Goldman Sachs : 2018 Full Year and Fourth Quarter Results

Full Year and Fourth Quarter 2018 Earnings Results

Media Relations: Jake Siewert 212-902-5400

Investor Relations: Heather Kennedy Miner 212-902-0300

The Goldman Sachs Group, Inc.

200 West Street | New York, NY 10282

Full Year and Fourth Quarter 2018 Earnings Results

Goldman Sachs Reports Earnings Per Common Share of $25.27 for 2018

Fourth Quarter Earnings Per Common Share was $6.04

"We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses in the second half. For the year, we delivered double-digit revenue growth, "..."

the highest earnings per share in the firm's history and the strongest return on equity since 2009. We are confident that we are well positioned to support an even larger universe of clients, continue to diversify our revenue mix and deliver strong returns for our shareholders in the years ahead."

- David M. Solomon, Chairman and Chief Executive Officer

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 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 Revenue Mix by Segment

Annual Highlights

Net Revenues

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.

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.

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.

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.

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.

Institutional Client Services