10-QPeriod: Q3 FY2020

GOLDMAN SACHS GROUP INC Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 2, 2020For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. reported strong third-quarter 2020 results, with net earnings of $3.37 billion, a significant increase from $1.88 billion in the prior year's quarter. Diluted earnings per share (EPS) rose 87% to $8.98. 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% 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.

Financial Highlights

34 data points
Beta

Net Income

$3.37B

EPS (Diluted)

$8.98

Total Assets

$1.13T

Cash & Equivalents

$153.20B

Free Cash Flow

$33.94B

Financial Statements
Beta
Interest Expense$1.85B
Net Income$3.37B
EPS (Basic)$9.07
EPS (Diluted)$8.98
Shares Outstanding (Basic)355.90M
Shares Outstanding (Diluted)359.90M

Key Highlights

  • 1Net earnings surged 79% year-over-year to $3.37 billion in Q3 2020.
  • 2Diluted EPS increased by 87% to $8.98, reflecting strong profitability.
  • 3Net revenues grew 30% to $10.78 billion, driven by robust performance across all business segments.
  • 4Global Markets segment showed significant strength, with FICC and Equities intermediation and financing activities contributing substantially to revenue growth.
  • 5Asset Management segment benefited from strong investment gains in public equities, leading to a significant increase in net revenues.
  • 6Operating expenses increased by 10%, primarily due to higher compensation and increased provisions for litigation and regulatory proceedings.
  • 7Common Equity Tier 1 (CET1) capital ratio remained strong at 14.5% (Standardized) and 12.9% (Advanced), demonstrating robust capital adequacy.

Frequently Asked Questions

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.

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.

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.

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.