Goldman Sachs Group Inc (NYSE:GS) Q4 2019 Earnings Conference Call - Final Transcript

Jan 15, 2020 • 09:30 am ET


Goldman Sachs Group Inc (NYSE:GS) Q4 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 Fourth Quarter 2019 Earnings Conference Call. This call is being recorded today, January 15, 2020.

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 fourth quarter earnings conference call.

Today, 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, I'm joined by our Chairman and Chief Executive Officer, David Solomon; and our Chief Financial Officer, Stephen Scherr. David will start with brief highlights on our financial results, give an update on the broader operating environment, including developments related to 1MDB, and provide context for our upcoming Investor Day. Stephen will then discuss the recent enhancements we've made to our segment financial presentation, and cover fourth quarter and full-year 2019 results in detail. They 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 happy to be here with you.

Let me begin on Page 1. In the fourth quarter, net revenues were $10 billion, up 23% versus a year ago. marking our highest fourth quarter since 2007. Net earnings were $1.9 billion, resulting in an earnings per share of $4.69 and an ROE of 8.7%. I would note that we took a $1.1 billion litigation charge during the quarter, which burdened EPS and ROE by $2.95 and 5.3% respectively. Overall, our business performed well and against an improved market environment relative to the challenging backdrop experienced a year ago.

For the 2019 full year, we generated firm-wide net revenues of $36.5 billion, nearly matching last year, which was our highest year in eight years. We reported a return on equity of 10% and return on tangible equity of 10.6%. Litigation impact ROE and ROTE was approximately 150 basis points for the year.

We had a number of accomplishments in 2019. Our incumbent businesses across the firm performed well, and our new business initiatives progressed as planned as we navigated a dynamic operating environment over the course of the year. On the revenue side, our Global Markets business produced stronger results in an environment that improved over the year, driven by strong leadership and a clear focus on client service.

We generated solid growth in FICC, driven by strength across strength across our franchise, including rates, commodities and mortgages. We grew firm-wide assets under supervision to record levels. We also delivered strong equity investment performance, which is an important precursor to our Alternatives platform expansion plans.

In Investment Banking, our performance was solid