GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended May 30, 2008

Summary

Goldman Sachs Group, Inc. reported a decrease in net revenues for the three months ended May 29, 2008, to $9.42 billion from $10.18 billion in the prior year period, primarily driven by a significant decline in Trading and Principal Investments, particularly within credit products. Despite challenging market conditions, the firm demonstrated resilience, with diluted earnings per common share of $4.58 compared to $4.93 in the prior year quarter. The Asset Management and Securities Services segment showed strong growth, with net revenues increasing significantly due to higher management fees and record net revenues in securities services driven by strong prime brokerage results. The firm ended the quarter with total shareholders' equity of $44.82 billion, an increase from the previous year.

Key Highlights

• 1Net revenues for the three months ended May 2008 decreased 7% to $9.42 billion year-over-year, impacted by weaker performance in Trading and Principal Investments, especially credit products.
• 2Diluted earnings per common share were $4.58 for the quarter, down from $4.93 in the same period last year.
• 3Asset Management and Securities Services saw a significant 18% increase in net revenues, reaching $2.15 billion, with assets under management reaching a record $895 billion.
• 4Investment Banking net revenues decreased slightly by 2% to $1.69 billion, with Financial Advisory up 13% while Underwriting declined 13% due to lower debt underwriting activity.
• 5Trading and Principal Investments net revenues decreased 16% to $5.59 billion, primarily due to a 29% drop in FICC revenues, largely attributable to credit products.
• 6The firm maintained a strong capital position, with total shareholders' equity increasing to $44.82 billion as of May 30, 2008.
• 7Compensation and benefits expenses decreased 7% year-over-year, reflecting lower net revenues and discretionary compensation.

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