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Goldman Sachs (NYSE: GS) reported Q4 EPS of $4.38, which may not compare with the analyst estimate of $4.32. Revenue for the quarter came in at $7.69 billion versus the consensus estimate of $7.64 billion.
UPDATE 2 - Based on a tax rate of about 35 percent, Goldman Sachs Q4 EPS is around $4.61.
The net gain attributable to the impact of changes in the firm's own credit spreads on borrowings for which the fair value option was elected was $82 million ($55 million and $27 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the fourth quarter of 2014, compared with a net loss of $206 million ($163 million and $43 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the fourth quarter of 2013.
“We are pleased with our performance during a year characterized by mixed global economic and financial conditions,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “The depth of our global client franchise and our continued discipline on expenses and capital management produced a solid return for our shareholders. Looking ahead, we see evidence of a continued pick up in momentum for the global economy that will improve the opportunity set for 2015.”
Highlights:
- Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions for the year. During the year, the firm advised on announced transactions valued at more than $1 trillion. The firm also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year. (2)
- Investment Banking produced net revenues of $6.46 billion, its second highest annual performance, as net revenues in Underwriting reflected strong results in both debt and equity underwriting and net revenues in Financial Advisory were the highest since 2008.
- Investment Management generated record net revenues of $6.04 billion, as assets under supervision (3) increased 13% from a year ago to a record $1.18 trillion, with net inflows in long-term assets under supervision of $74 billion (4) during 2014.
- During 2014, as part of a firmwide initiative to reduce activities with lower returns, the firm reduced total assets by $55 billion to $856 billion (5) as of December 31, 2014, while improving the firm’s pre-tax margin to 35.8%.
- The firm increased diluted earnings per common share by 10% to $17.07 compared with 2013 and increased book value per common share and tangible book value per common share (6) by 7% during the year to $163.01 and $153.79, respectively.
- The firm maintained strong capital ratios and liquidity, while returning approximately $6.5 billion of capital to shareholders during 2014. The firm’s Common Equity Tier 1 ratio (7) was 12.2% (5) as of December 31, 2014, under the Basel III Advanced approach. In addition, the firm’s global core excess liquidity (3) was $183 billion (5) as of December 31, 2014.
Capital
As of December 31, 2014, total capital was $250.37 billion, consisting of $82.80 billion in total shareholders’ equity (common shareholders’ equity of $73.60 billion and preferred stock of $9.20 billion) and $167.57 billion in unsecured long-term borrowings. Book value per common share was $163.01 and tangible book value per common share (6) was $153.79, both approximately 7% higher compared with the end of 2013 and approximately 1% higher compared with the end of the third quarter of 2014. 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 451.5 million as of December 31, 2014.
During 2014, the firm’s quarterly dividend was increased to $0.60 per common share from $0.55 per common share. On January 15, 2015, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.60 per common share to be paid on March 30, 2015 to common shareholders of record on March 2, 2015.
During the year, the firm repurchased 31.8 million shares of its common stock at an average cost per share of $171.79, for a total cost of $5.47 billion, including 6.6 million shares during the fourth quarter at an average cost per share of $188.14, for a total cost of $1.25 billion. The remaining share authorization under the firm’s existing repurchase program is 25.4 million shares. (11)
The firm’s Common Equity Tier 1 ratio (7) was 12.2% (5) as of December 31, 2014, up from 11.8% as of September 30, 2014, in each case under the Basel III Advanced approach reflecting the applicable transitional provisions.
