01—Abstract
Summary
Summary of the 10-Q filed November 3, 2023. Cited figures are marked; the original filing is the authoritative source.
Goldman Sachs Group, Inc. (GS) reported net earnings of $2.06 billiona for the third quarter of 2023, a decrease from $3.07 billion in the same period last year, with diluted EPS of $5.47, down from $8.25.
This decline was primarily driven by a significant drop in net revenues from Asset & Wealth Management, which was partially offset by higher net revenues in Global Banking & Markets and Platform Solutions. While net revenues remained largely stable year-over-year at $11.82 billionb, the firm's efficiency ratio worsened to 76.6% from 64.3% due to increased operating expenses, notably higher compensation and benefits, a substantial write-down of intangible assets related to GreenSky, and impairments in commercial real estate investments. Despite the weaker quarter-over-quarter profitability, the firm demonstrated resilience with strong capital ratios, maintaining a Common Equity Tier 1 (CET1) capital ratio of 14.8% under both Standardized and Advanced Capital Rules.
The company returned $2.44 billionc to shareholders through repurchases and dividends, underscoring a commitment to capital deployment. The firm also continues to strategically divest non-core assets, announcing agreements to sell its Personal Financial Management business and GreenSky. Looking ahead, Goldman Sachs anticipates its effective income tax rate to be under 23% for 2023.
02—Key points
Key Highlights
- Net earnings for Q3 2023 were $2.06 billion, down from $3.07 billion in Q3 2022.
- Diluted EPS decreased to $5.47 from $8.25 year-over-year.
- Total net revenues were stable at $11.82 billion, with Asset & Wealth Management revenues declining while Global Banking & Markets and Platform Solutions saw increases.
- Operating expenses increased by 18% year-over-year to $9.05 billion, leading to a higher efficiency ratio of 76.6%.
- Provision for credit losses significantly decreased to $7 million from $515 million year-over-year.
- Common Equity Tier 1 (CET1) capital ratio remained strong at 14.8%.
- Capital returned to shareholders totaled $2.44 billion in Q3 2023, including $1.50 billion in common stock repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2023filed November 3, 2023Financial Statements
Q3 FY2023 against Q3 FY2022
| Line item | Q3 FY2023Q3 FY2022 | Change |
|---|---|---|
| Interest Expense | $16.71B$6.51B | +156.8% |
| Net Income | $2.06B$3.07B | −32.9% |
| EPS (Basic) | $5.52$8.35 | −33.9% |
| EPS (Diluted) | $5.47$8.25 | −33.7% |
| Shares Outstanding (Basic) | 338.70M352.80M | −4.0% |
| Shares Outstanding (Diluted) | 343.90M359.20M | −4.3% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net earnings?
The primary driver for the decrease in net earnings was a significant decline in net revenues from Asset & Wealth Management, primarily due to net losses in Equity investments and lower Incentive fees, which were partially offset by increases in Global Banking & Markets and Platform Solutions.
How did operating expenses change compared to the prior year?
Operating expenses increased by 18% year-over-year to $9.05 billion in the third quarter of 2023. This increase was mainly due to higher compensation and benefits expenses, a $506 million write-down of intangible assets related to GreenSky, and $358 million in impairments for commercial real estate investments.
What is the firm's capital position?
Goldman Sachs maintained a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 14.8% under both Standardized and Advanced Capital Rules as of September 30, 2023. The firm also returned $2.44 billion to shareholders through dividends and share repurchases.
Are there any significant divestitures or strategic sales mentioned in the report?
Yes, the firm announced agreements to sell its Personal Financial Management business, expected to close in the fourth quarter of 2023, and GreenSky, expected to close in the first quarter of 2024.
06—Continue