

 

  

 

    
                 

 

OPERATING EXPENSES

 

                              

 

Compensation and benefits

     9,307       10,471           (11)          

 

Brokerage, clearing, exchange and distribution fees

     2,438       2,370           3           

 

Market development

     539       532           1           

 

Communications and technology

     859       761           13           

 

Depreciation and amortization

     1,240       951           30           

 

Occupancy

     711       594           20           

 

Professional fees

     950       897           6           

 

Other expenses

 

    

 

 1,556

 

  

 

    

 

 1,735  

 

  

 

      

 

 (10)    

 

  

 

    

 

Total operating expenses

 

    

 

 17,600

 

  

 

    

 

 18,311  

 

  

 

      

 

 (4)    

 

  

 

    
                 

Pre-tax earnings

     8,262       9,773           (15)          

 

Provision for taxes

 

    

 

 1,713

 

  

 

    

 

 1,852  

 

  

 

      

 

 (8)    

 

  

 

    

 

Net earnings

 

    

 

 6,549

 

  

 

    

 

 7,921  

 

  

 

      

 

 (17)    

 

  

 

    

 

Preferred stock dividends

 

    

 

 376

 

  

 

    

 

 383  

 

  

 

      

 

 (2)    

 

  

 

    

 

Net earnings applicable to common shareholders

 

    

 

 $            6,173

 

  

 

    

 

 $            7,538  

 

  

 

      

 

 (18)    

 

  

 

    
                 

 

EARNINGS PER COMMON SHARE

 

                              

 

Basic3

     $            16.43       $            19.42           (15) %      

 

Diluted

     $            16.32       $            19.21           (15)          
                 

 

AVERAGE COMMON SHARES

 

                              

 

Basic

     374.7       387.4           (3)          

 

Diluted

 

    

 

 378.2

 

  

 

    

 

 392.3  

 

  

 

      

 

 (4)    

 

  

 

    

 

10

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Financial Condition (unaudited)4

$ in billions

 

   
     AS OF                  
   
     SEPTEMBER 30,
2019		    

JUNE 30,

2019

                                                                              

 

ASSETS

 

                        

 

Cash and cash equivalents

     $                 94         $                 91            

 

Collateralized agreements

     279         276            

 

Receivables

     169         168            

 

Financial instruments owned

     425         371            

 

Other assets

 

    

 

 40  

 

  

 

    

 

 39  

 

  

 

        

 

Total assets

 

    

 

 $            1,007  

 

  

 

    

 

 $               945  

 

  

 

        
               

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

                        

 

Deposits

     $               183         $               166            

 

Collateralized financings

     140         103            

 

Payables

     188         185            

 

Financial instruments sold, but not yet purchased

     116         111            

 

Unsecured short-term borrowings

     52         50            

 

Unsecured long-term borrowings

     217         221            

 

Other liabilities

 

    

 

 19  

 

  

 

    

 

 18  

 

  

 

        

 

Total liabilities

 

    

 

 915  

 

  

 

    

 

 854  

 

  

 

        

 

Shareholders’ equity

 

    

 

 92  

 

  

 

    

 

 91  

 

  

 

        

 

Total liabilities and shareholders’ equity

 

    

 

 $            1,007  

 

  

 

    

 

 $               945  

 

  

 

        

 

Capital Ratios and Supplementary Leverage Ratio (unaudited)3,4

$ in billions

 

 

 

        
   
     AS OF                  
   
     SEPTEMBER 30,
2019		    

JUNE 30,

2019

                  

 

Common equity tier 1 capital

     $              75.7         $              75.6            
               

 

STANDARDIZED CAPITAL RULES

 

                        

 

Risk-weighted assets

     $               557         $               548            

 

Common equity tier 1 capital ratio

     13.6%       13.8%          
               

 

BASEL III ADVANCED CAPITAL RULES

 

                        

 

Risk-weighted assets

     $               566         $               559            

 

Common equity tier 1 capital ratio

     13.4%       13.5%          
               

Supplementary leverage ratio

     6.2%       6.4%          

 

Average Daily VaR (unaudited)3,4

$ in millions

 

 

 

        
   
     THREE MONTHS ENDED                  
   
     SEPTEMBER 30,
2019		    

JUNE 30,

2019

                  

 

RISK CATEGORIES

 

                        

 

Interest rates

     $                 49         $               41            

 

Equity prices

     28         27            

 

Currency rates

     12         10            

 

Commodity prices

     12         12            

 

Diversification effect

 

    

 

 (43) 

 

  

 

    

 

 (38) 

 

  

 

        

 

Total

 

    

 

 $                 58  

 

  

 

    

 

 $                 52  

 

  

 

        

 

11

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Assets Under Supervision (unaudited)3,4

$ in billions

 

   
     AS OF                                                                 
   
     SEPTEMBER 30,
2019		     JUNE 30,
2019		     SEPTEMBER 30,
2018		                    

 

ASSET CLASS

 

                              

 

Alternative investments

 

    

 

 $           182 

 

  

 

    

 

 $           174 

 

  

 

    

 

 $           175 

 

  

 

      

Equity

 

    

 

 392 

 

  

 

    

 

 350 

 

  

 

    

 

 349 

 

  

 

      

Fixed income

 

    

 

 

 784 

 

 

  

 

 

    

 

 

 749 

 

 

  

 

 

    

 

 

 668 

 

 

  

 

 

      

 

Total long-term AUS

 

    

 

 1,358 

 

  

 

    

 

 1,273 

 

  

 

    

 

 1,192 

 

  

 

      

 

Liquidity products

 

    

 

 404 

 

  

 

    

 

 387 

 

  

 

    

 

 358 

 

  

 

      

 

Total AUS

 

    

 

 $        1,762 

 

  

 

    

 

 $        1,660 

 

  

 

    

 

 $        1,550 

 

  

 

      
           
   
     THREE MONTHS ENDED                    
   
     SEPTEMBER 30,
2019		     JUNE 30,
2019		     SEPTEMBER 30,
2018		                    

 

Beginning balance

 

    

 

 $        1,660 

 

  

 

    

 

 $        1,599 

 

  

 

    

 

 $        1,513 

 

  

 

      

Net inflows / (outflows):

 

              

Alternative investments

 

    

 

 8 

 

  

 

    

 

 1 

 

  

 

    

 

 3 

 

  

 

      

Equity

 

    

 

 41 

 

  

 

    

 

 4 

 

  

 

    

 

 7 

 

  

 

      

Fixed income

 

    

 

 20 

 

  

 

    

 

 12 

 

  

 

    

 

 3 

 

  

 

      

 

Total long-term AUS net inflows / (outflows)

 

    

 

 69 

 

  

 

    

 

 17 

 

  

 

    

 

 13 

 

  

 

      

 

Liquidity products

 

    

 

 17 

 

  

 

    

 

 12 

 

  

 

    

 

 8 

 

  

 

      

 

Total AUS net inflows / (outflows)

 

    

 

 86 

 

 5 

 

    

 

 29 

 

 7  

 

    

 

 21 

 

  

 

      

 

Net market appreciation / (depreciation)

 

    

 

 16 

 

  

 

    

 

 32 

 

  

 

    

 

 16 

 

  

 

      

 

Ending balance

 

    

 

 $        1,762 

 

  

 

    

 

 $        1,660 

 

  

 

    

 

 $        1,550 

 

  

 

      

 

12

Goldman Sachs Reports

Third Quarter 2019 Earnings Results

 

 

Footnotes

    

 

  1.

Annualized ROE is calculated by dividing annualized net earnings applicable to common shareholders by average monthly common shareholders’ equity. Annualized ROTE  is  calculated by dividing annualized net earnings applicable to common shareholders by average monthly tangible common shareholders’ equity (tangible common shareholders’ equity is calculated as total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets). Management believes that ROTE is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed internally, and that tangible common shareholders’ equity is meaningful because it is a measure that the firm and investors use to assess capital adequacy. ROTE and tangible common shareholders’ equity are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies.

 

The table below presents average equity and a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity:

 

   
     AVERAGE FOR THE        
   
Unaudited, $ in millions  

 THREE MONTHS ENDED 

SEPTEMBER 30, 2019

      NINE MONTHS ENDED 
SEPTEMBER 30, 2019		         

 

Total shareholders’ equity

 

    

 

 $            91,054 

 

  

 

    

 

 $            90,265 

 

  

 

  

Preferred stock

 

    

 

 (11,203)

 

  

 

    

 

 (11,203)

 

  

 

  

 

Common shareholders’ equity

 

    

 

 79,851 

 

  

 

    

 

 79,062 

 

  

 

  

 

Goodwill and identifiable intangible assets

 

    

 

 (4,704)

 

  

 

    

 

 (4,347)

 

  

 

  

 

Tangible common shareholders’ equity

 

    

 

 $            75,147 

 

  

 

    

 

 $            74,715 

 

  

 

  

 

  2.

Dealogic – January 1, 2019 through September 30, 2019.

 

 

  3.

For information about the following items, see the referenced sections in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the firm’s Quarterly Report on Form 10-Q for the period ended June 30, 2019: (i) investment banking transaction backlog – see “Results of Operations – Investment Banking” (ii) assets under supervision – see  “Results of Operations – Investment Management” (iii) efficiency ratio – see “Results of Operations – Operating Expenses” (iv) share repurchase program – see “Equity Capital Management and Regulatory Capital – Equity Capital Management” (v) global core liquid assets – see “Risk Management – Liquidity Risk Management” (vi) basic shares – see “Balance Sheet and Funding Sources – Balance Sheet Analysis and Metrics” and (vii) VaR – see “Risk Management – Market Risk Management.”

 

For information about the following items, see the referenced sections in Part I, Item 1 “Financial Statements (Unaudited)” in the firm’s Quarterly Report on Form 10-Q for the period ended June 30, 2019: (i) risk-based capital ratios and supplementary leverage ratio – see Note 20 “Regulation and Capital Adequacy” (ii) geographic net revenues – see Note 25 “Business Segments” and (iii)  unvested  share-based  awards that  have  non-forfeitable  rights to dividends or dividend equivalents in calculating basic EPS – see Note 21 “Earnings Per Common Share.”

 

  4.

Represents a preliminary estimate for the third quarter of 2019 and may be revised in the firm’s Quarterly Report on Form 10-Q for the period ended September 30, 2019.

 

 

  5.

Includes $58 billion of inflows in assets under supervision (substantially all in equity and fixed income assets) in connection with the acquisitions of Standard & Poor’s Investment Advisory Services and United Capital Financial Partners, Inc.

 

 

  6.

The following reclassifications have been made to previously reported amounts for the third quarter and first nine months of 2018 to conform to the current presentation: (i) provision for credit losses, previously reported in other principal transactions revenues (and Investing & Lending segment net revenues), is now reported as a separate line item in the consolidated statements of earnings and (ii) headcount consists of the firm’s employees, and excludes consultants and temporary staff previously reported as part of total staff. As a result, expenses related to these consultants and temporary staff, previously reported in compensation and benefits, are now reported in professional fees.

 

 

  7.

Includes $13 billion of inflows in assets under supervision (substantially all in equity and fixed income assets) in connection with the acquisition of Rocaton Investment Advisors.

 

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