01—Abstract
Summary
Summary of the 10-Q filed August 4, 2016. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. reported its financial results for the second quarter and first half of 2016.
For the second quarter, net earnings were $1.82 billiona, or $3.72 per diluted share, a significant increase from $1.05 billion, or $1.98 per share, in the same quarter last year. The annualized return on average common shareholders' equity improved to 8.7% from 4.8%. However, net revenues decreased by 13% year-over-year to $7.93 billion, primarily due to lower net revenues in Investing & Lending, Investment Management, and Investment Banking.
Operating expenses also saw a substantial 26% reduction to $5.47 billionb, largely driven by lower non-compensation expenses, particularly litigation and regulatory provisions, and lower compensation and benefits. For the first half of 2016, net earnings declined by 24% to $2.96 billion, or $6.39 per diluted share, down from $3.89 billion, or $7.93 per share, in the first half of 2015. This decline was attributed to a 28% decrease in net revenues to $14.27 billion, impacted by weaker performance across all major segments, especially Institutional Client Services and Investing & Lending, amidst a challenging operating environment.
Operating expenses were reduced by 27% to $10.23 billionc. The firm maintained strong capital ratios, with its Common Equity Tier 1 ratio under the Standardized approach at 13.7% and under the Basel III Advanced approach at 12.2% as of June 2016.
02—Key points
Key Highlights
- Net earnings for Q2 2016 increased significantly by 74% year-over-year to $1.82 billion, with diluted EPS rising 88% to $3.72.
- Net revenues decreased by 13% in Q2 2016 to $7.93 billion, impacted by weaker performance in Investing & Lending, Investment Management, and Investment Banking segments.
- Operating expenses were reduced by 26% in Q2 2016 to $5.47 billion, primarily due to lower non-compensation expenses, including significantly reduced provisions for litigation and regulatory matters.
- The firm maintained strong capital positions, with its Common Equity Tier 1 ratio at 13.7% (Standardized) and 12.2% (Basel III Advanced) as of June 30, 2016.
- The firm generated $5.67 billion in net cash from operating activities for the first six months of 2016, a significant improvement from a use of cash in the prior year period.
- Assets under supervision for the Investment Management segment grew to $1.31 trillion as of June 30, 2016, driven by net inflows and market appreciation.
- Goldman Sachs Bank USA successfully acquired GE Capital Bank’s online deposit platform in April 2016, contributing to a significant increase in deposits.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2016filed August 4, 2016Financial Statements
Q2 FY2016 against Q2 FY2015
| Line item | Q2 FY2016Q2 FY2015 | Change |
|---|---|---|
| Interest Expense | $1.78B$1.49B | +19.4% |
| Net Income | $1.82B$1.05B | +73.9% |
| EPS (Basic) | $3.77$2.01 | +87.6% |
| EPS (Diluted) | $3.72$1.98 | +87.9% |
| Shares Outstanding (Basic) | 431.90M451.40M | −4.3% |
| Shares Outstanding (Diluted) | 439.20M461.60M | −4.9% |
05—Questions
Frequently Asked Questions
What was Goldman Sachs' net earnings and earnings per share (EPS) for the second quarter of 2016?
For the second quarter of 2016, Goldman Sachs reported net earnings of $1.82 billion, or $3.72 per diluted share. This represents a significant increase compared to the second quarter of 2015, when net earnings were $1.05 billion, or $1.98 per diluted share.
How did the firm's net revenues perform in the second quarter of 2016 compared to the prior year?
Net revenues for the second quarter of 2016 were $7.93 billion, a decrease of 13% compared to $9.07 billion in the second quarter of 2015. This decline was primarily driven by lower revenues in the Investing & Lending, Investment Management, and Investment Banking segments.
What was the primary driver for the reduction in operating expenses?
Operating expenses decreased by 26% year-over-year to $5.47 billion in the second quarter of 2016. A significant factor in this reduction was lower non-compensation expenses, particularly a substantial decrease in net provisions for mortgage-related litigation and regulatory matters, which were a major expense in the prior year's second quarter.
How did the firm's capital ratios fare at the end of the second quarter of 2016?
Goldman Sachs maintained strong capital ratios. As of June 30, 2016, its Common Equity Tier 1 (CET1) ratio was 13.7% under the Standardized approach and 12.2% under the Basel III Advanced approach, indicating a solid capital position above regulatory requirements.
06—Continue