GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2020

Summary

Goldman Sachs Group, Inc. reported strong net revenues of $13.30 billion for the second quarter of 2020, a significant 41% increase year-over-year, driven by robust performance across Global Markets and Investment Banking segments. However, net earnings saw a substantial decline of 85% to $373 million, largely impacted by a $2.96 billion provision for litigation and regulatory proceedings, which also significantly affected operating expenses and the efficiency ratio. The firm saw a notable increase in its provision for credit losses to $1.59 billion, reflecting the economic impact of the COVID-19 pandemic and the adoption of the CECL standard. Despite the significant legal provisions and increased credit loss provisions impacting profitability, the firm maintained a strong capital position, with a CET1 capital ratio of 13.3% under the Standardized Capital Rules as of June 30, 2020. The firm also experienced a substantial increase in deposits, contributing to a stronger liquidity position. Management highlighted continued client activity and the firm's ability to deploy balance sheet to meet client needs amidst market volatility as key drivers of revenue performance.

Key Highlights

• 1Net revenues increased by 41% to $13.30 billion in Q2 2020 compared to Q2 2019.
• 2Net earnings decreased by 85% to $373 million in Q2 2020 compared to Q2 2019, primarily due to litigation provisions.
• 3Provision for credit losses increased significantly to $1.59 billion in Q2 2020 from $214 million in Q2 2019.
• 4Global Markets segment revenue grew by 93% year-over-year, driven by strong client activity in FICC and Equities.
• 5Investment Banking revenues increased by 36% year-over-year, with strong performance in underwriting.
• 6CET1 capital ratio remained strong at 13.3% (Standardized Capital Rules) as of June 30, 2020.
• 7The firm suspended stock repurchases through Q3 2020 due to FRB requirements.

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