10-KPeriod: FY2014

GOLDMAN SACHS GROUP INC Annual Report, Year Ended Dec 31, 2014

Filed February 23, 2015For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) filed its 2014 10-K report, highlighting a year of stable net revenues at $34.53 billion, essentially unchanged from the prior year, with net earnings increasing by 5% to $8.48 billion. The firm demonstrated robust capital management, with a Common Equity Tier 1 ratio of 12.2% and returning $6.52 billion to shareholders through share repurchases and dividends. Key business segments showed varied performance, with Investment Banking and Investment Management revenues increasing, while Institutional Client Services and Investing & Lending saw slight decreases. The firm continued to navigate a complex regulatory environment, including ongoing implementation of the Dodd-Frank Act and Basel III. Despite these challenges and a generally subdued market environment with low volatility for much of the year, Goldman Sachs maintained its position as a leading global financial services provider, with a strong focus on risk management and client services.

Financial Statements
Beta
Interest Expense$5.56B
Net Income$8.48B
EPS (Basic)$17.55
EPS (Diluted)$17.07
Shares Outstanding (Basic)458.90M
Shares Outstanding (Diluted)473.20M

Key Highlights

  • 1Net revenues remained stable at $34.53 billion in 2014.
  • 2Net earnings increased by 5% to $8.48 billion.
  • 3Return on average common shareholders' equity (ROE) was 11.2%.
  • 4Book value per common share increased approximately 7% to $163.01.
  • 5Capital ratios remained strong, with a Common Equity Tier 1 ratio of 12.2% under Basel III (advanced approach with transitional provisions).
  • 6The firm returned $6.52 billion to shareholders via share repurchases ($5.47 billion) and common dividends ($1.05 billion).
  • 7Investment Banking revenues grew 8% due to strong financial advisory and underwriting activity.
  • 8Investment Management revenues increased 11%, driven by higher average assets under supervision and incentive fees.

Frequently Asked Questions

In 2014, Goldman Sachs reported net earnings of $8.48 billion, a 5% increase from $8.04 billion in 2013. Net revenues were largely stable at $34.53 billion. The firm maintained a strong Common Equity Tier 1 ratio of 12.2% and returned a significant amount of capital to shareholders.

Investment Banking revenues increased by 8% to $6.46 billion, driven by strong financial advisory and underwriting activity. Investment Management revenues grew by 11% to $6.04 billion, reflecting higher average assets under supervision. Institutional Client Services revenues decreased by 3% to $15.20 billion, impacted by lower market-making revenues in challenging conditions. Investing & Lending revenues slightly decreased by 3% to $6.83 billion, mainly due to lower net gains from public equities.

The report notes the final rules implementing the Volcker Rule, which prohibits proprietary trading but permits market making and underwriting. Goldman Sachs stated it did not expect the prohibition on proprietary trading to be material to its financial condition but acknowledged the complexity and evolving market practices related to the rule. The firm also highlighted limitations on investments in and sponsorship of 'covered funds' as defined by the rule, planning to manage existing and future activities within these regulations.

The firm emphasizes a comprehensive and conservative approach to liquidity and funding, maintaining substantial 'Global Core Liquid Assets' (GCLA) to meet potential crisis needs. Capital management involves adhering to regulatory requirements, including Basel III and Dodd-Frank Act stress tests (CCAR and DFAST), and dynamically managing capital levels through share repurchases and dividends, subject to Federal Reserve Board approval. The firm also highlights its focus on maintaining long-term, diversified funding sources.