>>> Goldman Sachs beats by $0.18, misses on revs

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Goldman Sachs beats by $0.18, misses on revs
  • Reports Q1 (Mar) earnings of $2.68 per share, $0.18 better than the Capital IQ Consensus of $2.50; revenues fell 40.3% year/year to $6.34 bln vs the $6.52 bln Capital IQ Consensus.
  • Annualized return on average common shareholders' equity (ROE) was 6.4%.
  • Investment Banking
    • Net revenues in Investment Banking were $1.46 billion for the first quarter of 2016, 23% lower than the first quarter of 2015 and 5% lower than the fourth quarter of 2015.
    • Net revenues in Financial Advisory were $771 million, 20% lower compared with a strong first quarter of 2015, reflecting a decrease in completed mergers and acquisitions transactions. Net revenues in Underwriting were $692 million, 27% lower than the first quarter of 2015.
    • Net revenues in debt underwriting were significantly higher compared with the first quarter of 2015, primarily reflecting an increase in investment-grade activity.
    • The firm's investment banking transaction backlog decreasedcompared with the end of 2015, but was higher compared with the end of the first quarter of 2015.
  • Institutional Client Services
  • Net revenues in Institutional Client Services were $3.44 billion for the first quarter of 2016, 37% lower than the first quarter of 2015 and 20% higher than the fourth quarter of 2015.
    • Net revenues in Fixed Income, Currency and Commodities ClientExecution were $1.66 billion for the first quarter of 2016, 47% lower compared with a strong first quarter of 2015.
    • Net revenues in Equities were $1.78 billion for the first quarter of 2016, 23% lower than the first quarter of 2015. The decrease in equities client execution reflected significantly lower net revenues in both cash products and derivatives.
  • Expenses
  • Operating expenses were $4.76 billion for the first quarter of 2016, 29% lower than the first quarter of 2015 and 23% lower than the fourth quarter of 2015.
    • The accrual for compensation and benefits expenses was $2.66 billion for the first quarter of 2016, 40% lower than the first quarter of 2015, reflecting a decrease in net revenues.
    • The ratio of compensation and benefits to net revenues for the first quarter of 2016 was 42.0%, unchanged compared with the first quarter of 2015.
  • Non-compensation expenses were $2.10 billion for the first quarter of 2016, 6% lower than the first quarter of 2015 and 49% lower than the fourth quarter of 2015.
    • The decrease compared with the first quarter of 2015 reflected lower other expenses, primarily due to lower net provisions for litigation and regulatory proceedings and lower expenses.
  • Book value per common share was $173.00 and tangible book value per common share was $163.54, both 1% higher compared with the end of 2015.