01—Abstract
Summary
Summary of the 10-K filed February 22, 2021. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. (GS) reported a solid financial performance for the fiscal year ended December 30, 2020, with net earnings of $9.46 billiona, an increase of 12% compared to 2019.
Diluted EPS rose by 18% to $24.74b, and the Return on Average Common Shareholders' Equity (ROE) improved to 11.1% from 10.0% in the prior year. This growth was primarily driven by strong client activity and significantly higher net revenues in both Global Markets (specifically FICC and Equities) and Investment Banking, benefiting from robust underwriting volumes. Despite a substantial increase in provisions for litigation and regulatory proceedings to $3.42 billion, the firm managed to improve its efficiency ratio to 65.0% due to increased net revenues.
The company also highlighted strategic initiatives aimed at achieving expense efficiencies and funding optimization, with a stated goal of $1.3 billionc in annual run-rate expense efficiencies and $1.0 billion in annual run-rate interest expense savings by year-end 2022. Goldman Sachs demonstrated strong capital and liquidity positions throughout the year, even as it navigated the economic uncertainties presented by the COVID-19 pandemic.
02—Key points
Key Highlights
- Net earnings increased by 12% to $9.46 billion.
- Diluted EPS rose by 18% to $24.74.
- ROE improved to 11.1% from 10.0% in 2019.
- Net revenues grew by 22% to $44.56 billion, driven by strong performance in Global Markets and Investment Banking.
- Provisions for litigation and regulatory proceedings increased significantly to $3.42 billion, impacting profitability.
- The company reported strong capital and liquidity positions, with a CET1 capital ratio of 14.7% (Standardized) and 13.4% (Advanced) as of year-end 2020.
- Strategic initiatives targeting expense efficiencies and funding optimization were highlighted, with progress made on expense targets.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 22, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Interest Expense | $8.94B$17.38B | −48.6% |
| Net Income | $9.46B$8.47B | +11.7% |
| EPS (Basic) | $24.94$21.18 | +17.8% |
| EPS (Diluted) | $24.74$21.03 | +17.6% |
| Shares Outstanding (Basic) | 356.40M371.60M | −4.1% |
| Shares Outstanding (Diluted) | 360.30M375.50M | −4.0% |
05—Questions
Frequently Asked Questions
What was Goldman Sachs' overall financial performance in 2020?
Goldman Sachs reported net earnings of $9.46 billion for the year ended December 30, 2020, an increase of 12% from $8.47 billion in 2019. Diluted EPS also increased by 18% to $24.74, and the Return on Average Common Shareholders' Equity (ROE) improved to 11.1%.
Which business segments drove the revenue growth for Goldman Sachs in 2020?
Revenue growth was primarily driven by strong client activity and higher net revenues in Global Markets, particularly in FICC and Equities. Investment Banking also contributed significantly due to increased underwriting volumes.
What was the impact of litigation and regulatory proceedings on Goldman Sachs' financials in 2020?
Goldman Sachs recorded net provisions for litigation and regulatory proceedings of $3.42 billion in 2020, a substantial increase from $1.24 billion in 2019. These provisions reduced diluted EPS by $9.51 and ROE by 3.9 percentage points for 2020.
How did Goldman Sachs manage its capital and liquidity during 2020?
The company maintained strong capital and liquidity positions throughout 2020. Its Common Equity Tier 1 (CET1) capital ratio was 14.7% under Standardized Capital Rules and 13.4% under Advanced Capital Rules as of December 2020. They also suspended stock repurchases through the fourth quarter of 2020 to support clients and maintain capital flexibility.
06—Continue