Financial Controls: Goldman Sachs Posts $393 Million Loss (Charts, Videos) *Worst financial performance since November 2008* GS

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Goldman Sachs (GS) reported Q3 2011 financial results on October 18, 2011

* Charts and commentary have been updated for Goldman Sachs Q2 June 2011 financial results *

Goldman Sachs Posts $393 Million Loss: Worst financial performance since November 2008

Goldman Sachs Summary Q3 2011 Goldman Sachs Q3 2011 financial results are the worst since the QE November 2008 during the depths of the USA Financial System Crisis. Plunging net revenues were primarily the result of a net loss of $2.54 billion in the Investing & Lending Division. This included a loss of $1.05 billion in the common share investment in Industrial and Commercial Bank of China (ICBC), another $1 billion loss in other equities, and a $907 million loss in debt securities and loans. Think you are a better trader than the Goldman Sachs staff? Call CEO Lloyd Blankfein because the current Goldman Sachs investment strategy is wiping out GS stockholders. There was a time in 2009 when GS stock and Apple stock were the same price... Financial position continues adequate. Significant uncertainty about Goldman Sachs future financial performance was created in the prior quarter and is heightened further by these latest financial results.

Goldman Sachs Income Statement Q3 2011 Goldman Sachs reported net revenues of $3.59 billion, a net loss of -$393 million, and a loss per share of -$0.84. From the prior quarter Q2 2011, net revenues were down -51%, net income down -136%, and earnings per share down -145%. From the prior year Q3 2010, these were down -60%, -121%, and -128%, respectively. The operating and net margins decreased QoQ and YoY to -20.35% and -10.96%, respectively.

Goldman Sachs Balance Sheet Q3 2011 Total assets increased QoQ +1.3% to $949 billion. The capital to assets ratio (total stockholders' equity divided by total assets) is a sub par 7.64%. Tier 1 capital decreased QoQ to 13.8% and Tier 1 common decreased QoQ to 12.1%. Both continue adequate. Return on assets decreased to a multi-year low of 0.63%.

Goldman Sachs Financial Performance by the Quarters (Charts)

Goldman Sachs Earnings per Share (Chart) Below is a chart of quarterly earnings per diluted share. After the plunge to -$4.97 in November 2008 during the USA Financial System Crisis, Goldman Sachs rebounded to a peak of +$8.20 in December 2009, but has downtrended since. Earnings per share had been positive since the November 2008 plunge, for 10 consecutive quarters, but have been volatile and erratic. The current Earnings per Share of -$0.84 is both a QoQ and YoY decrease and an 11-quarter low. The chart average EPS is $3.25.

Goldman Sachs Net Revenues, Operating Income, Net Income (Chart) Below is a chart of quarterly net revenues, operating income, and net income. Consolidated revenues are reported net of interest expense. The current quarter is the worst financial performance since November 2008, in the depths of the USA financial system crisis. Current Net Revenues of $3.59 billion are an 11-quarter low. Current Operating Loss of -$730 million is an 11-quarter low. Current Net Loss of -$393 million is also an 11-quarter low. The chart averages for NR, OI, and NI are $8.96 billion, $2.90 billion, and $1.97 billion, respectively.

Goldman Sachs Operating Margin and Net Margin (Chart) Below is a chart of quarterly operating margin and net margin. Both margins have been volatile because of the fluctuations in net revenues, operating income, and net income. Current Operating Margin of -20.35% is an 11-quarter low, the lowest since November 2008. Current Net Margin of -10.96% is also an 11-quarter low and the lowest since November 2008. The chart averages for OM and NM are 31.29% and 21.03%, respectively.

Goldman Sachs Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. Current Return on Assets of 0.63% continues the downtrend, but is remarkably high for all the financial problems of Goldman Sachs. The chart average for ROA is 1.14%.

Goldman Sachs Income Statement Components (Chart) Below is a chart of the major income statement components: NonInterest Revenue, Net Interest Income, NonInterest Expense, and Net Income. Current NonInterest Revenue plunged to $2.23 billion, after plunging the prior Q2 2011 to $5.87 billion from $10.54 billion. NonInterest Revenue has historically been incredibly volatile with large swings upwards or downwards which have ultimately affected Net Income, and Earnings per Share, either positively or negatively. NonInterest Revenue is not recovering sufficiently nor been stable enough and and therefore has become a drag on Net Revenues and ultimately Net Income. This is an 11-quarter low and the lowest since the QE November 2008. Current NonInterest Expense, operating expenses, of $4.32 billion dropped to a 7-quarter low and appear to be contained. Current Net Interest Income of $1.36 billion dipped but has been stable. The chart averages for NIR, NIE, and NII are $7.59 billion, $6.07 billion, and $1.375 billion.

Goldman Sachs Growth Rates (Chart) Below is a chart of the annual (YoY, Y/Y, annual change) growth rates for revenues and earnings per share. Net revenues and earnings per share have been volatile and erratic. Goldman Sachs has bounced back from the 2008 USA Financial System Crisis, but improvement was subdued in the latter part of 2010 and has not been consistent overall. Current Net Revenues Growth of -59.71% is the 6th consecutive quarterly decline. Current Earnings per Share Growth of -128.19% is dismal. The chart averages for NRG and EPSG are -17.52% and -27.17%.

Goldman Sachs Operating Expense Ratio (Chart) Below is a chart of the operating expense ratio (NonInterest Expense divided by Total Revenues, which are NonInterest Income plus Interest Income). The Current Operating Expense Ratio of 77.30% is astronomical and continues an upward trend to excessive levels. This is a negative development. NonInterest Expense, operating expenses, appear to be contained, but plunging NonInterest Revenue has disproportionately increased the ratio. An unreasonable share of each dollar of revenues is being spent on operating expenses. Ultimately a continuation of this uptrend will decrease profitability and already has. The OER chart average is 49.29%.

* Change in Accounting Periods The Goldman Sachs Group, Inc. (GS) changed from a fiscal year to a calendar year at the end of 2008 when the conversion to a bank holding company occurred. As a result, a fiscal quarter 3ME 11-30-08 was reported and the next quarter reported subsequently was the 3ME 3-31-09. The 1ME 12-26-08 was reported separately, as an "orphan month", and not included in a quarterly financial results.

Goldman Sachs Reports Third Quarter Loss per Common Share of $0.84

NEW YORK, October 18, 2011 - The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $3.59 billion and a net loss of $393 million for the third quarter ended September 30, 2011. The diluted loss per common share was $0.84 compared with diluted earnings per common share of $2.98 for the third quarter of 2010 and $1.85 for the second quarter of 2011.

Annualized return on average common shareholders’ equity (ROE) was 3.7% for the first nine months of 2011. Excluding the preferred dividend of $1.64 billion related to the redemption of the firm’s Series G Preferred Stock in the first quarter of 2011, annualized ROE was 6.0% (2) for the first nine months of 2011.

Highlights

* Goldman Sachs continued to rank first in worldwide announced mergers and acquisitions for the year-to-date.

* The firm continued its leadership in equity underwriting, ranking first in worldwide equity and equity-related offerings, common stock offerings and initial public offerings for the year-to-date.

* The firm’s global core excess liquidity averaged $164 billion for the third quarter of 2011, unchanged compared with the average for the second quarter of 2011.

“CEO and investor confidence as well as asset prices across markets were lower in the third quarter given the uncertain macroeconomic and market conditions. Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “However, we believe the strength of both our client franchise and our balance sheet positions us well for when economies and markets improve.”

About Goldman Sachs

The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.

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