NEW YORK, January 16, 2019 – The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues ⁽¹⁾ of $36.62 billion and net earnings of $10.46 billion for the year ended December 31, 2018. Net revenues ⁽¹⁾ were $8.08 billion and net earnings were $2.54 billion for the fourth quarter of 2018.

Diluted earnings per common share (EPS) was $25.27 ⁽²⁾ for the year ended December 31, 2018 compared with $9.01 ⁽²⁾ for the year ended December 31, 2017, and was $6.04 ⁽²⁾ for the fourth quarter of 2018 compared with a diluted loss per common share of $5.51 ⁽²⁾ for the fourth quarter of 2017 and diluted earnings per common share of $6.28 for the third quarter of 2018.

Return    on average common shareholders’ equity (ROE) ⁽³⁾ was 13.3%  ⁽²⁾ for 2018  and annualized  ROE was  12.1% for  the fourth quarter of 2018. Return on average tangible common shareholders’ equity (ROTE) ⁽³⁾ was 14.1% ⁽²⁾ for 2018 and annualized ROTE was 12.8% for the fourth quarter of 2018.

NET REVENUES

2018

$36.62 billion  

4Q18

$8.08 billion  

NET EARNINGS

2018

$10.46 billion  

4Q18

$2.54 billion  

EPS

2018

$25.27  

4Q18

$6.04  

ROE

2018

13.3%  

4Q18

12.1%  

ROTE

2018

14.1%  

4Q18

12.8%  

Net revenues of $36.62 billion and pre-tax earnings of $12.48 billion were both 12% higher compared with 2017 and the highest since 2010.

The firm ranked #1 in worldwide announced and completed mergers and acquisitions, equity and equity-related offerings and common stock offerings for the year. ⁽⁴⁾

Investment Banking produced net revenues of $7.86 billion, reflecting the highest net revenues in Financial Advisory since 2007 and a strong performance in Underwriting.

Equities generated net revenues of $7.60 billion, 15% higher than 2017 and the highest since 2015.

Net revenues in Investing & Lending were $8.25 billion, which included record net interest income in debt securities and loans of approximately $2.70 billion.

Investment Management produced record net revenues of $7.02 billion, including record management and other fees. Assets under supervision ⁽⁵⁾ of $1.54 trillion included net inflows of $89 billion during the year, with net inflows of $37 billion in long-term assets under supervision.

Diluted EPS of $25.27 was a record and ROE ⁽³⁾ of 13.3% was the highest since 2009.

Book value per common share increased 14.6% during the year to $207.36 and tangible book value per common share ⁽³⁾ increased 15.3% to $196.64.

The Standardized and Basel III Advanced common equity tier 1 ratios ⁽⁵⁾ increased 140 basis points and 240 basis points, respectively, compared with the fully phased-in ratios at the end of 2017 ⁽⁶⁾ to 13.3% ⁽⁷⁾ and 13.1% ⁽⁷⁾.

Full Year

Net revenues ⁽¹⁾ were $36.62 billion for 2018, 12% higher than 2017, reflecting higher net revenues across all segments.

Fourth Quarter

Net revenues ⁽¹⁾ were $8.08 billion for the fourth quarter of 2018, essentially unchanged compared with the fourth quarter of 2017 and 8% lower than the third quarter of 2018.

2018 NET REVENUES

$36.62 billion

4Q18 NET REVENUES

$8.08 billion

Full Year

Net revenues in Investment Banking were $7.86 billion for 2018, 7% higher than 2017.

Net revenues in Financial Advisory were $3.51 billion, 10% higher than 2017, reflecting an increase in industry-wide completed mergers and acquisitions volumes.

Net revenues in Underwriting were $4.36 billion, 4% higher than 2017, due to significantly higher net revenues in equity underwriting, driven by initial public offerings, partially offset by lower net revenues in debt underwriting, reflecting a decline in leveraged finance activity.

The firm’s investment banking transaction backlog ⁽⁵⁾ increased compared with the end of 2017.

2018 INVESTMENT BANKING

$7.86 billion

Financial Advisory

$3.51 billion  

Underwriting

$4.36 billion  

Fourth Quarter

Net revenues in Investment Banking were $2.04 billion for the fourth quarter of 2018, 5% lower than the fourth quarter of 2017 and 3% higher than the third quarter of 2018.

Net revenues in Financial Advisory were $1.20 billion, 56% higher than the fourth quarter of 2017, reflecting an increase in industry-wide completed mergers and acquisitions volumes.

Net revenues in Underwriting were $843 million, 38% lower than the fourth quarter of 2017, due to significantly lower net revenues in both debt underwriting, reflecting a decline in leveraged finance activity, and equity underwriting, reflecting a decline in secondary offerings.

The firm’s investment banking transaction backlog ⁽⁵⁾ decreased compared with the end of the third quarter of 2018.

4Q18 INVESTMENT BANKING

$2.04 billion

Financial Advisory

$1.20 billion  

Underwriting

$843 million  

Full Year

Net revenues in Institutional Client Services were $13.48 billion for 2018, 13% higher than 2017.

Net revenues in Fixed Income, Currency and Commodities (FICC) Client Execution were $5.88 billion, 11% higher than 2017, reflecting significantly higher net revenues in commodities and currencies. Net revenues in interest rate products and mortgages were slightly lower, while net revenues in credit products were essentially unchanged. During 2018, FICC Client Execution operated in an environment characterized by higher client activity and generally less challenging market conditions compared with 2017.

Net revenues in Equities were $7.60 billion, 15% higher than 2017, primarily due to significantly higher net revenues in equities client execution, reflecting significantly higher net revenues in both cash products and derivatives. In addition, commissions and fees were higher, reflecting higher market volumes, and net revenues in securities services were slightly higher. During 2018, Equities operated in an environment characterized by generally higher volatility and improved client activity compared with 2017.

         2018 INSTITUTIONAL         

CLIENT SERVICES

$13.48 billion

  FICC

$5.88 billion  

  Equities

$7.60 billion  

Fourth Quarter

Net revenues in Institutional Client Services were $2.43 billion for the fourth quarter of 2018, 2% higher than the fourth quarter of 2017 and 22% lower than the third quarter of 2018.

Net revenues in FICC Client Execution were $822 million, 18% lower than the fourth quarter of 2017, reflecting significantly lower net revenues in credit products and lower net revenues in interest rate products. Net revenues in commodities, currencies and mortgages were essentially unchanged. During the quarter, FICC Client Execution operated in an environment characterized by challenging market conditions, including wider credit spreads, compared with the third quarter of 2018.

Net revenues in Equities were $1.60 billion, 17% higher than the fourth quarter of 2017, primarily due to significantly higher net revenues in equities client execution compared with a challenging prior year period. This increase reflected significantly higher net revenues in cash products, while net revenues in derivatives were essentially unchanged. Commissions and fees were higher, reflecting higher market volumes, and net revenues in securities services were slightly lower. During the quarter, Equities operated in an environment generally characterized by higher volatility but less favorable market conditions compared with the third quarter of 2018.

         4Q18 INSTITUTIONAL          

CLIENT SERVICES

$2.43 billion

  FICC

$822 million  

  Equities

$1.60 billion  

Full Year

Net revenues in Investing & Lending were $8.25 billion for 2018, 14% higher than 2017.

Net revenues in equity securities were $4.46 billion, 3% lower than 2017, reflecting net losses from investments in public equities compared with net gains in the prior year, partially offset by significantly higher net gains from investments in private equities, driven by company-specific events, including sales, and corporate performance.

Net revenues in debt securities and loans were $3.80 billion, 43% higher than 2017, primarily driven by significantly higher net interest income. 2018 included net interest income of approximately $2.70 billion compared with approximately $1.80 billion in 2017.

2018 INVESTING & LENDING

$8.25 billion

Equity Securities

Debt Securities   and Loans

$3.80 billion  

Fourth Quarter

Net revenues in Investing & Lending were $1.91 billion for the fourth quarter of 2018, 2% lower than the fourth quarter of 2017 and 6% lower than the third quarter of 2018.

Net revenues in equity securities were $994 million, 18% lower than the fourth quarter of 2017, reflecting net losses from investments in public equities, as global equity prices decreased during the quarter. Net revenues in equity securities for the fourth quarter of 2018 included $1.26 billion of net gains from investments in private equities, driven by company-specific events, including sales, and corporate performance.

Net revenues in debt securities and loans were $912 million, 23% higher than the fourth quarter of 2017, driven by significantly higher net interest income. The fourth quarter of 2018 included net interest income of approximately $800 million compared with approximately $500 million in the fourth quarter of 2017.

4Q18 INVESTING & LENDING

$1.91 billion

Equity Securities

Debt Securities   and Loans

$912 million  

Full Year

Net revenues in Investment Management were $7.02 billion for 2018, 13% higher than 2017.

The increase in net revenues compared with 2017 was primarily due to significantly higher incentive fees, as a result of harvesting. Management and other fees were also higher, reflecting higher average assets under supervision and the impact of the recently adopted revenue recognition standard ⁽⁸⁾, partially offset by shifts in the mix of client assets and strategies. In addition, transaction revenues were higher.

During the year, total assets under supervision ⁽⁵⁾ increased $48 billion to $1.54 trillion. Long-term assets under supervision decreased $4 billion, including net market depreciation of $41 billion, primarily in equity assets, largely offset by net inflows of $37 billion, primarily in fixed income and equity assets. Liquidity products increased $52 billion.

2018 INVESTMENT
MANAGEMENT

$7.02 billion

Management and   Other Fees

$5.44 billion  

Incentive Fees

Transaction   Revenues

$830 million  

$754 million  

Fourth Quarter

Net revenues in Investment Management were $1.70 billion for the fourth quarter of 2018, 2% higher than the fourth quarter of 2017 and unchanged compared with the third quarter of 2018.

The increase compared with the fourth quarter of 2017 reflected higher incentive fees and transaction revenues. Management and other fees were essentially unchanged compared with the fourth quarter of 2017.

During the quarter, total assets under supervision ⁽⁵⁾ decreased $8 billion to $1.54 trillion. Long-term assets under supervision decreased $47 billion, including net market depreciation of $50 billion, primarily in equity assets, partially offset by net inflows of $3 billion. Liquidity products increased $39 billion.

4Q18 INVESTMENT

MANAGEMENT

$1.70 billion

Management and   Other Fees

Incentive Fees

Transaction   Revenues

$186 million  

Full Year

Provision for credit losses ⁽¹⁾ was $674 million for 2018, compared with $657 million for 2017, as higher provision for credit losses primarily related to consumer loan growth in 2018 were partially offset by an impairment of a secured loan in 2017.

Fourth Quarter

Provision for credit losses ⁽¹⁾ was $222 million for the fourth quarter of 2018, compared with $290 million for the fourth quarter of 2017 and $174 million for the third quarter of 2018. The decrease compared with the fourth quarter of 2017 reflected an impairment of a secured loan in the fourth quarter of 2017, partially offset by higher provision for credit losses primarily related to consumer loan growth in the fourth quarter of 2018.

2018 PROVISION FOR CREDIT LOSSES

$674 million

4Q18 PROVISION FOR

CREDIT LOSSES

$222 million

Full Year

Operating expenses were $23.46 billion for 2018, 12% higher than 2017. The firm’s efficiency ratio ⁽⁹⁾ for 2018 was 64.1%, compared with 64.0% for 2017.

The increase in operating expenses compared with 2017 was primarily due to higher compensation and benefits expenses, reflecting improved operating performance, and significantly higher net provisions for litigation and regulatory proceedings. Brokerage, clearing, exchange and distribution fees were also higher, reflecting an increase in activity levels, and technology expenses increased, reflecting higher expenses related to computing services. In addition, expenses related to consolidated investments and the firm’s digital lending and deposit platform increased, with the increases primarily in depreciation and amortization expenses, market development expenses and other expenses. The increase compared with 2017 also included $297 million related to the recently adopted revenue recognition standard ⁽⁸⁾.

Net provisions for litigation and regulatory proceedings for 2018 were $844 million compared with $188 million for 2017.

Headcount ⁽¹⁾ increased 9% during 2018, reflecting an increase in technology professionals and investments in new business initiatives.

2018 OPERATING EXPENSES

$23.46 billion

2018 EFFICIENCY RATIO

64.1%

Fourth Quarter

Operating expenses were $5.15 billion for the fourth quarter of 2018, 9% higher than the fourth quarter of 2017 and 8% lower than the third quarter of 2018.

The increase in operating expenses compared with the fourth quarter of 2017 primarily reflected significantly higher net provisions for litigation and regulatory proceedings. The increase compared with the fourth quarter of 2017 also included $79 million related to the recently adopted revenue recognition standard ⁽⁸⁾ . These increases were partially offset by lower compensation and benefits expenses.

Net provisions for litigation and regulatory proceedings for the fourth quarter of 2018 were $516 million compared with $9 million for the fourth quarter of 2017.

The fourth quarter of 2018 included a $132 million charitable contribution to Goldman Sachs Gives. Compensation was reduced to fund this charitable contribution to Goldman Sachs Gives.

4Q18 OPERATING EXPENSES

$5.15 billion

The effective income tax rate for 2018 was 16.2%, down from 19.0% for the first nine months of 2018 and down from 61.5% for full year 2017, as 2017 included the estimated impact of Tax Legislation ⁽²⁾, which increased the effective income tax rate by 39.5 percentage points. The finalization of this impact of Tax Legislation ⁽²⁾ reduced the effective income tax rate for 2018 by 3.9 percentage points.

2018 EFFECTIVE TAX RATE

16.2%

◾  Total shareholders’ equity was $90.19 billion (common shareholders’ equity of $78.98 billion  and  preferred  stock  of  $11.20  billion)  as  of December 31, 2018.

◾  The Standardized common equity tier 1 ratio ⁽⁵⁾ was 13.3% ⁽⁷⁾ as of December 31, 2018, compared with 11.9% ⁽⁶⁾ as of December 31, 2017 and 13.1% as of September 30, 2018.

◾  The   Basel  III  Advanced  common  equity  tier 1 ratio ⁽⁵⁾ was 13.1% ⁽⁷⁾ as of December 31, 2018, compared with 10.7% ⁽⁶⁾ as of December 31, 2017 and 12.4% as of September 30, 2018.

◾  The supplementary leverage ratio ⁽⁵⁾ was 6.2% ⁽⁷⁾ as of December 31, 2018, compared with 5.8% as of December 31, 2017 and 6.0% as of September 30, 2018.

◾  On January 15, 2019, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.80 per common share to be paid on March 28, 2019 to common shareholders of record on February 28, 2019.

◾  During the year, the firm repurchased 13.9 million shares of common stock at an average cost per share of $236.22, for a total cost of $3.29 billion. This included 5.6 million shares repurchased during the fourth quarter at an average cost per share of $222.30, for a total cost of $1.25 billion. ⁽⁵⁾

◾  Book  value  per  common  share  was  $207.36  and tangible book value per common share ⁽³⁾ was $196.64, both based on basic shares ⁽¹⁰⁾ of 380.9 million as of December 31, 2018.

TOTAL SHAREHOLDERS’ 

EQUITY 

$90.19 billion

STANDARDIZED RATIO 

13.3% 

ADVANCED RATIO 

13.1% 

SUPPLEMENTARY 

LEVERAGE RATIO 

6.2% 

DECLARED QUARTERLY 

DIVIDEND PER COMMON SHARE 

$0.80 

COMMON SHARE REPURCHASES 

13.9 million shares 

for $3.29 billion in 2018 

BOOK VALUE 

PER COMMON SHARE 

$207.36 

◾  Total assets were $933 billion ⁽⁷⁾ as of December 31, 2018, compared with $917 billion as of December 31, 2017 and $957 billion as of September 30, 2018.

◾  Global core liquid assets ⁽⁵⁾ averaged $233 billion ⁽⁷⁾ for 2018, compared with an average of $219 billion for 2017. Global core liquid assets averaged $229 billion ⁽⁷⁾ for the fourth quarter of 2018, compared with an average of $238 billion for the third quarter of 2018.

TOTAL ASSETS 

$933 billion 

AVERAGE GCLA 

$233 billion for 2018