10-QPeriod: Q2 FY2014

GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) reported solid financial results for the second quarter and first half of 2014. For the three months ended June 30, 2014, net earnings were $2.04 billion, a 6% increase year-over-year, with diluted earnings per share of $4.10, up from $3.70 in the prior year's quarter. The firm's annualized return on average common shareholders' equity improved slightly to 10.9%. Total assets saw a decrease of $56 billion from the previous quarter to $860 billion, attributed to a strategic initiative to reduce lower-return activities. Net revenues increased by 6% year-over-year to $9.13 billion in the second quarter, driven by significant growth in Investing & Lending and improvements in Investment Banking and Investment Management. These gains were partially offset by a decline in Institutional Client Services due to lower activity in Fixed Income, Currencies and Commodities Client Execution, and Equities. The firm's Common Equity Tier 1 ratio remained strong at 11.4% under the Basel III Advanced approach, reflecting robust capital levels.

Financial Highlights

37 data points
Beta

Net Income

$2.04B

EPS (Diluted)

$4.10

Total Assets

$859.91B

Cash & Equivalents

$56.98B

Free Cash Flow

$340.00M

Financial Statements
Beta
Interest Expense$1.58B
Net Income$2.04B
EPS (Basic)$4.21
EPS (Diluted)$4.10
Shares Outstanding (Basic)461.70M
Shares Outstanding (Diluted)475.90M

Key Highlights

  • 1Net earnings for Q2 2014 increased 6% year-over-year to $2.04 billion.
  • 2Diluted EPS rose to $4.10 in Q2 2014 from $3.70 in Q2 2013.
  • 3Net revenues grew 6% year-over-year to $9.13 billion in Q2 2014.
  • 4Investing & Lending segment showed a significant 46% increase in net revenues, driven by equity investments.
  • 5Investment Banking revenues increased 15% year-over-year, primarily due to strong underwriting activity.
  • 6Common Equity Tier 1 ratio stood at a strong 11.4% under Basel III Advanced rules as of June 30, 2014.
  • 7Total assets decreased by $56 billion from the prior quarter to $860 billion, reflecting a strategic reduction in lower-return activities.

Frequently Asked Questions

For the second quarter of 2014, net revenues increased by 6% to $9.13 billion compared to $8.61 billion in the second quarter of 2013. This growth was primarily driven by significant increases in the Investing & Lending segment, along with improved performance in Investment Banking and Investment Management, partially offset by a decline in Institutional Client Services.

The Investing & Lending segment saw a substantial 46% increase in net revenues, largely due to strong gains from private equity investments. Investment Banking revenues grew 15%, supported by robust underwriting activity, particularly in equity offerings. Investment Management revenues increased by 9%, driven by higher assets under supervision and fees. In contrast, Institutional Client Services experienced a 11% decline in net revenues, primarily due to lower activity in Fixed Income, Currencies and Commodities Client Execution and Equities.

As of June 30, 2014, Goldman Sachs maintained a strong capital position, with a Common Equity Tier 1 (CET1) ratio of 11.4% under the Basel III Advanced approach, which is above the minimum regulatory requirements. Total shareholders' equity increased to $81.63 billion from $78.47 billion at the end of 2013, and the firm repurchased $1.25 billion of its common stock during the quarter.

Total assets decreased by $56 billion from December 2013 to $859.91 billion as of June 30, 2014. This reduction was primarily due to a firmwide initiative to reduce lower-return activities, particularly within secured client financing and the matched book, which saw a decline of approximately $42 billion. This strategic move aims to improve balance sheet efficiency and enhance risk capacity.