Goldman Sachs Group, Inc. (the) · NYSE:GS
Goldman Sachs Group, Inc. (the) — FY2018 Earnings Presentation
20 slides from Goldman Sachs Group, Inc. (the)'s earnings presentation, Jan 16, 2019
Slide 1: Full Year and Fourth Quarter 2018 Earnings Results Presentation
Full Year and Fourth Quarter 2018 Earnings Results Presentation January 16, 2019
Slide 2: Earnings Call Agenda
Earnings Call Agenda Strategic priorities Macro perspectives and client engagement Update on 1MDB David M. Solomon, Chairman and Chief Executive Officer 1 Stephen M. Scherr, Chief Financial Officer 2 Q&A 3 Key financial highlights Segment performance review Expenses and taxes Capital, balance sheet
Slide 3: Strategic Overview
Client Centricity: One Goldman Sachs Business Reviews & Expanding our Addressable Market Investing for Scale via Technology and Platform Expansion Targets and Accountability Strategic Overview 2 Superior Long-Term Shareholder Returns Key Priorities Updates on Select Business Reviews Leverage technol
Slide 4: Macro Perspectives
Macro Perspectives 3 Economic Fundamentals Market Dynamics (4Q18) Positive but slowing global growth 2019 estimated GDP growth1: +2.4% U.S. +3.5% Global Strong corporate performance 22% 2018 estimated S&P 500 EPS growth1 $4.2 trillion Announced M&A volumes in 20182 Corporate confidence remains high
Slide 5: Annual Results Snapshot
Annual Results Snapshot Net revenues up 12% YoY, with highest net revenues since 2010 Broad contribution with every segment up YoY Net Revenues3 $36.6 billion $32.7 billion 2018 2017 EPS4 $25.27 $9.01 2018 2017 2018 Returns4,5 13.3% 14.1% ROE ROTE 2018 Book Value $207.36 $196.64 BVPS TBVPS5 Strong 2
Slide 6: Financial Overview
Financial Overview Full Year Net Revenue Mix by Segment 5 Financial Results Fee-Based or More-Recurring Revenues6 2018 61% 48% $22.3 billion $16.6 billion 2013 Investment Management 19% Institutional Client Services 37% (Financial Advisory 9%) (Underwriting 12%) (FICC 16%) (Equities 21%) Investment
Slide 7: Investment Banking Financial Results
Investment Banking Financial Results $ in millions 4Q18 vs. 3Q18 vs. 4Q17 2018 vs. 2017 Financial Advisory $ 1,201 31% 56% $ 3,507 10% Equity underwriting 315 -27% -32% 1,646 32% Debt underwriting 528 -16% -42% 2,709 -8% Total Underwriting 843 -21% -38% 4,355 4% Total Investment Banking $ 2,044 3% -
Slide 8: Institutional Client Services – FICC
Institutional Client Services – FICC FICC Net Revenues ($ in millions) 2018 net revenues increased YoY primarily reflecting higher client activity; 4Q18 performance challenged due to difficult market backdrop 4Q18 net revenues decreased YoY reflecting significantly lower net revenues in credit produ
Slide 9: Institutional Client Services – Equities
$ in millions 4Q18 vs. 3Q18 vs. 4Q17 2018 vs. 2017 Equities client execution $ 401 -41% 80% $ 2,835 39% Commissions and fees 801 19% 9% 3,055 5% Securities services 402 -8% -2% 1,710 4% Total Equities $ 1,604 -11% 17% $ 7,600 15% Institutional Client Services – Equities 2018 net revenues higher YoY
Slide 10: Investing & Lending – Equity Securities
Investing & Lending – Equity Securities Financial Results Key Highlights 2018 net revenues decreased slightly YoY as improved performance vs. vs. vs. from private equity investments largely offset net losses from public $ in millions 4Q18 3Q18 4Q17 2018 2017 investments 4Q18 net revenues reflected c
Slide 11: Investing & Lending – Debt Securities and Loans
Record net interest income in 2018 of ~$2.7 billion; 4Q18 included ~$800 million of net interest income (~$3.2 billion annual pace) Franchise adjacent loan portfolio that complements our current product offerings and expertise As of 4Q18, ~85% of total loans were secured 2018 and 4Q18 provision for
Slide 12: Investment Management Financial Results
44% 37% 75% 56% 26% 33% 15% 33% 19% 30% 10% 11% 11% $ in millions 4Q18 vs. 3Q18 vs. 4Q17 2018 vs. 2017 Management and other fees $ 1,365 -1% — $ 5,438 6% Incentive fees 153 3% 19% 830 99% Transaction revenues 186 7% 13% 754 15% Total Investment Management $ 1,704 — 2% $ 7,022 13% Investment Manageme
Slide 13: Expenses
Expenses Financial Results3 Key Highlights vs. vs. vs. Efficiency ratio13 stable YoY as net revenue growth funded $ in millions 4Q18 3Q18 4Q17 2018 2017 investments in our businesses Compensation and benefits $ 1,857 -38% -11% $12,328 6% 2018 operating expenses increased YoY, including: — Higher com
Slide 14: Capital
Capital Financial Metrics7,11,15 Key Highlights $ in billions, except per share amounts 4Q18 3Q18 4Q17 Rebuilt capital ratios to pre-Tax Legislation4 levels Common equity tier 1 (CET1) $ 73.1 $ 71.8 $ 67.0 — YoY improvement in CET1 ratios driven by retained earnings and reduced market RWAs Standardi
Slide 15: Balance Sheet & Liquidity
Balance Sheet & Liquidity Balance Sheet Allocation10,11 Key Highlights 4Q18 3Q18 4Q17 Highly liquid balance sheet and robust liquidity metrics allow the $ in billions firm to capitalize on market opportunities GCLA, segregated assets and other $ 313 $ 282 $ 285 — GCLA7 averaged $229 billion11 for 4Q
Slide 16: Cautionary Note on Forward-Looking Statements
Cautionary Note on Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the fir
Slide 17: Footnotes
Footnotes 1. 2019 estimated real gross domestic product (GDP) growth and 2018 estimated S&P 500 Index earnings per share (EPS) growth both per Goldman Sachs Research. U.S. credit z-spreads per Bloomberg. Corporate confidence level per Duke Fuqua CFO survey. 2. Dealogic – January 1, 2018 through Dece
Slide 18: Footnotes (continued)
Footnotes (continued) AVERAGE FOR THE YEAR ENDED YEAR ENDED DECEMBER 31, 2018 DECEMBER 31, 2017 Common shareholders’ equity, as reported $ 73,985 $ 74,721 Impact of Tax Legislation (42) 338 Common shareholders’ equity, excluding the impact of Tax Legislation 73,943 75,059 Goodwill and identifiable i
Slide 19: Footnotes (continued)
Footnotes (continued) 9. Includes consolidated investment entity assets reported in “Other Assets” on the consolidated statements of financial condition, substantially all of which relate to entities engaged in real estate investment activities. These assets are generally accounted for at historical
Slide 20: Footnotes (continued)
Footnotes (continued) 13. Efficiency ratio is calculated by dividing total operating expenses by total net revenues. 14. In the first quarter of 2018, the firm adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which required a change in the presentation of certain costs f