GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2010

Summary

Goldman Sachs Group, Inc. (GS) reported a significant decline in net earnings for the second quarter of 2010 compared to the same period in 2009, with diluted earnings per common share falling to $0.78 from $4.93. This was largely driven by substantially lower net revenues in the Trading and Principal Investments segment, particularly within Fixed Income, Currencies, and Commodities (FICC) and Equities, which faced challenging market conditions including lower activity levels and widening credit spreads. The firm also incurred significant one-time expenses, including a $600 million UK bank payroll tax and a $550 million settlement with the SEC related to a CDO offering. Excluding these items, diluted earnings per share were $2.75, and the annualized return on average common shareholders' equity was 9.5%. Despite the weaker quarterly performance and increased expenses, the firm saw an increase in total assets to $883.19 billion and total shareholders' equity to $73.82 billion, reflecting robust capital positioning with a Tier 1 capital ratio of 15.2%.

Key Highlights

• 1Net earnings applicable to common shareholders for the three months ended June 30, 2010, were $453 million, a significant decrease from $2,718 million in the prior year's period.
• 2Diluted earnings per common share were $0.78 for the quarter, down from $4.93 in the second quarter of 2009.
• 3Total net revenues decreased to $8.84 billion from $13.76 billion year-over-year, primarily due to a decline in Trading and Principal Investments.
• 4The firm recognized $600 million for the UK bank payroll tax and $550 million for the SEC settlement in operating expenses during the quarter.
• 5Despite the revenue decline, total assets grew to $883.19 billion and total shareholders' equity increased to $73.82 billion.
• 6The Tier 1 capital ratio remained strong at 15.2%, and the Tier 1 leverage ratio was 8.0% as of June 30, 2010.

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