Goldman Sachs Group Inc (NYSE:GS) Q2 2020 Earnings Conference Call - Final Transcript

Jul 15, 2020 • 09:30 am ET


Goldman Sachs Group Inc (NYSE:GS) Q2 2020 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 2020 Earnings Conference Call. This call is being recorded today, July 15, 2020. Thank you.

Ms. Miner, you may begin your conference.

Heather Kennedy Miner

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

Today, we will reference our earnings presentation, which can be found on the Investor Relations page of our website at No 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 Sir, Stephen Scherr. David will start by reviewing the second quarter and first half performance. He will then provide an update on several key strategic growth initiatives and the macroeconomic backdrop. David will also address the firm's commitments to diversity and discuss our return-to-office strategy. Stephen will then discuss the recent stress test and our second quarter results in greater detail. David and Stephen will be happy to take your questions following their remarks.

I will now pass the call over to David. David?

David M. Solomon

Thanks, Heather, and thank you, everyone, for joining this call this morning. I would like to start by saying that all of us at Goldman Sachs hope that you, your friends and your family remain safe and healthy during this unprecedented global health crisis.

Let me begin on Page 1 of the presentation to review our financial results. In the second quarter, we produced net revenues of $13.3 billion, up 41% versus a year ago. The strength and breadth of our client franchise was evident this quarter as we delivered solid net earnings of $2.4 billion, earnings per share of $6.26 and a return on equity of 11.1% and return on tangible equity of 11.8%.

Our results in the quarter were strong even while incurring higher credit provisions and litigation expenses, both of which impacted our returns. Our second quarter results contributed to solid first half 2020 revenues of $22 billion, net earnings of $3.6 billion and an ROE of 8.4% and ROTE of 9%. Litigation costs burdened our first half returns by approximately 280 basis points. Returns were also impacted by higher reserve build for credit losses.

The second quarter demonstrated the strength of our diversified business and was driven by significant new issue volumes and the countercyclical performance of our market making activities. We maintained our leading position as a strategic advisor of choice for our investment banking clients, under our strong league table positions across underwriting markets, with extraordinary volumes in both debt and equity, enabling us to pick up market share.

We delivered exceptional performance in FICC and equities on high levels of client activity, deploying our