Goldman Sachs 2001 Annual Report Download - page 7

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other firm. We also were the number
one global underwriter of initial public
offerings and all common stock offerings.
We think these results are a testament to
the strength and quality of our franchise.
Within our Trading and Principal
Investments business, Fixed Income,
Currency and Commodities produced
excellent results, increasing net revenues
35% by capitalizing on lower interest
rates, increased volatility and strong cus-
tomer demand. Performance was strong
across a wide range of our businesses,
including commodities, currencies, our
credit-sensitive businesses and fixed
income derivatives.
Net revenues declined in our equities
business in a difficult environment with
declining volatility and customer flow.
Despite the challenging market, we
were very pleased with our progress in
the integration of Spear, Leeds & Kellogg
with our own capabilities to strengthen
our leading position in equities markets.
Principal Investments had a very disap-
pointing year, with significant mark-
to-market losses, principally in our high
technology and telecommunications
investments. Overall, however, we con-
tinue to believe that our merchant bank-
ing activities are an excellent business for
us. We see many attractive opportunities
created by the volatility in the past year.
Asset Management and Securities Services
produced another record year in 2001.
Assets under management increased 19%
to $351 billion. In 2001, we had record
net inflows of $67 billion of new client
assets. These very strong results demon-
strate the value created through a diverse,
multi-product global platform. We also
continue to build our high-net-worth
business and believe it is one of our most
attractive growth opportunities.
As our industry has undergone dramatic
consolidation over the last few years,
and as commercial banks have increas-
ingly used low-priced credit as a competi-
tive tool, some observers have asked,
“Is Goldman Sachs big enough?” To be
frank, we believe that this is the wrong
question, particularly for a global firm
with over 22,000 people, $18 billion in
equity capital, and a $300 billion balance
sheet. Capital has never been a limiting
factor for us.
The right question—and the one we ask
ourselves constantly—is, “Can we con-
tinue to manage growth by adapting our
culture to a large and increasingly com-
plex global company?” This, and not the
size of competitors, will be the key to our
continuing ability to execute our strategy
superbly, which is the ultimate determi-
nant of our success.
We face a big challenge, but we are
up to it. We wouldn’t trade places with
any of our competitors, whatever their
size or business model. Despite the
uncertainties of the current market envi-
ronment, we remain bullish about the
future. We operate at the “sweet spot”
of global capitalism.
We believe that the trends that have
created opportunities for us in the past—
globalization, deregulation, consolidation
and market-driven reform—will continue
to do so in the future. But we know that
our ultimate success will depend upon a
constant commitment to the core cultural
values that allow us to execute success-
fully our corporate strategy and to attract
the very best of the best in the world of
finance. We have made that commitment
and intend to adhere resolutely to it in
2002 and the years that follow.
We owe you, our shareholders, no less.
Henry M. Paulson, Jr.
Chairman and
Chief Executive Officer
John A. Thain
President and
Co-Chief Operating Officer
John L. Thornton
President and
Co-Chief Operating Officer
Source of market share information: Thomson Financial Securities Data —January 1, 2001 through December 31, 2001.