01—Abstract
Summary
Summary of the 10-Q filed May 2, 2022. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. reported a decrease in net earnings for the first quarter of 2022, with net earnings of $3.94 billiona, down 42% from $6.84 billion in the prior year's quarter.
This decline was primarily driven by lower revenues in Investment Banking and Asset Management, impacted by broader macroeconomic and geopolitical concerns that led to market volatility. The company's total net revenues decreased by 27% year-over-year to $12.93 billionb. Despite the decline in earnings, Goldman Sachs demonstrated resilience with a solid return on average common shareholders' equity (ROE) of 15.0% for the quarter.
The company also saw an increase in its Common Equity Tier 1 (CET1) capital ratio, ending the quarter at 14.6%c under the Advanced Capital Rules. The acquisition of GreenSky in March 2022 and NN Investment Partners in April 2022 are expected to accelerate strategic growth. Management remains focused on its medium-term targets for ROE, ROTE, and efficiency ratio, signaling confidence in future performance.
02—Key points
Key Highlights
- Net earnings decreased by 42% to $3.94 billion, compared to $6.84 billion in Q1 2021.
- Total net revenues declined by 27% year-over-year to $12.93 billion, impacted by lower Investment Banking and Asset Management revenues.
- Investment Banking revenues fell 40% due to a significant slowdown in equity underwriting.
- Asset Management revenues decreased by 88% primarily due to losses in Equity Investments.
- Global Markets segment saw a 4% increase in net revenues to $7.87 billion, driven by strong FICC intermediation and currency/commodity revenues.
- Consumer & Wealth Management segment showed growth with a 21% increase in net revenues to $2.10 billion, boosted by wealth management and consumer banking.
- Common Equity Tier 1 (CET1) capital ratio remained strong at 14.6% (Advanced Capital Rules), well above regulatory requirements.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed May 2, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Interest Expense | $1.39B$1.57B | −11.9% |
| Net Income | $3.94B$6.84B | −42.4% |
| EPS (Basic) | $10.87$18.80 | −42.2% |
| EPS (Diluted) | $10.76$18.60 | −42.2% |
| Shares Outstanding (Basic) | 351.20M356.60M | −1.5% |
| Shares Outstanding (Diluted) | 355.90M360.90M | −1.4% |
05—Questions
Frequently Asked Questions
What drove the significant decrease in net earnings?
The decrease in net earnings was primarily driven by lower revenues in Investment Banking and Asset Management. This was due to broader macroeconomic and geopolitical concerns that led to market volatility, impacting equity underwriting volumes and equity investment performance.
How did the different business segments perform?
Investment Banking and Asset Management revenues were significantly lower year-over-year. Global Markets showed a modest increase in revenue, while Consumer & Wealth Management experienced robust growth. The company is strategically acquiring businesses like GreenSky and NN Investment Partners to bolster growth in specific segments.
What is the company's capital position?
Goldman Sachs maintained a strong capital position, with its Common Equity Tier 1 (CET1) capital ratio at 14.6% under the Advanced Capital Rules as of March 31, 2022. This ratio is well above regulatory requirements, indicating robust capital adequacy.
What is the outlook for the company's efficiency ratio?
The company's efficiency ratio for the first quarter of 2022 was 59.7%, an increase from 53.3% in the prior year's quarter. However, the company has a medium-term target efficiency ratio of approximately 60%, suggesting it views the current ratio as aligned with its strategic goals.
06—Continue