THE GOLDMAN SACHS GROUP, INC.2019/01/16 · $8.08 billion Investment Banking Full Year Net revenues...

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

January 16, 2019

THE GOLDMAN SACHS GROUP, INC. (Exact name of registrant as specified in its charter)

Delaware No. 001-14965 No. 13-4019460

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

200 West Street

New York, New York 10282

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 902-1000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under

any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR

230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition

Item 7.01 Regulation FD Disclosure

Item 8.01 Other Events

Item 9.01 Financial Statements and Exhibits

Signature

Exhibit 99.1: PRESS RELEASE

Exhibit 99.2: PRESENTATION

Item 2.02 Results of Operations and Financial Condition.

On January 16, 2019, The Goldman Sachs Group, Inc. (Group Inc. and, together with its consolidated subsidiaries, the firm) reported its

earnings for the fourth quarter and year ended December 31, 2018. A copy of Group Inc.’s press release containing this information is

attached as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On January 16, 2019, at 9:30 a.m. (ET), the firm will hold a conference call to discuss the firm’s financial results, outlook and related

matters. A copy of the presentation for the conference call is attached as Exhibit 99.2 to this Report on Form 8-K.

Item 8.01 Other Events.

On December 17, 2018, the Attorney General of Malaysia issued a press statement that (i) criminal charges in Malaysia had been

filed against Goldman Sachs International, as the arranger of three debt offerings of 1Malaysia Development Berhad (1MDB), for

alleged disclosure deficiencies in the offering documents relating to, among other things, the use of proceeds, (ii) Goldman Sachs

(Asia) LLC, Goldman Sachs (Singapore) PTE, Tim Leissner (a former participating managing director) and others had been

criminally charged in Malaysia, and indicated that Ng Chong Hwa (a former managing director) would be charged shortly, and

(iii) prosecutors in Malaysia will seek criminal fines against the accused in excess of $2.7 billion plus the $600 million of fees

received in connection with the debt offerings.

In November and December 2018, a shareholder books and records demand was made and purported securities law class action

lawsuits and other litigation (including by International Petroleum Investment Company, the guarantor of certain of the debt)

were initiated or threatened related to 1MDB.

See the disclosures concerning 1MDB related matters in our Quarterly Report on Form 10-Q for the period ended

September 30, 2018.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press release of Group Inc. dated January 16, 2019 containing financial information for its fourth quarter and year ended

December 31, 2018.

The quotation on page 1 of Exhibit 99.1 and the information under the caption “Annual Highlights” on the following page

(Excluded Sections) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (Exchange

Act) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any

filing of Group Inc. under the Securities Act of 1933 or the Exchange Act. The information included in Exhibit 99.1, other than

in the Excluded Sections, shall be deemed “filed” for purposes of the Exchange Act.

99.2 Presentation of Group Inc. dated January 16, 2019, for the conference call on January 16, 2019.

Exhibit 99.2 is being furnished pursuant to Item 7.01 of Form 8-K and the information included therein shall not be deemed

“filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be

deemed to be incorporated by reference into any filing of Group Inc. under the Securities Act of 1933 or the Exchange Act.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its

behalf by the undersigned hereunto duly authorized.

THE GOLDMAN SACHS GROUP, INC.

(Registrant)

Date: January 16, 2019 By: /s/ Stephen M. Scherr

Name: Stephen M. Scherr

Title: Chief Financial Officer

Exhibit 99.1

Full Year and

Fourth Quarter

2018 Earnings

Results

Media Relations: Jake Siewert 212-902-5400

Investor Relations: Heather Kennedy Miner 212-902-0300

The Goldman Sachs Group, Inc.

200 West Street | New York, NY 10282

Full Year and Fourth Quarter 2018 Earnings Results

Goldman Sachs Reports Earnings Per Common Share of $25.27 for 2018

Fourth Quarter Earnings Per Common Share was $6.04

“We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging

backdrop for our market-making businesses in the second half. For the year, we delivered double-digit revenue growth,

the highest earnings per share in the firm’s history and the strongest return on equity since 2009. We are confident that

we are well positioned to support an even larger universe of clients, continue to diversify our revenue mix and deliver

strong returns for our shareholders in the years ahead.”

- David M. Solomon, Chairman and Chief Executive Officer

NEW YORK, January 16, 2019 – The Goldman Sachs Group, Inc.

(NYSE: GS) today reported net revenues (1) of $36.62 billion and net

earnings of $10.46 billion for the year ended December 31, 2018. Net

revenues (1) were $8.08 billion and net earnings were $2.54 billion for

the fourth quarter of 2018.

Diluted earnings per common share (EPS) was $25.27 (2) for the year

ended December 31, 2018 compared with $9.01 (2) for the year ended

December 31, 2017, and was $6.04 (2) for the fourth quarter of 2018

compared with a diluted loss per common share of $5.51 (2) for the

fourth quarter of 2017 and diluted earnings per common share of

$6.28 for the third quarter of 2018.

Return on average common shareholders’ equity (ROE) (3) was

13.3% (2) for 2018 and annualized ROE was 12.1% for the fourth

quarter of 2018. Return on average tangible common shareholders’

equity (ROTE) (3) was 14.1% (2) for 2018 and annualized ROTE was

12.8% for the fourth quarter of 2018.

NET REVENUES

2018 $36.62 billion

4Q18 $8.08 billion

NET EARNINGS

2018 $10.46 billion

4Q18 $2.54 billion

EPS

2018 $25.27

4Q18 $6.04

ROE

2018 13.3%

4Q18 12.1%

ROTE

2018 14.1%

4Q18 12.8%

1

Goldman Sachs Reports


Annual Highlights

◾ Net revenues of $36.62 billion and pre-tax earnings of $12.48 billion were both 12% higher compared with 2017 and the

highest since 2010.

◾ The firm ranked #1 in worldwide announced and completed mergers and acquisitions, equity and equity-related offerings and

common stock offerings for the year. (4)

◾ Investment Banking produced net revenues of $7.86 billion, reflecting the highest net revenues in Financial Advisory since

2007 and a strong performance in Underwriting.

◾ Equities generated net revenues of $7.60 billion, 15% higher than 2017 and the highest since 2015.

◾ Net revenues in Investing & Lending were $8.25 billion, which included record net interest income in debt securities and loans

of approximately $2.70 billion.

◾ Investment Management produced record net revenues of $7.02 billion, including record management and other fees. Assets

under supervision (5) of $1.54 trillion included net inflows of $89 billion during the year, with net inflows of $37 billion in long-

term assets under supervision.

◾ Diluted EPS of $25.27 was a record and ROE (3) of 13.3% was the highest since 2009.

◾ Book value per common share increased 14.6% during the year to $207.36 and tangible book value per common share (3)

increased 15.3% to $196.64.

◾ The Standardized and Basel III Advanced common equity tier 1 ratios (5) increased 140 basis points and 240 basis points,

respectively, compared with the fully phased-in ratios at the end of 2017 (6) to 13.3% (7) and 13.1% (7).

Full Year Net Revenue Mix by Segment

2



Net Revenues

Full Year

Net revenues (1) were $36.62 billion for 2018, 12% higher than 2017, reflecting

higher net revenues across all segments.

Fourth Quarter

Net revenues (1) were $8.08 billion for the fourth quarter of 2018, essentially

unchanged compared with the fourth quarter of 2017 and 8% lower than the third

quarter of 2018.

2018 NET REVENUES

$36.62 billion

4Q18 NET REVENUES

$8.08 billion

Investment Banking

Full Year

Net revenues in Investment Banking were $7.86 billion for 2018, 7% higher than

2017.

Net revenues in Financial Advisory were $3.51 billion, 10% higher than 2017,

reflecting an increase in industry-wide completed mergers and acquisitions

volumes.

Net revenues in Underwriting were $4.36 billion, 4% higher than 2017, due to

significantly higher net revenues in equity underwriting, driven by initial public

offerings, partially offset by lower net revenues in debt underwriting, reflecting a

decline in leveraged finance activity.

The firm’s investment banking transaction backlog (5) increased compared with

the end of 2017.

2018 INVESTMENT BANKING

$7.86 billion

Financial Advisory $3.51 billion

Underwriting $4.36 billion

Fourth Quarter

Net revenues in Investment Banking were $2.04 billion for the fourth quarter of

2018, 5% lower than the fourth quarter of 2017 and 3% higher than the third

quarter of 2018.

Net revenues in Financial Advisory were $1.20 billion, 56% higher than the fourth

quarter of 2017, reflecting an increase in industry-wide completed mergers and

acquisitions volumes.

Net revenues in Underwriting were $843 million, 38% lower than the fourth

quarter of 2017, due to significantly lower net revenues in both debt underwriting,

reflecting a decline in leveraged finance activity, and equity underwriting,

reflecting a decline in secondary offerings.

The firm’s investment banking transaction backlog (5) decreased compared with

the end of the third quarter of 2018.

4Q18 INVESTMENT BANKING

$2.04 billion

Financial Advisory $1.20 billion

Underwriting $843 million

3



Institutional Client Services

Full Year

Net revenues in Institutional Client Services were $13.48 billion for 2018, 13%

higher than 2017.

Net revenues in Fixed Income, Currency and Commodities (FICC) Client

Execution were $5.88 billion, 11% higher than 2017, reflecting significantly higher

net revenues in commodities and currencies. Net revenues in interest rate

products and mortgages were slightly lower, while net revenues in credit products

were essentially unchanged. During 2018, FICC Client Execution operated in an

environment characterized by higher client activity and generally less challenging

market conditions compared with 2017.

Net revenues in Equities were $7.60 billion, 15% higher than 2017, primarily due

to significantly higher net revenues in equities client execution, reflecting

significantly higher net revenues in both cash products and derivatives. In

addition, commissions and fees were higher, reflecting higher market volumes,

and net revenues in securities services were slightly higher. During 2018,

Equities operated in an environment characterized by generally higher volatility

and improved client activity compared with 2017.

2018 INSTITUTIONAL

CLIENT SERVICES

$13.48 billion

FICC $5.88 billion

Equities $7.60 billion

Fourth Quarter

Net revenues in Institutional Client Services were $2.43 billion for the fourth

quarter of 2018, 2% higher than the fourth quarter of 2017 and 22% lower than

the third quarter of 2018.

Net revenues in FICC Client Execution were $822 million, 18% lower than the

fourth quarter of 2017, reflecting significantly lower net revenues in credit

products and lower net revenues in interest rate products. Net revenues in

commodities, currencies and mortgages were essentially unchanged. During the

quarter, FICC Client Execution operated in an environment characterized by

challenging market conditions, including wider credit spreads, compared with the

third quarter of 2018.

Net revenues in Equities were $1.60 billion, 17% higher than the fourth quarter of

2017, primarily due to significantly higher net revenues in equities client

execution compared with a challenging prior year period. This increase reflected

significantly higher net revenues in cash products, while net revenues in

derivatives were essentially unchanged. Commissions and fees were higher,

reflecting higher market volumes, and net revenues in securities services were

slightly lower. During the quarter, Equities operated in an environment generally

characterized by higher volatility but less favorable market conditions compared

with the third quarter of 2018.

4Q18 INSTITUTIONAL

CLIENT SERVICES

$2.43 billion

FICC $822 million

Equities $1.60 billion

4



Investing & Lending

Full Year

Net revenues in Investing & Lending were $8.25 billion for 2018, 14% higher than

2017.

Net revenues in equity securities were $4.46 billion, 3% lower than 2017,

reflecting net losses from investments in public equities compared with net gains

in the prior year, partially offset by significantly higher net gains from investments

in private equities, driven by company-specific events, including sales, and

corporate performance.

Net revenues in debt securities and loans were $3.80 billion, 43% higher than

2017, primarily driven by significantly higher net interest income. 2018 included

net interest income of approximately $2.70 billion compared with approximately

$1.80 billion in 2017.

2018 INVESTING & LENDING

$8.25 billion

Equity Securities $4.46 billion

Debt Securities

and Loans$3.80 billion

Fourth Quarter

Net revenues in Investing & Lending were $1.91 billion for the fourth quarter of

2018, 2% lower than the fourth quarter of 2017 and 6% lower than the third

quarter of 2018.

Net revenues in equity securities were $994 million, 18% lower than the fourth

quarter of 2017, reflecting net losses from investments in public equities, as

global equity prices decreased during the quarter. Net revenues in equity

securities for the fourth quarter of 2018 included $1.26 billion of net gains from

investments in private equities, driven by company-specific events, including

sales, and corporate performance.

Net revenues in debt securities and loans were $912 million, 23% higher than the

fourth quarter of 2017, driven by significantly higher net interest income. The

fourth quarter of 2018 included net interest income of approximately $800 million

compared with approximately $500 million in the fourth quarter of 2017.

4Q18 INVESTING & LENDING

$1.91 billion

Equity Securities $994 million

Debt Securities

and Loans$912 million

Investment Management

Full Year

Net revenues in Investment Management were $7.02 billion for 2018, 13%

higher than 2017.

The increase in net revenues compared with 2017 was primarily due to

significantly higher incentive fees, as a result of harvesting. Management and

other fees were also higher, reflecting higher average assets under supervision

and the impact of the recently adopted revenue recognition standard (8), partially

offset by shifts in the mix of client assets and strategies. In addition, transaction

revenues were higher.

During the year, total assets under supervision (5) increased $48 billion to $1.54

trillion. Long-term assets under supervision decreased $4 billion, including net

market depreciation of $41 billion, primarily in equity assets, largely offset by net

inflows of $37 billion, primarily in fixed income and equity assets. Liquidity

products increased $52 billion.

2018 INVESTMENT

MANAGEMENT

$7.02 billion

Management and

Other Fees $5.44 billion

Incentive Fees

Transaction

Revenues

$830 million

$754 million

5



Investment Management

Fourth Quarter

Net revenues in Investment Management were $1.70 billion for the fourth quarter

of 2018, 2% higher than the fourth quarter of 2017 and unchanged compared

with the third quarter of 2018.

The increase compared with the fourth quarter of 2017 reflected higher incentive

fees and transaction revenues. Management and other fees were essentially

unchanged compared with the fourth quarter of 2017.

During the quarter, total assets under supervision (5) decreased $8 billion to $1.54

trillion. Long-term assets under supervision decreased $47 billion, including net

market depreciation of $50 billion, primarily in equity assets, partially offset by net

inflows of $3 billion. Liquidity products increased $39 billion.

4Q18 INVESTMENT

MANAGEMENT

$1.70 billion

Management and

Other Fees $1.37 billion

Incentive Fees $153 million

Transaction

Revenues $186 million

Provision for Credit Losses

Full Year

Provision for credit losses (1) was $674 million for 2018, compared with $657

million for 2017, as higher provision for credit losses primarily related to

consumer loan growth in 2018 were partially offset by an impairment of a secured

loan in 2017.

Fourth Quarter

Provision for credit losses (1) was $222 million for the fourth quarter of 2018,

compared with $290 million for the fourth quarter of 2017 and $174 million for the

third quarter of 2018. The decrease compared with the fourth quarter of 2017

reflected an impairment of a secured loan in the fourth quarter of 2017, partially

offset by higher provision for credit losses primarily related to consumer loan

growth in the fourth quarter of 2018.

2018 PROVISION FOR

CREDIT LOSSES

$674 million

4Q18 PROVISION FOR

CREDIT LOSSES

$222 million

6



Operating Expenses

Full Year

Operating expenses were $23.46 billion for 2018, 12% higher than 2017. The

firm’s efficiency ratio (9) for 2018 was 64.1%, compared with 64.0% for 2017.

The increase in operating expenses compared with 2017 was primarily due to

higher compensation and benefits expenses, reflecting improved operating

performance, and significantly higher net provisions for litigation and regulatory

proceedings. Brokerage, clearing, exchange and distribution fees were also

higher, reflecting an increase in activity levels, and technology expenses

increased, reflecting higher expenses related to computing services. In addition,

expenses related to consolidated investments and the firm’s digital lending and

deposit platform increased, with the increases primarily in depreciation and

amortization expenses, market development expenses and other expenses. The

increase compared with 2017 also included $297 million related to the recently

adopted revenue recognition standard (8).

Net provisions for litigation and regulatory proceedings for 2018 were $844

million compared with $188 million for 2017.

Headcount (1) increased 9% during 2018, reflecting an increase in technology

professionals and investments in new business initiatives.

2018 OPERATING EXPENSES

$23.46 billion

2018 EFFICIENCY RATIO

64.1%

Fourth Quarter

Operating expenses were $5.15 billion for the fourth quarter of 2018, 9% higher

than the fourth quarter of 2017 and 8% lower than the third quarter of 2018.

The increase in operating expenses compared with the fourth quarter of 2017

primarily reflected significantly higher net provisions for litigation and regulatory

proceedings. The increase compared with the fourth quarter of 2017 also

included $79 million related to the recently adopted revenue recognition

standard (8) . These increases were partially offset by lower compensation and

benefits expenses.

Net provisions for litigation and regulatory proceedings for the fourth quarter of

2018 were $516 million compared with $9 million for the fourth quarter of 2017.

The fourth quarter of 2018 included a $132 million charitable contribution to

Goldman Sachs Gives. Compensation was reduced to fund this charitable

contribution to Goldman Sachs Gives.

4Q18 OPERATING EXPENSES

$5.15 billion

Provision for Taxes

The effective income tax rate for 2018 was 16.2%, down from 19.0% for the first

nine months of 2018 and down from 61.5% for full year 2017, as 2017 included

the estimated impact of Tax Legislation (2), which increased the effective income

tax rate by 39.5 percentage points. The finalization of this impact of Tax

Legislation (2) reduced the effective income tax rate for 2018 by 3.9 percentage

points.

2018 EFFECTIVE TAX RATE

16.2%

7

Goldman Sachs Reports Full Year and Fourth Quarter 2018 Earnings Results

Capital

◾ Total shareholders’ equity was $90.19 billion (common shareholders’ equity of $78.98 billion and preferred stock of $11.20 billion) as of December 31, 2018.

◾ The Standardized common equity tier 1 ratio (5) was 13.3% (7) as of December 31, 2018, compared with 11.9% (6) as of December 31, 2017 and 13.1% as of September 30, 2018.

◾ The Basel III Advanced common equity tier 1 ratio (5) was 13.1% (7) as of December 31, 2018, compared with 10.7% (6) as of December 31, 2017 and 12.4% as of September 30, 2018.

◾ The supplementary leverage ratio (5) was 6.2% (7) as of December 31, 2018, compared with 5.8% as of December 31, 2017 and 6.0% as of September 30, 2018.

◾ On January 15, 2019, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.80 per common share to be paid on March 28, 2019 to common shareholders of record on February 28, 2019.

◾ During the year, the firm repurchased 13.9 million shares of common stock at an average cost per share of $236.22, for a total cost of $3.29 billion. This included 5.6 million shares repurchased during the fourth quarter at an average cost per share of $222.30, for a total cost of $1.25 billion. (5)

◾ Book value per common share was $207.36 and tangible book value per common share (3) was $196.64, both based on basic shares (10) of 380.9 million as of December 31, 2018.

TOTAL SHAREHOLDERS’

EQUITY

$90.19 billion

STANDARDIZED RATIO

13.3%

ADVANCED RATIO

13.1%

SUPPLEMENTARY

LEVERAGE RATIO

6.2%

DECLARED QUARTERLY

DIVIDEND PER COMMON SHARE

$0.80

COMMON SHARE REPURCHASES

13.9 million shares

for $3.29 billion in 2018

BOOK VALUE

PER COMMON SHARE

$207.36

Other Balance Sheet and Liquidity Metrics

◾ Total assets were $933 billion (7) as of December 31, 2018, compared with $917 billion as of December 31, 2017 and $957 billion as of September 30, 2018.

◾ Global core liquid assets (5) averaged $233 billion (7) for 2018, compared with an average of $219 billion for 2017. Global core liquid assets averaged $229 billion (7) for the fourth quarter of 2018, compared with an average of $238 billion for the third quarter of 2018.

TOTAL ASSETS

$933 billion

AVERAGE GCLA

$233 billion for 2018

8



The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides

a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions,

governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial

centers around the world.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private

Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the firm’s

beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the firm’s control. It is

possible that the firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and

financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that

could affect the firm’s future results and financial condition, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on

Form 10-K for the year ended December 31, 2017.

Information regarding the firm’s capital ratios, risk-weighted assets, supplementary leverage ratio, total assets and balance sheet

data, global core liquid assets and VaR consists of preliminary estimates. These estimates are forward-looking statements and are

subject to change, possibly materially, as the firm completes its financial statements.

Statements about the firm’s investment banking transaction backlog also may constitute forward-looking statements. Such

statements are subject to the risk that the terms of these transactions may be modified or that they may not be completed at all;

therefore, the net revenues, if any, that the firm actually earns from these transactions may differ, possibly materially, from those

currently expected. Important factors that could result in a modification of the terms of a transaction or a transaction not being

completed include, in the case of underwriting transactions, a decline or continued weakness in general economic conditions,

outbreak of hostilities, volatility in the securities markets generally or an adverse development with respect to the issuer of the

securities and, in the case of financial advisory transactions, a decline in the securities markets, an inability to obtain adequate

financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval.

For a discussion of other important factors that could adversely affect the firm’s investment banking transactions, see “Risk

Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the year ended December 31, 2017.

Conference Call

A conference call to discuss the firm’s financial results, outlook and related matters will be held at 9:30 am (ET). The call will be

open to the public. Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (in the U.S.) or

1-706-679-5627 (outside the U.S.). The number should be dialed at least 10 minutes prior to the start of the conference call. The

conference call will also be accessible as an audio webcast through the Investor Relations section of the firm’s website,

www.goldmansachs.com/investor-relations. There is no charge to access the call. For those unable to listen to the live broadcast, a

replay will be available on the firm’s website or by dialing 1-855-859-2056 (in the U.S.) or 1-404-537-3406 (outside the U.S.)

passcode number 64774224 beginning approximately three hours after the event. Please direct any questions regarding obtaining

access to the conference call to Goldman Sachs Investor Relations, via e-mail, at [email protected].

9

Goldman Sachs Reports:


The Goldman Sachs Group, Inc. and Subsidiaries

Segment Net Revenues (unaudited)

$ in millions

YEAR ENDED % CHANGE FROM

DECEMBER 31,

2018

DECEMBER 31,

2017

DECEMBER 31,

2017

INVESTMENT BANKING

Financial Advisory $ 3,507 $ 3,188 10 %

Equity underwriting 1,646 1,243 32

Debt underwriting 2,709 2,940 (8)

Total Underwriting 4,355 4,183 4

Total Investment Banking 7,862 7,371 7

INSTITUTIONAL CLIENT SERVICES

FICC Client Execution 5,882 5,299 11

Equities client execution 2,835 2,046 39

Commissions and fees 3,055 2,920 5

Securities services 1,710 1,637 4

Total Equities 7,600 6,603 15

Total Institutional Client Services 13,482 11,902 13

INVESTING & LENDING

Equity securities 4,455 4,578 (3)

Debt securities and loans 3,795 2,660 43

Total Investing & Lending 8,250 7,238 14

INVESTMENT MANAGEMENT

Management and other fees 5,438 5,144 6

Incentive fees 830 417 99

Transaction revenues 754 658 15

Total Investment Management 7,022 6,219 13

Total net revenues (1) $ 36,616 $ 32,730 12

Geographic Net Revenues (unaudited) (5)

$ in millions

YEAR ENDED

DECEMBER 31,

2018

DECEMBER 31,

2017

Americas $ 22,339 $ 19,737

EMEA 9,244 8,168

Asia 5,033 4,825

Total net revenues (1) $ 36,616 $ 32,730

Americas 61% 60%

EMEA 25% 25%

Asia 14% 15%

Total 100% 100%

10




Segment Net Revenues (unaudited)

$ in millions

THREE MONTHS ENDED % CHANGE FROM

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

SEPTEMBER 30,

2018

DECEMBER 31,

2017

INVESTMENT BANKING

Financial Advisory $ 1,201 $ 916 $ 772 31 % 56 %

Equity underwriting 315 432 460 (27) (32)

Debt underwriting 528 632 909 (16) (42)

Total Underwriting 843 1,064 1,369 (21) (38)

Total Investment Banking 2,044 1,980 2,141 3 (5)

INSTITUTIONAL CLIENT SERVICES

FICC Client Execution 822 1,307 1,003 (37) (18)

Equities client execution 401 681 223 (41) 80

Commissions and fees 801 674 737 19 9

Securities services 402 439 409 (8) (2)

Total Equities 1,604 1,794 1,369 (11) 17

Total Institutional Client Services 2,426 3,101 2,372 (22) 2

INVESTING & LENDING

Equity securities 994 1,111 1,209 (11) (18)

Debt securities and loans 912 924 739 (1) 23

Total Investing & Lending 1,906 2,035 1,948 (6) (2)

INVESTMENT MANAGEMENT

Management and other fees 1,365 1,382 1,369 (1) –

Incentive fees 153 148 129 3 19

Transaction revenues 186 174 165 7 13

Total Investment Management 1,704 1,704 1,663 – 2

Total net revenues (1) $ 8,080 $ 8,820 $ 8,124 (8) (1)

Geographic Net Revenues (unaudited) (5)

$ in millions

THREE MONTHS ENDED

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

Americas $ 5,178 $ 5,351 $ 4,921

EMEA 1,766 2,254 1,945

Asia 1,136 1,215 1,258

Total net revenues (1) $ 8,080 $ 8,820 $ 8,124

Americas 64% 61% 61%

EMEA 22% 25% 24%

Asia 14% 14% 15%

Total 100% 100% 100%

11




Consolidated Statements of Earnings (unaudited) (1)

In millions, except per share amounts

YEAR ENDED % CHANGE FROM

DECEMBER 31,

2018

DECEMBER 31,

2017

DECEMBER 31,

2017

REVENUES

Investment banking $ 7,862 $ 7,371 7 %

Investment management 6,514 5,803 12

Commissions and fees 3,199 3,051 5

Market making 9,451 7,660 23

Other principal transactions 5,823 5,913 (2)

Total non-interest revenues 32,849 29,798 10

Interest income 19,679 13,113 50

Interest expense 15,912 10,181 56

Net interest income 3,767 2,932 28

Total net revenues 36,616 32,730 12

Provision for credit losses 674 657 3

OPERATING EXPENSES

Compensation and benefits 12,328 11,653 6

Brokerage, clearing, exchange and distribution fees 3,200 2,876 11

Market development 740 588 26

Communications and technology 1,023 897 14

Depreciation and amortization 1,328 1,152 15

Occupancy 809 733 10

Professional fees 1,214 1,165 4

Other expenses 2,819 1,877 50

Total operating expenses 23,461 20,941 12

Pre-tax earnings 12,481 11,132 12

Provision for taxes 2,022 6,846 (70)

Net earnings 10,459 4,286 144

Preferred stock dividends 599 601 –

Net earnings applicable to common shareholders $ 9,860 $ 3,685 168

EARNINGS PER COMMON SHARE

Basic (11) $ 25.53 $ 9.12 180 %

Diluted 25.27 9.01 180

AVERAGE COMMON SHARES

Basic 385.4 401.6 (4)

Diluted 390.2 409.1 (5)

12




Consolidated Statements of Earnings (unaudited) (1)

In millions, except per share amounts and headcount

THREE MONTHS ENDED % CHANGE FROM

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

SEPTEMBER 30,

2018

DECEMBER 31,

2017

REVENUES

Investment banking $ 2,044 $ 1,980 $ 2,141 3 % (5) %

Investment management 1,567 1,580 1,554 (1) 1

Commissions and fees 838 704 772 19 9

Market making 1,420 2,281 1,215 (38) 17

Other principal transactions 1,220 1,419 1,544 (14) (21)

Total non-interest revenues 7,089 7,964 7,226 (11) (2)

Interest income 5,468 5,061 3,736 8 46

Interest expense 4,477 4,205 2,838 6 58

Net interest income 991 856 898 16 10

Total net revenues 8,080 8,820 8,124 (8) (1)

Provision for credit losses 222 174 290 28 (23)

OPERATING EXPENSES

Compensation and benefits 1,857 3,019 2,098 (38) (11)

Brokerage, clearing, exchange and distribution fees 830 714 732 16 13

Market development 208 167 175 25 19

Communications and technology 262 250 230 5 14

Depreciation and amortization 377 317 350 19 8

Occupancy 215 203 190 6 13

Professional fees 317 310 363 2 (13)

Other expenses 1,084 588 588 84 84

Total operating expenses 5,150 5,568 4,726 (8) 9

Pre-tax earnings 2,708 3,078 3,108 (12) (13)

Provision for taxes 170 554 5,036 (69) (97)

Net earnings / (loss) 2,538 2,524 (1,928) 1 N.M.

Preferred stock dividends 216 71 215 N.M. –

Net earnings / (loss) applicable to common shareholders $ 2,322 $ 2,453 $ (2,143) (5) N.M.

EARNINGS / (LOSS) PER COMMON SHARE

Basic (11) $ 6.11 $ 6.35 $ (5.51) (4) % N.M. %

Diluted 6.04 6.28 (5.51) (4) N.M.

AVERAGE COMMON SHARES

Basic 379.5 385.4 389.8 (2) (3)

Diluted 384.3 390.5 389.8 (2) (1)

SELECTED DATA AT PERIOD-END

Headcount 36,600 36,300 33,600 1 9

13




Condensed Consolidated Statements of Financial Condition (unaudited) (7)

$ in billions

AS OF

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

ASSETS

Cash and cash equivalents $ 130 $ 119 $ 110

Collateralized agreements 276 298 312

Receivables 160 159 151

Financial instruments owned 336 351 316

Other assets 31 30 28

Total assets 933 957 917

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits 158 151 139

Collateralized financings 113 129 124

Payables 180 190 178

Financial instruments sold, but not yet purchased 109 113 112

Unsecured short-term borrowings 41 42 47

Unsecured long-term borrowings 224 229 218

Other liabilities 18 16 17

Total liabilities 843 870 835

Shareholders’ equity 90 87 82

Total liabilities and shareholders’ equity $ 933 $ 957 $ 917

Capital Ratios (unaudited) (5) (6) (7)

$ in billions

AS OF

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

Common equity tier 1 $ 73.1 $ 71.8 $ 67.0

STANDARDIZED CAPITAL RULES

Risk-weighted assets $ 548 $ 546 $ 564

Common equity tier 1 ratio 13.3% 13.1% 11.9%

BASEL III ADVANCED CAPITAL RULES

Risk-weighted assets $ 558 $ 577 $ 626

Common equity tier 1 ratio 13.1% 12.4% 10.7%

Average Daily VaR (unaudited) (5) (7)

$ in millions

THREE MONTHS ENDED YEAR ENDED

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

DECEMBER 31,

2018

DECEMBER 31,

2017

RISK CATEGORIES

Interest rates $ 40 $ 41 $ 40 $ 46 $ 40

Equity prices 28 28 28 31 24

Currency rates 19 15 9 14 12

Commodity prices 12 10 9 11 13

Diversification effect (50) (41) (32) (42) (35)

Total $ 49 $ 53 $ 54 $ 60 $ 54

14




Assets Under Supervision (unaudited) (5)

$ in billions

AS OF % CHANGE FROM

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

SEPTEMBER 30,

2018

DECEMBER 31,

2017

ASSET CLASS

Alternative investments $ 167 $ 175 $ 168 (5) % (1) %

Equity 301 349 321 (14) (6)

Fixed income 677 668 660 1 3

Total long-term AUS 1,145 1,192 1,149 (4) –

Liquidity products 397 358 345 11 15

Total AUS $ 1,542 $ 1,550 $ 1,494 (1) 3

THREE MONTHS ENDED YEAR ENDED

DECEMBER 31,

2018

SEPTEMBER 30,

2018

DECEMBER 31,

2017

DECEMBER 31,

2018

DECEMBER 31,

2017

Beginning balance $ 1,550 $ 1,513 $ 1,456 $ 1,494 $ 1,379

Net inflows / (outflows):

Alternative investments (4) 3 (2) 1 15

Equity (1) 7 1 13 2

Fixed income 8 3 – 23 25

Total long-term AUS net inflows / (outflows) 3 13 (1) 37 42

Liquidity products 39 8 17 52 (13)

Total AUS net inflows / (outflows) 42 21 16 89 29 (12)

Net market appreciation / (depreciation) (50) 16 22 (41) 86

Ending balance $ 1,542 $ 1,550 $ 1,494 $ 1,542 $ 1,494

15



Footnotes

(1) The following reclassifications have been made to previously reported amounts to conform to the current presentation.

• Provision for credit losses, previously reported in other principal transactions revenues (and Investing & Lending segment net revenues), is now

reported as a separate line item in the Consolidated Statements of Earnings.

• Headcount consists of the firm’s employees, and excludes consultants and temporary staff previously reported as part of total staff. As a result,

expenses related to consultants and temporary staff previously reported in compensation and benefits expenses are now reported in professional

fees.

• Regulatory-related fees that are paid to exchanges, reported in other expenses prior to 2018, are now reported in brokerage, clearing, exchange and

distribution fees.

(2) During the fourth quarter of 2017, the Tax Cuts and Jobs Act (Tax Legislation) was enacted and lowered U.S. corporate income tax rates as of January

1, 2018, implemented a territorial tax system and imposed a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The estimated

impact of Tax Legislation was an increase in income tax expense of $4.40 billion for the fourth quarter of 2017. Excluding this expense, diluted EPS was

$19.76, ROE was 10.8% and ROTE was 11.4% for 2017, and diluted EPS was $5.68 for the fourth quarter of 2017. In the fourth quarter of 2018, the firm

finalized this estimate to reflect the impact of updated information, including subsequent guidance issued by the U.S. Internal Revenue Service, resulting

in a $467 million income tax benefit ($487 million total income tax benefit for 2018). Excluding this benefit, diluted EPS was $24.02, ROE was 12.7% and

ROTE was 13.4% for 2018, and diluted EPS was $4.83 for the fourth quarter of 2018.

Management believes that presenting the firm’s results excluding Tax Legislation is meaningful as excluding this item increases the comparability of

period-to-period results. Diluted EPS and ROE, excluding the impact of Tax Legislation, are non-GAAP measures and may not be comparable to similar

non-GAAP measures used by other companies. The tables below present the calculation of net earnings applicable to common shareholders, diluted

EPS and average common shareholders’ equity, excluding the impact of Tax Legislation (unaudited, in millions, except per share amounts):

FOR THE

THREE MONTHS

ENDED

DECEMBER 31,

2018

YEAR ENDED

DECEMBER 31,

2018

THREE MONTHS

ENDED

DECEMBER 31,

2017

YEAR ENDED

DECEMBER 31,

2017

Net earnings / (loss) applicable to common shareholders, as

reported$ 2,322 $ 9,860 $ (2,143) $ 3,685

Impact of Tax Legislation (467) (487) 4,400 4,400

Net earnings applicable to common shareholders, excluding

the impact of Tax Legislation$ 1,855 $ 9,373 $ 2,257 $ 8,085

Divided by average diluted common shares used in the

calculation of diluted earnings (excluding the impact of Tax

Legislation) per common share

384.3 390.2 397.4 409.1

Diluted EPS, excluding the impact of Tax Legislation $ 4.83 $ 24.02 $ 5.68 $ 19.76

FOR THE

THREE MONTHS

ENDED

DECEMBER 31,

2017

YEAR ENDED

DECEMBER 31,

2017

Average basic common shares, as reported 389.8 401.6

Effect of dilutive securities 7.6 7.5

Average diluted common shares used in the calculation of diluted earnings (excluding the impact of Tax

Legislation) per common share397.4 409.1

AVERAGE FOR THE

YEAR ENDED

DECEMBER 31,

2018

YEAR ENDED

DECEMBER 31,

2017

Common shareholders’ equity, as reported $ 73,985 $ 74,721

Impact of Tax Legislation (42) 338

Common shareholders’ equity, excluding the impact of Tax Legislation 73,943 75,059

Goodwill and identifiable intangible assets (4,090) (4,065)

Tangible common shareholders’ equity, excluding the impact of Tax Legislation $ 69,853 $ 70,994

16



Footnotes (continued)

(3) ROE is calculated by dividing net earnings (or annualized net earnings for annualized ROE) applicable to common shareholders by average monthly

common shareholders’ equity. Tangible common shareholders’ equity is calculated as total shareholders’ equity less preferred stock, goodwill and

identifiable intangible assets. ROTE is calculated by dividing net earnings (or annualized net earnings for annualized ROTE) applicable to common

shareholders by average monthly tangible common shareholders’ equity. Tangible book value per common share is calculated by dividing tangible

common shareholders’ equity by basic shares. Management believes that tangible common shareholders’ equity and tangible book value per common

share are meaningful because they are measures that the firm and investors use to assess capital adequacy and that ROTE is meaningful because it

measures the performance of businesses consistently, whether they were acquired or developed internally. Tangible common shareholders’ equity,

ROTE and tangible book value per common share are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other

companies.

The table below presents the firm’s average total and common shareholders’ equity, as well as a reconciliation of total shareholders’ equity to tangible

common shareholders’ equity (unaudited, $ in millions):

AVERAGE FOR THE

THREE MONTHS ENDED

DECEMBER 31, 2018

YEAR ENDED

DECEMBER 31, 2018

AS OF

DECEMBER 31, 2018

Total shareholders’ equity $ 87,761 $ 85,238 $ 90,185

Preferred stock (11,203) (11,253) (11,203)

Common shareholders’ equity 76,558 73,985 78,982

Goodwill and identifiable intangible assets (4,094) (4,090) (4,082)

Tangible common shareholders’ equity $ 72,464 $ 69,895 $ 74,900

(4) Dealogic – January 1, 2018 through December 31, 2018.

(5) For information about the firm’s investment banking transaction backlog, assets under supervision, share repurchase program, global core liquid assets

and VaR, see “Results of Operations – Investment Banking,” “Results of Operations – Investment Management,” “Equity Capital Management and

Regulatory Capital – Equity Capital Management,” “Risk Management – Liquidity Risk Management” and “Risk Management – Market Risk

Management,” respectively, in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the firm’s

Quarterly Report on Form 10-Q for the period ended September 30, 2018. For information about the firm’s risk-based capital ratios and supplementary

leverage ratio, and geographic net revenues, see Note 20 “Regulation and Capital Adequacy” and Note 25 “Business Segments,” respectively, in Part I,

Item 1 “Financial Statements (Unaudited)” in the firm’s Quarterly Report on Form 10-Q for the period ended September 30, 2018.

(6) As of December 31, 2017, the firm’s capital ratios on a fully phased-in basis were non-GAAP measures and may not be comparable to similar non-GAAP

measures used by other companies. Management believes that the firm’s capital ratios on a fully phased-in basis are meaningful because they are

measures that the firm and investors use to assess capital adequacy. The table below presents reconciliations, for both the Standardized approach and

the Basel III Advanced approach, of common equity tier 1 and risk-weighted assets on a transitional basis to a fully phased-in basis as of December 31,

2017 (unaudited, $ in billions):

AS OF DECEMBER 31, 2017

STANDARDIZED BASEL III ADVANCED

Common equity tier 1, transitional basis $ 67.1 $ 67.1

Transitional adjustments (0.1) (0.1)

Common equity tier 1, fully phased-in basis $ 67.0 $ 67.0

Risk-weighted assets, transitional basis $ 556 $ 618

Transitional adjustments 8 8

Risk-weighted assets, fully phased-in basis $ 564 $ 626

Common equity tier 1 ratio, transitional basis 12.1% 10.9%

Common equity tier 1 ratio, fully phased-in basis 11.9% 10.7%

(7) Represents a preliminary estimate and may be revised in the firm’s Annual Report on Form 10-K for the year ended December 31, 2018.

(8) In the first quarter of 2018, the firm adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which required a change in the

presentation of certain costs from a net presentation within revenues to a gross basis and vice versa. For information about ASU No. 2014-09, see Note

3 “Significant Accounting Policies” in Part I, Item 1 “Financial Statements (Unaudited)” in the firm’s Quarterly Report on Form 10-Q for the period ended

September 30, 2018.

(9) Efficiency ratio is calculated by dividing total operating expenses by total net revenues.

(10) Basic shares include common shares outstanding and restricted stock units granted to employees with no future service requirements.

(11) Unvested share-based awards that have non-forfeitable rights to dividends or dividend equivalents are treated as a separate class of securities in

calculating EPS. The impact of applying this methodology was a reduction in basic EPS of $0.05 and $0.06 for the years ended December 31, 2018 and

December 31, 2017, respectively, and $0.01 for both the three months ended December 31, 2018 and September 30, 2018. The impact of applying this

methodology for the three months ended December 31, 2017 was a loss per common share (basic and diluted) of $0.01.

(12) Included $23 billion of inflows ($20 billion in long-term assets under supervision and $3 billion in liquidity products) in connection with the acquisition of a

portion of Verus Investors’ outsourced chief investment officer business and $5 billion of equity asset outflows in connection with the divestiture of the

firm’s local Australian-focused investment capabilities and fund platform.

17

Ex

hib

it 9

9.2

Fu

ll Y

ea

r a

nd F

ourth

Qua

rte

r 2

018 E

arn

ings R

esu

lts P

resentatio

n J

anu

ary 1

6, 2

019

Ea

rnin

gs C

all

Agenda

Stra

tegic

prio

ritie

s M

ac

ro p

erspecti

ves a

nd

clie

nt e

nga

ge

me

nt U

pd

ate

on

1M

DB

David M

. Solo

mon,

Cha

irm

an a

nd C

hie

f E

xe

cutiv

e O

ffi

cer 1

Ste

phe

n M

. Sc

herr, C

hie

f F

inanc

ial O

ffic

er 2

Q&

A 3

Ke

y f

ina

ncia

l highli

ghts

Se

gm

ent p

erfo

rm

anc

e re

vie

w E

xp

en

ses an

d ta

xes C

apita

l, b

alan

ce

she

et a

nd

liqu

idity

1

Clie

nt C

entr

icity

: One

Gold

ma

n S

ac

hs B

usin

ess R

evie

ws &

Expa

ndin

g o

ur A

ddre

ssa

ble

Ma

rke

t Inve

sti

ng f

or S

ca

le v

ia T

echn

olo

gy

an

d P

latf

orm

Expa

nsio

n T

arg

ets

an

d A

cc

oun

tabili

ty S

trategic O

verview

2 S

upe

rio

r L

on

g-T

erm

Sha

reh

old

er R

etu

rn

s K

ey P

rio

rit

ies U

pda

tes o

n S

ele

ct B

usin

ess R

eview

s L

ev

era

ge

tec

hno

logy to

cre

ate

be

st-

in-c

lass c

lient e

xp

erie

nc

e ac

ross m

ore p

roduc

ts E

xpa

nd

add

ressa

ble m

arket w

hile

opti

miz

ing

ex

pen

ses a

nd c

apita

l a

llo

catio

n M

arke

t Mak

ing: F

IC

C a

nd E

quitie

s O

ppo

rtunit

ies to

incre

ase 3

rd p

arty

asse

ts u

nd

er s

up

ervisio

n C

ontin

ue

mon

etiz

ati

on o

f o

n-ba

lan

ce

sheet in

ve

stm

ents

Inc

rea

se

fee

-base

d r

eve

nue

s a

nd o

ptim

ize c

apita

l consum

ptio

n A

lte

rnati

ve

Investin

g P

latf

orm

Deep

en c

orp

orate r

ela

tionship

s L

evera

ge

fra

nc

his

e a

dja

cenc

ies a

nd i

nnova

tion P

ote

ntia

l for F

X o

pportuniti

es C

ash M

ana

ge

me

nt

Contin

ue

to e

volve M

arc

us t

o m

ulti-

prod

uct p

latf

orm

La

unc

h m

ulti

-tie

red m

ass a

fflu

ent s

tra

tegy C

onsum

er B

usin

ess

Mac

ro P

ersp

ec

tives 3 E

co

nom

ic F

und

am

entals M

arke

t Dyna

mics (4

Q18) P

ositi

ve b

ut s

low

ing g

loba

l grow

th 2

019

estim

ate

d G

DP

grow

th1: +

2.4

% U

.S. +

3.5

% G

loba

l Str

ong

co

rpora

te p

erform

ance

22%

20

18 e

sti

ma

ted S

&P

500 E

PS gro

wth

1 $

4.2

tril

lion A

nnounc

ed M

&A

volu

me

s in

20

182 C

orpora

te c

on

fiden

ce

rem

ain

s h

igh –

2017 le

ve

ls1

Ma

rket

dis

locatio

n c

rea

tes o

ppo

rtunit

y f

or

str

ateg

ic c

lien

t enga

gem

en

t Ma

rk

et u

nce

rtain

ty d

riv

es

tacti

ca

l str

uc

turin

g o

f eq

uity

an

d d

eb

t fi

na

ncin

g P

ortf

olio

repo

sitio

nin

g a

nd

alp

ha g

en

era

tion

H

edg

ing a

nd l

iquid

ity s

olu

tio

ns S

hif

tin

g m

ac

ro e

nvir

onm

en

t cre

ate

s o

ppo

rtunit

y f

or p

roduc

tive

enga

ge

me

nt w

ith

clie

nts

10-year G

ove

rnm

ent B

on

d Y

ield

s: -3

6bps U

.S. ï

-2

2b

ps U

.K. ï

-1

2b

ps J

apa

n C

lient E

ng

age

ment O

pportu

niti

es -

14

% -1

3%

-38%

S&

P 5

00 M

SC

I W

orld

W

TI C

rude

Vo

latili

ty:

VIX

+110

% ï´

MO

VE

+44%

ï´ C

VIX

+12

% U

.S. C

redit S

prea

ds1: +

56bps I

G ï´

+171

bps H

Y

An

nua

l Re

sults

Sna

psho

t Net r

eve

nue

s u

p 1

2%

YoY

, with

highe

st n

et r

eve

nue

s s

ince

2010

Broa

d c

ontr

ibu

tion

with

eve

ry s

egm

ent u

p Y

oY

Ne

t Rev

enu

es3

$36.6

billi

on

$3

2.7

bil

lion

201

8 2

017

EP

S4

$25.2

7 $9.0

1 2

018 2

01

7 2

018

Re

turns4

,5 1

3.3

% 1

4.1

% R

OE

RO

TE

201

8 B

ook V

alu

e $

207.3

6 $

196

.64 B

VPS

TB

VP

S5 S

trong 2

01

8 p

erf

orm

anc

e a

cross th

e f

irm

crea

ted o

pe

ratin

g l

ev

era

ge to

fund i

nve

stm

ents in

our b

usiness R

ec

ord d

ilute

d E

PS H

ighe

st a

nnua

l RO

E a

nd R

OT

E s

inc

e 2

009 1

4.6

% Y

oY

grow

th

in b

ook v

alu

e p

er s

ha

re 1

5.3

% Y

oY

grow

th in

tangible

book value per s

hare

4

Fin

anc

ial O

ve

rvie

w F

ull Y

ea

r N

et R

eve

nue

Mix

by S

egm

en

t 5 F

ina

nc

ial R

esu

lts

Fe

e-B

ase

d o

r M

ore-R

ec

urrin

g R

ev

enu

es6

2018 6

1%

48%

$22

.3 b

illio

n $

16.6

billi

on 2

013

Investm

ent M

anag

em

en

t 19%

Institu

tio

na

l Clie

nt S

erv

ices 3

7%

(Fin

anc

ial A

dvis

ory 9

%) (

Underw

ritin

g 1

2%

) (

FIC

C 1

6%

) (

Equitie

s 2

1%

) I

nve

stm

ent B

ank

ing 2

1%

Investin

g &

Le

ndin

g 2

3%

(D

eb

t se

curi

ties a

nd l

oan

s n

et in

tere

st i

nco

me

~7%

) $

in m

illio

ns, e

xcept p

er s

hare

am

oun

ts 4

Q1

8 v

s. 3

Q1

8 v

s. 4

Q17 2

018

vs. 2

017 I

nve

stm

ent B

anking $

2,0

44 3

% -

5%

$ 7

,862 7

% F

IC

C 8

22 -

37%

-18%

5,882 1

1%

Eq

uiti

es 1,6

04 -

11%

17%

7,6

00 1

5%

Instit

utio

nal C

lie

nt S

ervices 2

,426 -

22%

2%

13,4

82 1

3%

Inve

stin

g &

Lendin

g 1,9

06 -

6%

-2%

8,2

50 1

4%

Inve

stm

ent M

ana

ge

me

nt 1

,704 —

2%

7,0

22 1

3%

Net re

ve

nue

s3 $

8,0

80 -

8%

-1%

$3

6,6

16 1

2%

Provisio

n fo

r cred

it losse

s3 2

22 2

8%

-23%

67

4 3

% O

pe

rati

ng e

xpe

nse

s 5

,15

0 -

8%

9%

23,4

61 1

2%

Pre-ta

x e

arnings 2

,708 -

12%

-13%

12

,481 1

2%

Provisio

n f

or t

axe

s4 1

70 -

69%

-97%

2,0

22 -

70%

Ne

t earnings 2

,538 1

% N

.M. 1

0,4

59

144%

Ne

t earnings to

co

mm

on $

2,3

22 -

5%

N.M

. $ 9

,860 1

68%

Dilu

ted

EPS

4 $

6.0

4 -

4%

N.M

. $ 2

5.2

7 1

80%

RO

E4

,5 1

2.1

% -

1.0

pp N

.M. 1

3.3

% 8

.4pp

RO

TE

4,5 1

2.8

% -

1.0

pp N

.M. 1

4.1

% 8

.9pp

Inv

estm

ent B

an

kin

g F

inanc

ial R

esults

$ in

mill

ions 4Q

18 v

s. 3

Q18 v

s. 4

Q17 2

018 v

s.

2017 F

ina

nc

ial A

dvisory

$ 1

,201 3

1%

56%

$ 3

,50

7 1

0%

Equ

ity

un

derw

rit

ing

31

5 -

27

% -

32

% 1

,64

6 3

2%

De

bt u

nd

erw

riti

ng

52

8 -1

6%

-4

2%

2,7

09

-8%

T

ota

l Un

de

rw

ritin

g 8

43

-2

1%

-3

8%

4,3

55 4

% T

ota

l Inve

stm

ent B

anking $

2,0

44 3

% -

5%

$ 7

,862 7

% F

ull

Year W

orl

dw

ide

Le

ag

ue T

able R

ankin

gs2 N

et R

eve

nue

s (

$ i

n m

illio

ns) K

ey

Hig

hli

ghts

Finan

cia

l Ad

vis

ory 2

018 a

nd 4

Q1

8 n

et r

ev

enu

es re

fle

ct s

trong

M&

A v

olu

mes a

nd

leadin

g m

ark

et s

hare

— ~

$1.2

tril

lion

of c

om

ple

ted M

&A

volum

es f

rom

nea

rly

40

0 tr

an

sa

ctio

ns i

n 2

018

2 —

~$1.3

tri

llion o

f a

nnounce

d M

&A

volu

me

s in

20

18, in

cludin

g ~

$45

0 b

illio

n f

rom

tran

sac

tio

ns b

elo

w $

5 b

illio

n in

de

al v

alu

e2 S

trong U

nderw

rit

ing n

et r

eve

nue

s in

2018 d

riv

en b

y in

crea

se

d I

PO

ac

tivity

off

se

ttin

g l

ow

er d

ebt u

nde

rw

ritin

g a

ctiv

ity; 4

Q18 n

et r

evenue

s d

ow

n sig

nifi

ca

ntl

y Q

oQ

on

low

er

industr

y-w

ide

acti

vity

C

ontin

ue

d s

tro

ng le

ve

ls o

f enga

ge

me

nt w

ith

ba

ck

log

7 u

p Y

oY

#1 A

nnoun

ce

d M

&A

#2 #

1 #

1 #

1 C

om

ple

ted M

&A

Equity

& E

quity

-Rela

ted

Hig

h-Y

ield

D

ebt 6

1Q

17 2

Q17 3

Q17

4Q

17 1

Q1

8 2

Q18 3

Q18 4

Q18 756 7

49

911 7

72 5

86 8

04 9

16

1,2

01 3

11 2

60 212 4

60

410 4

89 4

32 3

15 6

36 721 6

74

909 7

97 7

52 6

32 5

28

$1,7

03

$1,7

30 $1,7

97 $2,1

41 $

1,7

93 $

2,0

45 $

1,9

80 $

2,0

44 F

ina

nc

ial A

dv

isory

Equ

ity u

nde

rwrit

ing D

ebt

unde

rwri

ting C

om

mon S

tock O

ffe

rings I

nve

stm

ent-

Grad

e D

ebt (

$+

€) #

4

In

stitu

tion

al C

lient S

erv

ices –

FIC

C F

IC

C N

et R

ev

en

ues (

$ in

mil

lion

s) 2

018 n

et r

evenue

s in

cre

ase

d Y

oY

prim

arily

re

fle

ctin

g h

ighe

r cli

en

t acti

vity

; 4Q

18

perform

anc

e c

ha

lleng

ed due

to d

iff

icult

ma

rket b

ack

dro

p 4

Q18 n

et re

ve

nues d

ec

rea

se

d Y

oY

re

flec

ting s

ign

ific

an

tly l

ow

er n

et r

eve

nue

s in

cre

dit p

rod

uc

ts, a

mid

wid

er c

re

dit

sprea

ds a

nd

in

cre

ase

d v

ola

tilit

y, a

nd

low

er n

et r

ev

en

ues in

intere

st r

ate

pro

du

cts

R

em

ain

foc

use

d o

n e

xp

and

ing

add

re

ssa

ble

ma

rke

t by b

roade

ning c

lient r

ela

tion

ship

s, s

tre

am

lining e

xpe

nse

s, o

ptim

izing c

ap

ital a

nd in

ve

stin

g in

auto

ma

tion a

nd

pla

tform

enha

nc

em

en

ts 7

FIC

C K

ey H

ighlig

hts 2

018 FIC

C N

et R

eve

nue

Mix8 F

inanc

ing ~

10%

Ma

rke

t Inte

rm

edia

tion~

90

% 1

Q17 2

Q17

3Q

17 4

Q1

7 1

Q18 2

Q18 3

Q18 4Q

18 $

1,685 $

1,1

59 $

1,4

52 $

1,0

03 $

2,0

74 $

1,6

79 $

1,3

07 $

822

$ in

mill

ions 4

Q18 v

s. 3

Q18 v

s. 4

Q17 2

018 v

s.

2017 F

IC

C $

822 -3

7%

-18%

$ 5

,882

11%

Equitie

s 1

,604 -

11%

17%

7,600 1

5%

To

tal I

CS

$ 2

,42

6 -

22%

2%

$ 1

3,4

82 1

3%

Fin

anc

ial R

esults

$ in

milli

on

s 4

Q1

8 v

s. 3

Q1

8 v

s. 4

Q1

7 2

01

8 v

s. 2

01

7 E

qu

itie

s c

lien

t exe

cu

tion $

40

1 -4

1%

80

% $

2,8

35

39

% C

om

mis

sio

ns a

nd

fe

es 8

01 1

9%

9%

3,0

55

5%

Se

curitie

s s

ervice

s 4

02

-8%

-2%

1,7

10 4

% T

ota

l Equitie

s $

1,6

04 -

11%

17%

$ 7

,600 1

5%

Instit

utio

nal C

lie

nt S

erv

ice

s –

Eq

uiti

es 2

018

ne

t rev

en

ue

s h

igh

er Y

oY

on s

ign

ific

an

tly h

ig

he

r e

qu

ities c

lien

t e

xec

uti

on n

et r

even

ues 4

Q1

8 n

et r

ev

en

ue

s in

crease

d Y

oY

am

id im

prove

d m

ark

et c

onditio

ns, h

igh

er le

ve

ls o

f vola

tility

and h

ighe

r c

lie

nt a

ctiv

ity —

Equ

ities c

lient e

xe

cuti

on n

et r

even

ues in

crea

se

d s

ignif

ican

tly v

ersus a

ch

alle

nging 4

Q17

, supp

ort

ed

by b

ette

r p

erfo

rm

an

ce

in c

ash p

rodu

cts —

Com

mis

sions a

nd f

ees in

crease

d d

riv

en b

y h

igh

er m

arke

t vo

lum

es; m

arket s

ha

re in

low

touch

imp

roved

— S

ec

uriti

es s

ervice

s n

et r

evenue

s d

ec

rea

se

d s

lightly

; avera

ge

cu

sto

mer b

ala

nc

es lo

we

r N

et R

eve

nue

s (

$ in

mill

ions) 8

Key H

ighli

ghts

Fin

anc

ial R

esults

2018 E

quiti

es N

et R

eve

nue

Mix

8 F

inan

cing ~

40%

Ma

rket In

term

ed

iatio

n ~

60%

1Q

17

2Q

17 3

Q17 4

Q17 1

Q18 2

Q18

3Q

18 4

Q1

8 5

52 6

87 5

84 223 1

,062 6

91 6

81 4

01

738 7

64 6

81 7

37 8

17 763 6

74

801 3

84 4

41 4

03 4

09

432 4

37

439 4

02 $

1,6

74 $

1,8

92 $

1,6

68 $

1,3

69 $

2,3

11 $

1,8

91

$1,7

94

$1,6

04

Equit

ies c

lie

nt e

xe

cu

tion C

om

mis

sio

ns a

nd

fee

s S

ec

uriti

es s

erv

ice

s

Inv

estin

g &

Le

ndin

g –

Equity

Sec

uriti

es F

inan

cia

l Re

sult

s K

ey H

ighlig

hts 2

018 net re

ve

nue

s d

ec

rea

se

d s

lightl

y Y

oY

as im

prove

d p

erfo

rman

ce

vs. v

s. v

s. f

ro

m p

riv

ate

eq

uity

in

ve

stm

en

ts la

rg

ely

offset n

et l

osse

s f

ro

m p

ub

lic $

in

millio

ns 4

Q1

8 3

Q1

8 4

Q1

7 2

01

8 2

017 i

nve

stm

ents 4

Q18 n

et re

ve

nue

s r

efl

ec

ted c

onti

nue

d s

tron

g r

esu

lts i

n p

riv

ate

equit

y E

quit

y s

ecu

ritie

s $

994 -

11%

-18%

$ 4

,455 -

3%

inv

estm

ents

, driv

en b

y c

om

pan

y-spe

cifi

c e

ve

nts

, inc

luding s

ale

s, a

nd c

orp

ora

te p

erform

anc

e —

Approxim

ate

ly o

ne-half

of th

e n

et r

eve

nue

s w

ere

ge

ne

rate

d f

rom

real e

sta

te, w

hic

h p

rim

ari

ly r

efl

ec

ted g

ain

s fr

om

sa

les N

et R

evenue

s (

$ i

n m

illio

ns) in

ve

stm

ents

, Ou

r glo

ba

l priv

ate

which and

are

public

div

ersif

ied e

quit

y a

cro

ss p

ortf

olio

ge

ograp

hy c

onsis

ts a

nd o

f o

ver in

vestm

ent 1

,00

0 v

in

tag

e a

nd

hav

e a

tota

l carry

ing

valu

e o

f $

21 b

illio

n $

1,3

91 $

1,2

81 —

In a

ddit

ion, o

ur c

on

soli

dated

inve

stm

en

t entit

ies h

ave a c

arr

ying $

1,1

80 $

1,2

09 v

alu

e o

f $

13 billi

on, s

ubsta

nti

ally

all o

f wh

ich

is r

ela

ted to

real 3

1%

$1,1

11 e

sta

te 9

$1,0

69 2

5%

40

% $994 E

quity

I&

L A

sse

t Mix

10,1

1 $

798 49%

30%

41%

$ in

billio

ns 4

Q18

$ in

billi

ons 4

Q1

8 5

2%

Corp

orate $

17 P

ublic

eq

uit

y $

1 4

2%

Re

al e

sta

te 4

Priv

ate e

quity

20 T

ota

l $ 2

1 T

ota

l $ 2

1 7

5%

69%

70

% 60%

59%

Vin

tag

e G

eogra

phic

51

% 5

8%

48%

201

1 o

r A

sia

201

5 –

31%

Present 4

7%

Ea

rlie

r 30%

Am

eric

as 1

Q17 2

Q1

7 3

Q17 4

Q1

7 1

Q18 2

Q18 3

Q18

4Q

18 5

3%

2012 –

Corpora

te R

ea

l Esta

te 2

01

4 E

ME

A 2

3%

16%

9

Record

net in

terest in

com

e i

n 2

018

of ~

$2.7 b

illio

n; 4

Q18 i

nclude

d ~

$800 m

illion o

f n

et in

tere

st

inc

om

e (

~$3

.2 b

illio

n ann

ual p

ace

) F

ra

nchis

e a

dja

ce

nt lo

an p

ortf

olio

that c

om

ple

me

nts

our c

urr

en

t pro

duc

t offerin

gs a

nd e

xpe

rtis

e A

s o

f 4

Q1

8, ~

85%

of to

tal l

oan

s w

ere

se

cured 2

018 a

nd 4

Q1

8 p

rovis

ion f

or c

redit lo

sse

s3 o

f $

67

4 m

illio

n a

nd

$222 m

illio

n, r

espec

tive

ly,

dri

ve

n p

rim

arily

by c

onsu

mer l

oa

n g

row

th N

et c

ha

rge

-off

ra

te 0.5

% f

or 2

018 I

nv

estin

g &

Le

ndin

g –

Debt S

ec

uriti

es a

nd

Loa

ns N

et R

eve

nue

s3 (

$ in

milli

ons) $

in m

illio

ns 4

Q18 v

s. 3

Q18 v

s. 4

Q17 2018 v

s. 2

017 D

ebt s

ecurit

ies a

nd lo

ans3 $

912

-1%

23%

$ 3

,79

5 4

3%

44

% 3

7%

75

% 5

6%

26

% 3

3%

15%

33

% 1

9%

30

% 1

0%

11

% 1

1%

$ i

n m

illio

ns 4

Q1

8 v

s. 3

Q1

8 v

s. 4

Q1

7 2

01

8 v

s. 2

01

7 M

an

ag

em

en

t an

d o

th

er f

ees $

1,3

65

-1%

— $

5,4

38 6

% I

nc

entiv

e f

ee

s 1

53 3

% 1

9%

83

0 9

9%

Tra

nsactio

n r

even

ue

s 1

86 7

% 1

3%

754 1

5%

Tota

l Inve

stm

en

t Ma

na

ge

me

nt $

1,7

04 —

2%

$ 7

,02

2 1

3%

In

ve

stm

en

t Mana

ge

ment F

inanc

ial R

esu

lts 4

Q18 A

US

Mix

7 A

sse

ts U

nd

er S

upe

rvis

ion7 $

in b

illio

ns 4

Q18 v

s. 3

Q18 v

s. 4

Q17 L

ong-te

rm A

US

$ 1

,145

-4%

— L

iqu

idit

y p

roduc

ts 3

97 1

1%

15

% T

ota

l AU

S $

1,5

42 -

1%

3%

Long-T

erm

AU

S N

et F

low

s7,1

2 (

$ in

billio

ns) R

ec

ord n

et r

even

ues in

201

8, d

riv

en b

y re

cord m

ana

gem

ent a

nd o

the

r fe

es, s

ignif

ican

tly h

ighe

r in

cen

tive

fee

s a

nd h

ighe

r tr

an

sa

cti

on r

even

ues A

US7 in

cre

ase

d $

48 b

illio

n in

201

8 t

o $

1.5

4 tr

illion —

Long-te

rm

ne

t infl

ow

s o

f $

37 b

illio

n, p

rim

arily

in f

ixe

d in

com

e a

nd e

quity

asse

ts —

Liq

uid

ity p

roduc

ts n

et in

flo

ws o

f $

52 b

illio

n —

Ne

t mark

et d

ep

re

ciatio

n o

f $

41

bill

ion, p

rim

arily

in e

quity

assets O

ve

r p

ast f

ive

ye

ars,

tota

l cum

ula

tive

orga

nic

lon

g-te

rm A

US n

et in

flo

ws o

f ~

$21

5 b

illio

n A

lte

rnativ

e in

ve

stm

ents

Eq

uity

L

iquid

ity p

roduc

ts F

ixe

d in

com

e T

hir

d p

arty

distr

ibuted

Hig

h-ne

t- w

orth

indiv

idua

ls I

nstitu

tio

na

l EM

EA

Am

eric

as A

sia

Pu

blic

funds S

epa

rate

acc

oun

ts P

riv

ate

funds a

nd o

the

r 11 A

sse

t Cla

ss D

istr

ibutio

n C

ha

nne

l Re

gion V

ehic

le 1

Q17 2

Q1

7 3

Q17 4

Q17 1

Q18

2Q

18 3

Q1

8 4

Q18 $

5 $

25 $

13 $

(1) $

13 $

8 $

13 $

3 K

ey H

ighlig

hts

Ex

pen

se

s F

ina

ncial R

esult

s3 K

ey H

ighlig

hts

vs. v

s. v

s. E

fficie

nc

y r

atio

13 s

table

YoY

as n

et r

eve

nue

grow

th f

und

ed

$ in

mill

ions 4

Q18 3

Q18

4Q

17 2

018 2

017

inve

stm

ents

in o

ur b

usin

esse

s C

om

pe

nsati

on a

nd b

ene

fits

$ 1,8

57 -

38%

-11

% $

12,3

28

6%

2018 o

pera

ting e

xpe

nse

s in

crea

se

d Y

oY

, inc

ludin

g: —

Highe

r c

om

pensa

tion a

nd b

enefits

expe

nse

s (

+$675 m

illio

n); u

p B

roke

rag

e, c

lea

ring, e

xchan

ge 830 1

6%

13%

3,2

00 1

1%

6%

, only h

alf

the

rate o

f n

et r

eve

nue

grow

th a

nd d

istr

ibutio

n f

ee

s —

Sig

nif

ican

tly h

ighe

r n

et p

rovis

ions f

or l

itiga

tio

n a

nd

re

gula

tory

Mark

et d

ev

elo

pm

en

t 20

8 2

5%

19

% 7

40

26

% p

ro

ce

ed

in

gs (

+$656

mil

lion) —

Re

ve

nue

rec

ognitio

n sta

nda

rd im

pac

t14

(+$29

7 m

illio

n)

Co

mm

unica

tions a

nd 2

62 5

% 1

4%

1,0

23 1

4%

tec

hnolo

gy —

Sub

sta

ntia

lly a

ll of th

e r

em

ain

ing in

crea

se

(+

$892 m

illio

n) is

from

inve

stm

ents

to

driv

e g

row

th (i

nclu

din

g M

arcus, c

onsoli

da

ted

Dep

rec

iatio

n and

am

ortiz

atio

n 3

77 1

9%

8%

1,3

28 1

5%

in

ve

stm

en

ts a

nd te

chnology) a

nd h

igher a

ctiv

ity

refl

ec

ted in

BC

E&

D O

ccu

pan

cy 215 6

% 1

3%

809 1

0%

2018 e

ffe

ctiv

e ta

x r

ate

inc

lude

d a

$48

7 m

illio

n ta

x b

ene

fit r

elated t

o th

e f

ina

liza

tion o

f im

pac

t of T

ax L

egis

latio

n4

; 2019

effe

ctiv

e ta

x r

ate e

xpe

cte

d to

be

~2

2-23%

exc

ludin

g e

quity

based

com

pe

nsa

tion

an

d P

rofe

ssio

nal f

ee

s 3

17 2

% -

13%

1,2

14 4

% d

iscre

te ite

ms O

the

r exp

enses 1

,084 8

4%

84%

2,8

19

50%

Effic

ien

cy R

atio

13 6

6%

64%

64%

Tota

l ope

ra

ting ex

penses $ 5

,150 -8

% 9

% $23,4

61

12%

Pro

vis

ion f

or ta

xes4 $

170

-69%

-97%

$ 2

,02

2 -

70%

Effec

tive T

ax R

ate 1

6.2

% -

45.3

pp

2016 2

017 2

018 1

2

Capita

l Fin

anc

ial M

etr

ics7,11,1

5 K

ey H

ighlig

hts

$ i

n b

illio

ns, e

xce

pt p

er s

hare a

mounts 4

Q18

3Q

18 4

Q17

Re

buil

t cap

ital r

atio

s to

pre

-Tax L

egisla

tion

4 le

ve

ls C

om

mon e

quit

y tie

r 1

(C

ET

1)

$ 7

3.1

$ 7

1.8

$ 6

7.0

— Y

oY

imp

rov

em

en

t in C

ET

1 r

atio

s d

riv

en b

y r

eta

ine

d e

arnings a

nd r

educ

ed

ma

rket R

WA

s S

tanda

rdiz

ed

RW

As $

548 $

54

6 $

564

— D

ecre

ase i

n c

red

it R

WA

s a

lso c

ontr

ibuted

to B

ase

l III S

tan

dardize

d C

ET

1 r

atio

13

.3%

13.1

% 1

1.9

% A

dva

nced C

ET

1 r

atio

Y

oY

imp

rovem

ent B

ase

l III A

dva

nc

ed

RW

As $

558 $

57

7 $

626

Retu

rne

d $

4.5

2 b

illio

n o

f ca

pit

al

durin

g t

he y

ea

r B

ase

l III A

dvance

d C

ET

1 r

atio

13.1

% 1

2.4

% 1

0.7

% —

Paid $

1.2

3 b

illio

n i

n c

om

mon s

tock

div

iden

ds S

upple

mentary

leve

rag

e r

atio

6.2

% 6

.0%

5.8

% —

Re

purc

ha

se

d 1

3.9

mill

ion s

hare

s o

f c

om

mon s

toc

k, f

or a

tota

l cost o

f $3.2

9 b

illi

on7 B

VPS

$ 2

07

.36 $

19

7.3

3 $

181.0

0 T

BV

PS5 $ 1

96.6

4 $

186.62 $

170

.61 C

apita

l and L

eve

rage R

ati

os7,1

1,1

5 S

tan

dard

ize

d B

asel I

II S

upplem

entary C

ET

1 R

atio

Adv

anc

ed L

evera

ge

Ratio

CE

T1 R

atio

13.3

% 1

3.1

% 1

1.9

% 1

0.7

% 5.8

% 6

.2%

4Q

17 4

Q18 4

Q17 4

Q18 4Q

17 4

Q18

13

Bala

nce

She

et &

Liq

uid

ity B

ala

nc

e S

he

et A

llocati

on10,1

1 K

ey

Hig

hli

ghts

4Q

18 3

Q1

8 4

Q17 H

ighly

liq

uid b

ala

nc

e s

hee

t and r

obu

st li

quid

ity m

etri

cs a

llo

w th

e $

in b

illio

ns f

irm

to c

apit

aliz

e o

n m

arket o

pportu

niti

es G

CL

A, s

egre

gate

d a

ssets

and o

ther $

313 $

28

2 $

285

— G

CL

A7 a

vera

ge

d $

229 billi

on11 fo

r 4

Q1

8 S

ec

ured

clie

nt f

ina

nc

ing 1

47 1

61

164 W

ell-

div

ersifi

ed f

un

din

g m

ix a

cross te

nor, c

urren

cy,

cha

nne

l, str

uc

ture a

nd cou

nte

rparty

In

stit

utio

nal C

lient S

ervic

es 3

08 3

58 3

19

Benc

hm

ark m

atu

rit

ies e

xpe

cted t

o o

utpac

e b

ench

ma

rk is

su

anc

e in

Inve

stin

g &

Le

ndin

g 134 1

26

121 2

019, a

s d

eposits

grow

Othe

r asse

ts 3

1 3

0 2

8 D

eposit

fundin

g lo

wers o

ve

rall f

ina

nc

ing c

osts, a

dds d

ive

rsif

icati

on a

nd r

educ

es c

re

dit s

en

siti

vity

Tota

l asse

ts $

933 $

95

7 $

917

Sou

rce

s o

f F

undin

g a

s o

f 4

Q181

1 S

ec

ured S

ha

reh

old

ers’ B

ala

nc

e S

he

et A

sse

ts1

1 F

undin

g 1

8%

Equity

14%

$ in

billio

ns 4

Q18 3Q

18 4

Q17

Cash a

nd c

ash e

quiv

alents $

130

$ 1

19 $

110 C

olla

teraliz

ed

agre

em

ents

276 2

98

312 R

ec

eiv

able

s 1

60

159 1

51 D

ep

osit

s 2

5%

Fin

anc

ial in

str

um

ents

ow

ned 3

36 351 3

16

(Consum

er U

nse

cu

red D

eposits

6%

) L

on

g-T

erm

O

the

r assets

31 3

0 2

8 D

ebt 3

6%

To

tal a

sse

ts $

933 $

95

7 $

917

Unse

cu

red S

hort-

Te

rm D

ebt 7

% 1

4

Cautio

nary N

ote o

n F

orw

ard-L

ooking S

tate

me

nts

Th

is p

re

se

nta

tion c

onta

ins “

forw

ard-lo

okin

g s

tate

me

nts

” w

ith

in t

he

me

an

ing o

f t

he s

afe

ha

rbor p

rovis

ions o

f t

he U

.S. P

riv

ate

Se

curitie

s L

itig

ati

on R

eform

Act o

f 1995. F

orw

ard-lo

okin

g s

tate

me

nts

are

not h

isto

rica

l fa

cts, b

ut in

stea

d r

epre

se

nt

only

the fi

rm’s b

elie

fs r

eg

ardin

g f

utu

re

ev

ents, m

any of w

hic

h, b

y t

heir n

atu

re, a

re in

he

rently

un

ce

rta

in a

nd o

uts

ide

of th

e f

irm

’s c

ontr

ol. I

t is p

ossib

le th

at th

e f

irm

’s a

ctua

l resu

lts a

nd fi

nan

cial

co

nditi

on m

ay d

iff

er, p

ossib

ly m

ate

rially

, from

the antic

ipa

ted r

esu

lts a

nd fi

nan

cial

con

diti

on in

dic

ate

d i

n th

ese

forw

ard-lo

okin

g s

tate

me

nts

. For a

dis

cussio

n o

f som

e o

f th

e r

isk

s a

nd im

porta

nt f

actors th

at c

ould

affe

ct th

e f

irm

’s f

utu

re

results

an

d fi

na

ncial c

onditi

on, s

ee

“R

isk

Fa

cto

rs”

in P

art I, I

tem

1A

of th

e f

irm

’s A

nnua

l Re

port

on F

orm

10-K

fo

r th

e y

ea

r end

ed D

ec

em

be

r 31

, 2017

. Info

rma

tion r

ega

rdin

g t

he

firm

’s c

apita

l ratio

s, r

isk-w

eighte

d a

sse

ts, s

upple

mentary l

eve

ra

ge r

atio

, tota

l assets

an

d b

ala

nce

sh

ee

t data

, glo

bal c

ore

liquid

assets, a

nd p

lanne

d 2

019 b

enc

hm

ark is

sua

nce

s c

onsis

ts o

f p

relim

inary e

stim

ate

s. T

he

se

estim

ate

s a

re

forw

ard-lo

okin

g s

tate

me

nts

and a

re

subje

ct to

cha

nge

, po

ssib

ly m

ate

ria

lly,

inc

luding a

s th

e f

irm

com

ple

tes its

fin

an

cial s

tate

me

nts

. Statem

ents a

bout

the

firm

’s e

xpe

cted

20

19 e

ffe

ctiv

e i

nco

me

tax r

ate c

onstitu

te f

orw

ard-lo

oking s

tatem

en

ts. T

he

se

sta

tem

en

ts a

re

sub

jec

t to th

e r

isk

tha

t the

fir

m’s 2019 e

ffe

ctiv

e i

nco

me

tax r

ate m

ay

dif

fer f

rom

the antic

ipa

ted r

ate i

ndic

ated

in th

ese

forw

ard

-lookin

g s

tate

me

nts

, possib

ly m

ate

rially

, due

to, a

mong o

the

r th

ing

s, c

han

ges in

the f

irm

’s e

arnin

gs m

ix, th

e f

irm

’s p

rofit

ab

ility a

nd

the

entit

ies in

wh

ich th

e f

irm

ge

ne

rates p

rofits

, the

assum

ptio

ns th

e f

irm

ha

s m

ad

e in

fore

castin

g its

expe

cte

d ta

x r

ate

, a

s w

ell

as g

uid

anc

e th

at m

ay b

e i

ssue

d b

y th

e U

.S. I

nterna

l Rev

enu

e S

erv

ice. S

tate

me

nts

abo

ut th

e f

irm

’s in

ve

stm

en

t ba

nkin

g tr

ansa

ctio

n b

ac

klo

g als

o m

ay c

onstitu

te f

orw

ard-lo

oking s

tatem

ents. S

uch

sta

tem

ents

are

subjec

t to th

e r

isk t

ha

t the

term

s o

f the

se tr

ansac

tions m

ay b

e m

odif

ied o

r that th

ey m

ay n

ot b

e c

om

pleted at

all

; there

fore

, the n

et r

eve

nue

s, if

any, t

hat th

e f

irm

ac

tua

lly e

arn

s f

rom

these tr

ansa

ctio

ns m

ay d

iff

er, p

ossib

ly m

ate

riall

y, f

rom

tho

se

cu

rre

ntl

y e

xpec

ted. I

mp

orta

nt f

actors

tha

t could

resu

lt in a

mo

dif

ica

tion o

f th

e te

rm

s o

f a tr

ansa

ctio

n o

r a tr

ansa

ctio

n not b

ein

g c

om

ple

ted

in

clude

, in t

he c

ase

of u

nderw

ritin

g tr

an

sac

tion

s, a

de

clin

e o

r c

ontin

ue

d w

ea

kne

ss in

ge

ne

ral

ec

onom

ic c

ond

itio

ns, o

utb

re

ak

of h

osti

litie

s, v

ola

tility

in th

e s

ecu

riti

es m

ark

ets g

enera

lly o

r a

n a

dv

erse

de

ve

lop

men

t with

resp

ec

t to th

e is

suer o

f th

e s

ec

uriti

es a

nd

, in th

e c

ase

of fi

nancial a

dv

iso

ry t

ransa

ctio

ns, a

de

cli

ne

in th

e s

ec

uriti

es m

ark

ets, a

n in

abil

ity t

o o

bta

in a

de

qua

te f

ina

nc

ing

, an

ad

ve

rse

de

velopm

ent w

ith r

espe

ct to

a p

arty

to

the

tra

nsa

ctio

n o

r a f

ailu

re

to o

bta

in a

req

uired r

egu

lato

ry a

pp

roval. F

or a

discu

ssio

n o

f o

ther im

porta

nt f

actors

tha

t cou

ld a

dverse

ly affec

t the

firm

’s in

vestm

ent b

an

kin

g tr

an

sa

ctio

ns, s

ee “

Ris

k F

acto

rs” i

n P

art I

, Ite

m 1

A o

f th

e f

irm

’s A

nn

ual R

eport o

n F

orm

10-K

for th

e y

ear e

nde

d D

ece

mb

er 3

1, 2

017. 1

5

Fo

otnote

s 1

. 2

019 e

stim

ate

d r

eal g

ross d

om

esti

c p

roduc

t (G

DP

) g

row

th a

nd 2

01

8 e

stim

ated

S&

P 500 I

nde

x e

arn

ings per s

hare

(E

PS

) g

row

th both

per G

oldm

an S

achs R

ese

arc

h. U

.S. c

red

it z

-sprea

ds p

er B

loom

be

rg. C

orpo

rate

confid

enc

e le

vel p

er D

uk

e F

uq

ua C

FO

surve

y. 2

. D

ea

logic – J

anua

ry 1

, 201

8 th

ro

ug

h D

ece

mb

er 3

1,

2018. 3

. The

follo

win

g r

eclassif

icatio

ns hav

e b

ee

n m

ade

to

prev

iously r

eporte

d a

mounts to

co

nfo

rm to

the c

urre

nt p

re

se

nta

tion

. Provisio

n fo

r c

red

it losse

s, p

re

vio

usly

re

porte

d in

oth

er

prin

cip

al tr

ansa

ctio

ns re

ve

nue

s (

and I

nve

sti

ng &

L

end

ing s

egm

en

t ne

t re

ven

ues), i

s n

ow

re

porte

d a

s a

sepa

rate

line i

tem

in th

e C

on

soli

dated

Sta

tem

ents o

f E

arn

ings. H

ea

dco

unt c

onsis

ts o

f th

e f

irm

’s e

mp

loye

es, a

nd e

xclude

s c

onsulta

nts

an

d t

em

porary s

taff

pre

vio

usly

re

porte

d a

s p

art o

f to

tal s

taff.

As a

re

su

lt, e

xpe

nse

s r

elated to

consulta

nts

and t

em

pora

ry s

taff p

revio

usly

re

porte

d i

n c

om

pe

nsa

tion

and b

ene

fits

expe

nse

s a

re n

ow

repo

rted in

profe

ssio

nal fe

es. R

egu

lato

ry-re

late

d f

ees th

at a

re p

aid

to

exc

han

ges, re

ported

in o

ther e

xpe

nses p

rio

r t

o 2

018, a

re

now

re

porte

d in

bro

kera

ge

, clea

rin

g,

excha

nge

and d

istr

ibutio

n f

ees. 4

. Durin

g th

e f

ourth

qu

arte

r o

f 2

017,

the

Tax

Cuts a

nd J

obs A

ct (

Tax L

egisla

tion

) w

as e

na

cte

d a

nd lo

we

red

U.S

. co

rpora

te in

co

me ta

x r

ate

s a

s o

f J

anua

ry 1

, 20

18, im

ple

me

nte

d a

terri

toria

l tax s

yste

m a

nd i

mpo

sed

a r

epa

tria

tion

tax

on d

ee

me

d r

ep

atri

ate

d e

arn

ings o

f fo

reig

n s

ubsidia

rie

s. T

he

estim

ated

im

pa

ct o

f T

ax L

egis

latio

n w

as a

n in

cre

ase

in in

com

e ta

x e

xpe

nse

of $

4.4

0 b

illio

n fo

r the fo

urt

h q

ua

rte

r of 2

017. E

xclu

din

g t

his

expe

nse, d

ilu

ted E

PS

was $

19.7

6, re

turn

on a

vera

ge

co

mm

on s

ha

reh

old

ers’ e

quity

(R

OE

) w

as 1

0.8

% a

nd r

etu

rn o

n a

ve

rag

e t

ang

ible

com

mon s

hare

hold

ers’ e

quity

(RO

TE

) w

as 1

1.4

% f

or 2

017, a

nd d

ilute

d E

PS w

as $

5.6

8 f

or th

e f

ourth

qua

rter o

f 2

01

7. I

n th

e f

ourth

quarter o

f 2

01

8, th

e f

irm

fin

aliz

ed t

his

esti

ma

te to

re

fle

ct t

he

imp

ac

t of u

pdated in

form

atio

n, in

clu

din

g s

ubse

que

nt g

uid

ance

issue

d b

y t

he U

.S. I

nterna

l Reve

nue

Service

, re

sulti

ng in

a $

467 m

illion in

com

e t

ax

ben

efit

($487 m

illio

n to

tal in

com

e t

ax b

ene

fit f

or 2

018). E

xc

luding th

is b

ene

fit, d

ilu

ted E

PS w

as $

24.0

2, R

OE

wa

s 1

2.7

% a

nd

RO

TE

wa

s 1

3.4

% f

or

2018, a

nd d

iluted E

PS

was $

4.8

3 fo

r t

he f

ou

rth q

ua

rte

r of 2

018. M

ana

ge

me

nt b

elie

ves th

at p

re

se

ntin

g th

e f

irm

’s r

esult

s e

xcludin

g T

ax

Legisla

tion is

mea

ning

ful a

s e

xc

luding th

is ite

m in

crea

se

s th

e c

om

para

bili

ty o

f p

erio

d-to-p

erio

d r

esu

lts. D

ilu

ted E

PS

an

d R

OE

, ex

clu

din

g th

e i

mpa

ct o

f T

ax L

egis

lati

on, a

re n

on-G

AA

P m

easure

s a

nd m

ay

not b

e c

om

para

ble

to s

imila

r non-G

AA

P m

ea

sure

s u

sed b

y o

ther c

om

pa

nies. T

he ta

ble

s b

elo

w p

rese

nt th

e c

alc

ula

tion

of n

et e

arnin

gs a

ppli

ca

ble

to c

om

mon

sha

reh

olde

rs, d

ilute

d E

PS

an

d a

vera

ge

com

mon s

ha

re

hold

ers’ e

quity

, ex

clud

ing th

e im

pact o

f T

ax L

egis

latio

n (

un

au

dite

d, in

m

illio

ns, e

xce

pt p

er s

ha

re

am

ounts): F

OR

TH

E T

HR

EE

MO

NT

HS

YE

AR

TH

RE

E M

ON

TH

S Y

EA

R E

ND

ED

EN

DE

D E

ND

ED

EN

DE

D D

EC

EM

BE

R 3

1, D

EC

EM

BE

R 3

1, D

EC

EM

BE

R 3

1, D

EC

EM

BE

R 3

1,

201

8 2

01

8 2

01

7 2

017

N

et

ea

rn

ing

s / (

loss)

app

licab

le to

com

mon s

hare

hold

ers, a

s r

eporte

d $

2,3

22 $

9,8

60 $

(2,1

43) $

3,6

85

Impa

ct o

f T

ax

Legisla

tion (

467) (

487

) 4

,400

4,4

00 N

et e

arnin

gs a

pplic

able

to c

om

mon

sha

reholde

rs, e

xc

ludin

g t

he

impa

ct o

f T

ax L

egis

latio

n $

1,8

55 $

9,3

73 $

2,2

57 $

8,0

85 D

ivid

ed b

y a

ve

ra

ge

dilu

ted c

om

mon

sha

res u

sed

in th

e c

alc

ula

tion

of d

ilute

d e

arnin

gs (

exc

ludin

g t

he

impa

ct o

f T

ax L

egis

latio

n) p

er c

om

mon s

ha

re 3

84.3

39

0.2

397

.4 4

09.1

Dilu

ted

ea

rnin

gs p

er c

om

mon sha

re, e

xc

luding th

e im

pa

ct o

f T

ax

Legisla

tion $

4.8

3 $

24.0

2 $

5.6

8 $

19.7

6 F

OR

TH

E T

HR

EE

MO

NT

HS

YE

AR

EN

DE

D E

ND

ED

DE

CE

MB

ER

31, D

EC

EM

BE

R 3

1, 2

017 2

017 A

ve

rag

e b

asic c

om

mon s

hare

s, a

s r

eporte

d 3

89.8 4

01.6

E

ffe

ct o

f d

ilutiv

e s

ecu

ritie

s 7

.6 7

.5 A

ve

ra

ge d

iluted com

mon

sha

res u

sed

in th

e c

alc

ula

tion

of d

ilute

d e

arn

ing

s (

ex

clu

din

g t

he

imp

ac

t of T

ax L

egis

latio

n) p

er c

om

mon s

ha

re 397.4

40

9.1

16

Fo

otnote

s (

conti

nue

d) A

VE

RA

GE

FO

R T

HE

YE

AR

EN

DE

D Y

EA

R E

ND

ED

DE

CE

MB

ER

31, 2

018 D

EC

EM

BE

R 3

1, 2

017 C

om

mon sha

reholde

rs’ e

quity

, as r

eporte

d $

73,9

85 $ 7

4,7

21 I

mpa

ct o

f T

ax L

egis

latio

n (

42

) 338 C

om

mon s

hare

hold

ers’ e

quit

y, e

xcludin

g th

e im

pact

of T

ax

Leg

isla

tion 7

3,9

43 7

5,0

59 G

ood

will

and

ide

nti

fiable in

tangible

asse

ts (

4,0

90

) (4

,065) T

angib

le co

mm

on

sha

reho

lde

rs’ e

qu

ity,

exc

ludin

g t

he im

pac

t of T

ax L

egisla

tion

$ 6

9,8

53 $

70,9

94 5

. RO

E i

s c

alculated

by d

ivid

ing n

et e

arnings (

or a

nnua

lize

d n

et

ea

rnin

gs f

or

ann

ualiz

ed

RO

E) a

ppli

ca

ble

to c

om

mo

n s

ha

reh

old

ers b

y ave

rag

e m

onthly

com

mon s

ha

reholders’ e

quity

. Ta

ngible

co

mm

on s

ha

re

hold

ers’ e

qu

ity is

ca

lcu

late

d a

s to

tal s

ha

reh

old

ers

’ eq

uity

less p

re

ferred sto

ck

, go

od

will

an

d id

en

tif

iab

le in

tang

ib

le a

sse

ts. R

OT

E is

ca

lcula

ted b

y d

ividin

g n

et e

arnin

gs (

or a

nnua

lize

d n

et e

arn

ings f

or a

nnu

ali

ze

d R

OT

E) a

pplic

able

to com

mon

sh

areho

lde

rs b

y a

ve

rage

month

ly ta

ngible

co

mm

on s

ha

rehold

ers’ e

quity

. Ta

ngib

le b

ook v

alu

e p

er c

om

mon s

hare

(T

BV

PS) i

s c

alculated by d

ivid

ing ta

ngib

le com

mon

sh

areho

lders’ e

quity

by b

asic

sh

are

s (

380.9

m

illio

n as of D

ec

em

be

r 3

1, 2

018, 3

82

.9 m

illio

n a

s o

f S

eptem

be

r 30, 2

01

8 a

nd 3

88

.9 m

illio

n a

s o

f D

ece

mb

er 3

1,

2017). M

ana

ge

me

nt

belie

ves th

at t

ang

ible

com

mon s

hare

hold

ers’ e

quit

y a

nd T

BV

PS

are

mea

nin

gful b

ec

au

se th

ey

are

mea

sure

s th

at

the f

irm

an

d i

nve

sto

rs u

se

to a

sse

ss ca

pit

al a

de

qu

ac

y a

nd t

hat R

OT

E i

s m

ea

nin

gfu

l be

cause i

t me

asure

s th

e p

erform

anc

e o

f b

usin

esses con

sis

tently

, whe

ther th

ey w

ere

ac

quire

d o

r dev

elo

ped

intern

ally

. Tan

gib

le c

om

mon s

ha

reholders’ e

quity

, RO

TE

and T

BV

PS

are

no

n-G

AA

P m

ea

su

re

s a

nd

may

no

t b

e c

om

pa

rab

le t

o s

imila

r n

on

-G

AA

P m

ea

su

re

s u

se

d b

y o

the

r c

om

pa

nies.

Th

e ta

ble

be

low

pre

se

nts

th

e fi

rm

’s a

ve

rage

total a

nd c

om

mon s

hare

hold

ers’ e

quit

y, a

s w

ell a

s a

rec

onc

ilia

tion

of to

tal

sha

reholders’ e

quity

to ta

ngib

le com

mon

sha

reho

lde

rs’ e

qu

ity (u

naud

ited, $

in

milli

on

s): A

VE

RA

GE

FO

R T

HE

T

HR

EE

MO

NT

HS E

ND

ED

YE

AR

EN

DE

D A

S O

F D

EC

EM

BE

R 3

1, 2

018 D

EC

EM

BE

R 3

1, 2

01

8 D

EC

EM

BE

R 3

1, 2

018 T

otal s

ha

reh

old

ers’ e

quity

$ 8

7,7

61 $

85

,238 $

90,1

85 Pre

ferred

sto

ck (

11,2

03) (

11,2

53

) (11

,203) C

om

mon s

hare

hold

ers’ e

quit

y 7

6,5

58 7

3,9

85 7

8,9

82 G

oodw

ill a

nd i

de

ntif

iable

inta

ng

ible a

sse

ts (4

,094) (

4,0

90) (

4,0

82) T

an

gib

le c

om

mon s

hare

hold

ers’ e

quit

y $

72,4

64 $

69

,895 $

74,9

00 6

. Co

nsis

ts o

f I

nve

stm

ent B

an

king n

et r

even

ues, c

om

missio

ns a

nd f

ees w

ith

in E

quit

ies, s

ecu

ritie

s s

ervic

es n

et r

ev

enu

es w

ithin E

quit

ies, n

et in

tere

st

inc

om

e w

ithin

de

bt

sec

urit

ies a

nd lo

ans, a

nd In

vestm

ent M

an

ag

em

ent n

et r

ev

enue

s. 7

. Fo

r inform

atio

n a

bo

ut th

e f

irm

’s in

ve

stm

en

t ba

nk

ing tr

ansactio

n b

ac

klo

g, a

ssets u

nder s

upe

rvis

ion

(A

US

), s

ha

re r

epu

rch

ase

prog

ra

m a

nd

glo

ba

l core

liquid

asse

ts (

GC

LA

), see

“R

esults

of O

pe

ratio

ns –

Inve

stm

en

t B

ankin

g,”

“R

esu

lts o

f O

peratio

ns –

Inv

estm

ent M

ana

ge

me

nt,”

“E

qu

ity

Ca

pita

l Ma

nag

em

en

t an

d R

eg

ula

tory C

ap

ita

l – E

qu

ity C

ap

ital M

anage

me

nt”

and “

Risk M

ana

ge

me

nt –

L

iqu

idity

Ris

k M

anag

em

en

t,” re

spe

ctiv

ely

, in P

art I, I

tem

2 “

Ma

nag

em

ent’s D

isc

ussio

n a

nd A

naly

sis

of F

inan

cia

l Cond

itio

n a

nd R

esult

s o

f O

pe

rati

ons”

in t

he

firm

’s Q

ua

rte

rly R

eport o

n F

orm

10-Q

for th

e p

erio

d e

nd

ed S

epte

mbe

r 3

0, 2

018. F

or in

form

atio

n a

bout t

he fi

rm’s r

isk-ba

sed

cap

ital r

atio

s a

nd

sup

plem

en

tary

lev

era

ge ra

tio, s

ee N

ote

20 “

Re

gula

tion a

nd C

apita

l Adequa

cy

” i

n P

art I

, Ite

m 1

“F

inanc

ial S

tate

me

nts

(U

na

udite

d)”

in th

e f

irm

’s Q

ua

rte

rly R

eport o

n F

orm

10-Q

fo

r th

e p

erio

d e

nde

d S

epte

mber 3

0, 2

018. 8

. Fin

anc

ing

in F

IC

C in

clu

de

s n

et r

eve

nue

s p

rim

aril

y f

rom

sh

ort

-term

repu

rcha

se

ag

ree

me

nt a

ctiv

itie

s. F

ina

nc

ing i

n E

quitie

s in

clu

des n

et r

eve

nue

s f

rom

prim

e b

roke

rag

e a

nd o

the

r finan

cin

g a

cti

viti

es, in

clu

ding s

ec

uritie

s l

end

ing, m

argin

lendin

g a

nd s

wa

ps. 1

7

Fo

otnote

s (

conti

nue

d) 9

. Include

s c

onsolid

ate

d in

vestm

ent e

nti

ty a

sse

ts re

porte

d i

n “

Othe

r Assets”

on th

e c

onso

lida

ted s

tatem

en

ts o

f f

ina

ncia

l co

nditio

n, s

ub

stan

tia

lly a

ll o

f w

hic

h r

elate t

o e

ntit

ies e

ng

ag

ed

in

rea

l estate

inv

estm

en

t a

ctiv

ities. T

hese a

sse

ts a

re

ge

nera

lly a

cc

ou

nte

d f

or a

t his

toric

al c

ost l

ess d

epre

cia

tion

. Th

ese en

titie

s a

re

fun

de

d w

ith ap

pro

xim

ate

ly $

6 b

illio

n o

f n

on-rec

ourse

de

bt. 1

0. I

n a

dditi

on to

prepa

rin

g th

e fi

rm

’s c

onsolid

ate

d s

tate

ments o

f f

ina

nc

ial c

ondit

ion i

n a

cc

ord

ance

wit

h U

.S. G

AA

P, t

he

firm

pre

pare

s a

ba

lance

she

et th

at g

en

era

lly a

lloca

tes a

sse

ts to

the f

irm

’s b

usinesses, w

hic

h is

a n

on

-G

AA

P p

rese

nta

tion a

nd

ma

y n

ot b

e c

om

pa

rab

le to

sim

ilar n

on

-GA

AP

pre

se

nta

tion

s u

se

d b

y oth

er c

om

pa

nie

s. T

he

fir

m b

elie

ves th

at p

re

se

ntin

g th

e f

irm

’s a

ssets

on th

is b

asis

is m

ea

nin

gfu

l be

ca

use

it is

consiste

nt w

ith

the w

ay m

an

age

me

nt v

iew

s a

nd m

ana

ge

s r

isk

s a

ssocia

ted w

ith th

e f

irm

’s a

sse

ts a

nd bette

r enable

s i

nve

sto

rs t

o a

sse

ss th

e li

quid

ity o

f t

he f

irm

’s a

sse

ts. F

or m

ore

inform

ati

on a

bout th

e f

irm

’s b

ala

nc

e s

he

et

all

oc

atio

n, s

ee

“B

ala

nce

She

et a

nd

Fun

din

g S

ourc

es—

Ba

lanc

e S

he

et A

lloca

tion”

in P

art I, I

tem

2 “

Manag

em

en

t’s D

isc

ussio

n a

nd A

naly

sis

of F

ina

nc

ial C

onditio

n a

nd R

esult

s o

f O

pe

rati

ons”

in th

e fi

rm

’s Q

ua

rte

rly R

eport o

n F

orm

10-Q

for th

e p

erio

d e

nde

d S

epte

mbe

r 3

0, 2

018. T

he

table

s b

elo

w p

rese

nts th

e r

ec

onc

ilia

tions o

f th

e b

ala

nc

e s

hee

t allo

ca

tion to

the fi

rm’s b

usin

esse

s to

the

firm

’s U

.S. G

AA

P b

alanc

e s

he

et (

una

udite

d, $

in b

illio

ns): G

CL

A, S

ec

ured

In

stit

utio

nal

Se

greg

ated A

sse

ts a

nd O

ther C

lient F

ina

nc

ing C

lient S

ervic

es I

nve

stin

g &

Le

nding T

otal A

s o

f D

ec

em

be

r 3

1, 2

018 C

ash

an

d c

ash equ

iva

lents

$ 130 $

– $

– $

– $

130 C

olla

tera

lized

agre

em

ents

98 1

17 6

1 –

276 R

ece

iva

bles – 3

0 4

2 88 1

60 Fin

anc

ial i

nstr

um

en

ts o

wne

d 8

5 –

205 4

6 3

36 S

ubtota

l $ 3

13 $

14

7 $

308 $ 1

34 $

902 O

ther a

sse

ts 3

1 T

ota

l asse

ts $

933 G

CL

A, S

ec

ure

d I

nsti

tuti

ona

l Se

gre

ga

ted A

sse

ts a

nd O

the

r Clie

nt F

inan

cin

g C

lie

nt S

ervice

s I

nve

sti

ng &

Len

din

g T

ota

l As o

f S

ep

tem

be

r 3

0, 2

01

8 C

ash a

nd c

ash e

quivalents $

11

9 $

– $

– $

– $

119 C

olla

teraliz

ed a

gre

em

en

ts 1

01

128 6

9 –

298 R

ece

iva

ble

s –

33 4

5 8

1 1

59 F

ina

nc

ial in

str

um

ents o

wne

d 6

2 –

244 4

5 3

51 S

ubtota

l $ 2

82 $

161

$ 3

58 $

126 $

927 O

the

r a

sse

ts 3

0 T

ota

l asse

ts $

957 G

CL

A, S

ec

ure

d I

nstit

utio

nal S

egre

ga

ted

Asse

ts a

nd O

ther C

lient

Fin

anc

ing C

lie

nt S

ervic

es I

nve

sti

ng &

L

end

ing T

otal A

s o

f D

ece

mb

er 3

1, 2

017 C

ash a

nd c

ash

eq

uiv

ale

nts

$

110

$ –

$ –

$ –

$ 1

10

Coll

atera

lize

d a

gre

em

ents

12

2 1

24

65 1

312 R

ec

eiva

ble

s –

40 3

7 7

4 1

51 F

ina

ncial in

stru

me

nts

ow

ned

53

– 2

17

46 3

16 S

ubto

tal

$ 2

85 $

164

$ 3

19

$ 1

21

$ 8

89 O

the

r assets 2

8 T

otal a

ssets $

91

7 1

1. R

ep

rese

nts

a p

reli

min

ary e

stim

ate

and

ma

y b

e r

evise

d in

th

e fi

rm’s A

nnu

al R

eport o

n F

orm

10-K

for t

he

yea

r e

nde

d D

ec

em

be

r 3

1, 2

018. 1

2. 1

Q17

includ

es $

5 b

illi

on o

f o

utfl

ow

s in

con

nec

tio

n w

ith

the

div

estitu

re

of th

e f

irm

’s l

oc

al

Austr

alia

n-fo

cu

sed

inv

estm

ent c

ap

abilit

ies a

nd

fun

d p

latfo

rm

. 2Q

17 i

nclu

de

s $

20

bill

ion o

f inflo

ws i

n c

onne

ctio

n w

ith

the

ac

qu

isitio

n o

f a

po

rtio

n o

f Ve

rus I

nve

stors’ o

uts

ource

d c

hie

f in

ve

stm

ent o

ffic

er b

usin

ess. 1

8

Fo

otnote

s (

conti

nue

d) 1

3. E

ffic

iency

rati

o is

ca

lcula

ted b

y d

ivid

ing to

tal o

pe

rati

ng e

xpe

nse

s b

y t

ota

l ne

t re

ve

nue

s. 1

4. I

n t

he fi

rst q

ua

rte

r of

2018, t

he f

irm

ad

opte

d A

SU

No

. 201

4-09, “

Re

ve

nue f

rom

Contr

acts w

ith C

ustom

ers (

Topic 6

06),”

which

require

d a

change

in th

e p

re

se

nta

tion o

f c

erta

in c

osts f

rom

a n

et p

rese

nta

tion

with

in r

ev

enu

es t

o a

gross b

asis a

nd v

ice

ve

rsa. F

or in

fo

rm

atio

n a

bout A

SU

No

. 2014-09

, se

e N

ote 3

“S

ign

ific

ant A

cc

oun

ting P

olic

ies” i

n P

art I

, Ite

m 1

“F

ina

nc

ial S

tate

ments

(U

na

udite

d)”

in th

e f

irm

’s Q

ua

rte

rly R

eport o

n F

orm

10-Q

for th

e p

erio

d e

nd

ed S

epte

mbe

r 3

0, 2

018. 1

5. A

s o

f D

ece

mbe

r 3

1, 2

017, t

he f

irm

’s c

ap

ita

l r

ati

os o

n a

fully

phase

d-in

basis w

ere

no

n-G

AA

P m

ea

sures a

nd m

ay n

ot b

e c

om

pa

ra

ble

to s

im

ilar n

on-G

AA

P m

ea

sures u

se

d b

y o

ther c

om

pa

nie

s. M

an

age

ment b

elie

ve

s th

at t

he f

irm

’s c

apita

l r

ati

os o

n a

fully

pha

se

d-in

basis a

re m

ea

nin

gful b

ec

ause t

hey

are

me

asures th

at th

e f

irm

and

inve

sto

rs u

se

to a

sse

ss ca

pit

al

ade

qua

cy. T

he

table

be

low

pre

sents

reconc

iliati

ons, f

or b

oth

the

Sta

nda

rdiz

ed app

roac

h a

nd th

e B

asel II

I A

dva

nc

ed a

pproac

h, o

f com

mon e

quity

tie

r 1

and

risk

-w

eighte

d a

sse

ts o

n a

tran

siti

ona

l ba

sis

to

a f

ully

phased

-in b

asis

as o

f De

cem

be

r 31

, 2017

(unau

dite

d, $

in

bil

lion

s): A

S O

F D

EC

EM

BE

R 3

1, 2

017 ST

AN

DA

RD

IZ

ED

BA

SE

L I

II A

DV

AN

CE

D C

om

mo

n e

quity

tier 1

, tra

nsit

ion

al b

asis $

67

.1 $

67

.1 T

ran

sitio

nal a

dju

stm

ents

(0

.1) (

0.1

) C

om

mo

n e

quity

tier 1

, fu

lly

pha

se

d-in

basis $

67

.0 $

67

.0 R

isk

-w

eighte

d a

sse

ts, t

ransitio

nal b

asis

$ 556 $

618 T

ran

siti

ona

l adju

stm

ents

8 8

Ris

k-w

eig

hted a

ssets

, fully

phased

-in b

asis

$ 5

64 $

626 C

om

mon e

quit

y tie

r 1

ratio

, tra

nsitio

nal b

asis

12

.1%

10.9

% C

om

mon e

quit

y tie

r 1

ra

tio, f

ully

ph

ase

d-in

basis

11.9%

10.7

% 1

9

THE GOLDMAN SACHS GROUP, INC.2019/01/16 · $8.08 billion Investment Banking Full Year Net revenues...

Documents

Transcript of THE GOLDMAN SACHS GROUP, INC.2019/01/16 · $8.08 billion Investment Banking Full Year Net revenues...