The Goldman Sachs Group, Inc. (GS)
Q2 2009 Earnings Call Transcript
July 14, 2009 11:00 a.m. ET

Executives

Dane Holmes – Director, Investor Relations
David A. Viniar - Executive Vice President and Chief Financial Officer

Analysts

Guy Moszkowski – Bank of America/Merrill Lynch
Glenn Schorr – UBS
Howard Chen - Credit Suisse
Meredith Whitney - Meredith Whitney Advisors
Roger Freeman – Barclays Capital
Jeffery Harte - Sandler O''Neill & Partners LP
Kian Abouhossein – JPMorgan
Michael Mayo - CLSA
Chris Kotowski – Oppenheimer & Co.
James Mitchell – Buckingham Research
Robert Lee – Keefe, Bruyette & Woods
Douglas Sipkin – Pali Capital
Steve Stelmach - FBR Capital Markets
Richard Staite - Atlantic Equities
Michael Hecht - JMP Securities
Matt Burnell – Wells Fargo Securities
Ron Mandle – GIC

Presentation

Dane Holmes

Good morning. This is Dane Holmes, Director of Investor Relations at Goldman Sachs. Welcome to our second quarter earnings conference call.

Today''s call may include forward-looking statements. These statements represent the firm''s belief regarding future events that by their nature are uncertain and outside of the firm''s control. The firm''s actual results and financial condition may differ, possibly materially, from what is indicated in these forward-looking statements.

For a discussion of some of the risks and factors that could affect the firm''s future results, please see the description of risk factors in our current Annual Report on Form 10-K for the fiscal year ended November 2008.

I would also direct you to read the forward-looking disclaimers in our quarterly earnings release, particularly as it relates to our investment banking transaction backlog, and you should also read the information on the calculation of non-GAAP financial measures that is posted on the Investor Relations portion of our website at www.gs.com.

This audio cast is copyrighted material of The Goldman Sachs Group, Inc. and may not be duplicated, reproduced, or rebroadcast without our consent.

Our Chief Financial Officer, David Viniar, will now review the firm''s results. David.

David A. Viniar

Thanks, Dane. I’d like to thank all of you for listening today. I’ll give an overview of our second quarter results and then take your questions.

I’m pleased to report strong second quarter results for Goldman Sachs. Second quarter net revenues were $13.8 billion, net earnings were $3.4 billion, and earnings per diluted share were $4.93.

Excluding $426 million in preferred dividends associated with TARP repayment, earnings per diluted share were $5.71 and our annualized return on common equity was 23.8%. Our second quarter results are a product of the breadth, resilience and adaptability of our client franchise. We continue to believe that a diverse set of global businesses, staffed by dedicated professionals will be the critical driver of our long-term performance.

Several of the favorable conditions that we experienced in the first quarter of 2009 extended into the second quarter. The competitive environment in the second quarter remained fragmented and levels of available risk capital remained low.

Our ability to stay focused on serving our clients yielded strong results particularly within our multifaceted FICC business. Importantly, while first quarter 2009 FICC results reflected strength in our rates and commodities businesses, second quarter performance was driven by higher contribution from our credit and currency businesses.

This further demonstrates the benefits of having a diversified business model. The quarterly improvement in our results was also a function of a more favorable operating environment for several of our other businesses largely driven by higher equity market prices and activity levels.