10-QPeriod: Q3 FY2012

GOLDMAN SACHS GROUP INC Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 8, 2012For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. reported a strong recovery in its third quarter of 2012 compared to the same period in 2011, with net earnings of $1.51 billion, translating to $2.85 per diluted share. This turnaround from a net loss of $393 million in Q3 2011 highlights significant improvement, particularly in its Investing & Lending segment, which benefited from positive market conditions like tighter credit spreads and rising equity prices. Net revenues surged to $8.35 billion from $3.59 billion year-over-year, driven by robust performance in "Other principal transactions," "Market making," and "Investment banking." Despite a slight decrease in "Investment Management" and "Commissions and fees," the overall financial performance indicates a substantial rebound, supported by a solid capital position and a Tier 1 capital ratio of 15.0%. The firm also continued its share repurchase program, buying back 11.8 million shares during the quarter. The first nine months of 2012 also showed improved profitability, with net earnings of $4.58 billion compared to $3.43 billion in the prior year period. Diluted EPS reached $8.57, up from $2.70 in the first nine months of 2011. The company benefited from strong performance in Investing & Lending and stable revenues in Investment Banking and Investment Management, although Institutional Client Services saw a slight decrease. Overall, the report suggests a positive financial trajectory for Goldman Sachs, demonstrating resilience and recovery in a challenging economic environment.

Financial Highlights

37 data points
Beta

Net Income

$1.51B

EPS (Diluted)

$2.85

Total Assets

$949.21B

Cash & Equivalents

$63.64B

Free Cash Flow

$1.08B

Financial Statements
Beta
Interest Expense$1.79B
Net Income$1.51B
EPS (Basic)$2.95
EPS (Diluted)$2.85
Shares Outstanding (Basic)491.20M
Shares Outstanding (Diluted)510.90M

Key Highlights

  • 1Net earnings of $1.51 billion for Q3 2012, a significant turnaround from a net loss of $393 million in Q3 2011.
  • 2Diluted earnings per share of $2.85 for Q3 2012, compared to a diluted loss per share of $0.84 in Q3 2011.
  • 3Net revenues increased significantly to $8.35 billion in Q3 2012 from $3.59 billion in Q3 2011, driven by strong performance in Investing & Lending and Market Making.
  • 4The Investing & Lending segment reported pre-tax earnings of $802 million in Q3 2012, a substantial improvement from a pre-tax loss of $2.57 billion in Q3 2011.
  • 5Tier 1 capital ratio remained strong at 15.0% as of September 30, 2012.
  • 6The firm repurchased 11.8 million shares of common stock for $1.25 billion during the third quarter of 2012.
  • 7Net earnings for the first nine months of 2012 were $4.58 billion, an increase from $3.43 billion in the same period of 2011.

Frequently Asked Questions

Goldman Sachs reported a significant improvement in its third quarter 2012 financial performance. Net earnings were $1.51 billion, or $2.85 per diluted share, a substantial turnaround from a net loss of $393 million, or a loss of $0.84 per diluted share, in the third quarter of 2011. This was driven by a substantial increase in net revenues to $8.35 billion from $3.59 billion, largely due to stronger performance in the Investing & Lending and Market Making segments.

The Investing & Lending segment showed a dramatic improvement, reporting pre-tax earnings of $802 million in Q3 2012, a significant rebound from a pre-tax loss of $2.57 billion in Q3 2011. This segment benefited from positive market conditions, including tighter credit spreads and higher equity prices. Market Making revenues also saw a substantial increase, up 47% year-over-year, and Investment Banking revenues increased by 50%, indicating broad-based strength across key business areas.

Goldman Sachs maintained a strong capital position. As of September 30, 2012, its Tier 1 capital ratio was 15.0%, and its Tier 1 common ratio was 13.1%. The firm also continued its share repurchase program, buying back 11.8 million shares for $1.25 billion during the quarter, indicating confidence in its capital levels and a commitment to returning capital to shareholders.

The significant increase in net revenues was primarily driven by "Other principal transactions," which moved from a negative $2.54 billion in Q3 2011 to a positive $1.80 billion in Q3 2012. "Market making" revenues also saw a substantial increase of 47% year-over-year, and "Investment banking" revenues rose by 50%. These improvements were supported by a more favorable market environment, including tighter credit spreads and higher equity prices.