10-QPeriod: Q1 FY2016

GOLDMAN SACHS GROUP INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 6, 2016For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) reported a significant year-over-year decline in performance for the first quarter of 2016. Net revenues fell by 40% to $6.34 billion, driven by lower activity across most segments, particularly Institutional Client Services and Market Making, reflecting a challenging operating environment with economic uncertainty and market volatility. Net earnings attributable to common shareholders decreased by 56% to $1.20 billion, leading to diluted earnings per share of $2.68, down from $5.94 in the prior year quarter. The firm maintained strong capital ratios, with a Common Equity Tier 1 ratio of 12.2% (Basel III Advanced approach), and reported $196 billion in Global Core Liquid Assets, indicating a stable liquidity position. Despite the performance dip, the firm returned capital to shareholders through dividends and share repurchases, signaling confidence in its capital management and future outlook.

Financial Highlights

37 data points
Beta

Net Income

$1.14B

EPS (Diluted)

$2.68

Total Assets

$878.04B

Cash & Equivalents

$97.95B

Free Cash Flow

-$3.12B

Financial Statements
Beta
Interest Expense$1.47B
Net Income$1.14B
EPS (Basic)$2.71
EPS (Diluted)$2.68
Shares Outstanding (Basic)440.80M
Shares Outstanding (Diluted)447.40M

Key Highlights

  • 1Net revenues decreased by 40% to $6.34 billion in Q1 2016 compared to Q1 2015.
  • 2Net earnings applicable to common shareholders significantly declined by 56% to $1.20 billion.
  • 3Diluted earnings per share dropped to $2.68 from $5.94 in the prior year quarter.
  • 4Institutional Client Services segment net revenues decreased by 37%, with Fixed Income, Currency and Commodities Client Execution down 47%.
  • 5Market making revenues saw a substantial decline of 53% due to difficult market conditions.
  • 6The firm maintained a strong Common Equity Tier 1 ratio of 12.2% (Basel III Advanced approach) as of March 31, 2016.
  • 7Global Core Liquid Assets remained robust at $195.8 billion as of March 31, 2016.

Frequently Asked Questions

The primary driver of the decline in net revenues was the challenging operating environment characterized by economic uncertainty, higher market volatility, and significant price pressure across equity and fixed income markets, particularly in the first half of the quarter. This impacted market-making activities, investment banking volumes (especially equity underwriting and M&A), and other principal transactions.

Goldman Sachs maintained a strong capital position. As of March 31, 2016, its Common Equity Tier 1 (CET1) ratio under the Basel III Advanced approach was 12.2%, and under the Standardized approach was 13.4%. The firm also reported $195.8 billion in Global Core Liquid Assets (GCLA), indicating ample liquidity.

Institutional Client Services saw a significant decline in net revenues (down 37%) driven by weaker performance in Fixed Income, Currency and Commodities Client Execution (down 47%) and Equities (down 23%). Investment Banking revenues were down 23% due to lower advisory and underwriting activity. Investing & Lending experienced a substantial drop in revenues and reported a pre-tax loss of $356 million. Investment Management revenues declined by 15%, mainly due to lower incentive fees.

The firm's outlook is cautiously dependent on the operating environment. Management noted that if macroeconomic concerns persist, market-making and investment banking activity levels decline further, or asset prices remain under pressure, net revenues could continue to be negatively impacted. However, the strong capital and liquidity positions provide a foundation for navigating these challenges.