Goldman Sachs 2013 Annual Report Download - page 45

Management’s Discussion and Analysis
Net Revenues
2013 versus 2012. Net revenues on the consolidated
statements of earnings were $34.21 billion for 2013,
essentially unchanged compared with 2012. 2013 included
significantly higher investment banking revenues, as well as
higher other principal transactions revenues and investment
management revenues. In addition, commissions and fees
were slightly higher compared with 2012. These increases
were offset by lower market-making revenues and lower net
interest income compared with 2012.
2012 versus 2011. Net revenues on the consolidated
statements of earnings were $34.16 billion for 2012, 19%
higher than 2011, reflecting significantly higher other
principal transactions revenues, as well as higher market-
making revenues, investment banking revenues and
investment management revenues compared with 2011.
These increases were partially offset by significantly lower
net interest income and lower commissions and fees
compared with 2011.
Non-interest Revenues
Investment banking
During 2013, investment banking revenues reflected an
operating environment generally characterized by improved
industry-wide equity underwriting activity, particularly in
initial public offerings, as global equity prices significantly
increased during the year. In addition, industry-wide debt
underwriting activity remained solid, and included
significantly higher leveraged finance activity, as interest
rates remained low. However, ongoing macroeconomic
concerns continued to weigh on investment banking
activity as industry-wide mergers and acquisitions activity
declined compared with 2012. If macroeconomic concerns
continue and result in lower levels of client activity,
investment banking revenues would likely be
negatively impacted.
2013 versus 2012. Investment banking revenues on the
consolidated statements of earnings were $6.00 billion for
2013, 22% higher than 2012, reflecting significantly higher
revenues in underwriting, due to strong revenues in both
equity and debt underwriting. Revenues in equity
underwriting were significantly higher compared with
2012, reflecting an increase in client activity, particularly in
initial public offerings. Revenues in debt underwriting were
significantly higher compared with 2012, principally due to
leveraged finance activity. Revenues in financial advisory
were essentially unchanged compared with 2012.
2012 versus 2011. Investment banking revenues on the
consolidated statements of earnings were $4.94 billion for
2012, 13% higher than 2011, reflecting significantly higher
revenues in underwriting, due to strong revenues in debt
underwriting. Revenues in debt underwriting were
significantly higher compared with 2011, primarily
reflecting higher revenues from investment-grade and
leveraged finance activity. Revenues in equity underwriting
were lower compared with 2011, primarily reflecting a
decline in industry-wide initial public offerings. Revenues in
financial advisory were essentially unchanged compared
with 2011.
Investment management
During 2013, investment management revenues reflected an
operating environment generally characterized by improved
asset prices, particularly in equities, resulting in appreciation
in the value of client assets. In addition, the mix of average
assets under supervision shifted slightly compared with 2012
from liquidity products to long-term assets under
supervision, primarily due to growth in equity and fixed
income assets. In the future, if asset prices were to decline, or
investors favor asset classes that typically generate lower fees
or investors withdraw their assets, investment management
revenues would likely be negatively impacted. In addition,
continued concerns about the global economic outlook could
result in downward pressure on assets under supervision.
2013 versus 2012. Investment management revenues on
the consolidated statements of earnings were $5.19 billion
for 2013, 5% higher than 2012, reflecting higher
management and other fees, primarily due to higher
average assets under supervision.
2012 versus 2011. Investment management revenues on
the consolidated statements of earnings were $4.97 billion
for 2012, 6% higher than 2011, due to significantly higher
incentive fees, partially offset by slightly lower management
and other fees.
Commissions and fees
During 2013, commissions and fees reflected an
environment characterized by higher average daily volumes
in listed cash equities in Asia and Europe and lower average
daily volumes in listed cash equities in the United States,
and generally lower volatility levels compared with 2012. If
market volumes were to decline, commissions and fees
would likely be negatively impacted.
2013 versus 2012. Commissions and fees on the
consolidated statements of earnings were $3.26 billion for
2013, slightly higher than 2012, primarily reflecting higher
commissions and fees in Asia and Europe. During 2013,
our average daily volumes were higher in Asia and Europe
and lower in the United States compared with 2012,
consistent with listed cash equity market volumes.
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