Goldman Sachs 2015 Annual Report Download - page 208

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The segment information presented in the table above is
prepared according to the following methodologies:
‰Revenues and expenses directly associated with each
segment are included in determining pre-tax earnings.
‰Net revenues in the firm’s segments include allocations of
interest income and interest expense to specific securities,
commodities and other positions in relation to the cash
generated by, or funding requirements of, such
underlying positions. Net interest is included in segment
net revenues as it is consistent with the way in which
management assesses segment performance.
‰Overhead expenses not directly allocable to specific
segments are allocated ratably based on direct segment
expenses.
The table below presents the amounts of net interest income
by segment included in net revenues.
Year Ended December
$ in millions 2015 2014 2013
Investment Banking $— $— $—
Institutional Client Services 2,471 3,679 3,250
Investing & Lending 418 237 25
Investment Management 175 131 117
Total net interest income $3,064 $4,047 $3,392
The table below presents the amounts of depreciation and
amortization expense by segment included in pre-tax
earnings.
Year Ended December
$ in millions 2015 2014 2013
Investment Banking $ 123 $ 135 $ 144
Institutional Client Services 462 525 571
Investing & Lending 253 530 441
Investment Management 153 147 166
Total depreciation and amortization $ 991 $1,337 $1,322
Geographic Information
Due to the highly integrated nature of international
financial markets, the firm manages its businesses based on
the profitability of the enterprise as a whole. The
methodology for allocating profitability to geographic
regions is dependent on estimates and management
judgment because a significant portion of the firm’s
activities require cross-border coordination in order to
facilitate the needs of the firm’s clients.
Geographic results are generally allocated as follows:
‰Investment Banking: location of the client and investment
banking team.
‰Institutional Client Services: Fixed Income, Currency and
Commodities Client Execution, and Equities (excluding
Securities Services): location of the market-making desk;
Securities Services: location of the primary market for the
underlying security.
‰Investing & Lending: Investing: location of the
investment; Lending: location of the client.
‰Investment Management: location of the sales team.
The table below presents the total net revenues, pre-tax
earnings and net earnings of the firm by geographic region
allocated based on the methodology referred to above, as
well as the percentage of total net revenues, pre-tax
earnings and net earnings (excluding Corporate) for each
geographic region. In the table below, Asia includes
Australia and New Zealand.
Year Ended December
$ in millions 2015 2014 2013
Net revenues
Americas $19,202 56% $20,062 58% $19,858 58%
Europe, Middle East
and Africa 8,981 27% 9,057 26% 8,828 26%
Asia 5,637 17% 5,409 16% 5,520 16%
Total net revenues $33,820 100% $34,528 100% $34,206 100%
Pre-tax earnings
Americas $ 3,359 237% $ 7,144 57% $ 6,794 57%
Europe, Middle East
and Africa 3,364 38% 3,338 27% 3,230 27%
Asia 2,203 25% 2,012 16% 1,868 16%
Subtotal 8,926 100% 12,494 100% 11,892 100%
Corporate 1(148) (137) (155)
Total pre-tax earnings $ 8,778 $12,357 $11,737
Net earnings
Americas $ 1,587 26% $ 4,558 53% $ 4,425 54%
Europe, Middle East
and Africa 2,914 47% 2,576 30% 2,377 29%
Asia 1,686 27% 1,434 17% 1,345 17%
Subtotal 6,187 100% 8,568 100% 8,147 100%
Corporate 1(104) (91) (107)
Total net earnings $ 6,083 $ 8,477 $ 8,040
1. Includes charitable contributions that have not been allocated to the firm’s
geographic regions.
2. Includes provisions of $3.37 billion recorded during 2015 for the agreement
in principle with the RMBS Working Group. See Note 27 for further
information about this agreement in principle.
196 Goldman Sachs 2015 Form 10-K