01—Abstract
Summary
Summary of the 10-Q filed November 2, 2020. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group Inc. reported strong third-quarter 2020 results, with net earnings of $3.37 billiona, a significant increase from $1.88 billion in the prior year's quarter.
Diluted earnings per share (EPS) rose 87% to $8.98b. This performance was driven by broad-based strength across all segments, notably in Asset Management due to strong investment gains and in Global Markets, which benefited from robust client activity in both Fixed Income, Currency, and Commodities (FICC) and Equities.
Despite a 10%c increase in operating expenses, largely due to higher compensation and provisions for litigation and regulatory matters, the firm's efficiency ratio improved to 57.5% from 67.5% year-over-year. The company maintained a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 14.5% under Standardized Capital Rules.
02—Key points
Key Highlights
- Net earnings surged 79% year-over-year to $3.37 billion in Q3 2020.
- Diluted EPS increased by 87% to $8.98, reflecting strong profitability.
- Net revenues grew 30% to $10.78 billion, driven by robust performance across all business segments.
- Global Markets segment showed significant strength, with FICC and Equities intermediation and financing activities contributing substantially to revenue growth.
- Asset Management segment benefited from strong investment gains in public equities, leading to a significant increase in net revenues.
- Operating expenses increased by 10%, primarily due to higher compensation and increased provisions for litigation and regulatory proceedings.
- Common Equity Tier 1 (CET1) capital ratio remained strong at 14.5% (Standardized) and 12.9% (Advanced), demonstrating robust capital adequacy.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed November 2, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Interest Expense | $1.85B$4.45B | −58.5% |
| Net Income | $3.37B$1.88B | +79.4% |
| EPS (Basic) | $9.07$4.83 | +87.8% |
| EPS (Diluted) | $8.98$4.79 | +87.5% |
| Shares Outstanding (Basic) | 355.90M370.00M | −3.8% |
| Shares Outstanding (Diluted) | 359.90M374.30M | −3.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of Goldman Sachs' revenue growth in Q3 2020?
Revenue growth was driven by broad-based strength across all segments. Specifically, Asset Management benefited from significant net gains in public equities, while Global Markets saw robust client activity in both FICC and Equities.
How did operating expenses change compared to the previous year?
Operating expenses increased by 10% year-over-year, primarily due to higher compensation and benefits expenses reflecting the strong net revenues, and increased non-compensation expenses, notably higher provisions for litigation and regulatory proceedings.
What is the company's capital position as of September 30, 2020?
Goldman Sachs maintained a strong capital position, with a Common Equity Tier 1 (CET1) capital ratio of 14.5% under Standardized Capital Rules and 12.9% under Advanced Capital Rules.
What was the impact of the COVID-19 pandemic on the company's provisions for credit losses?
The provision for credit losses increased significantly for the nine months ended September 2020 compared to the prior year, primarily due to higher provisions related to wholesale loans, reflecting forecasts of economic deterioration due to the COVID-19 pandemic under the CECL standard, as well as individual impairments and rating downgrades. For the third quarter of 2020 specifically, the provision decreased slightly year-over-year.
06—Continue