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Goldman Sachs Reports Earnings Per Common Share Of $15.46 For 2013

Conference Call

A conference call to discuss the firm’s results, outlook and related matters will be held at 9:30 am (ET). The call will be open to the public. Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (U.S. domestic) or 1-706-679-5627 (international). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the firm’s web site, www.gs.com/shareholders. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the firm’s web site or by dialing 1-855-859-2056 (U.S. domestic) or 1-404-537-3406 (international) passcode number 20446309, beginning approximately two hours after the event. Please direct any questions regarding obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at gs-investor-relations@gs.com.

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES  SEGMENT NET REVENUES  (UNAUDITED)  $ in millions
  Year Ended % Change From

 December 31, 
     

 December 31, 

 December 31, 
2013 2012 2012
Investment Banking
Financial Advisory $ 1,978 $ 1,975 - %
 
Equity underwriting 1,659 987 68
Debt underwriting   2,367     1,964   21  
Total Underwriting 4,026 2,951 36
         
Total Investment Banking   6,004     4,926   22  
 
Institutional Client Services
Fixed Income, Currency and Commodities Client Execution 8,651 9,914 (13 )
 

Equities client execution  (10)
2,594 3,171 (18 )
Commissions and fees 3,103 3,053 2
Securities services   1,373     1,986  

(13)
(31 )
Total Equities 7,070 8,210 (14 )
         
Total Institutional Client Services   15,721     18,124   (13 )
 
Investing & Lending
Equity securities 3,930 2,800 40
Debt securities and loans 1,947 1,850 5
Other 1,141 1,241 (8 )
         
Total Investing & Lending   7,018     5,891   19  
 
Investment Management
Management and other fees 4,386 4,105 7
Incentive fees 662 701 (6 )
Transaction revenues 415 416 -
         
Total Investment Management   5,463     5,222   5  
         
Total net revenues $ 34,206   $ 34,163   -  
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES  SEGMENT NET REVENUES  (UNAUDITED)  $ in millions
  Three Months Ended % Change From

 December 31, 
     

September 30,
     

 December 31, 

September 30,
 

 December 31, 
2013 2013 2012 2013 2012
Investment Banking
Financial Advisory $ 585 $ 423 $ 508 38 % 15 %
 
Equity underwriting 622 276 304 125 105
Debt underwriting   511     467     593   9   (14 )
Total Underwriting 1,133 743 897 52 26
                 
Total Investment Banking   1,718     1,166     1,405   47   22  
 
Institutional Client Services
Fixed Income, Currency and Commodities Client Execution 1,724 1,247 2,038 38 (15 )
 

Equities client execution  (10)
598 549 764 9 (22 )
Commissions and fees 747 727 722 3 3
Securities services   337     340     818  

(13)
(1 ) (59 )
Total Equities 1,682 1,616 2,304 4 (27 )
                 
Total Institutional Client Services   3,406     2,863     4,342   19   (22 )
 
Investing & Lending
Equity securities 1,403 938 1,123 50 25
Debt securities and loans 423 300 485 41 (13 )
Other 234 237 365 (1 ) (36 )
                 
Total Investing & Lending   2,060     1,475     1,973   40   4  
 
Investment Management
Management and other fees 1,143 1,085 1,067 5 7
Incentive fees 333 71 344 N.M. (3 )
Transaction revenues 122 62 105 97 16
                 
Total Investment Management   1,598     1,218     1,516   31   5  
                 
Total net revenues $ 8,782   $ 6,722   $ 9,236   31   (5 )
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF EARNINGS  (UNAUDITED)  In millions, except per share amounts
              Year Ended % Change From

 December 31, 
     

 December 31, 

 December 31, 
2013 2012 2012
Revenues
Investment banking $ 6,004 $ 4,941 22 %
Investment management 5,194 4,968 5
Commissions and fees 3,255 3,161 3
Market making 9,368 11,348

(13)
(17 )
Other principal transactions   6,993     5,865   19  
Total non-interest revenues 30,814 30,283 2
 
Interest income 10,060 11,381 (12 )
Interest expense   6,668     7,501   (11 )
Net interest income   3,392     3,880   (13 )
 
Net revenues, including net interest income   34,206     34,163   -  
 
Operating expenses
Compensation and benefits 12,613 12,944 (3 )
 
Brokerage, clearing, exchange and distribution fees 2,341 2,208 6
Market development 541 509 6
Communications and technology 776 782 (1 )
Depreciation and amortization 1,322 1,738 (24 )
Occupancy 839 875 (4 )
Professional fees 930 867 7
Insurance reserves 176 598 (71 )
Other expenses   2,931     2,435   20  
Total non-compensation expenses 9,856 10,012 (2 )
         
Total operating expenses   22,469     22,956   (2 )
 
Pre-tax earnings 11,737 11,207 5
Provision for taxes   3,697     3,732   (1 )
Net earnings 8,040 7,475 8
 
Preferred stock dividends   314     183   72  
Net earnings applicable to common shareholders $ 7,726   $ 7,292   6  
 
 
Earnings per common share

Basic  (14)
$ 16.34 $ 14.63 12 %
Diluted 15.46 14.13 9
 
Average common shares outstanding
Basic 471.3 496.2 (5 )
Diluted 499.6 516.1 (3 )
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF EARNINGS  (UNAUDITED)  In millions, except per share amounts and total staff
  Three Months Ended % Change From

 December 31, 
     

September 30,
     

 December 31, 

September 30,
 

 December 31, 
2013 2013 2012 2013 2012
Revenues
Investment banking $ 1,718 $ 1,166 $ 1,407 47 % 22 %
Investment management 1,524 1,153 1,450 32 5
Commissions and fees 788 765 754 3 5
Market making 1,875 1,364 2,696

(13)
37 (30 )
Other principal transactions   2,076     1,434     1,956   45   6  
Total non-interest revenues 7,981 5,882 8,263 36 (3 )
 
Interest income 2,391 2,398 2,864 - (17 )
Interest expense   1,590     1,558     1,891   2   (16 )
Net interest income   801     840     973   (5 ) (18 )
 
Net revenues, including net interest income   8,782     6,722     9,236   31   (5 )
 
Operating expenses
Compensation and benefits 2,189 2,382 1,976 (8 ) 11
 
Brokerage, clearing, exchange and distribution fees 594 573 550 4 8
Market development 143 117 140 22 2
Communications and technology 204 202 194 1 5
Depreciation and amortization 474 280 500 69 (5 )
Occupancy 206 205 232 - (11 )
Professional fees 255 211 215 21 19
Insurance reserves - - 167 - (100 )
Other expenses   1,165     585     949   99   23  
Total non-compensation expenses 3,041 2,173 2,947 40 3
               
Total operating expenses   5,230     4,555     4,923   15   6  
 
Pre-tax earnings 3,552 2,167 4,313 64 (18 )
Provision for taxes   1,220     650     1,421   88   (14 )
Net earnings 2,332 1,517 2,892 54 (19 )
 
Preferred stock dividends   84     88     59   (5 ) 42  
Net earnings applicable to common shareholders $ 2,248   $ 1,429   $ 2,833   57   (21 )
 
 
Earnings per common share

Basic  (14)
$ 4.80 $ 3.07 $ 5.87 56 % (18 ) %
Diluted 4.60 2.88 5.60 60 (18 )
 
Average common shares outstanding
Basic 467.1 463.4 481.5 1 (3 )
Diluted 488.7 496.4 505.6 (2 ) (3 )
 
Selected Data

Total staff at period-end  (11)
32,900 32,600 32,400 1 2
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES  SELECTED FINANCIAL DATA  (UNAUDITED)
Average Daily VaR (15)
$ in millions
               
Three Months Ended Year Ended

 December 31, 

September 30,

 December 31, 

 December 31, 

 December 31, 
2013 2013 2012 2013 2012
Risk Categories
Interest rates $ 62 $ 68 $ 67 $ 63 $ 78
Equity prices 37 30 31 32 26
Currency rates 15 17 11 17 14
Commodity prices 18 17 20 19 22

Diversification effect  (15)
  (51 )   (48

)
  (53 )   (51 )   (54 )
Total $ 81   $ 84   $ 76   $ 80   $ 86  
 
 
Assets Under Supervision (3)
$ in billions
 
As of % Change From

 December 31, 
September 30,

 December 31, 
September 30,

 December 31, 
2013 2013 2012 2013 2012
 
Assets under management $ 919 $ 878 $ 854 5 % 8 %
Other client assets   123     113     111     9     11  
Assets under supervision (AUS) $ 1,042   $ 991   $ 965     5     8  
 
Asset Class
Alternative investments $ 142 $ 144 $ 151 (1 ) % (6 ) %
Equity 208 190 153 9 36
Fixed income   446     429     411     4     9  

Long-term AUS  (3)
796 763 715 4 11
 

Liquidity products  (3)
  246     228     250     8     (2 )
Total AUS $ 1,042   $ 991   $ 965     5     8  
 
 
Three Months Ended Year Ended

 December 31, 
September 30,

 December 31, 

 December 31, 

 December 31, 
2013 2013 2012 2013 2012
 
Balance, beginning of period $ 991 $ 955 $ 951 $ 965 $ 895
 
Net inflows / (outflows)
Alternative investments (4 ) - (3 ) (13 ) 1
Equity 4 4 (6 ) 13 (17 )
Fixed income   13     12     2     41     34  
Long-term AUS net inflows / (outflows) 13 16 (7 )

(16)
41

(4)
18

(16)
 
Liquidity products   18     1     15     (4 )   3  
Total AUS net inflows / (outflows) 31 17 8 37 21
 
Net market appreciation / (depreciation) 20 19 6 40 49
         
Balance, end of period $ 1,042   $ 991   $ 965   $ 1,042   $ 965  
 

Footnotes

(1)
 

ROE is computed by dividing net earnings (or annualized net earnings for annualized ROE) applicable to common shareholders by average monthly common shareholders’ equity. The table below presents the firm’s average common shareholders’ equity:
                                                              Average for the
Year Ended       Three Months Ended
Unaudited, in millions                                                     December 31, 2013       December 31, 2013

Total shareholders’ equity
$ 77,353 $ 77,737
Preferred stock                                                      

(6,892

)
        (7,200 )

Common shareholders’ equity
                                                    $ 70,461         $ 70,537  
 
(2)   Thomson Reuters – January 1, 2013 through December 31, 2013.
 
(3) Assets under supervision (AUS) include assets under management and other client assets. Assets under management include client assets where the firm earns a fee for managing assets on a discretionary basis. Other client assets include client assets invested with third-party managers, private bank deposits and advisory relationships where the firm earns a fee for advisory and other services, but does not have investment discretion. Long-term AUS represents AUS excluding liquidity products. Liquidity products represents money markets and bank deposit assets.
 
(4)

In April 2013, the firm completed the sale of a majority stake in its Americas reinsurance business and no longer consolidates this business. Long-term AUS flows for the year ended December 31, 2013 include $10 billion in assets managed by the firm related to this business which were previously excluded from AUS as they were assets of a consolidated subsidiary.
 
(5)

Tangible common shareholders' equity equals total shareholders' equity less preferred stock, goodwill and identifiable intangible assets. Tangible book value per common share is computed by dividing tangible common shareholders’ equity by the number of common shares outstanding, including restricted stock units granted to employees with no future service requirements. Management believes that tangible common shareholders’ equity and tangible book value per common share are meaningful because they are measures that the firm and investors use to assess capital adequacy. Tangible common shareholders’ equity and tangible book value per common share are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. The table below presents the reconciliation of total shareholders' equity to tangible common shareholders' equity:
                                                                                    As of
Unaudited, in millions                                                                           December 31, 2013

Total shareholders’ equity
$ 78,467
Preferred stock                                                                             (7,200 )
Common shareholders’ equity 71,267
Goodwill and identifiable intangible assets                                                                             (4,376 )
Tangible common shareholders’ equity                                                                           $ 66,891  
 
(6)  

The Tier 1 capital ratio equals Tier 1 capital divided by risk-weighted assets (RWAs). The Tier 1 common ratio equals Tier 1 common capital divided by RWAs. As of December 31, 2013, Tier 1 capital was $72.47 billion and Tier 1 common capital was $63.25 billion (Tier 1 capital less $9.22 billion of perpetual non-cumulative preferred stock, junior subordinated debt issued to trusts and other adjustments). The firm’s RWAs under the Board of Governors of the Federal Reserve System’s risk-based capital requirements were approximately $433 billion as of December 31, 2013, under Basel I and also reflecting the revised market risk regulatory capital requirements which became effective on January 1, 2013. Management believes that the Tier 1 common ratio is meaningful because it is one of the measures that the firm, its regulators and investors use to assess capital adequacy. The Tier 1 common ratio is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. For a further discussion of the firm's capital ratios, see “Equity Capital” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2013.
 
(7)

Represents a preliminary estimate and may be revised in the firm’s Annual Report on Form 10-K for the year ended December 31, 2013.
 
(8)

The firm’s global core excess represents a pool of excess liquidity consisting of unencumbered, highly liquid securities and cash. For a further discussion of the firm's global core excess liquidity pool, see “Liquidity Risk Management” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2013.
 
(9) The firm’s investment banking transaction backlog represents an estimate of the firm’s future net revenues from investment banking transactions where management believes that future revenue realization is more likely than not.
 
(10)

In April 2013, the firm completed the sale of a majority stake in its Americas reinsurance business and no longer consolidates this business. Net revenues related to the Americas reinsurance business were $317 million and $1.08 billion for the years ended December 31, 2013 and December 31, 2012, respectively, and $317 million for the three months ended December 31, 2012.
 
(11) Includes employees, consultants and temporary staff.
 
(12)

The remaining authorization represents the shares that may be repurchased under the repurchase program approved by the Board of Directors. As disclosed in Note 19. Shareholders’ Equity in Part I, Item 1 “Financial Statements” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2013, share repurchases require approval by the Board of Governors of the Federal Reserve System.
 
(13)

Includes a gain of $494 million on the sale of the firm’s hedge fund administration business.
 
(14)

Unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents are treated as a separate class of securities in calculating earnings per common share. The impact of applying this methodology was a reduction in basic earnings per common share of $0.05 and $0.07 for the years ended December 31, 2013 and December 31, 2012, respectively, and $0.01 for each of the three months ended December 31, 2013, September 30, 2013 and December 31, 2012.
 
(15)

VaR is the potential loss in value of the firm’s inventory positions due to adverse market movements over a one-day time horizon with a 95% confidence level. Diversification effect represents the difference between total VaR and the sum of the VaRs for the four risk categories. For a further discussion of VaR and the diversification effect, see “Market Risk Management” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2013.
 
(16)

Includes $34 billion of fixed income asset inflows in connection with the firm’s acquisition of Dwight Asset Management Company LLC for the year ended December 31, 2012. Includes $5 billion of fixed income and equity asset outflows related to the firm’s liquidation of Goldman Sachs Asset Management Korea Co., Ltd. for both the three months and the year ended December 31, 2012.
 

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