8-KEarnings & ResultsOther EventsExhibits & Filings

GOLDMAN SACHS GROUP INC 8-K Report, Financial Results (Oct 18, 2011)

Filed October 18, 2011For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group, Inc. reported its third quarter 2011 results on October 18, 2011, revealing a net loss of $393 million, or $0.84 per diluted share. This contrasts with a significant profit in the same quarter of the prior year and a profit in the immediately preceding quarter. The results were heavily impacted by a substantial net loss of $2.48 billion in the Investing & Lending segment, which included significant write-downs on investments in Industrial and Commercial Bank of China Limited (ICBC) and other equity and debt securities, driven by a challenging market environment characterized by declining global equity markets and unfavorable credit conditions. While the firm experienced a revenue decline across most segments, the Institutional Client Services division showed resilience, with net revenues up 16% from the prior quarter, largely driven by strong performance in Equities. However, Investment Banking revenues were down significantly year-over-year and sequentially, reflecting a broad industry-wide slowdown. The firm also highlighted ongoing expense reduction initiatives, with operating expenses down 24% from the second quarter and 29% from the prior year's third quarter, which helped to mitigate some of the impact of the revenue shortfall.

Key Highlights

  • 1Goldman Sachs reported a net loss of $393 million ($0.84 per diluted share) for Q3 2011, a significant downturn from Q3 2010 earnings and Q2 2011 profit.
  • 2The Investing & Lending segment incurred a substantial net loss of $2.48 billion, primarily due to losses on investments in ICBC and other securities amidst market downturns.
  • 3Net revenues in Institutional Client Services increased by 16% sequentially to $4.06 billion, driven by a 18% rise in Equities net revenues.
  • 4Investment Banking net revenues experienced a significant decline, down 33% year-over-year and 46% sequentially, reflecting a slowdown in industry-wide activity.
  • 5Operating expenses were reduced by 24% from the prior quarter to $4.32 billion, reflecting ongoing cost-saving initiatives.
  • 6Assets under management decreased by $23 billion to $821 billion, primarily due to market depreciation in equity assets.

Frequently Asked Questions

Goldman Sachs reported a net loss of $393 million, or $0.84 per diluted share, for the third quarter ended September 30, 2011. This contrasts with net earnings in the prior year's third quarter and the immediately preceding quarter.

The primary driver of the net loss was a significant negative net revenue of $2.48 billion in the Investing & Lending segment. This included substantial losses from investments in ICBC and other equity and debt securities, attributed to declining global equity markets and challenging credit conditions.

Institutional Client Services showed a sequential improvement with net revenues up 16%, driven by strong Equities performance. Investment Banking revenues declined significantly, reflecting a broad industry slowdown. Investment Management revenues were slightly down sequentially and year-over-year, with a decrease in assets under management due to market depreciation.

Goldman Sachs continued to implement expense reduction initiatives, resulting in operating expenses of $4.32 billion, a decrease of 24% from the second quarter and 29% from the third quarter of the prior year.