Goldman Sachs Group Inc (NYSE:GS) Q3 2020 Earnings Conference Call - Final Transcript

Oct 14, 2020 • 09:30 am ET


Goldman Sachs Group Inc (NYSE:GS) Q3 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 Third Quarter 2020 Earnings Conference Call. This call is being recorded today, October 14, 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 third 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 by reviewing third quarter and year-to-date performance. He will also provide an update on our client franchise, the macroeconomic backdrop and our progress on returning to office. Stephen will then discuss our third quarter results in detail. David and Stephen will be happy to take your questions following their remarks.

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

David M. Solomon

Thanks, Heather, and thank you to everyone for joining us this morning. I'd like to start by saying that all of us at Goldman Sachs hope that you, your friends and family remain healthy amid the continuing challenges with COVID-19. Let me begin on page 1 of the presentation with a summary of our financial results. In the third quarter, we produced net revenues of $10.8 billion, up 30% versus a year ago. The strength and breadth of our client franchise continue to be evident this quarter as we delivered net earnings of $3.6 billion, record quarterly earnings of $9.68 per share, and return on equity of 17.5% and return on tangible equity of 18.6%. Our third quarter results contributed to strong year-to-date revenues of $33 billion and an ROE of 8%. Litigation costs burdened our year-to-date returns by over 500 basis points.

Returns were also impacted by higher reserve build for credit losses in the first half. The third quarter continued to demonstrate the strength of our diversified business. We benefited from an improving market backdrop, high levels of client engagement, continued countercyclical performance in market-making and positive momentum across our strategic initiatives. We maintained our leading global position in M&A as announcements increased in the quarter from a relatively dormant period earlier in the year. We maintained strong lead table positions in underwriting including a number one ranking in equity underwriting and a top three ranking in high yield with both markets very active during the quarter. We again delivered robust performance in Global Markets in both FICC and Equities on solid client activity across our global platform reinforced by recent market share gains across asset classes in the first half of 2020.

In Asset Management, we recognized strong gains