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8-K - FORM 8-K - GOLDMAN SACHS GROUP INCd97284d8k.htm

Exhibit 99.1

The Goldman Sachs Group, Inc.  |  200 West Street  |  New York, New York 10282

 

 

GOLDMAN SACHS REPORTS THIRD QUARTER

EARNINGS PER COMMON SHARE OF $2.90

  LOGO

NEW YORK, October 15, 2015 — The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $6.86 billion and net earnings of $1.43 billion for the third quarter ended September 30, 2015. Diluted earnings per common share were $2.90 compared with $4.57 for the third quarter of 2014 and $1.98 for the second quarter of 2015. Annualized return on average common shareholders’ equity (ROE) (1) was 7.0% for the third quarter of 2015 and 8.8% for the first nine months of 2015.

Highlights

 

 

Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date, and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year-to-date. (2)

 

 

Investment Banking produced year-to-date net revenues of $5.48 billion, its highest performance for the first nine months of the year since 2007.

 

 

Investment Management generated year-to-date net revenues of $4.65 billion, a record for the first nine months of the year. Assets under supervision (3) ended the quarter at a record $1.19 trillion, with net inflows in long-term assets under supervision of $41 billion (4) during the quarter.

 

 

Book value per common share and tangible book value per common share (5) of $171.45 and $162.11, respectively, were both 5% higher compared with the end of 2014.

 

 

The firm continues to maintain strong capital ratios and liquidity. As of September 30, 2015, the firm’s Common Equity Tier 1 ratio (6) as computed in accordance with both the Standardized approach and the Basel III Advanced approach was 12.4% (7) and 12.7% (7), respectively. In addition, the firm’s global core liquid assets (3) were $193 billion (7) as of September 30, 2015.

 

 

“We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “We continue to see strong levels of activity in Investment Banking and growth in Investment Management, and looking ahead, are encouraged by the competitive positioning of our global client franchise. Our focus on serving our clients and improving operating leverage puts us in a strong position to generate superior returns for our shareholders.”

 

 

Media Relations:  Jake Siewert  212-902-5400

  |     Investor Relations:  Dane E. Holmes   212-902-0300   


Net Revenues

Investment Banking

Net revenues in Investment Banking were $1.56 billion for the third quarter of 2015, 6% higher than the third quarter of 2014 and 23% lower than a strong second quarter of 2015. Net revenues in Financial Advisory were $809 million, 36% higher than the third quarter of 2014, reflecting a significant increase in industry-wide completed mergers and acquisitions. Net revenues in Underwriting were $747 million, 14% lower than the third quarter of 2014, due to significantly lower net revenues in equity underwriting, reflecting a significant decrease in industry-wide activity. This decrease was partially offset by significantly higher net revenues in debt underwriting, reflecting higher net revenues from investment-grade and leveraged finance activity. The firm’s investment banking transaction backlog increased compared with both the end of the second quarter of 2015 and the end of 2014. (3)

Institutional Client Services

Net revenues in Institutional Client Services were $3.21 billion for the third quarter of 2015, 15% lower than the third quarter of 2014 and 11% lower than the second quarter of 2015. Results for the third quarter of 2014 included a gain of $270 million related to the extinguishment of certain of the firm’s junior subordinated debt, of which $157 million was included in Fixed Income, Currency and Commodities Client Execution and $113 million in Equities ($28 million and $85 million included in equities client execution and securities services, respectively).

Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.46 billion for the third quarter of 2015, 33% lower than the third quarter of 2014. Excluding the gain related to the extinguishment of debt, net revenues in Fixed Income, Currency and Commodities Client Execution were 27% lower than the third quarter of 2014, due to significantly lower net revenues in mortgages and, to a lesser extent, currencies and interest rate products. In addition, net revenues in commodities were lower. These decreases were partially offset by higher net revenues in credit products. As compared with the second quarter of 2015, Fixed Income, Currency and Commodities Client Execution operated in an environment characterized by lower levels of client activity and more challenging market-making conditions.

Net revenues in Equities were $1.75 billion for the third quarter of 2015, 9% higher than the third quarter of 2014. Excluding the gain related to the extinguishment of debt, net revenues in Equities were 18% higher than the third quarter of 2014, primarily due to significantly higher net revenues in equities client execution, reflecting significantly higher net revenues in cash products, partially offset by lower net revenues in derivatives. In addition, commissions and fees were higher, reflecting higher volumes in the United States. Excluding the gain related to the extinguishment of debt, securities services net revenues were higher, reflecting the impact of higher average customer balances. As compared with the second quarter of 2015, Equities operated in an environment characterized by a significant decrease in global equity prices and lower client activity levels.

The fair value net gain attributable to the impact of changes in the firm’s credit spreads on borrowings was $182 million ($147 million and $35 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the third quarter of 2015, compared with a net gain of $66 million ($37 million and $29 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the third quarter of 2014.

 

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Investing & Lending

Net revenues in Investing & Lending (8) were $670 million for the third quarter of 2015, 60% lower than the third quarter of 2014 and 63% lower than the second quarter of 2015. The decrease in net revenues compared with the third quarter of 2014 was primarily due to a significant decrease in net revenues from investments in equities, as net revenues in public equities were negatively impacted by a significant decrease in global equity prices during the third quarter of 2015. In addition, net revenues in debt securities and loans were significantly lower compared with the third quarter of 2014, reflecting lower net gains from certain investments.

Investment Management

Net revenues in Investment Management were $1.42 billion for the third quarter of 2015, 3% lower than the third quarter of 2014 and 14% lower than the second quarter of 2015. The decrease in net revenues compared with the third quarter of 2014 was due to lower incentive fees, partially offset by higher transaction revenues. During the quarter, total assets under supervision (3) increased $6 billion to $1.19 trillion. Long-term assets under supervision increased $11 billion, including net inflows of $41 billion (4) (which includes $18 billion related to an acquisition), primarily reflecting net inflows in fixed income and equity assets, partially offset by net market depreciation of $30 billion, primarily in equity assets. Liquidity products decreased $5 billion.

Expenses

Operating expenses were $4.82 billion for the third quarter of 2015, 5% lower than the third quarter of 2014 and 34% lower than the second quarter of 2015.

Compensation and Benefits

The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $2.35 billion for the third quarter of 2015, 16% lower than the third quarter of 2014. The ratio of compensation and benefits to net revenues for the first nine months of 2015 was 40.0%, compared with 42.0% for the first half of 2015 and 40.0% for the first nine months of 2014. Total staff increased 6% during the third quarter of 2015, primarily reflecting the timing of campus hires.

Non-Compensation Expenses

Non-compensation expenses were $2.46 billion for the third quarter of 2015, 8% higher than the third quarter of 2014 and 30% lower than the second quarter of 2015. The increase compared with the third quarter of 2014 reflected an increase in other expenses, due to higher net provisions for litigation and regulatory proceedings, and an increase in brokerage, clearing, exchange and distributions fees, reflecting higher transaction volumes in Equities. These increases were partially offset by lower depreciation and amortization expenses, primarily due to impairment charges during the third quarter of 2014.

Net provisions for litigation and regulatory proceedings for the third quarter of 2015 were $416 million compared with $194 million for the third quarter of 2014.

Provision for Taxes

The effective income tax rate for the first nine months of 2015 was 31.0%, essentially unchanged from 31.2% for the first half of 2015.

 

- 3 -


Capital

As of September 30, 2015, total capital was $263.52 billion, consisting of $87.70 billion in total shareholders’ equity (common shareholders’ equity of $76.50 billion and preferred stock of $11.20 billion) and $175.82 billion in unsecured long-term borrowings. As of September 30, 2015, the firm’s Standardized Common Equity Tier 1 ratio (6) was 12.4% (7) and the firm’s Basel III Advanced Common Equity Tier 1 ratio (6) was 12.7% (7), in each case reflecting the applicable transitional provisions. As of June 30, 2015, these ratios were 11.8% and 12.5%, respectively. The firm’s supplementary leverage ratio (3) on a fully phased-in basis was 5.8% (7) as of September 30, 2015, compared with 5.7% as of June 30, 2015.

On October 14, 2015, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.65 per common share to be paid on December 30, 2015 to common shareholders of record on December 2, 2015.

During the quarter, the firm repurchased 5.4 million shares of its common stock at an average cost per share of $196.00, for a total cost of $1.05 billion. On October 14, 2015, the Board of Directors of The Goldman Sachs Group, Inc. authorized the repurchase of an additional 60.0 million shares of common stock pursuant to the firm’s existing share repurchase program. The remaining share authorization under the firm’s existing repurchase program, including the newly authorized amount, is 72.1 million shares. (9)

Book value per common share was $171.45 and tangible book value per common share (5) was $162.11, both 1% higher compared with the end of the second quarter of 2015. Book value per common share and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 446.2 million as of September 30, 2015.

Other Balance Sheet and Liquidity Metrics

 

 

Total assets were $881 billion (7) as of September 30, 2015, 2% higher compared with June 30, 2015.

 

 

The firm’s global core liquid assets (3) were $193 billion (7) as of September 30, 2015 and averaged $193 billion (7) for the third quarter of 2015, compared with an average of $181 billion for the second quarter of 2015.

 

 

Level 3 assets were $27 billion (7) as of September 30, 2015, compared with $32 billion as of June 30, 2015, and represented 3.1% of total assets.

 

 

 

- 4 -


The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.

Cautionary Note Regarding Forward-Looking Statements

This press release 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 firm’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the firm’s control. It is possible that the firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm’s future results and financial condition, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2014.

Information regarding the firm’s capital ratios, risk-weighted assets, supplementary leverage ratio, total assets, level 3 assets and global core liquid assets consists of preliminary estimates. These estimates are forward-looking statements and are subject to change, possibly materially, as the firm completes its financial statements.

Statements about the firm’s investment banking transaction backlog also may constitute forward-looking statements. Such statements are subject to the risk that the terms of these transactions may be modified or that they may not be completed at all; therefore, the net revenues, if any, that the firm actually earns from these transactions may differ, possibly materially, from those currently expected. Important factors that could result in a modification of the terms of a transaction or a transaction not being completed include, in the case of underwriting transactions, a decline or continued weakness in general economic conditions, outbreak of hostilities, volatility in the securities markets generally or an adverse development with respect to the issuer of the securities and, in the case of financial advisory transactions, a decline in the securities markets, an inability to obtain adequate financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval. For a discussion of other important factors that could adversely affect the firm’s investment banking transactions, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2014.

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 (in the U.S.) or 1-706-679-5627 (outside the U.S.). 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.goldmansachs.com/investor-relations. 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 (in the U.S.) or 1-404-537-3406 (outside the U.S.) passcode number 1497687 beginning approximately three 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.

 

- 5 -


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

SEGMENT NET REVENUES

(UNAUDITED)

$ in millions

 

    Three Months Ended                 % Change From  
      September 30,  
2015
         June  30,
2015
              September 30,
2014
                       June 30,       
2015
       September 30,  
2014
 

Investment Banking

                             

Financial Advisory

  $ 809         $ 821              $ 594                 (1)      36 
                             

Equity underwriting

    190           595                426                 (68)         (55)   

Debt underwriting

    557           603                444                 (8)         25    
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Underwriting

    747           1,198                870                 (38)         (14)   
                             
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Investment Banking

    1,556           2,019                1,464                 (23)           
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 
                             

Institutional Client Services

                             

Fixed Income, Currency and Commodities Client Execution

    1,461           1,604                2,170                 (9)         (33)   
                             

Equities client execution

    555           787                429                 (29)         29    

Commissions and fees

    818           767                745                         10    

Securities services

    379           443                428                 (14)         (11)   
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Equities

    1,752           1,997                1,602                 (12)           
                             
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Institutional Client Services

    3,213           3,601                3,772                 (11)         (15)   
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 
                             

Investing & Lending

                             

Equity securities

    370           1,254                1,058                 (70)         (65)   

Debt securities and loans

    300           547                634                 (45)         (53)   
                             
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Investing & Lending (8)

    670           1,801                1,692                 (63)         (60)   
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 
                             

Investment Management

                             

Management and other fees

    1,212           1,245                1,214                 (3)         —    

Incentive fees

    73           263                133                 (72)         (45)   

Transaction revenues

    137           140                112                 (2)         22    
                             
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total Investment Management

    1,422           1,648                1,459                 (14)         (3)   
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 
                             
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 

Total net revenues

  $ 6,861         $ 9,069              $ 8,387                 (24)         (18)   
 

 

 

      

 

 

           

 

 

           

 

 

    

 

 

 
                             
    Nine Months Ended               % Change From                           
    September 30,
2015
         September 30,  
2014
              September 30,
2014
                          

Investment Banking

                             

Financial Advisory

  $ 2,591         $ 1,782                45              
                             

Equity underwriting

    1,318           1,408                (6)                

Debt underwriting

    1,571           1,834                (14)                
 

 

 

      

 

 

           

 

 

              

Total Underwriting

    2,889           3,242                (11)                
                             
 

 

 

      

 

 

           

 

 

              

Total Investment Banking

    5,480           5,024                               
 

 

 

      

 

 

           

 

 

              
                             

Institutional Client Services

                             

Fixed Income, Currency and Commodities Client Execution

    6,199           7,243                (14)                
                             

Equities client execution

    2,466           1,328                86                 

Commissions and fees

    2,393           2,324                               

Securities services

    1,215           1,153                               
 

 

 

      

 

 

           

 

 

              

Total Equities

    6,074           4,805                26                 
                             
 

 

 

      

 

 

           

 

 

              

Total Institutional Client Services

    12,273           12,048                               
 

 

 

      

 

 

           

 

 

              
                             

Investing & Lending

                             

Equity securities

    2,784           3,412                (18)                

Debt securities and loans

    1,356           1,881                (28)                
                             
 

 

 

      

 

 

           

 

 

              

Total Investing & Lending (8)

    4,140           5,293                (22)                
 

 

 

      

 

 

           

 

 

              
                             

Investment Management

                             

Management and other fees

    3,651           3,569                               

Incentive fees

    590           576                               

Transaction revenues

    413           330                25                 
                             
 

 

 

      

 

 

           

 

 

              

Total Investment Management

    4,654           4,475                               
 

 

 

      

 

 

           

 

 

              
                             
 

 

 

      

 

 

           

 

 

              

Total net revenues

  $ 26,547         $ 26,840                (1)                
 

 

 

      

 

 

           

 

 

              

 

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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  
      September 30,  
2015
              June 30,       
2015
         September 30,  
2014
                         June 30,       
2015
       September 30,  
2014
 

Revenues

                          

Investment banking

  $ 1,556         $ 2,019         $ 1,464                  (23)     

Investment management

    1,331           1,566           1,386                  (15)         (4)   

Commissions and fees

    859           805           783                          10    

Market making

    1,730           2,309           2,087                  (25)         (17)   

Other principal transactions

    543           1,707           1,618                  (68)         (66)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Total non-interest revenues

    6,019           8,406           7,338                  (28)         (18)   
                          

Interest income

    2,119           2,150           2,297                  (1)         (8)   

Interest expense

    1,277           1,487           1,248                  (14)           
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Net interest income

    842           663           1,049                  27          (20)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 
                          

Net revenues, including net interest income

    6,861           9,069           8,387                  (24)         (18)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 
                          

Operating expenses

                          

Compensation and benefits

    2,351           3,809           2,801                  (38)         (16)   
                          

Brokerage, clearing, exchange and distribution fees

    665           647           624                            

Market development

    123           147           129                  (16)         (5)   

Communications and technology

    200           203           190                  (1)           

Depreciation and amortization

    222           265           301                  (16)         (26)   

Occupancy

    182           186           212                  (2)         (14)   

Professional fees

    253           250           220                          15    

Other expenses

    819           1,836           605                  (55)         35    
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Total non-compensation expenses

    2,464           3,534           2,281                  (30)           
                          
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Total operating expenses

    4,815           7,343           5,082                  (34)         (5)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 
                          

Pre-tax earnings

    2,046           1,726           3,305                  19          (38)   

Provision for taxes

    620           678           1,064                  (9)         (42)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Net earnings

    1,426           1,048           2,241                  36          (36)   
                          

Preferred stock dividends

    96           132           98                  (27)         (2)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 

Net earnings applicable to common shareholders

  $ 1,330         $ 916         $ 2,143                  45          (38)   
 

 

 

      

 

 

      

 

 

             

 

 

    

 

 

 
                          

Earnings per common share

                          

Basic (10)

  $ 2.95         $ 2.01         $ 4.69                  47       (37)

Diluted

    2.90           1.98           4.57                  46          (37)   
                          

Average common shares outstanding

                          

Basic

    449.0           451.4           455.5                  (1)         (1)   

Diluted

    458.6           461.6           469.2                  (1)         (2)   
                          

Selected data at period-end

                          

Total staff (employees, consultants and temporary staff)

    36,900           34,900           33,500                          10    

 

- 7 -


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

In millions, except per share amounts

 

    Nine Months Ended                   % Change From  
      September 30,  
2015
         September 30,  
2014
                  September 30,
2014
 

Revenues

                  

Investment banking

  $ 5,480         $ 5,024                 

Investment management

    4,400           4,262                    

Commissions and fees

    2,517           2,441                    

Market making

    7,964           6,911                  15    

Other principal transactions

    3,822           5,116                  (25)   
 

 

 

      

 

 

             

 

 

 

Total non-interest revenues

    24,183           23,754                    
                  

Interest income

    6,304           7,470                  (16)   

Interest expense

    3,940           4,384                  (10)   
 

 

 

      

 

 

             

 

 

 

Net interest income

    2,364           3,086                  (23)   
 

 

 

      

 

 

             

 

 

 
                  

Net revenues, including net interest income

    26,547           26,840                  (1)   
 

 

 

      

 

 

             

 

 

 
                  

Operating expenses

                  

Compensation and benefits

    10,619           10,736                  (1)   
                  

Brokerage, clearing, exchange and distribution fees

    1,950           1,832                    

Market development

    409           408                  —    

Communications and technology

    601           576                    

Depreciation and amortization

    706           985                  (28)   

Occupancy

    572           627                  (9)   

Professional fees

    714           656                    

Other expenses

    3,270           1,873                  75    
 

 

 

      

 

 

             

 

 

 

Total non-compensation expenses

    8,222           6,957                  18    
                  
 

 

 

      

 

 

             

 

 

 

Total operating expenses

    18,841           17,693                    
 

 

 

      

 

 

             

 

 

 
                  

Pre-tax earnings

    7,706           9,147                  (16)   

Provision for taxes

    2,388           2,836                  (16)   
 

 

 

      

 

 

             

 

 

 

Net earnings

    5,318           6,311                  (16)   
                  

Preferred stock dividends

    324           266                  22    
 

 

 

      

 

 

             

 

 

 

Net earnings applicable to common shareholders

  $ 4,994         $ 6,045                  (17)   
 

 

 

      

 

 

             

 

 

 
                  

Earnings per common share

                  

Basic (10)

  $ 11.03         $ 13.05                  (15)

Diluted

    10.84           12.69                  (15)   
                  

Average common shares outstanding

                  

Basic

    451.2           461.8                  (2)   

Diluted

    460.9           476.5                  (3)   

 

- 8 -


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA

(UNAUDITED)

 

Average Daily VaR (3)

$ in millions

 
                        
    Three Months Ended                      
      September 30,  
2015
            June 30,       
2015
         September 30,  
2014
                            

Risk Categories

                        

Interest rates

  $ 46        $ 46          $ 46                   

Equity prices

    26          28            24                   

Currency rates

    28          30            19                   

Commodity prices

    17          19            20                   

Diversification effect

    (43)         (46)           (43)                  
 

 

 

    

 

 

      

 

 

                

Total

  $ 74        $ 77          $ 66                   
 

 

 

    

 

 

      

 

 

                

Assets Under Supervision (3)

$ in billions

  

  

                        
    As of                   % Change From  
      September 30,  
2015
            June 30,       
2015
         September 30,  
2014
                         June 30,       
2015
       September 30,  
2014
 

Assets under management

  $ 1,019        $ 1,032          $ 1,008                   (1)      1

Other client assets

    169          150            142                   13          19   
 

 

 

    

 

 

      

 

 

             

 

 

    

 

 

 

Assets under supervision (AUS)

  $ 1,188        $ 1,182          $ 1,150                           3   
 

 

 

    

 

 

      

 

 

             

 

 

    

 

 

 
                        

Asset Class

                        

Alternative investments

  $ 146        $ 145          $ 146                       

Equity

    237          249            232                   (5)         2   

Fixed income

    547          525            517                           6   
 

 

 

    

 

 

      

 

 

             

 

 

    

 

 

 

Long-term AUS

    930          919            895                           4   
                        

Liquidity products

    258          263            255                   (2)         1   
 

 

 

    

 

 

      

 

 

             

 

 

    

 

 

 

Total AUS

  $ 1,188        $ 1,182          $ 1,150                           3   
 

 

 

    

 

 

      

 

 

             

 

 

    

 

 

 
                        
    Three Months Ended                      
      September 30,  
2015
            June 30,       
2015
         September 30,  
2014
                            

Balance, beginning of period

  $ 1,182        $ 1,177          $ 1,142                   
                        

Net inflows / (outflows)

                        

Alternative investments

                      —                   

Equity

    13                                     

Fixed income

    24          10                             
 

 

 

    

 

 

      

 

 

                

Long-term AUS net inflows / (outflows)

    41  (4)       14            13                   
                        

Liquidity products

    (5)         (6)                            
 

 

 

    

 

 

      

 

 

                

Total AUS net inflows / (outflows)

    36                    20                   
                        

Net market appreciation / (depreciation)

    (30)         (3)           (12)                  
                        
 

 

 

    

 

 

      

 

 

                

Balance, end of period

  $ 1,188        $ 1,182          $ 1,150                   
 

 

 

    

 

 

      

 

 

                

 

- 9 -


Footnotes

 

(1)

Annualized ROE is computed by dividing annualized net earnings applicable to common shareholders by average monthly common shareholders’ equity. The table below presents the firm’s average common shareholders’ equity:

 

     Average for the
Unaudited, $ in millions   

Three Months Ended

September 30, 2015

      

Nine Months Ended

September 30, 2015

 

 

 

Total shareholders’ equity

   $ 87,509          $ 86,105    

Preferred stock

     (11,200)           (10,400)   

 

 

Common shareholders’ equity

   $ 76,309          $ 75,705    

 

 

 

(2)

Thomson Reuters — January 1, 2015 through September 30, 2015.

 

(3)

For information about the firm’s investment banking transaction backlog, assets under supervision, supplementary leverage ratio, global core liquid assets and VaR, see “Results of Operations — Investment Banking,” “Results of Operations — Investment Management,” “Equity Capital Management and Regulatory Capital,” “Liquidity Risk Management” and “Market Risk Management,” respectively, 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, 2015.

 

(4)

Includes $18 billion of fixed income, equity and alternative investments asset inflows in connection with the acquisition of Pacific Global Advisors’ solutions business for the three months ended September 30, 2015.

 

(5)

Tangible book value per common share is computed by dividing tangible common shareholders’ equity (total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets) by 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 a reconciliation of total shareholders’ equity to tangible common shareholders’ equity:

 

     As of
Unaudited, $ in millions      September 30, 2015  

 

 

Total shareholders’ equity

     $ 87,703    

Preferred stock

       (11,200)   

 

 

Common shareholders’ equity

       76,503    

Goodwill and identifiable intangible assets

       (4,168)   

 

 

Tangible common shareholders’ equity

     $ 72,335    

 

 

 

(6)

The lower of the ratios computed in accordance with the Standardized approach and the Basel III Advanced approach is the binding regulatory capital ratio for the firm. As of September 30, 2015, Common Equity Tier 1 was $72.2 billion and the firm’s risk-weighted assets calculated in accordance with the Standardized Capital Rules and the Basel III Advanced Rules were approximately $582 billion and $570 billion, respectively, each reflecting the applicable transitional provisions. For information about the firm’s capital ratios, see “Equity Capital Management and Regulatory 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 June 30, 2015.

 

(7)

Represents a preliminary estimate and may be revised in the firm’s Quarterly Report on Form 10-Q for the period ended September 30, 2015.

 

(8)

Net revenues related to the firm’s consolidated investments, previously reported in other net revenues within Investing & Lending, are now reported in equity securities and debt securities and loans, as results from these activities ($99 million and $265 million for the three and nine months ended September 30, 2015, respectively) are no longer significant due to the sale of Metro International Trade Services in the fourth quarter of 2014. Reclassifications have been made to previously reported amounts to conform to the current presentation.

 

(9)

The remaining authorization represents the shares that may be repurchased under the repurchase program approved by the Board of Directors. Prior to repurchasing shares, the firm must receive confirmation that the Federal Reserve Board does not object to such capital actions.

 

(10)

Unvested share-based 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 $0.01, $0.02 and $0.01 for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively, and $0.04 for both the nine months ended September 30, 2015 and September 30, 2014.

 

- 10 -