EX-99.1 2 d53148dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

 

Second Quarter 2020 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              

 

   

Second Quarter 2020 Earnings Results

Goldman Sachs Reports Second Quarter Earnings Per Common Share of $6.26

 

 

“This quarter demonstrated the continued dedication of the people of Goldman Sachs to helping our clients navigate a very challenging environment, while working remotely or returning to offices that are quite different than the ones we left earlier in the year. We also continue to be grateful for those working hard to contain the pandemic and limit its human and economic costs.

 

Our strong financial performance across our client franchises demonstrates the inherent benefits of our diversified business model. The turbulence we have seen in recent months only reinforces our commitment to the strategy we outlined earlier this year to investors. While the economic outlook remains uncertain, I am confident that we will continue to be the firm of choice for clients around the world who are looking to reshape their businesses and rebuild a more resilient economy.”

 

 

- David M. Solomon, Chairman and Chief Executive Officer     

 

 

 

Financial Summary

 

 

 

     

    

     

  

 

Net Revenues

 

  

 

Net Earnings

 

  

 

EPS

 

 

2Q                   $13.30 billion

 

2Q YTD          $22.04 billion

 

  

 

2Q                     $2.42 billion

 

2Q YTD            $3.64 billion

 

  

 

2Q                               $6.26

 

2Q YTD                       $9.36

 

 

    

        

 

Annualized ROE 1

 

    

 

Annualized ROTE  1

 

    

 

Book Value Per Share

 

 

2Q                                11.1%

 

2Q YTD                          8.4%

 

    

 

2Q                                11.8%

 

2Q YTD                          9.0%

 

    

 

2Q                            $227.31

 

YTD Growth                4.0%

 

       

NEW YORK, July 15, 2020 – The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $13.30 billion and net earnings of $2.42 billion for the second quarter ended June 30, 2020. Net revenues were $22.04 billion and net earnings were $3.64 billion for the first half of 2020.

Diluted earnings per common share (EPS) was $6.26 for the second quarter of 2020 compared with $5.81 for the second quarter of 2019 and $3.11 for the first quarter of 2020, and was $9.36 for the first half of 2020 compared with $11.52 for the first half of 2019.

Annualized return on average common shareholders’ equity (ROE)1 was 11.1% for the second quarter of 2020 and 8.4% for the first half of 2020. Annualized return on average tangible common shareholders’ equity (ROTE)1 was 11.8% for the second quarter of 2020 and 9.0% for the first half of 2020.

During the second quarter of 2020, the firm recorded net provisions for litigation and regulatory proceedings of $945 million, which increased net provisions to $1.13 billion for the first half of 2020. These amounts reduced diluted EPS by $2.60 and annualized ROE by 4.5 percentage points in the second quarter of 2020 and reduced diluted EPS by $3.15 and annualized ROE by 2.8 percentage points in the first half of 2020.

1      

 

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

 

Highlights

 

 

  ◾  

Net revenues of $13.30 billion, 41% higher than the second quarter of 2019, were the firm’s second highest quarterly net revenues.

 

 

  ◾  

Investment Banking  generated record quarterly net revenues of $2.66 billion,  including record  quarterly net revenues in both Equity and Debt underwriting. The firm remained ranked #1 in worldwide announced and completed mergers and acquisitions for the year-to-date.2 The firm also ranked #1 in worldwide equity and equity-related offerings for the year-to-date.2

 

 

  ◾  

Fixed Income, Currency and Commodities (FICC) generated quarterly net revenues of $4.24 billion, its highest quarterly performance in nine years, reflecting continued strong client activity in intermediation and financing.

 

 

  ◾  

Equities generated quarterly net revenues of $2.94 billion, its highest quarterly performance in eleven years, reflecting strong performance in intermediation.

 

 

  ◾  

Firmwide assets under supervision3,4 increased $239 billion during the quarter to a record $2.06 trillion.

 

 

  ◾  

The firm continued to scale the digital consumer deposit platforms, as consumer deposits increased by a record $20 billion in the second quarter of 2020 to $92 billion4.

 

 

  ◾  

The firm formally launched its transaction banking business in the U.S., offering deposit-taking, payments, liquidity management, and escrow services. During the quarter, deposits on the platform increased by $16 billion to $25 billion4.

 

 

  ◾  

The firm’s Standardized common equity tier 1 capital ratio3 increased 110 basis points during the quarter to 13.6%4.

 

 

  ◾  

The firm maintained a highly liquid balance sheet, as global core liquid assets3 averaged $290 billion4 for the second quarter of 2020.

 

 

 

Quarterly Net Revenue Mix by Segment

 

LOGO

   LOGO       

2      

 

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

 

Net Revenues

 

    

 

Net revenues were $13.30 billion for the second quarter of 2020, 41% higher than the second quarter of 2019 and 52% higher than the first quarter of 2020. The increase compared with the second quarter of 2019 reflected significantly higher net revenues in Global Markets and Investment Banking and higher net revenues in Consumer & Wealth Management, partially offset by lower net revenues in Asset Management.

 

The operating environment during the quarter continued to be impacted by the COVID-19 pandemic, resulting in a deceleration in global economic activity and elevated market volatility. Economic indicators generally improved as the quarter progressed, following significant declines in March and April, as economies began to reopen and central banks, along with governments, continued to implement monetary easing measures and provide fiscal stimulus to support the economy. These contributed to higher global equity prices and tighter credit spreads compared with the end of the first quarter of 2020.

  

  

  

 

Net Revenues

 

   

 

$13.30 billion

 

   
   
   
   
   
   
   
   
   
   
   
   

 

 

 

  

 

   Investment Banking  

 

  

 

  

 

Net revenues in Investment Banking were $2.66 billion for the second quarter of 2020, 36% higher than the second quarter of 2019 and 22% higher than the first quarter of 2020. The increase compared with the second quarter of 2019 reflected significantly higher net revenues in Underwriting, partially offset by a net loss in Corporate lending and lower net revenues in Financial advisory.

 

The increase in Underwriting net revenues was due to significantly higher net revenues in both Equity and Debt underwriting, reflecting a significant increase in industry-wide volumes. The net loss in Corporate lending reflected the impact of changes in credit spreads on hedges related to relationship lending activities. The decrease in Financial advisory net revenues reflected a decrease in industry-wide completed mergers and acquisitions transactions.

 

The firm’s investment banking transaction backlog3 decreased significantly compared with the end of the first quarter of 2020.

    

 

Investment Banking

 

   

 

$2.66 billion

 

 

  

  

Financial Advisory

  

$686 million  

   

Underwriting

  

$2.05 billion  

   

Corporate Lending  

 

  

$(76) million  

 

     
     
     
     
     
     
     
     

 

 

 

  

 

   Global Markets  

 

  

 

  

 

Net revenues in Global Markets were $7.18 billion for the second quarter of 2020, 93% higher than the second quarter of 2019 and 39% higher than the first quarter of 2020.

 

Net revenues in FICC were $4.24 billion, compared with $1.70 billion in the second quarter of 2019. Net revenues in FICC intermediation were significantly higher, reflecting significantly higher net revenues across all major businesses, particularly in interest rate products, credit products and commodities. In addition, net revenues in FICC financing were significantly higher, primarily driven by repurchase agreements.

 

Net revenues in Equities were $2.94 billion, 46% higher than the second quarter of 2019, due to significantly higher net revenues in Equities intermediation, reflecting significantly higher net revenues in both cash products and derivatives, partially offset by lower net revenues in Equities financing, reflecting lower average customer balances, tighter spreads and a decrease in dividends.

  

  

  

 

Global Markets

 

   

 

$7.18 billion

 

   

FICC Intermediation

  

$3.79 billion  

   

FICC Financing

  

$499 million  

   

FICC

  

$4.24 billion  

       
   

Equities   Intermediation

  

$2.20 billion  

   

Equities Financing

  

$742 million  

   

Equities

 

  

$2.94 billion  

 

     
     
     
     
     
     

3      

 

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

 

      

 

   Asset Management  

 

       

 

Net revenues in Asset Management were $2.10 billion for the second quarter of 2020, compared with $2.55 billion for the second quarter of 2019 and $(96) million for the first quarter of 2020. The decrease compared with the second quarter of 2019 reflected significantly lower net revenues in Equity investments, partially offset by significantly higher net revenues in Lending and debt investments and slightly higher Management and other fees  from the  firm’s  institutional  and  third-party  distribution asset management clients. Incentive fees were essentially unchanged.

 

The decrease in Equity investments net revenues reflected significantly lower net gains from investments in private equities, partially offset by significantly higher net gains from investments in public equities. The increase in Lending and debt investments net revenues reflected significantly higher net gains as corporate credit spreads tightened during the quarter. The increase in Management and other fees reflected the impact of higher average assets under supervision, partially offset by a lower average effective fee due to shifts in the mix of client assets and strategies.

    

 

Asset Management

   

 

$2.10 billion

 

   

Management and

    
   

  Other Fees

   $684 million  
   

Incentive Fees

   $34 million  
   

Equity Investments

   $924 million  
 

  

  

Lending and Debt

  Investments

  

$459 million  

 

     
     
     
     
     
     

 

      

 

   Consumer & Wealth Management  

 

       

 

Net revenues in Consumer & Wealth Management were $1.36 billion for the second quarter  of 2020, 9%  higher than the  second quarter of 2019  and 9%   lower  than  the first quarter of 2020.

 

Net revenues in Wealth management were $1.10 billion, 7% higher than the second quarter of 2019, due to higher Management and other fees (including the impact of the consolidation of GS Personal Financial Management5), primarily reflecting higher average assets under supervision and higher transaction volumes. Net revenues in Private banking and lending were lower, primarily reflecting lower interest rates, and Incentive fees were essentially unchanged.

 

Net revenues in Consumer banking were $258 million, 19% higher than the second quarter of 2019, as the second quarter of 2020 included credit card loans.

    

 

Consumer &

Wealth Management

 

   

 

$1.36 billion

 

   

Wealth Management

   $ 1.10  billion  
   

Consumer Banking

   $258  million  
     
     
     
     
     
     
     
     

 

 

Provision for Credit Losses

 

Provision for credit losses was $1.59 billion for the second quarter of 2020, compared with $214 million for the second quarter of 2019 and $937 million for the first quarter of 2020. The increase compared with the second quarter of 2019 was primarily due to significantly higher provisions related to wholesale loans and, to a lesser extent, consumer loans, reflecting revisions to forecasts of expected deterioration in the broader economic environment (incorporating the accounting for credit losses under the Current Expected Credit Losses standard6). In addition, the increase in provisions related to wholesale loans reflected the impact of individual impairments during the quarter.

 

The firm’s allowance for credit losses was $4.39 billion as of June 30, 2020.

       
   

 

Provision for Credit Losses

 

   

 

$1.59 billion

 

   
   
   
   
   
   
   
   
   
   
   

4      

 

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

 

Operating Expenses

 

 

Operating expenses were $8.40 billion for the second quarter of 2020, 37% higher than the second quarter of 2019 and 30% higher than the first quarter of 2020. The firm’s efficiency ratio3 for the first half of 2020 was 67.4%, compared with 65.6% for the first half of 2019.

  

 

  

 

Operating Expenses

 

 

 

$8.40 billion

 

 

 

The increase in operating expenses compared with the second quarter of 2019 was primarily due to significantly higher compensation and benefits expenses (reflecting significantly higher net revenues) and significantly higher net provisions for litigation and regulatory proceedings. In addition, brokerage, clearing, exchange and distribution fees were higher (reflecting an increase in activity levels) and expenses related to consolidated investments, including impairments, were higher (increase was primarily in depreciation and amortization and occupancy expenses). The second quarter of 2020 also included higher technology expenses, higher expenses related to the firm’s credit card activities and the impact of the consolidation of GS Personal Financial Management5. These increases were partially offset by lower travel and entertainment expenses (included in market development expenses).

 

Net provisions for litigation and regulatory proceedings for the second quarter of 2020 were $945 million compared with $66 million for the second quarter of 2019.

 

Headcount increased 2% compared with the end of the first quarter of 2020.

 

  

 

YTD Efficiency Ratio

 

 

 

67.4%

 

 
 
   
   
   
   
   
   
   
   
   

 

Provision for Taxes

 

 

The effective income tax rate for the first half of 2020 increased to 21.9% from 10.0% for the first quarter of 2020, primarily due to a decrease in the impact of permanent tax benefits and an increase in provisions for non-deductible litigation in the first half of 2020 compared with the first quarter of 2020.

      

 

YTD Effective Tax Rate

 

   

 

21.9%

 

   

 

 

Other Matters

 

 

◾ On July 14, 2020, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $1.25 per common share to be paid on September 29, 2020 to common shareholders of record on September 1, 2020.

 

◾ During the quarter, the firm returned $450 million of capital in common stock dividends.3

 

◾ Global core liquid assets3 averaged $290 billion4 for the second quarter of 2020, compared with an average of $243 billion for the first quarter of 2020.

      

 

Declared Quarterly

Dividend Per Common Share

 

 

 

$1.25

 

 
 

 

Common Stock Dividends

 

 

 

$450 million

 

   
   

 

Average GCLA

 

   

 

$290 billion

 

5      

 

Goldman Sachs Reports

Second Quarter 2020 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, financial condition and liquidity may differ, possibly materially, from the anticipated results, financial condition and liquidity indicated in these forward-looking statements. For information about some of the risks and important factors that could affect the firm’s future results, financial condition and liquidity, see “Risk Factors” in Part II, Item 1A of the firm’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 and in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2019.

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, an 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 II, Item 1A of the firm’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 and in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2019.

Statements about the effects of the COVID-19 pandemic on the firm’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected.

 

          

 

   Conference Call  

 

             

A conference call to discuss the firm’s financial results, outlook and related matters will be held at 9:30 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

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)

$ in millions

 

     
     THREE MONTHS ENDED           % CHANGE FROM  
         
    

JUNE 30,

2020

    

MARCH 31,

2020

    

JUNE 30,

2019

             

MARCH 31,

2020

    

JUNE 30,

2019

  

 

INVESTMENT BANKING

 

                                          

 

Financial advisory

     $             686          $           781          $                771                               (12) %                           (11) %  
                 

Equity underwriting

     1,057          378          476           180            122       

Debt underwriting

 

    

 

 990   

 

  

 

    

 

 583   

 

  

 

    

 

 514  

 

  

 

      

 

 70     

 

  

 

    

 

 93     

 

  

 

Underwriting

     2,047          961          990           113            107       
                 

Corporate lending

 

    

 

 (76)  

 

  

 

    

 

 442   

 

  

 

    

 

 187  

 

  

 

      

 

 N.M.     

 

  

 

    

 

 N.M.     

 

  

 

 

Net revenues

 

    

 

 2,657   

 

  

 

    

 

 2,184   

 

  

 

    

 

 1,948  

 

  

 

      

 

 22     

 

  

 

    

 

 36     

 

  

 

                 

 

GLOBAL MARKETS

 

                                          

 

FICC intermediation

     3,786          2,537          1,440           49            163       

FICC financing

 

    

 

 449   

 

  

 

    

 

 432   

 

  

 

    

 

 262  

 

  

 

      

 

 4     

 

  

 

    

 

 71     

 

  

 

FICC

     4,235          2,969          1,702           43            149       
                 

Equities intermediation

     2,199          1,528          1,154           44            91       

 

Equities financing

    

 

 742   

 

  

 

    

 

 666   

 

  

 

    

 

 860  

 

  

 

      

 

 11     

 

  

 

    

 

 (14)    

 

  

 

 

Equities

 

    

 

 2,941   

 

  

 

    

 

 2,194   

 

  

 

    

 

 2,014  

 

  

 

      

 

 34     

 

  

 

    

 

 46     

 

  

 

Net revenues

 

    

 

 7,176   

 

  

 

    

 

 5,163   

 

  

 

    

 

 3,716  

 

  

 

      

 

 39     

 

  

 

    

 

 93     

 

  

 

                 

 

ASSET MANAGEMENT

 

                                          

 

Management and other fees

     684          640          667           7            3       

 

Incentive fees

 

     34          154          31           (78)           10       

Equity investments

     924          (22)         1,499           N.M.           (38)      

 

Lending and debt investments

 

    

 

 459   

 

  

 

    

 

 (868)  

 

  

 

    

 

 351  

 

  

 

      

 

 N.M.    

 

  

 

    

 

 31     

 

  

 

Net revenues

 

    

 

 2,101   

 

  

 

    

 

 (96)  

 

  

 

    

 

 2,548  

 

  

 

      

 

 N.M.    

 

  

 

    

 

 (18)    

 

  

 

                 

 

CONSUMER & WEALTH MANAGEMENT

 

                                          

 

Management and other fees

     938          959          833           (2)           13       

 

Incentive fees

     10          69          13           (86)           (23)      

 

Private banking and lending

 

    

 

 155   

 

  

 

    

 

 182   

 

  

 

    

 

 187  

 

  

 

      

 

 (15)    

 

  

 

    

 

 (17)    

 

  

 

Wealth management

     1,103          1,210          1,033           (9)           7       
                 

Consumer banking

 

    

 

 258   

 

  

 

    

 

 282   

 

  

 

    

 

 216  

 

  

 

      

 

 (9)    

 

  

 

    

 

 19     

 

  

 

Net revenues

 

    

 

 1,361   

 

  

 

    

 

 1,492   

 

  

 

    

 

 1,249  

 

  

 

      

 

 (9)    

 

  

 

    

 

 9     

 

  

 

                 

 

Total net revenues

 

    

 

 $        13,295   

 

  

 

    

 

 $        8,743   

 

  

 

    

 

 $            9,461  

 

  

 

      

 

 52    

 

  

 

    

 

 41     

 

  

 

 

Geographic Net Revenues (unaudited)3

 

          
$ in millions            
   
     THREE MONTHS ENDED                    
     
    

JUNE 30,

2020

    

MARCH 31,

2020

    

JUNE 30,

2019

                       

 

Americas

     $          8,289          $        5,171          $            5,652          

 

EMEA

     3,453          2,108          2,689          

 

Asia

 

    

 

 1,553   

 

  

 

    

 

 1,464   

 

  

 

    

 

 1,120  

 

  

 

      

Total net revenues

 

    

 

 $        13,295   

 

  

 

    

 

 $        8,743   

 

  

 

    

 

 $            9,461  

 

  

 

      
               

Americas

     62%        59%        60%        

 

EMEA

     26%        24%        28%        

 

Asia

 

    

 

 12% 

 

  

 

    

 

 17% 

 

  

 

    

 

 12%

 

  

 

      

Total

 

    

 

 100% 

 

  

 

    

 

 100% 

 

  

 

    

 

 100%

 

  

 

      

 

7

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)

$ in millions

 

     
     SIX MONTHS ENDED         % CHANGE FROM                                 
     
    

JUNE 30,

2020

    

JUNE 30,

2019

           

JUNE 30,

2019

      

 

INVESTMENT BANKING

 

                            

 

Financial advisory

     $           1,467          $           1,645           (11) %    
               

Equity underwriting

     1,435          738           94         

 

Debt underwriting

     1,573          996           58         

 

Underwriting

     3,008          1,734           73         
               

 

Corporate lending

 

    

 

 366   

 

  

 

    

 

 315  

 

  

 

      

 

 16     

 

  

 

  

 

Net revenues

 

    

 

 4,841   

 

  

 

    

 

 3,694  

 

  

 

      

 

 31     

 

  

 

  
               

 

GLOBAL MARKETS

 

                            

FICC intermediation

     6,323          3,312           91         

 

FICC financing

     881          628           40         

 

FICC

     7,204          3,940           83         
               

Equities intermediation

     3,727          2,315           61         

 

Equities financing

     1,408          1,501           (6)        

 

Equities

 

    

 

 5,135   

 

  

 

    

 

 3,816  

 

  

 

      

 

 35     

 

  

 

  

 

Net revenues

 

    

 

 12,339   

 

  

 

    

 

 7,756  

 

  

 

      

 

 59     

 

  

 

  
               

 

ASSET MANAGEMENT

 

                            

 

Management and other fees

     1,324          1,274           4         

 

Incentive fees

     188          61           N.M.        

 

Equity investments

     902          2,304           (61)        

 

Lending and debt investments

 

    

 

 (409)  

 

  

 

    

 

 702  

 

  

 

      

 

 N.M.    

 

  

 

  

 

Net revenues

 

    

 

 2,005   

 

  

 

    

 

 4,341  

 

  

 

      

 

 (54)    

 

  

 

  
               

 

CONSUMER & WEALTH MANAGEMENT

 

                            

 

Management and other fees

     1,897          1,627           17         

 

Incentive fees

     79          41           93         

 

Private banking and lending

     337          390           (14)        

 

Wealth management

     2,313          2,058           12         
               

Consumer banking

 

    

 

 540   

 

  

 

    

 

 419  

 

  

 

      

 

 29     

 

  

 

  

 

Net revenues

 

    

 

 2,853   

 

  

 

    

 

 2,477  

 

  

 

      

 

 15     

 

  

 

  
               

 

Total net revenues

 

    

 

 $         22,038   

 

  

 

    

 

 $         18,268  

 

  

 

      

 

 21     

 

  

 

  

 

Geographic Net Revenues (unaudited)3

$ in millions

 

 

 

        
   
     SIX MONTHS ENDED                
   
    

JUNE 30,

2020

    

JUNE 30,

2019

                

Americas

     $         13,460          $         10,897          

 

EMEA

     5,561          5,148          

 

Asia

 

    

 

 3,017   

 

  

 

    

 

 2,223  

 

  

 

      

 

Total net revenues

 

    

 

 $         22,038   

 

  

 

    

 

 $         18,268  

 

  

 

      
             

Americas

     61%        60%        

 

EMEA

     25%        28%        

 

Asia

 

    

 

 14% 

 

  

 

    

 

 12%

 

  

 

      

 

Total

 

    

 

 100% 

 

  

 

    

 

 100%

 

  

 

      

 

8

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)

In millions, except per share amounts and headcount

 

     
     THREE MONTHS ENDED          % CHANGE FROM           
       
     JUNE 30,
2020		           MARCH 31,     
2020		          JUNE 30,    
2019		                  MARCH 31,     
2020		          JUNE 30,    
2019		        

 

REVENUES

 

                                                

 

Investment banking

     $           2,733        $         1,742         $         1,761            57  %        55  %    

 

Investment management

     1,635        1,768         1,520            (8)            8         

 

Commissions and fees

     875        1,020         808            (14)            8         

 

Market making

     5,787        3,682         2,479            57             133         

 

Other principal transactions

 

    

 

 1,321

 

  

 

     

 

 (782)

 

  

 

     

 

 1,822  

 

  

 

       

 

 N.M.    

 

  

 

     

 

 (27)    

 

  

 

  

 

Total non-interest revenues

 

    

 

 12,351

 

  

 

     

 

 7,430 

 

  

 

     

 

 8,390  

 

  

 

       

 

 66     

 

  

 

     

 

 47     

 

  

 

  
                       

Interest income

     3,034        4,750         5,760            (36)            (47)        

 

Interest expense

 

    

 

 2,090

 

  

 

     

 

 3,437 

 

  

 

     

 

 4,689  

 

  

 

       

 

 (39)    

 

  

 

      (55)        

 

Net interest income

 

    

 

 944

 

  

 

     

 

 1,313 

 

  

 

     

 

 1,071  

 

  

 

       

 

 (28)    

 

  

 

   

 

 

 

 

(12)    

 

 

 

 

  
                       

 

Total net revenues

 

    

 

 13,295

 

  

 

     

 

 8,743 

 

  

 

     

 

 9,461  

 

  

 

       

 

 52     

 

  

 

     

 

 41     

 

  

 

  
                       

 

Provision for credit losses

 

    

 

 1,590

 

  

 

     

 

 937 

 

  

 

     

 

 214  

 

  

 

       

 

 70     

 

  

 

     

 

 N.M.    

 

  

 

  
                       

 

OPERATING EXPENSES

 

                                                

 

Compensation and benefits

     4,478        3,235         3,317            38             35         

 

Brokerage, clearing, exchange and distribution fees

     945        975         823            (3)            15         

 

Market development

     89        153         186            (42)            (52)        

 

Communications and technology

     345        321         290            7             19         

 

Depreciation and amortization

     499        437         399            14             25         

 

Occupancy

     233        238         234            (2)            –         

 

Professional fees

     311        347         302            (10)            3         

 

Other expenses

 

    

 

 1,500

 

  

 

     

 

 752 

 

  

 

     

 

 569  

 

  

 

       

 

 99     

 

  

 

     

 

 164     

 

  

 

  

 

Total operating expenses

 

    

 

 8,400

 

  

 

     

 

 6,458 

 

  

 

     

 

 6,120  

 

  

 

       

 

 30     

 

  

 

     

 

 37     

 

  

 

  
                       

Pre-tax earnings

     3,305        1,348         3,127            145             6         

 

Provision for taxes

 

    

 

 882

 

  

 

     

 

 135 

 

  

 

     

 

 706  

 

  

 

       

 

 N.M.    

 

  

 

     

 

 25     

 

  

 

  

 

Net earnings

 

    

 

 2,423

 

  

 

     

 

 1,213 

 

  

 

     

 

 2,421  

 

  

 

       

 

 100     

 

  

 

     

 

 –     

 

  

 

  

Preferred stock dividends

 

    

 

 176

 

  

 

     

 

 90 

 

  

 

     

 

 223  

 

  

 

       

 

 96     

 

  

 

     

 

 (21)    

 

  

 

  

 

Net earnings applicable to common shareholders

 

    

 

 $           2,247

 

  

 

     

 

 $         1,123 

 

  

 

     

 

 $         2,198  

 

  

 

       

 

 100     

 

  

 

     

 

 2     

 

  

 

  
                       

 

EARNINGS PER COMMON SHARE

 

                                                

 

Basic3

     $             6.29        $           3.12         $           5.86            102  %        7  %    

 

Diluted

     $             6.26        $           3.11         $           5.81            101             8         
                       

 

AVERAGE COMMON SHARES

 

                                                

 

Basic

     355.7        358.0         374.5            (1)            (5)        

 

Diluted

     359.1        361.1         378.0            (1)            (5)        
                       

 

SELECTED DATA AT PERIOD-END

 

                                                

 

Common shareholders’ equity

     $         80,876        $       81,176         $       79,689            –             1         

 

Basic shares3

     355.8        355.7         372.2            –             (4)        

 

Book value per common share

     $         227.31        $       228.21         $       214.10            –             6         
                       

Headcount

 

    

 

 39,100

 

  

 

     

 

 38,500 

 

  

 

     

 

 35,600  

 

  

 

       

 

 2     

 

  

 

     

 

 10     

 

  

 

  

 

9

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)

In millions, except per share amounts

 

     
     SIX MONTHS ENDED           % CHANGE FROM                                   
     
    

    JUNE 30,    

2020

    

    JUNE 30,    

2019

             

JUNE 30,

2019

        

 

REVENUES

 

                            

Investment banking

 

     $           4,475       $          3,379           32 %     

Investment management

 

     3,403       2,956           15         

Commissions and fees

 

     1,895       1,553           22         

Market making

 

     9,469       5,202           82         

Other principal transactions

 

    

 

 539

 

  

 

    

 

 2,889  

 

  

 

      

 

 (81)    

 

  

 

  

 

Total non-interest revenues

 

    

 

 19,781

 

  

 

    

 

 15,979  

 

  

 

      

 

 24     

 

  

 

  
               

Interest income

 

     7,784       11,357           (31)        

Interest expense

 

    

 

 5,527

 

  

 

    

 

 9,068  

 

  

 

      

 

 (39)    

 

  

 

  

 

Net interest income

 

    

 

 2,257

 

  

 

    

 

 2,289  

 

  

 

      

 

 (1)    

 

  

 

  
               

 

Total net revenues

 

    

 

 22,038

 

  

 

    

 

 18,268  

 

  

 

      

 

 21     

 

  

 

  
               

 

Provision for credit losses

 

    

 

 2,527

 

  

 

    

 

 438  

 

  

 

      

 

 N.M.    

 

  

 

  
               

 

OPERATING EXPENSES

 

                            

Compensation and benefits

 

     7,713       6,576           17         

Brokerage, clearing, exchange and distribution fees

 

     1,920       1,585           21         

Market development

 

     242       370           (35)        

Communications and technology

 

     666       576           16         

Depreciation and amortization

 

     936       767           22         

Occupancy

 

     471       459           3         

Professional fees

 

     658       600           10         

Other expenses

 

    

 

 2,252

 

  

 

    

 

 1,051  

 

  

 

      

 

 114     

 

  

 

  

Total operating expenses

 

    

 

 14,858

 

  

 

    

 

 11,984  

 

  

 

      

 

 24     

 

  

 

  
               

Pre-tax earnings

     4,653       5,846           (20)        

 

Provision for taxes

     1,017       1,174           (13)        

Net earnings

 

     3,636       4,672           (22)        

Preferred stock dividends

 

     266       292           (9)        

 

Net earnings applicable to common shareholders

 

     $           3,370       $          4,380           (23)        
               

 

EARNINGS PER COMMON SHARE

 

                            

Basic3

     $             9.40       $          11.59           (19) %    

 

Diluted

     $             9.36       $          11.52           (19)        
               

 

AVERAGE COMMON SHARES

                            

 

Basic

     356.8       377.1           (5)        

 

Diluted

 

    

 

 360.1

 

  

 

    

 

 380.2  

 

  

 

      

 

 (5)    

 

  

 

  

 

10

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)4

$ in billions

 

   
     AS OF                     
   
    

JUNE 30,

2020

    

MARCH 31,

2020

                                                                              

 

ASSETS

 

                        

 

Cash and cash equivalents

     $             132         $             106            

 

Collateralized agreements

     274         254            

 

Customer and other receivables

     107         121            

 

Trading assets

     398         375            

 

Investments

     76         69            

 

Loans

     117         128            

 

Other assets

 

     38         37            

 

Total assets

 

  

 

 

 

 

$           1,142  

 

 

 

 

  

 

 

 

 

$           1,090  

 

 

 

 

        
               

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

                        

 

Deposits

     $             268         $             220            

 

Collateralized financings

     131         147            

 

Customer and other payables

     199         213            

 

Trading liabilities

     163         137            

 

Unsecured short-term borrowings

     44         37            

 

Unsecured long-term borrowings

     223         226            

 

Other liabilities

     22         18            

 

Total liabilities

 

  

 

 

 

 

1,050  

 

 

 

 

  

 

 

 

 

998  

 

 

 

 

        

 

Shareholders’ equity

 

     92         92            

 

Total liabilities and shareholders’ equity

 

  

 

 

 

 

$           1,142  

 

 

 

 

  

 

 

 

 

$           1,090  

 

 

 

 

        

 

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

$ in billions

 

 

 

        
   
     AS OF                      
   
    

JUNE 30,

2020

    

MARCH 31,

2020

                  

 

Common equity tier 1 capital

     $             76.8         $             74.6            
               

 

STANDARDIZED CAPITAL RULES

 

                        

 

Risk-weighted assets

     $             563         $             594            

 

Common equity tier 1 capital ratio

     13.6%       12.5%          
               

 

ADVANCED CAPITAL RULES

 

                        

 

Risk-weighted assets

     $             620         $             606            

 

Common equity tier 1 capital ratio

     12.4%       12.3%          
               

 

SUPPLEMENTARY LEVERAGE RATIO

 

                        

 

Supplementary leverage ratio

 

     6.7%  7      5.9%          

 

Average Daily VaR (unaudited)3,4

$ in millions

 

 

 

        
   
     THREE MONTHS ENDED                      
   
    

JUNE 30,

2020

    

MARCH 31,

2020

                  

 

RISK CATEGORIES

 

                        

 

Interest rates

     $               98         $               60            

 

Equity prices

     74         41            

 

Currency rates

     39         18            

 

Commodity prices

     24         11            

 

Diversification effect

     (113)        (49)           

 

 

Total

 

  

 

 

 

 

$             122  

 

 

 

 

  

 

 

 

 

$               81  

 

 

 

 

        

 

11

Goldman Sachs Reports

Second Quarter 2020 Earnings Results

 

The Goldman Sachs Group, Inc. and Subsidiaries

Assets Under Supervision (unaudited)3,4

$ in billions

 

   
     AS OF                                                                 
   
         JUNE 30,    
2020		         MARCH 31,    
2020		         JUNE 30,    
2019		                    

 

SEGMENT

 

                              

Asset Management

 

    

 

 $        1,499 

 

  

 

    

 

 $        1,309 

 

  

 

    

 

 $        1,171 

 

  

 

      

Consumer & Wealth Management

 

    

 

 558 

 

  

 

    

 

 509 

 

  

 

    

 

 489 

 

  

 

      

Total AUS

 

    

 

 $        2,057 

 

  

 

    

 

 $        1,818 

 

  

 

    

 

 $        1,660 

 

  

 

      
               

 

ASSET CLASS

 

                              

Alternative investments

 

    

 

 $           179 

 

  

 

    

 

 $            178 

 

  

 

    

 

 $            174 

 

  

 

      

Equity

 

    

 

 394 

 

  

 

    

 

 335 

 

  

 

    

 

 350 

 

  

 

      

Fixed income

 

    

 

 817 

 

  

 

    

 

 771 

 

  

 

    

 

 749 

 

  

 

      

Total long-term AUS

 

    

 

 1,390 

 

  

 

    

 

 1,284 

 

  

 

    

 

 1,273 

 

  

 

      

Liquidity products

 

    

 

 667 

 

  

 

    

 

 534 

 

  

 

    

 

 387 

 

  

 

      

Total AUS

 

    

 

 $        2,057 

 

  

 

    

 

 $        1,818 

 

  

 

    

 

 $        1,660 

 

  

 

      
           
   
     THREE MONTHS ENDED                    
   
     JUNE 30,
2020		     MARCH 31,
2020		     JUNE 30,
2019		                    

 

ASSET MANAGEMENT

 

                              

Beginning balance

 

    

 

 $        1,309 

 

  

 

    

 

 $        1,298 

 

  

 

    

 

 $        1,117 

 

  

 

      

Net inflows / (outflows):

 

              

Alternative investments

    

 

 (2)

 

  

 

    

 

 (1)

 

  

 

    

 

 4 

 

  

 

      

Equity

    

 

 3 

 

  

 

    

 

 2 

 

  

 

    

 

 4 

 

  

 

      

Fixed income

    

 

 6 

 

  

 

    

 

 7 

 

  

 

    

 

 10 

 

  

 

      

Total long-term AUS net inflows / (outflows)

    

 

 7 

 

  

 

    

 

 8 

 

  

 

    

 

 18 

 

 8  

 

      

Liquidity products

    

 

 121 

 

  

 

    

 

 66 

 

  

 

    

 

 15 

 

  

 

      

Total AUS net inflows / (outflows)

    

 

 128 

 

  

 

    

 

 74 

 

  

 

    

 

 33 

 

  

 

      

Net market appreciation / (depreciation)

    

 

 62 

 

  

 

    

 

 (63)

 

  

 

    

 

 21 

 

  

 

      

Ending balance

    

 

 $        1,499 

 

  

 

    

 

 $        1,309 

 

  

 

    

 

 $        1,171 

 

  

 

      
               

 

CONSUMER & WEALTH MANAGEMENT

 

                              

Beginning balance

 

    

 

 $           509 

 

  

 

    

 

 $            561 

 

  

 

    

 

 $            482 

 

  

 

      

Net inflows / (outflows):

 

              

Alternative investments

 

    

 

 – 

 

  

 

    

 

 – 

 

  

 

    

 

 (3)

 

  

 

      

Equity

 

    

 

 (1)

 

  

 

    

 

 1 

 

  

 

    

 

 – 

 

  

 

      

Fixed income

 

    

 

 – 

 

  

 

    

 

 (8)

 

  

 

    

 

 2 

 

  

 

      

Total long-term AUS net inflows / (outflows)

 

    

 

 (1)

 

  

 

    

 

 (7)

 

  

 

    

 

 (1)

 

  

 

      

Liquidity products

 

    

 

 12 

 

  

 

    

 

 6 

 

  

 

    

 

 (3)

 

  

 

      

Total AUS net inflows / (outflows)

 

    

 

 11 

 

  

 

    

 

 (1)

 

  

 

    

 

 (4)

 

  

 

      

Net market appreciation / (depreciation)

 

    

 

 38 

 

  

 

    

 

 (51)

 

  

 

    

 

 11 

 

  

 

      

Ending balance

 

    

 

 $            558 

 

  

 

    

 

 $            509 

 

  

 

    

 

 $            489 

 

  

 

      
               

 

FIRMWIDE

 

                              

Beginning balance

 

    

 

 $        1,818 

 

  

 

    

 

 $        1,859 

 

  

 

    

 

 $        1,599 

 

  

 

      

Net inflows / (outflows):

 

              

Alternative investments

 

    

 

 (2)

 

  

 

    

 

 (1)

 

  

 

    

 

 1 

 

  

 

      

Equity

 

    

 

 2 

 

  

 

    

 

 3 

 

  

 

    

 

 4 

 

  

 

      

Fixed income

 

    

 

 6 

 

  

 

    

 

 (1)

 

  

 

    

 

 12 

 

  

 

      

Total long-term AUS net inflows / (outflows)

 

    

 

 6 

 

  

 

    

 

 1 

 

  

 

    

 

 17 

 

  

 

      

Liquidity products

 

    

 

 133 

 

  

 

    

 

 72 

 

  

 

    

 

 12 

 

  

 

      

Total AUS net inflows / (outflows)

 

    

 

 139 

 

  

 

    

 

 73 

 

  

 

    

 

 29 

 

  

 

      

Net market appreciation / (depreciation)

 

    

 

 100 

 

  

 

    

 

 (114)

 

  

 

    

 

 32 

 

  

 

      

Ending balance

 

    

 

 $        2,057 

 

  

 

    

 

 $        1,818 

 

  

 

    

 

 $        1,660 

 

  

 

      

 

12

Goldman Sachs Reports

Second Quarter 2020 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 a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity:

 

   
     AVERAGE FOR THE        
   
Unaudited, $ in millions  

 THREE MONTHS ENDED 

JUNE 30, 2020

    

    

    SIX MONTHS ENDED 
JUNE 30, 2020		         

 

Total shareholders’ equity

 

    

 

 $            92,315 

 

  

 

      

 

 $            91,249 

 

  

 

  

Preferred stock

 

    

 

 (11,203)

 

  

 

      

 

 (11,203)

 

  

 

  

 

Common shareholders’ equity

 

    

 

 81,112 

 

  

 

        

 

 80,046 

 

  

 

  

 

Goodwill and identifiable intangible assets

 

    

 

 (4,806)

 

  

 

      

 

 (4,814)

 

  

 

  

 

Tangible common shareholders’ equity

 

    

 

 $            76,306 

 

  

 

        

 

 $            75,232 

 

  

 

  

 

  2.

Dealogic – January 1, 2020 through June 30, 2020.

 

 

  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 March 31, 2020: (i) investment banking transaction backlog – see “Results of Operations – Investment Banking” (ii) assets under supervision – see “Results of Operations – Assets Under Supervision” (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 March 31, 2020: (i) risk-based capital ratios and the 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 second quarter of 2020 and may be revised in the firm’s Quarterly Report on Form 10-Q for the period ended June 30, 2020.

 

 

  5.

GS Personal Financial Management, formerly United Capital Financial Partners, Inc., was acquired by the firm in the third quarter of 2019.

 

 

  6.

In the first quarter of 2020, the firm adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” For further information about ASU No. 2016-13, see Note 3 “Significant Accounting Policies” in Part I, Item 1 “Financial Statements (Unaudited)” in the firm’s Quarterly Report on Form 10-Q for the period ended March 31, 2020.

 

 

  7.

In the second quarter of 2020, the U.S. Federal Reserve revised the calculation of the supplementary leverage ratio to exclude U.S. Treasury securities and cash held at the U.S. Federal Reserve. The estimated impact of this change was an increase in the firm’s supplementary leverage ratio of approximately 0.8 percentage points.

 

 

  8.

Net inflows in assets under supervision for the second quarter of 2019 included $13 billion of inflows (substantially all in equity and fixed income assets) in connection with the acquisition of Rocaton Investment Advisors, which was included in the Asset Management segment.

 

13