Goldman Sachs Reports Third Quarter Earnings Per Common Share of $14.93 - Form 8-K

Net Revenues

Net Earnings

EPS

3Q21 $13.61 billion

3Q21 YTD $46.70 billion

3Q21 $5.38 billion

3Q21 YTD $17.70 billion

3Q21 $14.93

3Q21 YTD $48.59

Annualized ROE¹

Annualized ROTE¹

Book Value Per Share

3Q21 22.5%

3Q21 YTD 25.7%

3Q21 23.8%

3Q21 YTD 27.2%

3Q21 $277.25

YTD Growth 17.4%

Results in the third quarter of 2021 evidenced continued strong overall performance with net revenues of $13.61 billion, 26% higher than the third quarter of 2020.

In the first nine months of 2021, the firm generated net revenues of $46.70 billion, net earnings of $17.70 billion and diluted EPS of $48.59, each surpassing the previous full year records.

Investment Banking generated its second highest quarterly net revenues of $3.70 billion, reflecting record quarterly net revenues in Financial advisory and continued strength in Underwriting.

The firm remained ranked #1 in worldwide announced and completed mergers and acquisitions, and in worldwide equity and equity-related offerings, common stock offerings, and initial public offerings for the year-to-date.²

Global Markets generated quarterly net revenues of $5.61 billion, primarily reflecting strong performance in Equities, including record Equities financing net revenues, and the second highest Fixed Income, Currency and Commodities (FICC) financing net revenues.

Consumer & Wealth Management produced quarterly net revenues of over $2 billion for the first time, 35% higher than the third quarter of 2020.

Firmwide assets under supervision^3,4 increased $67 billion during the quarter, including long-term net inflows of $49 billion, to a record $2.37 trillion. Firmwide Management and other fees were a record $1.95 billion for the third quarter of 2021.

Book value per common share increased by 4.7% during the quarter and 17.4% during the first nine months of 2021 to $277.25.

During the third quarter of 2021, the firm announced the acquisitions of NN Investment Partners and GreenSky, Inc., to accelerate the firm's strategy to drive higher, more durable returns. Both are expected to close by the end of the first quarter of 2022.

Net Revenues

Net revenues were $13.61 billion for the third quarter of 2021, 26% higher than the third quarter of 2020 and 12% lower than the second quarter of 2021. The increase compared with the third quarter of 2020 reflected significantly higher net revenues in Investment Banking, Global Markets and Consumer & Wealth Management, partially offset by lower net revenues in Asset Management.

Net Revenues

$13.61 billion

Net revenues in Investment Banking were $3.70 billion for the third quarter of 2021, 88% higher than the third quarter of 2020 and 3% higher than the second quarter of 2021. The increase compared with the third quarter of 2020 reflected significantly higher net revenues in Financial advisory, Underwriting and Corporate lending.

The increase in Financial advisory net revenues reflected an increase in completed mergers and acquisitions volumes. The increase in Underwriting net revenues was due to significantly higher net revenues in both Equity underwriting, primarily driven by private placements, convertible offerings and initial public offerings, and Debt underwriting, reflecting an increase in leveraged finance activity. The increase in Corporate lending net revenues primarily reflected net gains related to middle-market lending activities.

The firm's backlog³ was lower compared with the end of the second quarter of 2021, but remained significantly higher compared with the end of 2020.

Investment Banking

$3.70 billion

Financial advisory

$1.65 billion

Underwriting

$1.90 billion

Corporate lending

$152 million

Net revenues in Global Markets were $5.61 billion for the third quarter of 2021, 23% higher than the third quarter of 2020 and 15% higher than the second quarter of 2021.

Net revenues in FICC were $2.51 billion, essentially unchanged compared with the third quarter of 2020. Net revenues in FICC financing were significantly higher, primarily from mortgage lending. Net revenues in FICC intermediation were lower, reflecting significantly lower net revenues in interest rate products, credit products and mortgages, partially offset by significantly higher net revenues in commodities and higher net revenues in currencies.

Net revenues in Equities were $3.10 billion, 51% higher than the third quarter of 2020, due to significantly higher net revenues in both Equities financing, reflecting increased client activity (including higher average client balances), and Equities intermediation, reflecting significantly higher net revenues in both derivatives and cash products.

Global Markets

$5.61 billion

FICC intermediation

$2.00 billion

FICC financing

$513 million

FICC

$2.51 billion

Equities intermediation

$1.92 billion

Equities financing

$1.18 billion

Equities

$3.10 billion

Net revenues in Asset Management were $2.28 billion for the third quarter of 2021,18% lower than the third quarter of 2020 and 56% lower than a strong second quarter of 2021. The decrease compared with the third quarter of 2020 was primarily driven by significantly lower net revenues in Equity investments. In addition, net revenues in Lending and debt investments were lower, while Incentive fees were higher.

The decrease in Equity investments net revenues reflected significant net losses from investments in public equities during the quarter compared with net gains in the third quarter of 2020, partially offset by significantly higher net gains from investments in private equities. The decrease in Lending and debt investments net revenues reflected lowernetgainsfrominvestmentsin debtinstruments.Managementandotherfeeswere essentially unchanged, primarily reflecting higher fee waivers on money market funds, offset by the impact of higher average assets under supervision. The increase in Incentive fees was due to harvesting.

Asset Management

$2.28 billion

Management and

other fees

Incentive fees

Equity investments

Lending and debt

investments

$520 million

Net revenues in Consumer & Wealth Management were $2.02 billion for the third quarterof2021,35%higherthanthethirdquarter of 2020 and 16% higher than the second quarter of 2021.

Net revenues in Wealth management were $1.64 billion, 40% higher than the third quarter of 2020.Managementandotherfees were significantly higher, primarily reflecting the impact of higher average assets under supervision. Incentive fees were significantlyhigher,duetoharvesting,andnetrevenues in Private banking and lending were higher, primarily reflecting higher loan balances.

NetrevenuesinConsumerbankingwere$382 million,17%higherthanthe thirdquarter of 2020, reflecting higher credit card and deposit balances.

Consumer &

Wealth Management

$2.02 billion

Wealth management

Consumer banking

$382 million

Provision for credit losses was $175 million for the third quarter of 2021, compared with $278 million for the third quarter of 2020 and a net benefit of $92 million for the second quarter of 2021. The third quarter of 2021 primarily reflected provisions related to portfolio growth (primarily in credit cards), while the third quarter of 2020 reflected reserve increases from individual impairments related to wholesale loans and growth in credit card loans, partially offset by reserve reductions from paydowns on corporate lines of credit and consumer installment loans.

The firm's allowance for credit losses was $4.17 billion as of September 30, 2021.

Provision for Credit Losses

$175 million

Operating expenses were $6.59 billion for the third quarter of 2021, 6% higher than the third quarter of 2020 and 24% lower than the second quarter of 2021. The firm's efficiency ratio³ for the first nine months of 2021 was 52.8%, compared with 70.3% for the first nine months of 2020.

Operating Expenses

$6.59 billion

The increase in operating expenses compared with the third quarter of 2020 was due to higher technology expenses, professional fees, transaction based expenses and market development expenses. These increases were partially offset by significantly lower net provisions for litigation and regulatory proceedings. Compensation and benefits expenses were slightly higher.

Netprovisionsforlitigationandregulatoryproceedingsforthethirdquarterof2021were $52 million compared with $256 million for the third quarter of 2020.

Headcount increased 5% compared with the end of the second quarter of 2021, primarily reflecting the timing of campus hires.

YTD Efficiency Ratio

52.8%

The effective income tax rate for the first nine months of 2021 increased to 19.6% from 18.8% for the first half of 2021, primarily due to a decrease in the impact of tax benefits and changes in the geographic mix of earnings.

YTD Effective Tax Rate

19.6%

◾ On October 13, 2021, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $2.00 per common share to be paid on December 30, 2021 to common shareholders of record on December 2, 2021.

◾ During the quarter, the firm returned $1.70 billion of capital to common shareholders, including $1.00 billion of common share repurchases (2.5 million shares at an average cost of $395.28) and $700 million of common stock dividends.³

◾ Global core liquid assets³ averaged $356 billion⁴ for the third quarter of 2021, compared with an average of $329 billion for the second quarter of 2021.

Declared Quarterly

Dividend Per Common Share

$2.00

Common Share Repurchases

2.5 million shares for

$1.00 billion

Average GCLA

$356 billion

Footnotes

Annualized ROE is calculated by dividing annualized net earnings applicable to common shareholders by average monthly common shareholders' equity. Annualized ROTE is calculated by dividing annualized net earnings applicable to common shareholders by average monthly tangible common shareholders' equity (tangible common shareholders' equity is calculated as total shareholders' equity less preferred stock, goodwill and identifiable intangible assets). Management believes that ROTE is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed internally, and that tangible common shareholders' equity is meaningful because it is a measure that the firm and investors use to assess capital adequacy. ROTE and tangible common shareholders' equity are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies.

Dealogic - January 1, 2021 through September 30, 2021.

For information about the following items, see the referenced sections 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 June 30, 2021: (i) investment banking transaction backlog - see "Results of Operations - Investment Banking" (ii) assets under supervision - see "Results of Operations - Assets Under Supervision" (iii) efficiency ratio - see "Results of Operations - Operating Expenses" (iv) share repurchase program - see "Equity Capital Management and Regulatory Capital - Equity Capital Management" (v) global core liquid assets - see "Risk Management - Liquidity Risk Management" (vi) basic shares - see "Balance Sheet and Funding Sources - Balance Sheet Analysis and Metrics" and (vii) VaR - see "Risk Management - Market Risk Management."

For information about the following items, see the referenced sections in Part I, Item 1 "Financial Statements (Unaudited)" in the firm's Quarterly Report on Form 10-Q for the period ended June 30, 2021: (i) risk-based capital ratios and the supplementary leverage ratio - see Note 20 "Regulation and Capital Adequacy" (ii) geographic net revenues - see Note 25 "Business Segments" and (iii) unvested share-based awards that have non-forfeitable rights to dividends or dividend equivalents in calculating basic EPS - see Note 21 "Earnings Per Common Share."

Represents a preliminary estimate for the third quarter of 2021 and may be revised in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2021.

In the third quarter of 2021, based on regulatory feedback, the firm revised certain interpretations of the Capital Rules underlying the calculation of Standardized risk-weighted assets which increased risk-weighted assets by approximately $23 billion and reduced the firm's Standardized CET1 capital ratio by 0.5 percentage points, Standardized Tier 1 capital ratio by 0.5 percentage points to 15.5%, and Standardized Total capital ratio by 0.7 percentage points to 17.7%, all as of September 30, 2021.

As of June 30, 2021, this change would have increased risk-weighted assets by approximately $23 billion to $644 billion, which would have reduced the firm's Standardized CET1 capital ratio of 14.4% by 0.5 percentage points, Standardized Tier 1 capital ratio of 15.9% by 0.6 percentage points, and Standardized Total capital ratio of 18.3% by 0.7 percentage points. As of March 31, 2021, this change would have increased risk-weighted assets by approximately $22 billion to $616 billion, which would have reduced the firm's Standardized CET1 capital ratio of 14.3% by 0.5 percentage points, Standardized Tier 1 capital ratio of 15.9% by 0.6 percentage points, and Standardized Total capital ratio of 18.4% by 0.7 percentage points.