NEW YORK, October 15, 2015 - The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $6.86 billion and net earnings of $1.43 billion for the third quarter ended September 30, 2015. Diluted earnings per common share were $2.90 compared with $4.57 for the third quarter of 2014 and $1.98 for the second quarter of 2015. Annualized return on average common shareholders’ equity (ROE) (1) was 7.0% for the third quarter of 2015 and 8.8% for the first nine months of 2015.

Highlights
 Goldman Sachs 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 year-to-date net revenues of $5.48 billion, its highest performance for the first nine months of the year since 2007.
 Investment Management generated year-to-date net revenues of $4.65 billion, a record for the first nine months of the year. Assets under supervision (3) ended the quarter at a record $1.19 trillion, with net inflows in long-term assets under supervision of $41 billion (4) during the quarter.
 Book value per common share and tangible book value per common share (5) of $171.45 and $162.11, respectively, were both 5% higher compared with the end of 2014.
 The firm continues to maintain strong capital ratios and liquidity. As of September 30, 2015, the firm’s Common Equity Tier 1 ratio (6) as computed in accordance with both the Standardized approach and the Basel III Advanced approach was 12.4% (7) and 12.7% (7), respectively. In addition, the firm’s global core liquid assets (3) were $193 billion (7) as of September 30, 2015.

“We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “We continue to see strong levels of activity in Investment Banking and growth in Investment Management, and looking ahead, are encouraged by the competitive positioning of our global client franchise. Our focus on serving our clients and improving operating leverage puts us in a strong position to generate superior returns for our shareholders.”

Net Revenues
Investment Banking
Net revenues in Investment Banking were $1.56 billion for the third quarter of 2015, 6% higher than the third quarter of 2014 and 23% lower than a strong second quarter of 2015. Net revenues in Financial Advisory were $809 million, 36% higher than the third quarter of 2014, reflecting a significant increase in industry-wide completed mergers and acquisitions. Net revenues in Underwriting were $747 million, 14% lower than the third quarter of 2014, due to significantly lower net revenues in equity underwriting, reflecting a significant decrease in industry-wide activity. This decrease was partially offset by significantly higher net revenues in debt underwriting, reflecting higher net revenues from investment-grade and leveraged finance activity. The firm’s investment banking transaction backlog increased compared with both the end of the second quarter of 2015 and the end of 2014. (3)

Institutional Client Services
Net revenues in Institutional Client Services were $3.21 billion for the third quarter of 2015, 15% lower than the third quarter of 2014 and 11% lower than the second quarter of 2015. Results for the third quarter of 2014 included a gain of $270 million related to the extinguishment of certain of the firm’s junior subordinated debt, of which $157 million was included in Fixed Income, Currency and Commodities Client Execution and $113 million in Equities ($28 million and $85 million included in equities client execution and securities services, respectively).
Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.46 billion for the third quarter of 2015, 33% lower than the third quarter of 2014. Excluding the gain related to the extinguishment of debt, net revenues in Fixed Income, Currency and Commodities Client Execution were 27% lower than the third quarter of 2014, due to significantly lower net revenues in mortgages and, to a lesser extent, currencies and interest rate products. In addition, net revenues in commodities were lower. These decreases were partially offset by higher net revenues in credit products. As compared with the second quarter of 2015, Fixed Income, Currency and Commodities Client Execution operated in an environment characterized by lower levels of client activity and more challenging market-making conditions.
Net revenues in Equities were $1.75 billion for the third quarter of 2015, 9% higher than the third quarter of 2014. Excluding the gain related to the extinguishment of debt, net revenues in Equities were 18% higher than the third quarter of 2014, primarily due to significantly higher net revenues in equities client execution, reflecting significantly higher net revenues in cash products, partially offset by lower net revenues in derivatives. In addition, commissions and fees were higher, reflecting higher volumes in the United States. Excluding the gain related to the extinguishment of debt, securities services net revenues were higher, reflecting the impact of higher average customer balances. As compared with the second quarter of 2015, Equities operated in an environment characterized by a significant decrease in global equity prices and lower client activity levels.
The fair value net gain attributable to the impact of changes in the firm's credit spreads on borrowings was $182 million ($147 million and $35 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the third quarter of 2015, compared with a net gain of $66 million ($37 million and $29 million related to Fixed Income, Currency and Commodities Client Execution and equities client execution, respectively) for the third quarter of 2014.

Investing & Lending
Net revenues in Investing & Lending (8) were $670 million for the third quarter of 2015, 60% lower than the third quarter of 2014 and 63% lower than the second quarter of 2015. The decrease in net revenues compared with the third quarter of 2014 was primarily due to a significant decrease in net revenues from investments in equities, as net revenues in public equities were negatively impacted by a significant decrease in global equity prices during the third quarter of 2015. In addition, net revenues in debt securities and loans were significantly lower compared with the third quarter of 2014, reflecting lower net gains from certain investments.

Investment Management
Net revenues in Investment Management were $1.42 billion for the third quarter of 2015, 3% lower than the third quarter of 2014 and 14% lower than the second quarter of 2015. The decrease in net revenues compared with the third quarter of 2014 was due to lower incentive fees, partially offset by higher transaction revenues. During the quarter, total assets under supervision (3) increased $6 billion to $1.19 trillion. Long-term assets under supervision increased $11 billion, including net inflows of $41 billion (4) (which includes $18 billion related to an acquisition), primarily reflecting net inflows in fixed income and equity assets, partially offset by net market depreciation of $30 billion, primarily in equity assets. Liquidity products decreased $5 billion.

Expenses
Operating expenses were $4.82 billion for the third quarter of 2015, 5% lower than the third quarter of 2014 and 34% lower than the second 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 $2.35 billion for the third quarter of 2015, 16% lower than the third quarter of 2014. The ratio of compensation and benefits to net revenues for the first nine months of 2015 was 40.0%, compared with 42.0% for the first half of 2015 and 40.0% for the first nine months of 2014. Total staff increased 6% during the third quarter of 2015, primarily reflecting the timing of campus hires.

Non-Compensation Expenses
Non-compensation expenses were $2.46 billion for the third quarter of 2015, 8% higher than the third quarter of 2014 and 30% lower than the second quarter of 2015. The increase compared with the third quarter of 2014 reflected an increase in other expenses, due to higher net provisions for litigation and regulatory proceedings, and an increase in brokerage, clearing, exchange and distributions fees, reflecting higher transaction volumes in Equities. These increases were partially offset by lower depreciation and amortization expenses, primarily due to impairment charges during the third quarter of 2014. Net provisions for litigation and regulatory proceedings for the third quarter of 2015 were $416 million compared with $194 million for the third quarter of 2014.

Provision for Taxes
The effective income tax rate for the first nine months of 2015 was 31.0%, essentially unchanged from 31.2% for the first half of 2015.

Capital
As of September 30, 2015, total capital was $263.52 billion, consisting of $87.70 billion in total shareholders’ equity (common shareholders’ equity of $76.50 billion and preferred stock of $11.20 billion) and $175.82 billion in unsecured long-term borrowings. As of September 30, 2015, the firm’s Standardized Common Equity Tier 1 ratio (6) was 12.4% (7) and the firm’s Basel III Advanced Common Equity Tier 1 ratio (6) was 12.7% (7), in each case reflecting the applicable transitional provisions. As of June 30, 2015, these ratios were 11.8% and 12.5%, respectively. The firm’s supplementary leverage ratio (3) on a fully phased-in basis was 5.8% (7) as of September 30, 2015, compared with 5.7% as of June 30, 2015.
On October 14, 2015, the Board of Directors of The Goldman Sachs Group, Inc. declared a dividend of $0.65 per common share to be paid on December 30, 2015 to common shareholders of record on December 2, 2015.
During the quarter, the firm repurchased 5.4 million shares of its common stock at an average cost per share of $196.00, for a total cost of $1.05 billion. On October 14, 2015, the Board of Directors of The Goldman Sachs Group, Inc. authorized the repurchase of an additional 60.0 million shares of common stock pursuant to the firm’s existing share repurchase program. The remaining share authorization under the firm’s existing repurchase program, including the newly authorized amount, is 72.1 million shares. (9)
Book value per common share was $171.45 and tangible book value per common share (5) was $162.11, both 1% higher compared with the end of the second 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 446.2 million as of September 30, 2015.

Other Balance Sheet and Liquidity Metrics
 Total assets were $881 billion (7) as of September 30, 2015, 2% higher compared with June 30, 2015.
 The firm’s global core liquid assets (3) were $193 billion (7) as of September 30, 2015 and averaged $193 billion (7) for the third quarter of 2015, compared with an average of $181 billion for the second
quarter of 2015.
 Level 3 assets were $27 billion (7) as of September 30, 2015, compared with $32 billion as of June 30, 2015, and represented 3.1% of total assets.

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