8-KEarnings & ResultsOther EventsExhibits & Filings

GOLDMAN SACHS GROUP INC 8-K Report, Financial Results (Jul 16, 2013)

Filed July 16, 2013For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

Goldman Sachs Group Inc. reported its second quarter 2013 financial results on July 16, 2013. The firm posted strong net revenues of $8.61 billion and net earnings of $1.93 billion, translating to diluted earnings per share of $3.70. This represents a significant increase compared to the $1.78 per share reported in the second quarter of 2012, though it was lower than the $4.29 from the first quarter of 2013. The results were driven by robust performance across several key business segments, particularly Investment Banking and Institutional Client Services. The company highlighted strong growth in Investment Banking net revenues, up 29% year-over-year, primarily due to increased activity in both debt and equity underwriting. Institutional Client Services also saw a 11% increase in net revenues compared to the prior year, benefiting from higher revenues in Fixed Income, Currency and Commodities Client Execution, and Equities. Management also noted improvements in capital ratios, with the Tier 1 capital ratio rising to 15.6% and the Tier 1 common ratio to 13.5%.

Key Highlights

  • 1Reported Q2 2013 net revenues of $8.61 billion and net earnings of $1.93 billion.
  • 2Diluted earnings per common share were $3.70, a significant increase from $1.78 in Q2 2012.
  • 3Investment Banking net revenues surged 29% year-over-year to $1.55 billion, driven by underwriting activity.
  • 4Institutional Client Services net revenues increased 11% year-over-year to $4.31 billion.
  • 5Annualized return on average common shareholders' equity (ROE) was 10.5% for Q2 2013.
  • 6Tier 1 capital ratio improved to 15.6% and Tier 1 common ratio to 13.5% as of June 30, 2013.
  • 7The firm repurchased 10.5 million shares of common stock for $1.60 billion during the quarter.

Frequently Asked Questions

The primary drivers for the year-over-year increase in net earnings were strong performance in Investment Banking, with a 29% rise in net revenues due to increased underwriting activity (debt and equity), and a 11% increase in net revenues from Institutional Client Services, supported by higher activity in Fixed Income, Currency and Commodities Client Execution, and Equities.

Goldman Sachs demonstrated an improvement in its capital position. The Tier 1 capital ratio increased to 15.6% and the Tier 1 common ratio rose to 13.5% as of June 30, 2013, compared to March 31, 2013. Additionally, the firm repurchased approximately $1.60 billion of its common stock during the quarter.

The Investment Management segment reported net revenues of $1.33 billion, which was essentially unchanged compared to both the second quarter of 2012 and the first quarter of 2013. While management and other fees increased due to higher average assets under supervision, this was offset by lower incentive fees. Total assets under supervision decreased by $13 billion during the quarter to $955 billion.

Operating expenses were $5.97 billion, 14% higher than Q2 2012, primarily driven by a 27% increase in compensation and benefits expenses, reflecting the significant rise in net revenues. Non-compensation expenses were essentially unchanged year-over-year, although they included $149 million in net provisions for litigation and regulatory proceedings.