Goldman Sachs 2015 Annual Report Download - page 67

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
Results of Operations
The composition of our net revenues has varied over time as
financial markets and the scope of our operations have
changed. The composition of net revenues can also vary
over the shorter term due to fluctuations in U.S. and global
economic and market conditions. See “Risk Factors” in
Part I, Item 1A of the 2015 Form 10-K for further
information about the impact of economic and market
conditions on our results of operations.
Financial Overview
The table below presents an overview of our financial
results.
$ in millions, except
per share amounts
Year Ended December
2015 2014 2013
Net revenues $ 33,820 $34,528 $34,206
Pre-tax earnings 8,778 12,357 11,737
Net earnings 6,083 8,477 8,040
Net earnings applicable to common
shareholders 5,568 8,077 7,726
Diluted earnings per common share 12.14 17.07 15.46
Return on average common
shareholders’ equity 17.4% 11.2% 11.0%
1. ROE is computed by dividing net earnings applicable to common
shareholders by average monthly common shareholders’ equity. The table
below presents our average common shareholders’ equity.
Average for the
Year Ended December
$ in millions 2015 2014 2013
Total shareholders’ equity $ 86,314 $80,839 $77,353
Preferred stock (10,585) (8,585) (6,892)
Common shareholders’ equity $ 75,729 $72,254 $70,461
The table below presents selected financial ratios.
Year Ended December
2015 2014 2013
Net earnings to average assets 0.7% 0.9% 0.9%
Return on average total shareholders’
equity 17.0% 10.5% 10.4%
Total average equity to average assets 9.9% 9.0% 8.2%
Dividend payout ratio 221.0% 13.2% 13.3%
1. Return on average total shareholders’ equity is computed by dividing net
earnings by average monthly total shareholders’ equity.
2. Dividend payout ratio is computed by dividing dividends declared per
common share by diluted earnings per common share.
Net Revenues
The table below presents our net revenues by line item on
the consolidated statements of earnings.
Year Ended December
$ in millions 2015 2014 2013
Investment banking $ 7,027 $ 6,464 $ 6,004
Investment management 5,868 5,748 5,194
Commissions and fees 3,320 3,316 3,255
Market making 9,523 8,365 9,368
Other principal transactions 5,018 6,588 6,993
Total non-interest revenues 30,756 30,481 30,814
Interest income 8,452 9,604 10,060
Interest expense 5,388 5,557 6,668
Net interest income 3,064 4,047 3,392
Total net revenues $33,820 $34,528 $34,206
In the table above:
‰“Investment banking” is comprised of revenues
(excluding net interest) from financial advisory and
underwriting assignments, as well as derivative
transactions directly related to these assignments. These
activities are included in our Investment Banking
segment.
‰“Investment management” is comprised of revenues
(excluding net interest) from providing investment
management services to a diverse set of clients, as well as
wealth advisory services and certain transaction services
to high-net-worth individuals and families. These
activities are included in our Investment Management
segment.
‰“Commissions and fees” is comprised of revenues from
executing and clearing client transactions on major stock,
options and futures exchanges worldwide, as well as
over-the-counter (OTC) transactions. These activities are
included in our Institutional Client Services and
Investment Management segments.
‰“Market making” is comprised of revenues (excluding
net interest) from client execution activities related to
making markets in interest rate products, credit products,
mortgages, currencies, commodities and equity products.
These activities are included in our Institutional Client
Services segment.
‰“Other principal transactions” is comprised of revenues
(excluding net interest) from our investing activities and
the origination of loans to provide financing to clients. In
addition, “Other principal transactions” includes
revenues related to our consolidated investments. These
activities are included in our Investing & Lending
segment.
Goldman Sachs 2015 Form 10-K 55