01—Abstract
Summary
Summary of the 10-K filed March 1, 2013. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. reported a strong financial performance for the fiscal year ended December 30, 2012, with net earnings of $7.48 billiona and diluted earnings per share of $14.13, a significant increase from $4.44 billion and $4.51 per share in 2011.
The firm's return on average common shareholders' equity improved to 10.7% from 3.7% in the prior year, reflecting a generally improved business environment characterized by tighter credit spreads and higher global equity prices, despite ongoing concerns about the global economy and political uncertainties. The firm repurchased $4.64 billionb of its common stock and maintained robust capital ratios, with a Tier 1 capital ratio of 16.7% and a Tier 1 common ratio of 14.5% as of December 2012. Net revenues increased by 19% to $34.16 billion, driven by significant growth in Investing & Lending and higher net revenues across all other segments.
Investment Banking saw increased revenues, primarily from debt underwriting, while Institutional Client Services benefited from strong mortgage-related revenues. Investment Management experienced higher incentive fees, contributing to overall revenue growth. The firm also made progress on expense management initiatives, with total operating expenses remaining stable year-over-year, despite a 6%c increase in compensation and benefits driven by higher revenues.
02—Key points
Key Highlights
- Net earnings increased significantly to $7.48 billion in 2012, up from $4.44 billion in 2011.
- Diluted earnings per share rose to $14.13 in 2012, compared to $4.51 in 2011.
- Return on average common shareholders' equity (ROE) improved to 10.7% in 2012 from 3.7% in 2011.
- Net revenues increased by 19% to $34.16 billion, driven by improved performance across all business segments, particularly Investing & Lending.
- The firm repurchased $4.64 billion of its common stock during 2012.
- Tier 1 capital ratio remained strong at 16.7% and Tier 1 common ratio at 14.5% as of December 2012, indicating robust capital adequacy.
- Investment Banking segment pre-tax earnings increased 17% to $1.60 billion, driven by strong debt underwriting activity.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed March 1, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Interest Expense | $7.50B$7.98B | −6.0% |
| Net Income | $7.47B$4.44B | +68.3% |
| EPS (Basic) | $14.63$4.71 | +210.6% |
| EPS (Diluted) | $14.13$4.51 | +213.3% |
| Shares Outstanding (Basic) | 496.20M524.60M | −5.4% |
| Shares Outstanding (Diluted) | 516.10M556.90M | −7.3% |
05—Questions
Frequently Asked Questions
How did Goldman Sachs perform financially in 2012 compared to 2011?
Goldman Sachs demonstrated a significant improvement in financial performance in 2012 compared to 2011. Net earnings more than doubled to $7.48 billion from $4.44 billion, and diluted earnings per share increased substantially to $14.13 from $4.51. This growth was reflected in a higher return on average common shareholders' equity, which improved from 3.7% to 10.7%.
What were the main drivers of the revenue growth in 2012?
The firm's net revenues grew by 19% to $34.16 billion in 2012. The Investing & Lending segment saw a substantial increase in net revenues, while Investment Banking benefited from strong debt underwriting activity. Institutional Client Services experienced growth driven by mortgage-related revenues, and Investment Management saw higher incentive fees, all contributing to the overall revenue increase.
What is the firm's capital position and how did it manage shareholder equity in 2012?
Goldman Sachs maintained a strong capital position in 2012, with a Tier 1 capital ratio of 16.7% and a Tier 1 common ratio of 14.5% as of year-end. The firm actively managed its shareholder equity by repurchasing $4.64 billion of its common stock during the year, indicating a commitment to returning capital to shareholders and optimizing its capital structure.
What were the key factors influencing the firm's operating expenses in 2012?
Total operating expenses remained stable year-over-year at $22.96 billion. While compensation and benefits increased by 6% to $12.94 billion due to higher revenues and corresponding compensation accruals, non-compensation expenses decreased by 4% to $10.01 billion, reflecting the impact of ongoing expense reduction initiatives and lower brokerage fees.
06—Continue