GOLDMAN SACHS GROUP INC Quarterly Report for Q1 Ended Mar 31, 2023

Summary

Goldman Sachs Group Inc. reported net earnings of $3.23 billion for the first quarter of 2023, a decrease from $3.94 billion in the prior year period. Diluted earnings per share (EPS) were $8.79, down from $10.76 year-over-year. Net revenues declined 5% to $12.22 billion, primarily driven by a 26% drop in investment banking fees and lower market-making revenues. However, these declines were partially offset by an 11% increase in investment management revenues and significant growth in Platform Solutions. The firm's provision for credit losses swung from a net provision of $561 million in Q1 2022 to a net benefit of $171 million in Q1 2023. This shift was largely due to a reserve reduction related to the partial sale and transfer to held-for-sale of the Marcus loans portfolio. Operating expenses increased by 9% to $8.40 billion, mainly due to real estate investment impairments, the inclusion of NN Investment Partners, and higher technology and transaction-based expenses, leading to an elevated efficiency ratio of 68.7% compared to 59.7% in the prior year. Despite the headwinds in investment banking and market-making, the firm's Asset & Wealth Management segment showed resilience, and the Platform Solutions segment experienced substantial revenue growth. Goldman Sachs remains well-capitalized, with a Common Equity Tier 1 (CET1) capital ratio of 14.8% under Standardized Capital Rules, exceeding regulatory requirements.

Key Highlights

• 1Net earnings decreased by 17.5% to $3.23 billion compared to $3.94 billion in Q1 2022.
• 2Diluted EPS fell to $8.79 from $10.76 in the prior year quarter.
• 3Total net revenues decreased by 5% to $12.22 billion, impacted by lower Investment Banking and Market Making revenues.
• 4Asset & Wealth Management revenues increased by 24% to $3.22 billion, driven by higher Management and other fees and positive Equity investment performance.
• 5Provision for credit losses improved significantly, turning into a net benefit of $171 million from a net provision of $561 million in Q1 2022.
• 6Operating expenses increased by 9% to $8.40 billion, resulting in a higher efficiency ratio of 68.7%.
• 7The firm returned $3.41 billion to shareholders in Q1 2023 through share repurchases ($2.55 billion) and dividends ($868 million).

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