10-QPeriod: Q3 FY2015

GOLDMAN SACHS GROUP INC Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 3, 2015For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) reported financial results for the quarter ended September 30, 2015, showing a decrease in net earnings to $1.43 billion from $2.24 billion in the prior year's quarter, with diluted earnings per share falling to $2.90 from $4.57. This decline was primarily attributed to lower net revenues across most segments, particularly in Investing & Lending and Institutional Client Services, impacted by challenging market conditions including global economic concerns and lower commodity prices. Despite the revenue dip, Investment Banking showed a year-over-year increase in net revenues due to strong financial advisory activity, while the firm maintained robust capital ratios, with its Common Equity Tier 1 ratio remaining strong under both Standardized and Basel III Advanced approaches. Total assets saw an increase, driven by higher receivables and securities borrowed, while liabilities also rose, largely due to increased deposits and unsecured long-term borrowings.

Financial Highlights

37 data points
Beta

Net Income

$1.43B

EPS (Diluted)

$2.90

Total Assets

$880.56B

Cash & Equivalents

$65.58B

Free Cash Flow

$763.00M

Financial Statements
Beta
Interest Expense$1.28B
Net Income$1.43B
EPS (Basic)$2.95
EPS (Diluted)$2.90
Shares Outstanding (Basic)449.00M
Shares Outstanding (Diluted)458.60M

Key Highlights

  • 1Net earnings decreased by 36% year-over-year to $1.43 billion, with diluted EPS falling 37% to $2.90.
  • 2Net revenues declined by 18% year-over-year to $6.86 billion, primarily driven by lower performance in Investing & Lending and Institutional Client Services segments.
  • 3Investment Banking segment revenues increased by 6% year-over-year, boosted by strong financial advisory activity.
  • 4Operating expenses decreased by 5% year-over-year to $4.82 billion, largely due to lower compensation and benefits, though offset by higher litigation and regulatory provisions.
  • 5Common Equity Tier 1 (CET1) ratios remained strong, at 12.4% under the Standardized approach and 12.7% under the Basel III Advanced approach, demonstrating robust capital adequacy.
  • 6Global Core Liquid Assets (GCLA) stood at $192.5 billion, reflecting a commitment to maintaining strong liquidity.
  • 7The firm repurchased approximately 5.4 million shares of common stock during the quarter, totaling $1.05 billion.

Frequently Asked Questions

The decrease in net earnings was primarily driven by a significant decline in net revenues across most business segments, particularly in Investing & Lending and Institutional Client Services, which were impacted by challenging market conditions, including global economic concerns, lower commodity prices, and reduced client activity. While Investment Banking revenues increased, it was not enough to offset the declines in other segments.

Goldman Sachs maintained a strong capital position. Its Common Equity Tier 1 (CET1) ratios remained robust, at 12.4% under the Standardized approach and 12.7% under the Basel III Advanced approach. The firm also maintained a significant level of Global Core Liquid Assets (GCLA) at $192.5 billion, indicating a strong liquidity position.

Investment Banking showed a year-over-year increase in net revenues due to strong financial advisory activity. However, Institutional Client Services and Investing & Lending experienced significant revenue declines. Investment Management revenues saw a slight decrease. The overall result was impacted by challenging market conditions across several key segments.

Operating expenses decreased by 5% year-over-year. This was mainly due to lower compensation and benefits expenses, reflecting the decrease in net revenues. However, non-compensation expenses increased due to higher provisions for litigation and regulatory matters.