Goldman Sachs 2015 Annual Report Download - page 3

Goldman Sachs 2015 Annual Report 1
As the year progressed, increasing concerns about China,
the first rate hike from the U.S. Federal Reserve in nearly
a decade, slowing global growth and falling commodity
prices — especially in oil — began to emerge. We faced
these headwinds, and lower client activity across many
of our businesses suggested that our clients and peers
also faced their share of challenges.
In addition to the impact of the operating environment,
our 2015 financial performance was negatively affected
by the resolution of our most significant outstanding legal
exposure relating to our securitization, underwriting and
sale of residential mortgage-backed securities (RMBS)
from 2005 to 2007. In January 2016, we announced an
agreement in principle with the RMBS Working Group,*
under which we will pay a $2.39 billion civil monetary
penalty, make $875 million in cash payments and provide
$1.80 billion in consumer relief.
Despite these factors, our strong and diversified client
franchise allowed us to produce relatively stable net
revenues in 2015. The firm generated net revenues of
$33.82 billion, marking our fourth consecutive year of
roughly $34 billion in net revenues. Net earnings were
$6.08 billion and diluted earnings per common share
were $12.14. Return on average common shareholders’
equity (ROE) was 7.4 percent for 2015, which would
have been 3.8 percentage points higher excluding the
provisions we recorded during the year related to the
RMBS Working Group settlement.
Fellow Shareholders:
As many of you know first hand, 2015 was a tale of two
halves: the first half of the year featured a strong operating
environment, but headwinds emerged, particularly during the
second half, and these headwinds persisted into early 2016.
The first two quarters of 2015 were marked by heightened demand from our
corporate clients for strategic advice and financings, strong client activity across
our Equities franchise and growing demand from our Investment Management
clients for our products and services. These factors culminated in record first-half
results in Investment Banking and Investment Management, as well as the best
first-half performance for Equities in six years.
* On January 14, 2016, the firm announced an agreement in principle, subject to the negotiation of definitive documentation, to resolve the ongoing investigation of the Residential Mortgage-Backed
Securities Working Group of the U.S. Financial Fraud Enforcement Task Force (RMBS Working Group). The agreement in principle will resolve actual and potential civil claims by the U.S. Department of
Justice, the New York and Illinois Attorneys General, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle,
relating to the firm’s securitization, underwriting and sale of residential mortgage-backed securities from 2005 to 2007. For additional information, see the firm’s Form 8-K filed with the U.S. Securities
and Exchange Commission on January 14, 2016.