Full Year and Fourth Quarter 2018 Earnings Results Presentation - PowerPoint PPT Presentation

Full Year and Fourth Quarter 2018 Earnings Results Presentation January 16, 2019

Earnings Call Agenda 1 David M. Solomon, Chairman and Chief Executive Officer  Strategic priorities  Macro perspectives and client engagement  Update on 1MDB 2 Stephen M. Scherr, Chief Financial Officer  Key financial highlights  Segment performance review  Expenses and taxes  Capital, balance sheet and liquidity 3 Q&A 1

Strategic Overview Key Priorities Updates on Select Business Reviews Market Making: FICC and Equities Client Centricity:  Leverage technology to create best-in-class client experience across more One Goldman Sachs products  Expand addressable market while optimizing expenses and capital allocation Alternative Investing Platform Business Reviews & Expanding  Opportunities to increase 3 rd party assets under supervision our Addressable Market  Continue monetization of on-balance sheet investments  Increase fee-based revenues and optimize capital consumption Investing for Scale via Cash Management Technology and Platform  Deepen corporate relationships Expansion  Leverage franchise adjacencies and innovation  Potential for FX opportunities Targets and Accountability Consumer Business  Continue to evolve Marcus to multi-product platform  Launch multi-tiered mass affluent strategy Superior Long-Term Shareholder Returns 2

Macro Perspectives Economic Fundamentals Market Dynamics (4Q18) MSCI WTI Positive but slowing global growth S&P 500 World Crude 2019 estimated +2.4% +3.5% -14% -13% GDP growth 1 : U.S. Global -38% 10-year Government Bond Yields: Strong corporate performance -36bps U.S.  -22bps U.K.  -12bps Japan 22% Corporate U.S. Credit Spreads 1 : $4.2 trillion 2018 estimated confidence +56bps IG  +171bps HY Announced M&A S&P 500 remains high – volumes in 2018 2 Volatility: EPS growth 1 2017 levels 1 VIX +110%  MOVE +44%  CVIX +12% Client Engagement Opportunities Market dislocation Market uncertainty Portfolio creates opportunity drives tactical Hedging and liquidity repositioning and for strategic client structuring of equity solutions alpha generation engagement and debt financing Shifting macro environment creates opportunity for productive engagement with clients 3

Annual Results Snapshot Strong 2018 performance across the firm created operating leverage to fund investments in our business Net Revenues 3  Net revenues up 12% YoY, with highest net revenues since 2010 $36.6 billion 2018  Broad contribution with every segment up YoY 2017 $32.7 billion EPS 4  Record diluted EPS 2018 $25.27 $9.01 2017 2018 Returns 4,5  Highest annual ROE and ROTE since 2009 13.3% ROE 14.1% ROTE 2018 Book Value  14.6% YoY growth in book value per share BVPS $207.36  15.3% YoY growth in tangible book value per share TBVPS 5 $196.64 4

Financial Overview Financial Results Full Year Net Revenue Mix by Segment vs. vs. vs. 4Q18 3Q18 4Q17 2018 2017 Investment $ in millions, except per share amounts Investment Management Investment Banking $ 2,044 3% -5% $ 7,862 7% Banking 19% (Financial 21% Advisory 9%) FICC 822 -37% -18% 5,882 11% Equities 1,604 -11% 17% 7,600 15% (Underwriting 12%) Institutional Client Services 2,426 -22% 2% 13,482 13% (FICC 16%) Investing & Lending 1,906 -6% -2% 8,250 14% Investing & Lending 23% Investment Management 1,704 ─ 2% 7,022 13% (Debt securities (Equities 21%) and loans net interest Net revenues 3 $ 8,080 -8% -1% $36,616 12% Institutional income ~7%) Client Services Provision for credit losses 3 222 28% -23% 674 3% 37% Fee-Based or More-Recurring Revenues 6 Operating expenses 5,150 -8% 9% 23,461 12% 2013 Pre-tax earnings 2,708 -12% -13% 12,481 12% 2018 Provision for taxes 4 170 -69% -97% 2,022 -70% 48% 61% Net earnings 2,538 1% N.M. 10,459 144% Net earnings to common $ 2,322 -5% N.M. $ 9,860 168% $16.6 billion $22.3 billion Diluted EPS 4 $ 6.04 -4% N.M. $ 25.27 180% ROE 4,5 12.1% -1.0pp N.M. 13.3% 8.4pp ROTE 4,5 12.8% -1.0pp N.M. 14.1% 8.9pp 5

Investment Banking Financial Results Key Highlights  Financial Advisory 2018 and 4Q18 net revenues reflect strong M&A vs. vs. vs. volumes and leading market share 4Q18 3Q18 4Q17 2018 2017 $ in millions — ~$1.2 trillion of completed M&A volumes from nearly 400 Financial Advisory $ 1,201 31% 56% $ 3,507 10% transactions in 2018 2 Equity underwriting 315 -27% -32% 1,646 32% — ~$1.3 trillion of announced M&A volumes in 2018, including ~$450 billion from transactions below $5 billion in deal value 2 Debt underwriting 528 -16% -42% 2,709 -8%  Strong Underwriting net revenues in 2018 driven by increased IPO activity offsetting lower debt underwriting activity; 4Q18 net revenues down significantly QoQ on lower industry-wide activity Total Underwriting 843 -21% -38% 4,355 4%  Continued strong levels of engagement with backlog 7 up YoY Total Investment Banking $ 2,044 3% -5% $ 7,862 7% Net Revenues ($ in millions) Full Year Worldwide League Table Rankings 2 Announced M&A #1 $2,141 $2,045 $2,044 $1,980 Completed M&A #1 $1,797 $1,793 $1,730 $1,703 528 909 752 632 674 Equity & Equity-Related #1 636 797 721 315 432 489 212 460 311 260 Common Stock Offerings 410 #1 1,201 911 916 804 756 772 749 586 High-Yield Debt #2 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Investment-Grade Debt ($+€) #4 Financial Advisory Equity underwriting Debt underwriting 6

Institutional Client Services – FICC FICC Key Highlights Financial Results  2018 net revenues increased YoY primarily reflecting higher client vs. vs. vs. activity; 4Q18 performance challenged due to difficult market 4Q18 3Q18 4Q17 2018 2017 $ in millions backdrop FICC $ 822 -37% -18% $ 5,882 11%  4Q18 net revenues decreased YoY reflecting significantly lower net revenues in credit products, amid wider credit spreads and increased volatility, and lower net revenues in interest rate products Equities 1,604 -11% 17% 7,600 15%  Remain focused on expanding addressable market by broadening client relationships, streamlining expenses, optimizing capital and investing in automation and platform enhancements Total ICS $ 2,426 -22% 2% $ 13,482 13% FICC Net Revenues ($ in millions) 2018 FICC Net Revenue Mix 8 $2,074 Financing ~10% $1,679 $1,685 $1,452 $1,307 $1,159 $1,003 $822 Market Intermediation ~90% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 7

Institutional Client Services – Equities Key Highlights Financial Results  2018 net revenues higher YoY on significantly higher equities client vs. vs. vs. execution net revenues 4Q18 3Q18 4Q17 2018 2017 $ in millions  4Q18 net revenues increased YoY amid improved market conditions, Equities client execution $ 401 -41% 80% $ 2,835 39% higher levels of volatility and higher client activity — Equities client execution net revenues increased significantly Commissions and fees 801 19% 9% 3,055 5% versus a challenging 4Q17, supported by better performance in cash products — Commissions and fees increased driven by higher market Securities services 402 -8% -2% 1,710 4% volumes; market share in low touch improved — Securities services net revenues decreased slightly; average Total Equities $ 1,604 -11% 17% $ 7,600 15% customer balances lower Net Revenues ($ in millions) 2018 Equities Net Revenue Mix 8 $2,311 432 $1,892 $1,891 $1,794 Financing $1,674 $1,668 ~40% $1,604 441 437 439 $1,369 384 403 817 402 409 764 763 674 681 738 801 737 1,062 687 691 681 584 552 Market 401 223 Intermediation ~60% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Equities client execution Commissions and fees Securities services 8

Investing & Lending – Equity Securities Key Highlights Financial Results  2018 net revenues decreased slightly YoY as improved performance from private equity investments largely offset net losses from public vs. vs. vs. investments 4Q18 3Q18 4Q17 2018 2017 $ in millions  4Q18 net revenues reflected continued strong results in private equity Equity securities $ 994 -11% -18% $ 4,455 -3% investments, driven by company-specific events, including sales, and corporate performance — Approximately one-half of the net revenues were generated from real estate, which primarily reflected gains from sales  Our global private and public equity portfolio consists of over 1,000 Net Revenues ($ in millions) investments, which are diversified across geography and investment vintage and have a total carrying value of $21 billion $1,391 — In addition, our consolidated investment entities have a carrying $1,281 value of $13 billion, substantially all of which is related to real $1,209 $1,180 estate 9 31% $1,111 $1,069 $994 Equity I&L Asset Mix 10,11 25% 40% 49% 30% $ in billions 4Q18 $ in billions 4Q18 41% $798 Corporate $ 17 Public equity $ 1 52% Real estate 4 Private equity 20 42% Total $ 21 Total $ 21 69% 75% 60% Vintage Geographic 70% 59% 51% 48% 58% Asia 2011 or 2015 – 31% Earlier 30% Americas Present 47% 53% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 2012 – EMEA Corporate Real Estate 2014 16% 23% 9