Financial Results

Net Revenues Rise At Goldman Sachs' IM Arm

Robbie Lawther Assistant Editor 17 October 2018

Net Revenues Rise At Goldman Sachs' IM Arm

The firm released its financial results for Q3 2018 and logged a rise in net revenue and total assets in its investment management division.

Goldman Sachs logged a 12 per cent year-on-year rise in net revenues in its investment management segment, which stood at $1.7 billion in its third quarter results for 2018.

There was an 8 per cent decrease in net revenue compared with the second quarter of 2018. The increase in net revenues compared with the third quarter of 2017 was primarily due to higher management and other fees, reflecting higher average assets under supervision and the impact of the recently adopted revenue recognition standard, partially offset by shifts in the mix of client assets and strategies.

During the third quarter of 2018, total assets under supervision increased from $37 billion to $1.55 trillion. Long-term assets under supervision increased to $29 billion, due to net market appreciation of $16 billion and net inflows of $13 billion, both primarily in equity assets. Liquidity products increased to $8 billion.

Overall, net revenues for the group stood at $8.65 billion and net earnings at $2.52 billion for the third quarter. Net revenues were $28.08 billion, which was 16 per cent higher than the first nine months of 2017, and net earnings were $7.92 billion for the first nine months of 2018. 

Diluted earnings per common share (EPS) weighed in at $6.28 for the third quarter of 2018, compared with $5.02 for the third quarter of 2017.

Operating expenses were $5.57 billion for the third quarter of 2018, 4 per cent higher than the third quarter of 2017 and 9 per cent lower than the second quarter of 2018. The increase compared with the third quarter of 2017 was due to higher non-compensation expenses, partially offset by slightly lower compensation and benefits expenses.

The firm reported the Basel III Common Equity Tier 1 Advanced Ratio at 12.4 per cent for Q3 2018.

On October 15, the board of directors declared a dividend of $0.80 per common share to be paid on December 28, to common shareholders.

“We delivered solid results in the third quarter driven by contributions from across our diversified client franchise,” said David Solomon, chief executive. “Year-to-date earnings per share are the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities. We remain well positioned to continue delivering for our clients and shareholders.”

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