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

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.

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.

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