01—Abstract
Summary
Summary of the 10-Q filed August 4, 2022. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group Inc. (GS) reported its second quarter 2022 results, showing a significant year-over-year decrease in net earnings and diluted EPS.
Net revenues declined by 23% to $11.86 billiona, primarily impacted by lower performance in Investment Banking and Asset Management, which was partially offset by stronger results in Global Markets and Consumer & Wealth Management. The firm experienced a significant increase in the provision for credit losses to $667 million, a reversal from a net benefit in the prior year quarter, reflecting portfolio growth and broader macroeconomic concerns.
Operating expenses decreased by 11%b year-over-year, mainly due to lower compensation and benefits, although non-compensation expenses rose. The company continued to return capital to shareholders through share repurchases and dividends.
02—Key points
Key Highlights
- Net revenues for Q2 2022 were $11.86 billion, down 23% year-over-year, impacted by weaker Investment Banking and Asset Management performance.
- Diluted EPS was $7.73 for Q2 2022, down from $15.02 in Q2 2021.
- Provision for credit losses increased significantly to $667 million, compared to a net benefit of $92 million in Q2 2021.
- Operating expenses decreased by 11% to $7.65 billion, primarily driven by lower compensation and benefits.
- The firm returned $1.22 billion to common shareholders in Q2 2022 through $500 million in share repurchases and $719 million in dividends.
- The Common Equity Tier 1 (CET1) capital ratio remained strong at 14.2% under Standardized Rules and 14.3% under Advanced Rules.
- Acquisitions of NN Investment Partners and GreenSky were completed, contributing to increased expenses and assets in the respective business segments.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed August 4, 2022Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Interest Expense | $3.12B$1.31B | +137.9% |
| Net Income | $2.93B$5.49B | −46.6% |
| EPS (Basic) | $7.81$15.22 | −48.7% |
| EPS (Diluted) | $7.73$15.02 | −48.5% |
| Shares Outstanding (Basic) | 355.00M350.80M | +1.2% |
| Shares Outstanding (Diluted) | 360.50M356.00M | +1.3% |
05—Questions
Frequently Asked Questions
What was the main driver of the decrease in net earnings compared to the prior year?
The decrease in net earnings was primarily driven by significantly lower net revenues in Investment Banking and Asset Management, coupled with a substantial increase in the provision for credit losses. These factors more than offset the stronger performance seen in Global Markets and Consumer & Wealth Management, and the reduction in operating expenses.
How did the different business segments perform?
Investment Banking saw a significant revenue decline due to lower underwriting activity. Asset Management experienced net losses in Equity investments and lower revenues from Lending and debt investments, though Management and other fees increased. Global Markets showed strong performance, with higher revenues in FICC and Equities, while Consumer & Wealth Management also delivered higher revenues due to growth in both wealth management and consumer banking.
What is the outlook for credit losses?
The firm increased its provision for credit losses significantly in the second quarter of 2022, attributing it to portfolio growth (particularly in credit cards) and the impact of broad macroeconomic concerns. This suggests a more cautious outlook on credit quality given the prevailing economic uncertainties.
What is the company's capital position?
Goldman Sachs maintained a strong capital position, with a Common Equity Tier 1 (CET1) capital ratio of 14.2% under Standardized Rules and 14.3% under Advanced Rules as of June 30, 2022, well above regulatory minimums.
06—Continue