10-QPeriod: Q3 FY2022

GOLDMAN SACHS GROUP INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. (GS) reported its third quarter 2022 results, showing a decrease in net earnings to $3.07 billion from $5.38 billion in the prior year period, with diluted EPS falling to $8.25 from $14.93. This decline was primarily driven by a significant drop in Investment Banking revenues, particularly in underwriting and financial advisory, reflecting a slowdown in M&A and capital markets activity compared to a strong 2021. Asset Management revenues also saw a decrease, mainly due to lower gains in equity and debt investments, though this was partially offset by higher management fees, boosted by the acquisition of NN Investment Partners and improved net interest income. The Global Markets segment demonstrated resilience with higher net revenues, driven by strong performance in FICC (Fixed Income, Currencies, and Commodities), though equities saw a decline. The Consumer & Wealth Management segment showed robust growth, with net revenues nearly doubling year-over-year, propelled by increased credit card balances and higher deposit spreads. The firm's efficiency ratio deteriorated to 64.3% from 48.4% in the prior year, reflecting higher operating expenses and lower revenues. Despite the challenging revenue environment, particularly in investment banking and asset management, Goldman Sachs maintained a strong capital position, with a Common Equity Tier 1 (CET1) capital ratio of 14.3% under Standardized Capital Rules. The firm returned $1.89 billion to shareholders through dividends and share repurchases in the quarter. The overall results indicate a more subdued quarter compared to the exceptional performance in the prior year, influenced by broader macroeconomic and geopolitical concerns, leading to increased provisions for credit losses, particularly in the consumer segment.

Financial Highlights

35 data points
Beta

Net Income

$3.07B

EPS (Diluted)

$8.25

Total Assets

$1.56T

Cash & Equivalents

$284.25B

Free Cash Flow

$15.02B

Financial Statements
Beta
Interest Expense$6.51B
Net Income$3.07B
EPS (Basic)$8.35
EPS (Diluted)$8.25
Shares Outstanding (Basic)352.80M
Shares Outstanding (Diluted)359.20M

Key Highlights

  • 1Net earnings decreased by 43% to $3.07 billion in Q3 2022 compared to $5.38 billion in Q3 2021.
  • 2Diluted Earnings Per Share (EPS) fell to $8.25 from $14.93 year-over-year.
  • 3Investment Banking revenues declined significantly (57%) to $1.54 billion, driven by lower underwriting and advisory activity.
  • 4Global Markets segment saw a 11% increase in net revenues to $6.20 billion, with strong performance in FICC partially offsetting a decline in Equities.
  • 5Consumer & Wealth Management segment delivered strong growth, with net revenues up 18% to $2.38 billion, driven by higher credit card balances and deposit spreads.
  • 6Provision for credit losses increased to $515 million from $175 million year-over-year, primarily due to consumer portfolio growth and macroeconomic concerns.
  • 7Common Equity Tier 1 (CET1) capital ratio remained strong at 14.3% (Standardized) / 14.6% (Advanced) as of September 30, 2022.

Frequently Asked Questions

Goldman Sachs experienced a mixed revenue performance across its segments. Investment Banking revenues saw a significant decline of 57% year-over-year, reflecting a slowdown in M&A and underwriting activity. Global Markets revenues increased by 11%, driven by strong performance in FICC. Asset Management revenues decreased by 20%, mainly due to lower gains in equity and debt investments, although management and other fees increased. The Consumer & Wealth Management segment showed robust growth with an 18% increase in net revenues, boosted by higher credit card balances and deposit spreads.

Broader macroeconomic and geopolitical concerns, including inflation, rising interest rates, and the war in Ukraine, significantly impacted Goldman Sachs' results. These factors contributed to market volatility, a decrease in global equity prices, and wider credit spreads. This environment led to lower investment banking and asset management revenues, particularly in equity and debt investments, and necessitated higher provisions for credit losses, especially in the consumer segment, reflecting increased macroeconomic concerns.

Goldman Sachs maintained a strong capital position, with its Common Equity Tier 1 (CET1) capital ratio at 14.3% under Standardized Capital Rules and 14.6% under Advanced Capital Rules as of September 30, 2022, remaining well above regulatory minimums. The firm returned $1.89 billion to shareholders during the third quarter of 2022, comprising $1.00 billion in common share repurchases and $893 million in common stock dividends, demonstrating a continued commitment to capital return.