10.18.2022

Goldman Sachs Unveils New Operating Segments

10.18.2022
Goldman Sachs Unveils New Operating Segments

Goldman Sachs’ third quarter results reflect the strength, breadth and diversification of our global franchise. Against the backdrop of uncertainty and volatility in the markets, we continue to prudently manage our resources and remain focused on risk management as we serve our clients. Importantly, we are confident that our strategic evolution will drive higher, more durable returns and unlock long-term value for shareholders. In January 2020, we outlined our strategy in clear and direct terms, introducing a plan to grow and strengthen our core businesses, diversify our products and services, and operate more efficiently as we drive higher, more durable returns. Today, we enter the next phase of our growth, introducing a realignment of our businesses that will enable us to further capitalize on the predominant operating model of One Goldman Sachs as we better serve our clients.” – David Solomon, Chairman and Chief Executive Officer

Source: Goldman Sachs

The Goldman Sachs Group, Inc. reported net revenues of $11.98 billion and net earnings of $3.07 billion for the third quarter ended September 30, 2022. Net revenues were $36.77 billion and net earnings were $9.94 billion for the first nine months of 2022. Diluted earnings per common share (EPS) was $8.25 for the third quarter of 2022 compared with $14.93 for the third quarter of 2021 and $7.73 for the second quarter of 2022, and was $26.71 for the first nine months of 2022 compared with $48.59 for the first nine months of 2021. Annualized return on average common shareholders’ equity (ROE)1 was 11.0% for the third quarter of 2022 and 12.2% for the first nine months of 2022. Annualized return on average tangible common shareholders’ equity (ROTE)1 was 12.0% for the third quarter of 2022 and 13.1% for the first nine months of 2022.

Highlights

During the quarter, the firm continued to support clients amid a challenging macroeconomic environment and generated solid quarterly net revenues of $11.98 billion, net earnings of $3.07 billion and diluted EPS of $8.25.

The firm ranked #1 in worldwide announced and completed mergers and acquisitions and in worldwide equity and equityrelated offerings for the year-to-date.2

Global Markets generated quarterly net revenues of $6.20 billion, reflecting strong performances in both Fixed Income, Currency and Commodities (FICC) and Equities, particularly in financing.

Consumer & Wealth Management generated record quarterly net revenues of $2.38 billion, 18% higher than the third quarter of 2021.

Firmwide Management and other fees were a record $2.24 billion for the third quarter of 2022, 15% higher than the third quarter of 2021.

Book value per common share increased by 2.1% during the quarter and 8.4% during the first nine months of 2022 to $308.22.

Net revenues were $11.98 billion for the third quarter of 2022, 12% lower than a strong third quarter of 2021 and 1% higher than the second quarter of 2022. The decrease compared with the third quarter of 2021 reflected significantly lower net revenues in Investment Banking and Asset Management, partially offset by higher net revenues in Global Markets and Consumer & Wealth Management.

Investment Banking

Net revenues in Investment Banking were $1.58 billion for the third quarter of 2022, 57% lower than a strong third quarter of 2021 and 26% lower than the second quarter of 2022.

The decrease compared with the third quarter of 2021 reflected significantly lower net revenues in Underwriting, Financial advisory and Corporate lending.

The decrease in Underwriting net revenues was due to significantly lower net revenues in both Equity and Debt underwriting, reflecting a significant decline in industry-wide volumes.

The decrease in Financial advisory net revenues reflected a significant decline in industry-wide completed mergers and acquisitions transactions from elevated activity levels in the prior year period.

The decrease in Corporate lending net revenues was primarily due to net mark-downs on acquisition financing activities and net losses on hedges.

The firm’s backlog3 was essentially unchanged compared with the end of the second quarter of 2022.

Global Markets

Net revenues in Global Markets were $6.20 billion for the third quarter of 2022, 11% higher than the third quarter of 2021 and 4% lower than the second quarter of 2022.

Net revenues in FICC were $3.53 billion, 41% higher than the third quarter of 2021, primarily reflecting significantly higher net revenues in FICC intermediation, driven by significantly higher net revenues in interest rate products and currencies, and higher net revenues in commodities and credit products, partially offset by significantly lower net revenues in mortgages.

In addition, net revenues in FICC financing were significantly higher, primarily driven by repurchase agreements and mortgage lending.

Net revenues in Equities were $2.68 billion, 14% lower than a strong third quarter of 2021, primarily due to lower net revenues in Equities intermediation, reflecting significantly lower net revenues in cash products and lower net revenues in derivatives.

Net revenues in Equities financing were slightly lower.

The full results can be read here

Source: Goldman Sachs

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