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Goldman Sachs Group Inc GS

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Morningstar’s Analysis

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On an Adjusted Basis, 2020 Was a Great Year for Goldman Sachs

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

On an adjusted basis excluding litigation and regulatory costs, 2020 was a great year for narrow-moat Goldman Sachs. For the full year, pre-provision net revenue increased 22% to $44.6 billion. Areas of strong performance included equity underwriting that was up 130% to $3.4 billion, FICC (fixed income, currency, and commodities) trading that was up 57% to $11.6 billion, equities trading that was up 30% to $9.6 billion, and consumer banking that was up 40% to $1.2 billion. Diluted earnings per share increased 18% to $24.74, and return on average common shareholders’ equity was 11.1%. Excluding net provisions for litigation and regulatory proceedings of $3.42 billion, mainly related to the 1MDB event, adjusted diluted earnings per share would have been over $34 and return on common equity would have been about 15%. We don’t anticipate making a significant change to our $238 fair value estimate for Goldman Sachs.

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Company Profile

Business Description

Goldman Sachs is a leading global investment banking firm whose activities are organized into investment banking (20% of net revenue), global markets (40% of net revenue), asset management (25% of net revenue), and consumer and wealth management (15% of net revenue) segments. Approximately 60% of the company's net revenue is generated in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa. In 2008, Goldman reorganized itself as a financial holding company regulated by the Federal Reserve System.

200 West Street
New York, NY, 10282
T +1 212 902-1000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 38,300