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MarketScreener Homepage  >  Equities  >  Nyse  >  Goldman Sachs Group Inc.    GS

GOLDMAN SACHS GROUP INC.

(GS)
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Goldman Sachs : 2019 Fourth Quarter Results

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01/15/2020 | 07:28am EST

Full Year and

Fourth 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

Full Year and Fourth Quarter 2019 Earnings Results

Goldman Sachs Reports Earnings Per Common Share of $21.03 for 2019

Fourth Quarter Earnings Per Common Share was $4.69

"Strong performance in the fourth quarter helped us to deliver solid results for the year, while continuing to invest in new businesses. We aim to drive higher returns in the future, and look forward to sharing our strategic goals and financial targets at Investor Day later this month."

  • David M. Solomon, Chairman and Chief Executive Officer

Financial Summary

Net Revenues

Net Earnings

EPS

2019

$36.55 billion

2019

$8.47 billion

2019

$21.03

4Q19

$9.96 billion

4Q19

$1.92 billion

4Q19

$4.69

ROE1

ROTE1

Book Value Per Share

2019

10.0%

2019

10.6%

2019

$218.52

4Q19

8.7%

4Q19

9.2%

2019 Growth

5.4%

NEW YORK, January 15, 2020 - The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $36.55 billion and net earnings of $8.47 billion for the year ended December 31, 2019. Net revenues were $9.96 billion and net earnings were $1.92 billion for the fourth quarter of 2019.

Diluted earnings per common share (EPS) was $21.03 for the year ended December 31, 2019 compared with $25.27 for the year ended December 31, 2018, and was $4.69 for the fourth quarter of 2019 compared with $6.04 for the fourth quarter of 2018 and $4.79 for the third quarter of 2019.

Return on average common shareholders' equity (ROE)1 was 10.0% for 2019 and annualized ROE was 8.7% for the fourth quarter of 2019. Return on average tangible common shareholders' equity (ROTE)1 was 10.6% for 2019 and annualized ROTE was 9.2% for the fourth quarter of 2019.

During 2019, the firm recorded net provisions for litigation and regulatory proceedings of $1.24 billion, which reduced diluted EPS by $3.16 and reduced ROE by 1.5 percentage points and ROTE by 1.6 percentage points.

1

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Annual Highlights

  • Net revenues were $36.55 billion, which included fourth quarter net revenues of $9.96 billion, the second highest fourth quarter net revenues and the highest since 2007.
  • The firm ranked #1 in worldwide announced and completed mergers and acquisitions for the year2. The firm also ranked #1 in worldwide equity and equity-related offerings and common stock offerings for the year2.
  • Investment Banking generated net revenues of $7.60 billion, its second highest annual net revenues.
  • FICC financing net revenues increased for the fifth consecutive year to a record $1.38 billion.
  • Firmwide assets under supervision3,4 increased $317 billion5 during the year to a record $1.86 trillion, including net inflows of $108 billion in long-term assets under supervision.
  • Consumer & Wealth Management generated record net revenues of $5.20 billion, including record Management and other fees in Wealth management and significant growth in Consumer banking net revenues.
  • During 2019, the firm returned $6.88 billion of capital to common shareholders, including $5.34 billion of share repurchases and $1.54 billion of common stock dividends.

Full Year Net Revenue Mix by Segment6

Consumer & Wealth

Investment

Management

Investment Banking

14%

Banking

21%

$7.60 billion

Global Markets

$14.78 billion

FICC

$7.39 billion

Asset

Equities

$7.39 billion

Management

(FICC 20%)

Asset Management

25%

$8.97 billion

(Equities 20%)

Consumer & Wealth Management

Global Markets

$5.20 billion

40%

2

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Net Revenues

Full Year

Net revenues were $36.55 billion for 2019, essentially unchanged compared with 2018, reflecting lower net revenues in Investment Banking, offset by slightly higher net revenues in Global Markets.

Fourth Quarter

Net revenues were $9.96 billion for the fourth quarter of 2019, 23% higher than the fourth quarter of 2018 and 20% higher than the third quarter of 2019. The increase compared with the fourth quarter of 2018 primarily reflected significantly higher net revenues in Asset Management and Global Markets.

2019 Net Revenues

$36.55 billion

4Q19 Net Revenues

$9.96 billion

Investment Banking

Full Year

Net revenues in Investment Banking were $7.60 billion for 2019, 7% lower compared with a strong 2018, reflecting lower net revenues in Underwriting and Financial advisory, partially offset by higher net revenues in Corporate lending.

The decrease in Underwriting net revenues was due to lower net revenues in Debt underwriting, driven by lower net revenues from investment-grade and leveraged finance activity, and in Equity underwriting, reflecting a decline in industry-wide initial public offerings. 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 was essentially unchanged compared with the end of 2018.

Fourth Quarter

Net revenues in Investment Banking were $2.06 billion for the fourth quarter of 2019, 6% lower than the fourth quarter of 2018 and 12% higher than the third quarter of 2019. The decrease compared with the fourth quarter of 2018 reflected significantly lower net revenues in Financial advisory and lower net revenues in Corporate lending, partially offset by significantly higher net revenues in Underwriting.

The decrease in Financial advisory net revenues, compared with a strong prior year period, reflected a significant decrease in industry-wide completed mergers and acquisitions volumes. The increase in Underwriting net revenues was due to significantly higher net revenues in Debt underwriting, driven by asset-backed activity, and higher net revenues in Equity underwriting, reflecting an increase in industry-wide transactions.

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

2019 Investment Banking

$7.60 billion

Financial Advisory

$3.20 billion

Underwriting

$3.60 billion

Corporate Lending

$801 million

4Q19 Investment Banking

$2.06 billion

Financial Advisory

$855 million

Underwriting

$977 million

Corporate Lending

$232 million

3

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Global Markets

Full Year

Net revenues in Global Markets were $14.78 billion for 2019, 2% higher than 2018.

Net revenues in Fixed Income, Currency and Commodities (FICC) were $7.39 billion, 6% higher than 2018, due to slightly higher net revenues in FICC intermediation, reflecting significantly higher net revenues in commodities and mortgages and higher net revenues in interest rate products, partially offset by significantly lower net revenues in currencies and lower net revenues in credit products. In addition, net revenues in FICC financing were higher, reflecting higher net revenues in structured credit financing.

Net revenues in Equities were $7.39 billion, essentially unchanged compared with 2018. Net revenues in Equities intermediation were lower, reflecting lower net revenues in derivatives, partially offset by higher net revenues in cash products. This decrease was offset by higher net revenues in Equities financing, reflecting improved spreads.

Fourth Quarter

Net revenues in Global Markets were $3.48 billion for the fourth quarter of 2019, 33% higher than the fourth quarter of 2018 and 2% lower than the third quarter of 2019.

Net revenues in FICC were $1.77 billion, 63% higher compared with a weak fourth quarter of 2018, primarily due to significantly higher net revenues in FICC intermediation, reflecting higher net revenues across most major businesses, including significant increases in interest rate products, commodities and mortgages. In addition, net revenues in FICC financing were higher.

Net revenues in Equities were $1.71 billion, 12% higher than the fourth quarter of 2018, due to higher net revenues in Equities financing, reflecting improved spreads and higher average customer balances, and in Equities intermediation, reflecting significantly higher net revenues in cash products.

2019 Global Markets

$14.78 billion

FICC Intermediation

$6.01 billion

FICC Financing

$1.38 billion

FICC

$7.39 billion

Equities

Intermediation

$4.37 billion

Equities Financing

$3.02 billion

Equities

$7.39 billion

4Q19 Global Markets

$3.48 billion

FICC Intermediation

$1.38 billion

FICC Financing

$387 million

FICC

$1.77 billion

Equities

Intermediation

$979 million

Equities Financing

$732 million

Equities

$1.71 billion

Asset Management

Full Year

Net revenues in Asset Management were $8.97 billion for 2019, essentially unchanged compared with 2018, reflecting higher net revenues in Equity investments, offset by significantly lower Incentive fees and lower net revenues in Lending. Management and other fees were essentially unchanged.

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

2019 Asset Management

$8.97 billion

Management and

Other Fees

$2.60 billion

Incentive Fees

$130 million

Equity Investments

$4.77 billion

Lending

$1.47 billion

4

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Asset Management

Fourth Quarter

Net revenues in Asset Management were $3.00 billion for the fourth quarter of 2019, 52% higher than the fourth quarter of 2018 and 85% higher than the third quarter of 2019. The increase compared with the fourth quarter of 2018 reflected significantly higher net revenues in Equity investments and Lending, as well as higher Management and other fees, partially offset by lower Incentive fees.

The increase in Equity investments net revenues reflected significant net gains in public equities compared with net losses in the prior year period and significantly higher net gains in private equities. The increase in Lending net revenues primarily reflected higher net gains from investments in debt instruments. 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.

Consumer & Wealth Management

4Q19 Asset Management

$3.00 billion

Management and

Other Fees

$666 million

Incentive Fees

$ 45 million

Equity Investments

$1.87 billion

Lending

$427 million

Full Year

Net revenues in Consumer & Wealth Management were $5.20 billion for 2019, essentially unchanged compared with 2018.

Net revenues in Wealth management were $4.34 billion, 5% lower than 2018, reflecting significantly lower Incentive fees and slightly lower net revenues in Private banking and lending. These decreases were partially offset by higher Management and other fees (including the impact of United Capital7), reflecting higher average assets under supervision.

Net revenues in Consumer banking were $864 million, 41% higher than 2018, driven by higher net interest income, primarily reflecting an increase in deposit balances.

Fourth Quarter

Net revenues in Consumer & Wealth Management were $1.41 billion for the fourth quarter of 2019, 8% higher than the fourth quarter of 2018 and 7% higher than the third quarter of 2019.

Net revenues in Wealth management were $1.18 billion, 6% higher than the fourth quarter of 2018, due to higher Management and other fees (including the impact of United Capital7), reflecting higher average assets under supervision. This increase was partially offset by lower Incentive fees, while net revenues in Private banking and lending were essentially unchanged.

Net revenues in Consumer banking were $228 million, 23% higher than the fourth quarter of 2018, driven by higher net interest income, primarily reflecting an increase in deposit balances.

2019 Consumer &

Wealth Management

$5.20 billion

Wealth Management

$4.34 billion

Consumer Banking

$864 million

4Q19 Consumer &

Wealth Management

$1.41 billion

Wealth Management

$1.18 billion

Consumer Banking

$228 million

5

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Provision for Credit Losses

Full Year

Provision for credit losses was $1.07 billion for 2019, 58% higher than 2018, primarily reflecting higher impairments and higher provisions related to consumer loans.

Fourth Quarter

Provision for credit losses was $336 million for the fourth quarter of 2019, 51% higher than the fourth quarter of 2018 and 15% higher than the third quarter of 2019. The increase compared with the fourth quarter of 2018 primarily reflected higher impairments.

2019 Provision for Credit Losses

$1.07 billion

4Q19 Provision for Credit Losses

$336 million

Operating Expenses

Full Year

Operating expenses were $24.90 billion for 2019, 6% higher than 2018. The firm's efficiency ratio3 for 2019 was 68.1%, compared with 64.1% for 2018.

The increase in operating expenses compared with 2018 primarily reflected significantly higher net provisions for litigation and regulatory proceedings and higher expenses for consolidated investments and technology (increases primarily in depreciation and amortization, communications and technology, occupancy and other expenses). In addition, 2019 included higher expenses related to the firm's credit card and transaction banking activities (increases were primarily in professional fees and other expenses) and also included the impact of United Capital7. Compensation and benefits expenses were essentially unchanged compared with 2018.

Net provisions for litigation and regulatory proceedings for 2019 were $1.24 billion compared with $844 million for 2018.

Headcount increased 5% during 2019, reflecting an increase in the firm's technology professionals and the impact of United Capital7.

Fourth Quarter

Operating expenses were $7.30 billion for the fourth quarter of 2019, 42% higher than the fourth quarter of 2018 and 30% higher than the third quarter of 2019.

The increase in operating expenses compared with the fourth quarter of 2018 primarily reflected significantly higher compensation and benefits expenses and net provisions for litigation and regulatory proceedings. In addition, expenses related to consolidated investments and technology were higher (increases were primarily in occupancy and depreciation and amortization expenses). The fourth quarter of 2019 also included higher expenses related to the firm's credit card and transaction banking activities (increases were primarily in professional fees and other expenses) and also included the impact of United Capital7.

Net provisions for litigation and regulatory proceedings for the fourth quarter of 2019 were $1.09 billion compared with $516 million for the fourth quarter of 2018.

The fourth quarter of 2019 included a $140 million charitable contribution to Goldman Sachs Gives.

2019 Operating Expenses

$24.90 billion

2019 Efficiency Ratio

68.1%

4Q19 Operating Expenses

$7.30 billion

6

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Provision for Taxes

The effective income tax rate for 2019 was 20.0%, down from 20.7% for the first nine months of 2019 due to the impact of regulatory guidance released in the fourth quarter related to the international provisions of the Tax Cuts and Jobs Act (Tax Legislation), partially offset by the impact of provisions for non-deductible litigation. The 2019 effective income tax rate increased from 16.2% for full year 2018, as 2018 included a $487 million income tax benefit related to the finalization of the enactment impact of Tax Legislation.

2019 Effective Tax Rate

20.0%

Other Matters

  • On January 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 March 30, 2020 to common shareholders of record on March 2, 2020.
  • During the year, the firm returned $6.88 billion of capital to common shareholders, including $5.34 billion of share repurchases (25.8 million shares at an average cost of $206.56) and $1.54 billion of common stock dividends. This included $2.62 billion of capital returned to common shareholders during the fourth quarter, including $2.16 billion of share repurchases (10.2 million shares at an average cost of $212.67) and $453 million of common stock dividends.3
  • Global core liquid assets3 averaged $234 billion4 for 2019, compared with an average of $233 billion for 2018. Global core liquid assets averaged $237 billion4 for the fourth quarter of 2019, compared with an average of $238 billion for the third quarter of 2019.

Declared Quarterly

Dividend Per Common Share

$1.25

Common Share Repurchases

25.8 million shares for $5.34 billion in 2019

Average GCLA

$234 billion for 2019

7

Goldman Sachs Reports

Full Year and Fourth 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, 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 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 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.

8

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

The Goldman Sachs Group, Inc. and Subsidiaries Segment Net Revenues (unaudited)

$ in millions

YEAR ENDED

DECEMBER 31,

DECEMBER 31,

2019

2018

INVESTMENT BANKING

Financial advisory

$

3,197

$

3,444

Equity underwriting

1,482

1,628

Debt underwriting

2,119

2,358

Underwriting

3,601

3,986

Corporate lending

801

748

Net revenues

7,599

8,178

GLOBAL MARKETS

FICC intermediation

6,009

5,737

FICC financing

1,379

1,248

FICC

7,388

6,985

Equities intermediation

4,374

4,681

Equities financing

3,017

2,772

Equities

7,391

7,453

Net revenues

14,779

14,438

ASSET MANAGEMENT

Management and other fees

2,600

2,612

Incentive fees

130

384

Equity investments

4,765

4,207

Lending

1,470

1,632

Net revenues

8,965

8,835

CONSUMER & WEALTH MANAGEMENT

Management and other fees

3,475

3,282

Incentive fees

81

446

Private banking and lending

783

826

Wealth management

4,339

4,554

Consumer banking

864

611

Net revenues

5,203

5,165

Total net revenues

$

36,546

$

36,616

Geographic Net Revenues (unaudited)3

$ in millions

YEAR ENDED

DECEMBER 31,

DECEMBER 31,

2019

2018

Americas

$

22,148

$

22,339

EMEA

9,745

9,244

Asia

4,653

5,033

Total net revenues

$

36,546

$

36,616

Americas

60%

61%

EMEA

27%

25%

Asia

13%

14%

Total

100%

100%

  • CHANGE FROM
    DECEMBER 31,
    2018
    1. %

(9)

(10)

(10)

7

(7)

5

10

6

(7)

9

(1)

2

-

(66)

13

(10)

1

6

(82)

(5)

(5)

41

1

-

9

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)

$ in millions

THREE MONTHS ENDED

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

INVESTMENT BANKING

Financial advisory

$

855

$

697

$

1,198

Equity underwriting

378

366

307

Debt underwriting

599

524

437

Underwriting

977

890

744

Corporate lending

232

254

251

Net revenues

2,064

1,841

2,193

GLOBAL MARKETS

FICC intermediation

1,382

1,315

757

FICC financing

387

364

330

FICC

1,769

1,679

1,087

Equities intermediation

979

1,080

897

Equities financing

732

784

625

Equities

1,711

1,864

1,522

Net revenues

3,480

3,543

2,609

ASSET MANAGEMENT

Management and other fees

666

660

629

Incentive fees

45

24

67

Equity investments

1,865

596

951

Lending

427

341

327

Net revenues

3,003

1,621

1,974

CONSUMER & WEALTH MANAGEMENT

Management and other fees

967

881

830

Incentive fees

19

21

86

Private banking and lending

194

199

202

Wealth management

1,180

1,101

1,118

Consumer banking

228

217

186

Net revenues

1,408

1,318

1,304

Total net revenues

$

9,955

$

8,323

$

8,080

Geographic Net Revenues (unaudited)3

$ in millions

THREE MONTHS ENDED

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

Americas

$

6,310

$

4,941

$

5,178

EMEA

2,268

2,329

1,766

Asia

1,377

1,053

1,136

Total net revenues

$

9,955

$

8,323

$

8,080

Americas

63%

59%

64%

EMEA

23%

28%

22%

Asia

14%

13%

14%

Total

100%

100%

100%

% CHANGE FROM

SEPTEMBER 30,

DECEMBER 31,

2019

2018

23

%

(29) %

3

23

14

37

10

31

(9)

(8)

12

(6)

5

83

6

17

5

63

  1. 9
  1. 17
  2. 12
  1. 33

1

6

88

(33)

N.M.

96

25

31

85

52

10

17

  1. (78)
  1. (4)

76

523

  1. 8
  1. 23

10

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

The Goldman Sachs Group, Inc. and Subsidiaries

Consolidated Statements of Earnings (unaudited)

In millions, except per share amounts

YEAR ENDED

% CHANGE FROM

DECEMBER 31,

DECEMBER 31,

DECEMBER 31,

2019

2018

2018

REVENUES

Investment banking

$

6,798

$

7,430

(9) %

Investment management

6,189

6,590

(6)

Commissions and fees

2,988

3,199

(7)

Market making

10,157

9,724

4

Other principal transactions

6,052

5,906

2

Total non-interest revenues

32,184

32,849

(2)

Interest income

21,738

19,679

10

Interest expense

17,376

15,912

9

Net interest income

4,362

3,767

16

Total net revenues

36,546

36,616

-

Provision for credit losses

1,065

674

58

OPERATING EXPENSES

Compensation and benefits

12,353

12,328

-

Brokerage, clearing, exchange and distribution fees

3,252

3,200

2

Market development

739

740

-

Communications and technology

1,167

1,023

14

Depreciation and amortization

1,704

1,328

28

Occupancy

1,029

809

27

Professional fees

1,316

1,214

8

Other expenses

3,338

2,819

18

Total operating expenses

24,898

23,461

6

Pre-tax earnings

10,583

12,481

(15)

Provision for taxes

2,117

2,022

5

Net earnings

8,466

10,459

(19)

Preferred stock dividends

569

599

(5)

Net earnings applicable to common shareholders

$

7,897

$

9,860

(20)

EARNINGS PER COMMON SHARE

Basic3

$

21.18

$

25.53

(17) %

Diluted

$

21.03

$

25.27

(17)

AVERAGE COMMON SHARES

Basic

371.6

385.4

(4)

Diluted

375.5

390.2

(4)

11

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 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

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

REVENUES

Investment banking

$

1,832

$

1,587

$

1,942

Investment management

1,671

1,562

1,574

Commissions and fees

687

748

838

Market making

2,479

2,476

1,454

Other principal transactions

2,221

942

1,281

Total non-interest revenues

8,890

7,315

7,089

Interest income

4,922

5,459

5,468

Interest expense

3,857

4,451

4,477

Net interest income

1,065

1,008

991

Total net revenues

9,955

8,323

8,080

Provision for credit losses

336

291

222

OPERATING EXPENSES

Compensation and benefits

3,046

2,731

1,857

Brokerage, clearing, exchange and distribution fees

814

853

830

Market development

200

169

208

Communications and technology

308

283

262

Depreciation and amortization

464

473

377

Occupancy

318

252

215

Professional fees

366

350

317

Other expenses

1,782

505

1,084

Total operating expenses

7,298

5,616

5,150

Pre-tax earnings

2,321

2,416

2,708

Provision for taxes

404

539

170

Net earnings

1,917

1,877

2,538

Preferred stock dividends

193

84

216

Net earnings applicable to common shareholders

$

1,724

$

1,793

$

2,322

EARNINGS PER COMMON SHARE

Basic3

$

4.74

$

4.83

$

6.11

Diluted

$

4.69

$

4.79

$

6.04

AVERAGE COMMON SHARES

Basic

362.4

370.0

379.5

Diluted

367.3

374.3

384.3

SELECTED DATA AT PERIOD-END

Common shareholders' equity

$

79,062

$

80,809

$

78,982

Basic shares3

361.8

369.3

380.9

Book value per common share

$

218.52

$

218.82

$

207.36

Headcount

38,300

37,800

36,600

% CHANGE FROM

SEPTEMBER 30,

DECEMBER 31,

2019

2018

15

%

(6) %

7

6

(8)

(18)

-

70

136

73

22

25

  1. (10)
  1. (14)

67

2023

1551

1264

  1. (2)

18

(4)

9

18

  1. 23

26

48

5

15

N.M.

64

3042

  1. (14)
  1. 138

2(24)

130(11)

  1. (26)

(2) %

(22) %

  1. (22)
  1. (5)
  1. (4)

(2)-

  1. (5)

-5

15

12

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

The Goldman Sachs Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited) 4,8

$ in billions

AS OF

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

ASSETS

Cash and cash equivalents

$

133

$

94

$

131

Collateralized agreements

222

279

275

Trading assets

355

356

280

Investments

64

62

47

Loans

109

105

98

Customer and other receivables

75

77

72

Other assets

35

34

29

Total assets

$

993

$

1,007

$

932

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

$

190

$

183

$

158

Collateralized financings

152

140

112

Trading liabilities

109

116

109

Customer and other payables

175

188

180

Unsecured short-term borrowings

48

52

41

Unsecured long-term borrowings

207

217

224

Other liabilities

22

19

18

Total liabilities

903

915

842

Shareholders' equity

90

92

90

Total liabilities and shareholders' equity

$

993

$

1,007

$

932

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

$ in billions

AS OF

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

Common equity tier 1 capital

$

74.9

$

75.7

$

73.1

STANDARDIZED CAPITAL RULES

Risk-weighted assets

$

564

$

557

$

548

Common equity tier 1 capital ratio

13.3%

13.6%

13.3%

ADVANCED CAPITAL RULES

Risk-weighted assets

$

545

$

566

$

558

Common equity tier 1 capital ratio

13.7%

13.4% 9

13.1%

SUPPLEMENTARY LEVERAGE RATIO

Supplementary leverage ratio

6.2%

6.2%

6.2%

Average Daily VaR (unaudited) 3,4

$ in millions

THREE MONTHS ENDED

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

RISK CATEGORIES

Interest rates

$

49

$

49

$

40

Equity prices

24

28

28

Currency rates

11

12

19

Commodity prices

12

12

12

Diversification effect

(38)

(43)

(50)

Total

$

58

$

58

$

49

YEAR ENDED

DECEMBER 31,

DECEMBER 31,

2019

2018

$

46

$

46

27

31

11

14

12

11

(40)

(42)

$

56

$

60

13

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

The Goldman Sachs Group, Inc. and Subsidiaries

Assets Under Supervision (unaudited) 3,4

$ in billions

AS OF

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

SEGMENT

Asset Management

$

1,298

$

1,232

$

1,087

Consumer & Wealth Management

561

530

455

Total AUS

$

1,859

$

1,762

$

1,542

ASSET CLASS

Alternative investments

$

185

$

182

$

167

Equity

423

392

301

Fixed income

789

784

677

Total long-term AUS

1,397

1,358

1,145

Liquidity products

462

404

397

Total AUS

$

1,859

$

1,762

$

1,542

THREE MONTHS ENDED

DECEMBER 31,

SEPTEMBER 30,

DECEMBER 31,

2019

2019

2018

ASSET MANAGEMENT

Beginning balance

$

1,232

$

1,171

$

1,067

Net inflows / (outflows):

Alternative investments

(1)

(1)

-

Equity

1

26

(3)

Fixed income

(4)

11

8

Total long-term AUS net inflows / (outflows)

(4)

36

5

Liquidity products

50

12

39

Total AUS net inflows / (outflows)

46

48

5

44

Net market appreciation / (depreciation)

20

13

(24)

Ending balance

$

1,298

$

1,232

$

1,087

CONSUMER & WEALTH MANAGEMENT

Beginning balance

$

530

$

489

$

483

Net inflows / (outflows):

Alternative investments

2

9

(4)

Equity

-

15

2

Fixed income

4

9

-

Total long-term AUS net inflows / (outflows)

6

33

(2)

Liquidity products

8

5

-

Total AUS net inflows / (outflows)

14

38

5

(2)

Net market appreciation / (depreciation)

17

3

(26)

Ending balance

$

561

$

530

$

455

FIRMWIDE

Beginning balance

$

1,762

$

1,660

$

1,550

Net inflows / (outflows):

Alternative investments

1

8

(4)

Equity

1

41

(1)

Fixed income

-

20

8

Total long-term AUS net inflows / (outflows)

2

69

3

Liquidity products

58

17

39

Total AUS net inflows / (outflows)

60

86

5

42

Net market appreciation / (depreciation)

37

16

(50)

Ending balance

$

1,859

$

1,762

$

1,542

YEAR ENDED

DECEMBER 31,

DECEMBER 31,

2019

2018

$

1,087

$

1,036

2

6

34

6

35

14

71

26

52

51

123

5

77

88

(26)

$

1,298

$

1,087

$

455

$

458

9

(5)

11

7

17

9

37

11

13

1

50

5

12

56

(15)

$

561

$

455

$

1,542

$

1,494

11

1

45

13

52

23

108

37

65

52

173

5

89

144

(41)

$

1,859

$

1,542

14

Goldman Sachs Reports

Full Year and Fourth Quarter 2019 Earnings Results

Footnotes

1. ROE is calculated by dividing net earnings (or annualized net earnings for annualized ROE) applicable to common shareholders by average monthly common shareholders' equity. ROTE is calculated by dividing net earnings (or annualized net earnings for annualized ROTE) 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

THREE MONTHS ENDED

YEAR ENDED

Unaudited, $ in millions

DECEMBER 31, 2019

DECEMBER 31, 2019

Total shareholders' equity

$

90,808

$

90,297

Preferred stock

(11,203)

(11,203)

Common shareholders' equity

79,605

79,094

Goodwill and identifiable intangible assets

(4,862)

(4,464)

Tangible common shareholders' equity

$

74,743

$

74,630

  1. Dealogic - January 1, 2019 through December 31, 2019.
  2. 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 September 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 September 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."

  1. Represents a preliminary estimate for the fourth quarter of 2019 and may be revised in the firm's Annual Report on Form 10-K for the year ended December 31, 2019.
  2. Net inflows in assets under supervision for 2019 included $71 billion of total inflows (substantially all in equity and fixed income assets) in connection with the acquisitions of both Standard & Poor's Investment Advisory Services (SPIAS) and United Capital Financial Partners, Inc. (United Capital) in the third quarter of 2019 ($58 billion) and Rocaton Investment Advisors (Rocaton) in the second quarter of 2019 ($13 billion). SPIAS and Rocaton were included in the Asset Management segment and United Capital was included in the Consumer & Wealth Management segment.
  3. The firm made certain changes to the firm's business segments, commencing with the fourth quarter of 2019. For more information about these changes, see the firm's Form 8-K dated January 6, 2020.
  4. United Capital was acquired by the firm in the third quarter of 2019.
  5. Beginning in the fourth quarter of 2019, the firm changed the balance sheet presentation to better reflect the nature of the firm's activities. The primary changes include the elimination of the Financial instruments owned line item, the introduction of new line items for Investments and Trading assets and the expansion of the Loans line item. Reclassifications have been made to previously reported amounts to conform to the current presentation.
  6. Beginning in the fourth quarter of 2019, the firm made changes to the calculation of loss given default for certain wholesale exposures. As of September 30, 2019, the estimated impact of these changes would have been an increase in the firm's Advanced common equity tier 1 capital ratio of approximately 1 percentage point.

15

Disclaimer

The Goldman Sachs Group Inc. published this content on 15 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 January 2020 12:27:03 UTC

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Financials (USD)
Sales 2020 36 844 M
EBIT 2020 12 426 M
Net income 2020 8 557 M
Debt 2020 122 B
Yield 2020 2,17%
P/E ratio 2020 9,92x
P/E ratio 2021 9,15x
EV / Sales2020 5,64x
EV / Sales2021 7,91x
Capitalization 85 661 M
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Number of Analysts 29
Average target price 259,67  $
Last Close Price 241,92  $
Spread / Highest target 48,0%
Spread / Average Target 7,34%
Spread / Lowest Target -25,6%
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NameTitle
David Michael Solomon Chairman & Chief Executive Officer
John E. Waldron President & Chief Operating Officer
Stephen M. Scherr Chief Financial Officer & Executive Vice President
Marco Argenti Co-Chief Information Officer
Atte Lahtiranta Chief Technology Officer
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