10-QPeriod: Q1 FY2010

GOLDMAN SACHS GROUP INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 10, 2010For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. reported a strong first quarter of 2010, with net earnings of $3.46 billion, or $5.59 per diluted share, a significant increase from $1.81 billion, or $3.39 per diluted share, in the same period of 2009. This performance was primarily driven by a substantial rebound in Trading and Principal Investments, which saw a revenue increase of 43% year-over-year, benefiting from improved results in Principal Investments, FICC (Fixed Income, Currency, and Commodities), and Equities. Investment Banking also showed robust growth, with a 44% increase in net revenues driven by strong underwriting performance. The firm's improved profitability is also reflected in its operating expenses, where the compensation and benefits as a percentage of net revenues fell to 43.0% from 50.0% in the prior year's first quarter, reaching a company record low for the period. Goldman Sachs actively managed its capital during the quarter, repurchasing approximately $2.27 billion of its common stock. The firm maintained strong capital ratios, with a Tier 1 capital ratio of 15.0% as of March 31, 2010, well above regulatory requirements. Overall, the report indicates a solid recovery and improved operational performance for Goldman Sachs heading into the second quarter of 2010.

Financial Highlights

25 data points
Beta

Net Income

$3.46B

EPS (Diluted)

$5.59

Total Assets

$880.53B

Free Cash Flow

-$7.50B

Financial Statements
Beta
Net Income$3.46B
EPS (Basic)$6.02
EPS (Diluted)$5.59
Shares Outstanding (Basic)546.00M
Shares Outstanding (Diluted)590.00M

Key Highlights

  • 1Net earnings increased significantly to $3.46 billion ($5.59 per diluted share) in Q1 2010 from $1.81 billion ($3.39 per diluted share) in Q1 2009.
  • 2Trading and Principal Investments revenue grew 43% to $10.25 billion, driven by strong performance in FICC, Equities, and Principal Investments.
  • 3Investment Banking revenue increased 44% to $1.18 billion, with strong growth in both underwriting and financial advisory.
  • 4The compensation and benefits expense ratio to net revenues decreased to 43.0% from 50.0% in the prior year quarter.
  • 5Goldman Sachs repurchased $2.27 billion of its common stock during the quarter.
  • 6The firm maintained strong capital adequacy, with a Tier 1 capital ratio of 15.0% as of March 31, 2010.

Frequently Asked Questions

The substantial increase in net earnings was primarily driven by a significant rebound in the Trading and Principal Investments segment, which benefited from stronger client activity, improved market conditions, and positive results in Principal Investments. Additionally, the Investment Banking segment also contributed positively with strong underwriting revenues.

Goldman Sachs demonstrated improved expense management, with the ratio of compensation and benefits to net revenues decreasing significantly to 43.0% in Q1 2010 from 50.0% in Q1 2009. This improvement reflects higher net revenues and a focus on operational efficiency, reaching a company record low for the first quarter.

The firm maintained a strong capital position, with a Tier 1 capital ratio of 15.0% as of March 31, 2010, exceeding regulatory requirements. To manage its share count and offset increases from employee compensation, Goldman Sachs repurchased approximately $2.27 billion of its common stock during the quarter.

The Trading and Principal Investments segment was the strongest performer, with a 43% revenue increase driven by FICC, Equities, and Principal Investments. Investment Banking also showed robust growth with a 44% revenue increase, primarily from underwriting activities. Asset Management and Securities Services saw a slight decrease in revenues compared to the prior year.