Goldman Sachs 2009 Annual Report Download - page 58

2009 versus 2008. Net revenues in Trading and Principal
Investments of $34.37billion for 2009 increased signi cantly
compared with 2008.
Net revenues in FICC of $23.32billion for 2009 increased
signi cantly compared with 2008. During 2009, FICC
operated in an environment characterized by strong client-
driven activity, particularly in more liquid products. In
addition, asset values generally improved and corporate
credit spreads tightened signi cantly for most of the year.
The increase in net revenues compared with 2008 re ected
particularly strong performances in credit products,
mortgages and interest rate products, which were each
signi cantly higher than 2008. Net revenues in commodities
were also particularly strong and were slightly higher than
2008, while net revenues in currencies were strong, but lower
than a particularly strong 2008. During 2009, mortgages
included a loss of approximately $1.5billion (excluding
hedges) on commercial mortgage loans. Results in 2008
were negatively impacted by asset writedowns across non-
investment-grade credit origination activities, corporate debt,
private and public equities, and residential and commercial
mortgage loans and securities.
Net revenues in Equities of $9.89billion for 2009 increased
7% compared with 2008. Net revenues for 2009 re ected
strong results in the client franchise businesses. However,
these results were lower than a strong 2008 and included
signi cantly lower commissions. Results in principal strategies
were positive compared with losses in 2008. During 2009,
Equities operated in an environment characterized by a
signi cant increase in global equity prices, favorable market
opportunities and a signi cant decline in volatility levels.
Principal Investments recorded net revenues of $1.17billion
for 2009. These results included a gain of $1.58billion related
to our investment in the ordinary shares of ICBC, a gain of
$1.31billion from corporate principal investments and a loss
of $1.76billion from real estate principal investments.
Operating expenses of $17.05billion for 2009 increased
44% compared with 2008, due to increased compensation
and bene ts expenses, resulting from higher net revenues. In
addition, depreciation and amortization expenses were higher
than 2008, re ecting the impact of real estate impairment
charges of approximately $600million related to consolidated
entities held for investment purposes during 2009, while
brokerage, clearing, exchange and distribution fees were lower
than 2008, principally re ecting lower transaction volumes
in Equities. Pre-tax earnings were $17.32billion in 2009
compared with a pre-tax loss of $2.75billion in 2008.
2008 versus 2007. Net revenues in Trading and Principal
Investments of $9.06billion for 2008 decreased 71%
compared with 2007.
Net revenues in FICC of $3.71billion for 2008 decreased
77% compared with 2007, primarily re ecting losses in
credit products, which included a loss of approximately
The following table sets forth the operating results of our Trading and Principal Investments segment:
Trading and Principal Investments Operating Results
Year Ended One Month Ended
December November November December
(inmillions) 2009 2008 2007 2008
FICC $23,316 $ 3,713 $16,165 $ (320)
Equities trading 6,046 4,208 6,725 363
Equities commissions 3,840 4,998 4,579 251
Total Equities 9,886 9,206 11,304 614
ICBC 1,582 (446) 495 228
Gross gains 3,415 1,335 3,728 213
Gross losses (3,870) (4,815) (943) (1,243)
Net other corporate and real estate investments (455) (3,480) 2,785 (1,030)
Overrides 44 70 477 1
Total Principal Investments 1,171 (3,856) 3,757 (801)
Total net revenues 34,373 9,063 31,226 (507)
Operating expenses 17,053 11,808 17,998 875
Pre-tax earnings/(loss) $17,320 $ (2,745) $13,228 $(1,382)
Goldman Sachs 2009 Annual Report
56
Management’s Discussion and Analysis