10-QPeriod: Q2 FY2009

GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 26, 2009

Filed August 5, 2009For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. (GS) reported strong financial results for the quarter ending June 25, 2009, with diluted earnings per share of $4.93, up from $4.58 in the prior year period. This increase was primarily driven by a significant surge in net revenues from Trading and Principal Investments, particularly in Fixed Income, Currencies, and Commodities (FICC) and Equities, reflecting robust client activity and favorable market opportunities. Investment Banking saw a decline in financial advisory but a strong increase in underwriting revenues, especially in equity offerings. Asset Management and Securities Services experienced a downturn due to lower assets under management, largely attributed to market depreciation. The company also successfully repurchased its TARP preferred stock from the U.S. Treasury and completed a public offering of common stock, strengthening its capital position. Operationally, GS demonstrated resilience despite a challenging economic environment. Trading and Principal Investments significantly outperformed, largely offsetting weaker results in other segments. The company's liquidity position remained strong, supported by substantial excess liquidity and a conservative liability structure. While specific segments faced headwinds, the overall performance indicates a recovery and adaptation to market conditions, with a focus on client-driven activities and capital management.

Financial Highlights

27 data points
Beta

Net Income

$3.44B

EPS (Diluted)

$4.93

Total Assets

$889.54B

Free Cash Flow

$12.82B

Financial Statements
Beta
Net Income$3.44B
EPS (Basic)$5.27
EPS (Diluted)$4.93
Shares Outstanding (Basic)514.10M
Shares Outstanding (Diluted)551.00M

Key Highlights

  • 1Diluted earnings per share increased to $4.93 from $4.58 year-over-year, excluding a one-time preferred dividend related to TARP stock repurchase.
  • 2Net revenues grew by 46% year-over-year to $13.76 billion, driven primarily by a significant increase in Trading and Principal Investments.
  • 3Trading and Principal Investments segment pre-tax earnings surged to $4.49 billion from $1.63 billion year-over-year, fueled by strong FICC and Equities performance.
  • 4Investment Banking net revenues declined by 15% year-over-year, with Financial Advisory down 54% but Underwriting up 21%.
  • 5Asset Management and Securities Services net revenues decreased by 28% year-over-year due to lower assets under management and customer balances.
  • 6Goldman Sachs successfully repurchased its TARP preferred stock from the U.S. Treasury for $10.04 billion in June 2009.
  • 7The company completed a public offering of common stock in Q2 2009, raising $5.75 billion in proceeds.

Frequently Asked Questions

The primary driver of Goldman Sachs' revenue growth was a significant increase in net revenues from the Trading and Principal Investments segment. This segment benefited from strong performances in Fixed Income, Currencies, and Commodities (FICC) and Equities, driven by robust client activity, favorable market conditions, and increased volatility in certain markets.

Goldman Sachs strengthened its capital position by repurchasing its TARP preferred stock from the U.S. Treasury for $10.04 billion and completing a public offering of common stock that raised $5.75 billion. These actions, along with strong earnings, contributed to an increase in its Tier 1 capital ratios.

The main challenges faced were a decline in net revenues for the Investment Banking segment, particularly in Financial Advisory, due to reduced industry-wide merger and acquisition activity. Additionally, the Asset Management and Securities Services segment experienced lower revenues due to a decrease in assets under management and customer balances, impacted by market depreciation and lower client activity.

The repurchase of the TARP preferred stock signifies a key step in the company's deleveraging and a move away from government support. It also removed certain restrictions previously imposed by the U.S. Treasury, such as limitations on common stock repurchases, thereby providing greater financial flexibility.