GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2016

Summary

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 billion, 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 billion, 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 billion. 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.

Key Highlights

• 1Net earnings for Q2 2016 increased significantly by 74% year-over-year to $1.82 billion, with diluted EPS rising 88% to $3.72.
• 2Net revenues decreased by 13% in Q2 2016 to $7.93 billion, impacted by weaker performance in Investing & Lending, Investment Management, and Investment Banking segments.
• 3Operating 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.
• 4The 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.
• 5The 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.
• 6Assets under supervision for the Investment Management segment grew to $1.31 trillion as of June 30, 2016, driven by net inflows and market appreciation.
• 7Goldman Sachs Bank USA successfully acquired GE Capital Bank’s online deposit platform in April 2016, contributing to a significant increase in deposits.

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