Goldman Sachs(GS) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited consolidated financial statements for the quarter ended March 31, 2024, show total net revenues of $14.21 billion and net earnings of $4.13 billion, with total assets increasing to $1.70 trillion from $1.64 trillion at year-end 2023 Consolidated Statements of Earnings Consolidated Statements of Earnings (Unaudited) | in millions, except per share amounts | Three Months Ended March 2024 | Three Months Ended March 2023 | | :--- | :--- | :--- | | Total net revenues | $14,213 | $12,224 | | Provision for credit losses | $318 | $(171) | | Total operating expenses | $8,658 | $8,402 | | Pre-tax earnings | $5,237 | $3,993 | | Net earnings | $4,132 | $3,234 | | Net earnings applicable to common shareholders | $3,931 | $3,087 | | Diluted Earnings per common share | $11.58 | $8.79 | Consolidated Balance Sheets Consolidated Balance Sheets (Unaudited) | $ in millions | As of March 2024 | As of December 2023 | | :--- | :--- | :--- | | Total assets | $1,698,440 | $1,641,594 | | Cash and cash equivalents | $209,385 | $241,577 | | Trading assets | $507,718 | $477,510 | | Loans (net) | $183,934 | $183,358 | | Total liabilities | $1,579,894 | $1,524,689 | | Deposits | $440,662 | $428,417 | | Trading liabilities | $201,142 | $200,355 | | Unsecured long-term borrowings | $233,919 | $241,877 | | Total shareholders' equity | $118,546 | $116,905 | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Unaudited) | $ in millions | Three Months Ended March 2024 | Three Months Ended March 2023 | | :--- | :--- | :--- | | Net cash provided by/(used for) operating activities | $(28,038) | $9,404 | | Net cash used for investing activities | $(7,980) | $(1,978) | | Net cash provided by/(used for) financing activities | $7,171 | $(20,544) | | Net decrease in cash and cash equivalents | $(32,192) | $(12,498) | Notes to Consolidated Financial Statements - The firm's business is managed across three segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions[20] - The financial statements are prepared in accordance with U.S. GAAP and reflect all necessary adjustments for a fair statement of the interim periods[25] - Significant accounting policies include fair value measurements, allowance for credit losses, and consolidation, with the firm using estimates for fair value, credit loss allowances, discretionary compensation, goodwill, litigation provisions, and income taxes[26][31] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the firm's financial performance for Q1 2024, highlighting a 16% YoY increase in net revenues to $14.21 billion and a rise in net earnings to $4.13 billion, covering segment results, balance sheet changes, funding, capital, and risk management Executive Overview Q1 2024 Financial Highlights | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Earnings | $4.13 billion | $3.23 billion | | Diluted EPS | $11.58 | $8.79 | | Annualized ROE | 14.8% | 11.6% | | Net Revenues | $14.21 billion | $12.21 billion | - Revenue growth was driven by higher net revenues across all segments, particularly in Investment banking fees, FICC, and Equities[456] - Provision for credit losses was $318 million, compared to a net benefit of $171 million in Q1 2023, driven by provisions for the credit card portfolio and wholesale loans[456] - Operating expenses increased 3% YoY to $8.66 billion, primarily due to higher compensation and benefits, transaction-based expenses, and an FDIC special assessment fee[456] - The firm returned $2.43 billion to common shareholders in Q1 2024, consisting of $1.50 billion in share repurchases and $929 million in dividends[457] Results of Operations Net Revenues by Line Item (Q1 2024 vs Q1 2023) | $ in millions | 2024 | 2023 | | :--- | :--- | :--- | | Investment banking | $2,085 | $1,578 | | Investment management | $2,491 | $2,289 | | Market making | $5,992 | $5,433 | | Other principal transactions | $960 | $55 | | Net interest income | $1,608 | $1,781 | | Total net revenues | $14,213 | $12,224 | - Investment banking revenues increased 32% YoY, driven by significantly higher revenues in debt underwriting (especially leveraged finance), advisory (M&A), and equity underwriting (IPOs and secondary offerings)[476] - Other principal transactions revenues surged to $960 million from $55 million, primarily due to the impact of the Marcus loans portfolio sale in 2023, which included a significant mark-down in Q1 2023[477] Segment Assets and Operating Results Segment Pre-Tax Earnings (Q1 2024 vs Q1 2023) | $ in millions | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Global Banking & Markets | $4,477 | $3,686 | | Asset & Wealth Management | $877 | $613 | | Platform Solutions | $(117) | $(306) | - Global Banking & Markets net revenues grew 15% YoY to $9.73 billion, driven by a 32% increase in Investment banking fees and a 10% increase in FICC revenues[498][499] - Asset & Wealth Management net revenues rose 18% YoY to $3.79 billion, primarily due to higher Private banking and lending revenues (reflecting the absence of the prior year's Marcus loan sale mark-down) and higher Equity investments revenues[513] - Platform Solutions net revenues increased 24% YoY to $698 million, reflecting higher average credit card and deposit balances, with the pre-tax loss narrowing to $117 million from $306 million[542] - Assets Under Supervision (AUS) grew to $2.85 trillion as of March 2024 from $2.67 trillion a year prior, driven by net inflows into long-term assets and net market appreciation[515][516] Balance Sheet and Funding Sources Balance Sheet Summary | $ in millions | As of March 2024 | As of December 2023 | | :--- | :--- | :--- | | Total assets | $1,698,440 | $1,641,594 | | Total liabilities | $1,579,894 | $1,524,689 | | Total shareholders' equity | $118,546 | $116,905 | Funding Sources Breakdown (As of March 2024) | Funding Source | Amount ($ in millions) | Percentage | | :--- | :--- | :--- | | Deposits | $440,662 | 36% | | Collateralized financings | $348,792 | 29% | | Unsecured long-term borrowings | $233,919 | 19% | | Total shareholders' equity | $118,546 | 10% | | Unsecured short-term borrowings | $78,603 | 6% | - Book value per common share increased to $321.10 from $313.56 at year-end 2023, and tangible book value per common share rose to $300.40 from $292.52[552] Capital Management and Regulatory Capital Regulatory Capital Ratios (Standardized) | Ratio | As of March 2024 | Requirement | | :--- | :--- | :--- | | CET1 capital ratio | 14.6% | 13.0% | | Tier 1 capital ratio | 16.2% | 14.5% | | Total capital ratio | 18.3% | 16.5% | - The firm's most binding capital constraint as of March 2024 was the supplementary leverage ratio (SLR) requirement[573] - Based on the 2023 CCAR submission, the FRB reduced the firm's Stress Capital Buffer (SCB) from 6.3% to 5.5%, effective from October 1, 2023[567] - The firm's G-SIB surcharge is 3.0% for 2024 and 2025, with 2023 financial data indicating the firm is in the 3.5% G-SIB surcharge threshold range, potentially effective as early as January 2026[573] Risk Management - The firm's risk management framework is built on three core components: governance, processes, and people, operating on a three-lines-of-defense model[601][602] - Key risk measures include Value-at-Risk (VaR) and Earnings-at-Risk (EaR) for market risk, and current and potential exposure for credit risk, with the firm also conducting extensive stress testing[643][646][672] Average Daily VaR (95%, 1-day) | $ in millions | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Interest rates | $86 | $87 | $92 | | Equity prices | $29 | $29 | $28 | | Currency rates | $18 | $18 | $32 | | Commodity prices | $17 | $19 | $22 | | Total | $87 | $91 | $101 | - Average Global Core Liquid Assets (GCLA) was $423.2 billion for Q1 2024, up from $413.6 billion in Q4 2023[629] PART II. OTHER INFORMATION Item 1. Legal Proceedings The firm is involved in numerous judicial, regulatory, and arbitration proceedings, with an estimated upper end of reasonably possible aggregate loss of approximately $2.1 billion in excess of existing reserves for certain matters, while many others cannot be estimated - The firm estimates the upper end of the range of reasonably possible aggregate loss for certain legal and regulatory matters to be approximately $2.1 billion in excess of the aggregate reserves for such matters[404] - Key ongoing legal matters include those related to 1MDB, mortgage-backed securities, Archegos, Silicon Valley Bank, and various antitrust litigations concerning currencies, securities lending, and interest rate swaps[405][408][413][415] - The firm is cooperating with the CFPB and other governmental bodies regarding investigations into GS Bank USA's credit card account management practices[443] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2024, the firm repurchased 3.9 million shares of common stock at an average price of $384.55 per share, totaling $1.5 billion, under the $30 billion share repurchase program approved in February 2023 Q1 2024 Common Stock Repurchases | Month | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January | 1,442,363 | $381.56 | | February | 2,459,260 | $386.30 | | March | 0 | - | | Total | 3,901,623 | $384.55 (weighted avg) | - The total cost of common share repurchases for the quarter was $1.5 billion[338] - As of March 2024, the remaining authorized amount for repurchases under the current program was $22.7 billion[745]