NEW YORK, July 16, 2015 - The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $9.07 billion, net earnings of $1.05 billion and diluted earnings per common share of $1.98 for the second quarter ended June 30, 2015. Annualized return on average common shareholders’ equity (ROE) (1) was 4.8% for the second quarter of 2015 and 9.7% for the first half of 2015.
During the quarter, the firm recorded $1.45 billion in net provisions for mortgage-related litigation and regulatory matters. These provisions reduced diluted earnings per common share for the second quarter of 2015 by $2.77, and reduced annualized ROE for the second quarter of 2015 and the first half of 2015 by 6.7 and 3.4 percentage points, respectively.
Highlights
 Goldman Sachs reported its highest first half net revenues in five years, reflecting record first half results in Investment Banking and Investment Management.
 The firm ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date, and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year-to-date. (2)
 Investment Banking produced net revenues of $2.02 billion, reflecting the second highest quarterly performance in Underwriting and strong net revenues in Financial Advisory.
 Investment Management generated strong net revenues of $1.65 billion, its second highest quarterly performance, as assets under supervision (3) increased to a record level.
 Equities net revenues were $4.32 billion for the first half of 2015, its highest first half performance in six years.
 Book value per common share and tangible book value per common share (4) of $169.33 and $160.11, respectively, were both essentially unchanged compared with the end of the first quarter of 2015 and 4% higher compared with the end of 2014, despite the net provisions for mortgagerelated litigation and regulatory matters recorded during the quarter.
 The firm continues to maintain strong capital ratios and liquidity. As of June 30, 2015, the firm’s Common Equity Tier 1 ratio (5) as computed in accordance with both the Standardized approach and the Basel III Advanced approach was 11.8% (6) and 12.5% (6), respectively. In addition, the firm’s global core liquid assets (3) were $189 billion (6) as of June 30, 2015.

“We are pleased with our performance for the quarter,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “While uncertainty in the EU weighed on investors’ level of conviction, many of our businesses continued to benefit from generally improving economic conditions and healthy client activity.”

Net Revenues
Investment Banking
Net revenues in Investment Banking were $2.02 billion for the second quarter of 2015, 13% higher than the second quarter of 2014 and 6% higher than the first quarter of 2015. Net revenues in Financial Advisory were $821 million, 62% higher than the second quarter of 2014, reflecting an increase in industry-wide completed mergers and acquisitions. Net revenues in Underwriting were $1.20 billion, 6% lower than record results in the second quarter of 2014, due to lower net revenues in debt underwriting, reflecting lower leveraged finance activity. Net revenues in equity underwriting were higher, including an increase in net revenues from secondary offerings. The firm’s investment banking transaction backlog decreased slightly compared with the end of the first quarter of 2015, but was higher compared with the end of the second quarter of 2014. (7)
Institutional Client Services
Net revenues in Institutional Client Services were $3.60 billion for the second quarter of 2015, 6% lower than the second quarter of 2014 and 34% lower than the first quarter of 2015.
Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.60 billion for the second quarter of 2015, 28% lower than the second quarter of 2014. Although net revenues in interest rate products were significantly higher compared with the second quarter of 2014, this increase was more than offset by significantly lower net revenues in credit products and, to a lesser extent, mortgages and currencies. Net revenues in commodities were also lower. During the quarter, Fixed Income, Currency and Commodities Client Execution operated in an environment generally characterized by lower levels of client activity and less favorable market-making conditions compared with the first quarter of 2015.
Net revenues in Equities were $2.00 billion for the second quarter of 2015, 24% higher than the second quarter of 2014, primarily due to significantly higher net revenues in equities client execution.
Net revenues in both derivatives and cash products were significantly higher compared with the second quarter of 2014, primarily reflecting increased activity in Europe and Asia. In addition, securities services net revenues were higher, reflecting the impact of higher average customer balances. Commissions and fees were slightly higher compared with the second quarter of 2014.
During the quarter, Equities operated in an environment generally characterized by continued strong client activity levels.
The fair value net gain attributable to the impact of changes in the firm's credit spreads on borrowings was $185 million ($153 million and $32 million related to Fixed Income, Currency and Commodities
Client Execution and equities client execution, respectively) for the second quarter of 2015, compared with a net loss of $19 million (substantially all related to equities client execution) for the second quarter of 2014.

Investing & Lending
Net revenues in Investing & Lending (8) were $1.80 billion for the second quarter of 2015, 13% lower than the second quarter of 2014 and 8% higher than the first quarter of 2015. The decline in net revenues compared with the second quarter of 2014 was primarily due to lower net revenues from investments in equities, as a decrease in net gains from private equities was partially offset by an increase in net gains from public equities. Results for the second quarter of 2015 included net revenues of $1.25 billion from investments in equities, primarily reflecting strong corporate performance and company-specific events in private equities, and net gains in public equities. In addition, net revenues from debt securities and loans of $547 million included net gains and net interest income.
Investment Management
Net revenues in Investment Management were $1.65 billion for the second quarter of 2015, 14% higher than the second quarter of 2014 and 4% higher than the first quarter of 2015. The increase in net revenues compared with the second quarter of 2014 was due to significantly higher incentive fees, as well as higher management and other fees and transaction revenues. During the quarter, total assets under supervision (3) increased $5 billion to $1.18 trillion. Long-term assets under supervision increased $11 billion, including net inflows of $14 billion and net market depreciation of $3 billion, both primarily in fixed income assets. Liquidity products decreased $6 billion.
Expenses Operating expenses were $7.34 billion for the second quarter of 2015, 16% higher than the second quarter of 2014 and 10% higher than the first quarter of 2015.
Compensation and Benefits
The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $3.81 billion for the second quarter of 2015, 3% lower than the second quarter of 2014. The ratio of compensation and benefits to net revenues for the first half of 2015 was 42.0%, compared with 43.0% for the first half of 2014. Total staff increased 1% during the second quarter of 2015.
Non-Compensation Expenses
Non-compensation expenses were $3.53 billion for the second quarter of 2015, 48% higher than the second quarter of 2014 and 59% higher than the first quarter of 2015. The increase in noncompensation expenses compared with the second quarter of 2014 was due to significantly higher net provisions for mortgage-related litigation and regulatory matters, which are included in other expenses. Net provisions for litigation and regulatory proceedings for the second quarter of 2015 were $1.45 billion compared with $284 million for the second quarter of 2014.
Provision for Taxes
The effective income tax rate for the first half of 2015 increased to 31.2% from 27.7% for the first quarter of 2015, as a result of estimated non-deductible provisions for mortgage-related litigation and regulatory matters, partially offset by a benefit related to the determination that certain non-U.S. earnings would be permanently reinvested abroad.

Capital
As of June 30, 2015, total capital was $257.91 billion, consisting of $87.65 billion in total shareholders’ equity (common shareholders’ equity of $76.45 billion and preferred stock of $11.20 billion) and $170.26 billion in unsecured long-term borrowings. As of June 30, 2015, the firm’s Standardized Common Equity Tier 1 ratio (5) was 11.8% (6) and the firm’s Basel III Advanced Common
Equity Tier 1 ratio (5) was 12.5% (6), in each case reflecting the applicable transitional provisions. As of March 31, 2015, these ratios were 11.4% and 12.6%, respectively. The firm’s supplementary leverage ratio (3) on a fully phased-in basis was 5.7% (6) as of June 30, 2015, compared with 5.3% as of March 31, 2015.
On April 23, 2015, the firm issued 80,000 shares of perpetual 5.375% Fixed-to-Floating Rate NonCumulative
Preferred Stock, Series M, for aggregate proceeds of $2.00 billion.
On July 15, 2015, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.65 per common share to be paid on September 29, 2015 to common shareholders of record on September 1, 2015.
During the quarter, the firm repurchased 1.2 million shares of its common stock at an average cost per share of $208.20, for a total cost of $245 million. The remaining share authorization under the firm’s existing repurchase program is 17.4 million shares. (9)
Book value per common share was $169.33 and tangible book value per common share (4) was $160.11, both essentially unchanged compared with the end of the first quarter of 2015. Book value per common share and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 451.5 million as of June 30, 2015.
Other Balance Sheet and Liquidity Metrics
 Total assets were $860 billion (6) as of June 30, 2015, compared with $865 billion as of March 31, 2015.
 The firm’s global core liquid assets (3) were $189 billion (6) as of June 30, 2015 and averaged $181 billion (6) for the second quarter of 2015, compared with an average of $175 billion for the first quarter of 2015.
 Level 3 assets (10) were $32 billion (6) as of June 30, 2015, compared with $34 billion as of March 31, 2015, and represented 3.8% of total assets.
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