01—Abstract
Summary
Summary of the 10-Q filed August 4, 2017. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. (GS) reported its financial results for the second quarter and the first half of 2017 in its 10-Q filing.
For the second quarter, net earnings were $1.83 billiona, essentially unchanged from the prior year, with diluted earnings per share increasing by 6% to $3.95. The firm maintained strong capital ratios, with a Common Equity Tier 1 (CET1) ratio of 13.9% under the Standardized approach. Net revenues remained stable at $7.89 billion, as strong performance in Investing & Lending and Investment Management offset declines in Institutional Client Services, particularly in Fixed Income, Currency, and Commodities (FICC) Client Execution.
For the first half of 2017, net earnings surged by 38% to $4.09 billionb, with diluted earnings per share increasing by 42% to $9.10. This significant improvement was partly driven by a $485 million reduction in the provision for taxes due to the adoption of a new accounting standard for employee share-based payments.
Net revenues for the half-year increased by 12% to $15.91 billionc, propelled by strong growth in Investing & Lending, Investment Management, and Investment Banking. Operating expenses increased by 6% in the first half, primarily due to higher compensation and benefits expenses linked to increased net revenues.
02—Key points
Key Highlights
- Net earnings for Q2 2017 were $1.83 billion, flat year-over-year, while diluted EPS increased 6% to $3.95.
- Net revenues for Q2 2017 were $7.89 billion, essentially unchanged from Q2 2016, with growth in Investing & Lending and Investment Management offsetting declines in Institutional Client Services (FICC Client Execution).
- First half 2017 net earnings increased 38% to $4.09 billion, and diluted EPS rose 42% to $9.10.
- First half 2017 net revenues increased 12% to $15.91 billion, driven by strong performance in Investing & Lending, Investment Management, and Investment Banking.
- Operating expenses for Q2 2017 decreased by 2% year-over-year, while first half operating expenses increased by 6% due to higher compensation.
- The firm maintained strong capital and liquidity positions with a CET1 ratio of 13.9% (Standardized approach) and global core liquid assets of $221 billion as of June 2017.
- Adoption of ASU No. 2016-09 in Q1 2017 resulted in a $485 million tax benefit in the first half of 2017, boosting EPS by $1.16.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2017filed August 4, 2017Financial Statements
Q2 FY2017 against Q2 FY2016
| Line item | Q2 FY2017Q2 FY2016 | Change |
|---|---|---|
| Interest Expense | $2.43B$1.78B | +36.9% |
| Net Income | $1.83B$1.82B | +0.5% |
| EPS (Basic) | $4.00$3.77 | +6.1% |
| EPS (Diluted) | $3.95$3.72 | +6.2% |
| Shares Outstanding (Basic) | 406.10M431.90M | −6.0% |
| Shares Outstanding (Diluted) | 413.30M439.20M | −5.9% |
05—Questions
Frequently Asked Questions
How did Goldman Sachs' profitability change in the second quarter of 2017 compared to the second quarter of 2016?
In the second quarter of 2017, Goldman Sachs reported net earnings of $1.83 billion, which was essentially unchanged compared to $1.82 billion in the second quarter of 2016. Diluted earnings per common share increased by 6% to $3.95 in Q2 2017 from $3.72 in Q2 2016.
What drove the significant increase in net earnings for the first half of 2017?
The first half of 2017 saw a substantial 38% increase in net earnings to $4.09 billion compared to $2.96 billion in the first half of 2016. This growth was driven by a 12% increase in net revenues, particularly strong performance in Investing & Lending, Investment Management, and Investment Banking. Additionally, the adoption of ASU No. 2016-09 in the first quarter of 2017 provided a tax benefit of $485 million, which significantly boosted earnings per share.
How were the different business segments performing in the second quarter of 2017?
In the second quarter of 2017, net revenues were stable overall. Investment Banking revenues saw a slight decrease of 3%. Institutional Client Services revenues declined by 17%, primarily due to significantly lower revenues in Fixed Income, Currency and Commodities (FICC) Client Execution. Investing & Lending revenues surged by 42%, driven by strong gains in equity securities. Investment Management revenues grew by 13%, reflecting higher assets under supervision and fees.
What is Goldman Sachs' capital position as of June 2017?
As of June 2017, Goldman Sachs maintained strong capital ratios. The Common Equity Tier 1 (CET1) ratio was 13.9% under the Standardized approach and 12.5% under the Basel III Advanced approach. Global core liquid assets stood at $221 billion, indicating a solid liquidity position.
06—Continue