Goldman Sachs Group Inc (NYSE:GS) Q2 2019 Earnings Conference Call - Final Transcript

Jul 16, 2019 • 09:30 am ET


Goldman Sachs Group Inc (NYSE:GS) Q2 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Dennis, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs Second Quarter 2019 Earnings Conference Call. This call is being recorded today, July 16, 2019.

Thank you. Ms. Miner, you may begin your conference.

Heather Kennedy Miner

Good morning. This is Heather Kennedy Miner, Head of Investor Relations at Goldman Sachs. Welcome to our second quarter earnings conference call.

On this call, we will reference our earnings presentation, which can be found on the Investor Relations page of our website at Note, information on forward-looking statements and non-GAAP measures appear on the earnings release and presentation. This audiocast is copyrighted material of The Goldman Sachs Group, Inc. and may not be duplicated reproduced or rebroadcast without our consent.

Today on the call, I'm joined by our Chairman and Chief Executive Officer, David Solomon; and our Chief Financial Officer, Stephen Scherr. David will start with a high-level review of our financial performance, the operating environment, give an update on several recent strategic decisions and discuss our stress test results. Stephen will then cover second quarter results across each of our businesses. We will be happy to take your questions after that.

I'll now pass the call over to David. David?

David M. Solomon

Thanks, Heather, and thanks, everyone, for joining us this morning. I'm very happy to be here with you.

Let me begin on page one. We reported second quarter 2019 revenues of $9.5 billion, down slightly versus last year, but nonetheless, reflecting solid franchise performance amid a mixed operating environment. Net earnings were $2.4 billion, resulting in earnings per share of $5.81. All in, we posted a return on equity of 11.1%, and a return on tangible equity of 11.7%. Our business performed well and remain solidly positioned for future growth.

In Investment Banking, we ranked number one in global announced and completed M&A, and number one in global equity underwritings year-to-date. Our equity market making business delivered its second highest quarter in four years, and our franchise continues to generate broad-based market share gains across regions. We produced the highest quarterly I&L revenues in eight years, aided by significant gains from our private equity investment -- investing activities, reflecting our ability to source opportunities for the firm and our clients, and record net interest income in debt I&L, which annualizes to $3.5 billion. Lastly, our assets under supervision increased by over $60 billion to another record of $1.7 trillion.

Turning to page two. Our second quarter results were generated in an operating backdrop that presented both opportunities and challenges. This quarter, perhaps more than others, reflected changing market sentiment in each of the three component months. Against this shifting sentiment, we continue to witness relatively solid underlying economic fundamentals. This year, we expect real GDP growth of approximately 2.5% in the US and 3.4% globally.

European growth remains a bit more subdued at about 1.5%. As recently reported, China is running in the low 6% range, slower than it has