10-QPeriod: Q2 FY2023

GOLDMAN SACHS GROUP INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. reported a decrease in net revenues and net earnings for the second quarter and first half of 2023 compared to the prior year. This decline was primarily driven by lower performance in Global Banking & Markets, particularly in FICC (Fixed Income, Currencies, and Commodities) intermediation and investment banking fees, reflecting a more challenging market environment. While Asset & Wealth Management saw some improvement in fees due to higher average assets under supervision and lower fee waivers, it was impacted by lower incentive fees and net losses in equity investments. The Platform Solutions segment showed growth, largely due to higher revenues from consumer platforms, though it also incurred significant operating expenses and impairments. Despite the revenue headwinds, the company maintained strong capital ratios, with CET1 ratios well above regulatory minimums. The firm returned substantial capital to shareholders through dividends and share repurchases, and its liquidity position remained robust. However, increased operating expenses, particularly due to impairments in goodwill and commercial real estate, led to a higher efficiency ratio and lower profitability compared to the prior year. Investors should monitor the ongoing impact of macroeconomic conditions, interest rate sensitivity, and the firm's ability to navigate a dynamic market landscape.

Financial Highlights

36 data points
Beta

Net Income

$1.22B

EPS (Diluted)

$3.08

Total Assets

$1.57T

Cash & Equivalents

$270.93B

Free Cash Flow

$31.23B

Financial Statements
Beta
Interest Expense$15.15B
Net Income$1.22B
EPS (Basic)$3.09
EPS (Diluted)$3.08
Shares Outstanding (Basic)342.30M
Shares Outstanding (Diluted)347.20M

Key Highlights

  • 1Net revenues decreased by 8% to $10.9 billion in Q2 2023 compared to Q2 2022, driven by weaker Global Banking & Markets performance.
  • 2Net earnings for Q2 2023 were $1.22 billion, a significant decrease from $2.93 billion in Q2 2022, resulting in diluted EPS of $3.08.
  • 3Global Banking & Markets segment pre-tax earnings decreased by 23% year-over-year, impacted by lower FICC intermediation and investment banking fees.
  • 4Asset & Wealth Management segment reported a pre-tax loss of $243 million in Q2 2023, compared to pre-tax earnings of $207 million in Q2 2022, largely due to impairments and lower incentive fees.
  • 5Platform Solutions segment net revenues more than doubled year-over-year to $659 million, but reported a pre-tax loss of $872 million due to significant operating expenses and goodwill impairment.
  • 6The firm maintained strong capital ratios, with a Standardized CET1 capital ratio of 14.9% and an Advanced CET1 capital ratio of 14.4% as of June 30, 2023.
  • 7Total operating expenses increased by 12% year-over-year in Q2 2023, primarily due to impairments related to commercial real estate and goodwill.

Frequently Asked Questions

Goldman Sachs reported net revenues of $10.9 billion and net earnings of $1.22 billion for Q2 2023. This represents a decrease compared to Q2 2022, where net revenues were $11.9 billion and net earnings were $2.93 billion. The decline was primarily attributed to weaker performance in the Global Banking & Markets segment.

The decrease in net revenues was mainly due to lower performance in Global Banking & Markets, specifically in FICC intermediation and investment banking fees, reflecting a more challenging macroeconomic environment and reduced transaction volumes. Asset & Wealth Management also saw a slight decline, while Platform Solutions experienced growth.

Goldman Sachs maintained strong capital ratios, with its Common Equity Tier 1 (CET1) capital ratio standing at 14.9% under Standardized Capital Rules and 14.4% under Advanced Capital Rules as of June 30, 2023. These ratios remain well above regulatory requirements, indicating a solid capital position.

Global Banking & Markets faced headwinds due to market conditions impacting investment banking and FICC activities. Asset & Wealth Management is targeting growth in third-party alternatives and aims for mid-teen ROE and mid-twenties pre-tax margins in the medium term. Platform Solutions is focusing on achieving profitability by the end of 2025, with growth driven by consumer platforms.