10-QPeriod: Q2 FY2022

GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

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 billion, 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% 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.

Financial Highlights

35 data points
Beta

Net Income

$2.93B

EPS (Diluted)

$7.73

Total Assets

$1.60T

Cash & Equivalents

$288.61B

Free Cash Flow

$44.34B

Financial Statements
Beta
Interest Expense$3.12B
Net Income$2.93B
EPS (Basic)$7.81
EPS (Diluted)$7.73
Shares Outstanding (Basic)355.00M
Shares Outstanding (Diluted)360.50M

Key Highlights

  • 1Net revenues for Q2 2022 were $11.86 billion, down 23% year-over-year, impacted by weaker Investment Banking and Asset Management performance.
  • 2Diluted EPS was $7.73 for Q2 2022, down from $15.02 in Q2 2021.
  • 3Provision for credit losses increased significantly to $667 million, compared to a net benefit of $92 million in Q2 2021.
  • 4Operating expenses decreased by 11% to $7.65 billion, primarily driven by lower compensation and benefits.
  • 5The firm returned $1.22 billion to common shareholders in Q2 2022 through $500 million in share repurchases and $719 million in dividends.
  • 6The Common Equity Tier 1 (CET1) capital ratio remained strong at 14.2% under Standardized Rules and 14.3% under Advanced Rules.
  • 7Acquisitions of NN Investment Partners and GreenSky were completed, contributing to increased expenses and assets in the respective business segments.

Frequently Asked Questions

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.

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.

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.

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.