Goldman Sachs
Annual Report 2022

Plain-text annual report

G O L D M A N S A C H S 2 0 2 2 A N N U A L R E P O R T THE GOLDMAN SACHS GROUP, INC. Annual Report 2022 1 Fellow Shareholders: In January 2020, I stood in the auditorium of our New York headquarters at 200 West Street and kicked off our first Investor Day. Back then, our leadership team and I laid out a comprehensive strategy to strengthen and grow the firm: First, we would invest in our core businesses. Second, we would pursue four growth initiatives: asset management, wealth management, transaction banking and consumer banking. And third, we would run the firm more efficiently. In addition, for the first time, we set public, firmwide financial targets to help investors hold us accountable. In February 2023, we took another step on our journey when we held our second Investor Day, and as I said then, it has certainly been an interesting three years. Back in January 2020, nobody would have imagined that just a few weeks later a pandemic would break out and there would be such disruption in the global economy. Even today, we’re operating in an uncertain environment. The war in Ukraine has roiled energy markets, and an increase in inflation has triggered monetary tightening. But through it all, we’ve stayed focused on shareholders, and I’m proud of what we’ve accomplished. Since our first Investor Day, our total shareholder return is 60 percent, outperforming our peer average meaningfully.1 Our book value per share is up by nearly 40 percent, roughly twice that of our closest competitor.1 Our earnings per share is up by over 40 percent. We’ve returned nearly $18 billion in capital to common shareholders. And our average returns over the past three years are in line with John Waldron President and Chief Operating Officer David Solomon Chairman and Chief Executive Officer Denis Coleman Chief Financial Officer ANNUAL REPORT 2022LETTER TO SHAREHOLDERSour current targets of 14–16 percent return on equity (ROE) and 15–17 percent return on tangible equity (ROTE).2 When you look at our 2022 results specifically, there’s no question that the operating environment was challenging. The same business mix that did so well in 2021 faced headwinds, such as low capital markets issuance activity and falling equity and fixed income asset prices. At the same time, we continued to make strategic investments in our acquisitions and technology that, though important to the firm’s long- term strength, weighed on our financial performance in the short run. Despite those difficulties, we delivered for shareholders in 2022. Net revenues were $47.4 billion, net earnings were $11.3 billion and diluted earnings per common share were $30.06. ROE was 10.2 percent and ROTE2 was 11.0 percent. We also grew our book value per share by 6.7 percent and continued to make significant progress on our strategic evolution. As a result, in a macro environment where equity issuance hit a nearly two-decade low, we performed better than we would have three years ago. 3 “Being exceptional is not a given, but we always learn and adapt.” David Solomon be the world’s most exceptional financial institution, united by our core values of partnership, client service, integrity and excellence. Being exceptional is not a given, but we always learn and adapt. We are constantly focused on outperforming for our clients. In the pages that follow, we lay out in detail the state of our franchise as well as the progress we’ve made in our businesses, and as you’ll see, our strategy is a reflection of our purpose: We aspire to And what’s most exceptional about our firm is our people. As I travel around the world meeting with clients, I’m often told how talented our people are. We couldn’t have anticipated all the challenges Financial Performance $47.4B $11.3B Net revenues Net earnings 10.2% 11.0% ROE ROTE2 $30.06 Diluted earnings per common share ANNUAL REPORT 2022 LETTER TO SHAREHOLDERS we’d face over the past three years, and yet our people met them all with hard work, creativity and determination. I’m grateful to call them my colleagues. I’m also fortunate to work with a leadership team that is laser-focused on executing our strategy: our president and chief operating officer, John Waldron; our chief financial officer, Denis Coleman; and our entire Management Committee. The path ahead is never certain, and there will be plenty of challenges along the way, but we head into 2023 energized, excited and determined to deliver for shareholders. One Goldman Sachs At the heart of our strategy is a focus on clients. We believe that serving our clients exceptionally well will both strengthen our franchise and deliver returns for our shareholders. As a result, in 2019, we started a pilot program that we believed would help demonstrate that commitment: One Goldman Sachs. One Goldman Sachs is now the organizational philosophy that underpins how we cover our clients in an increasingly complex world. It puts clients at the center of everything we do. It brings to bear our intellectual capital and expertise across all our businesses to serve our global client franchise in a more integrated and comprehensive manner. 5 Today, we have partners who are responsible for owning the entire firmwide relationship with One Goldman Sachs clients, and as part of that, they are responsible for building dedicated teams that bring together the relevant experts and thought leaders across the firm to serve the client. One Goldman Sachs is highly accretive to multiple parts of our business and, more importantly, it’s highly accretive to our clients, who get the best of Goldman Sachs. One Goldman Sachs has expanded beyond a pilot program. We believe this ethos is applicable and extensible to a much broader set of clients. Strategic Reorganization In December 2022, building off our renewed commitment to client centricity, we reorganized the firm into three segments: 1) Global Banking & Markets; 2) Asset & Wealth Management; and 3) Platform Solutions, into which we have integrated two lines of businesses: Transaction banking and Consumer platforms, which consists of our consumer card partnerships and GreenSky. We saw this as the logical next step in our strategic journey to building a more durable firm that generates higher returns through the cycle. We are now reporting our results under our new structure, and we have also announced three key execution priorities: 1) maximizing wallet share and growing financing activities in GBM; 2) growing management and other fees in AWM; and 3) scaling Platform Solutions to deliver profitability. We believe we’re now well positioned to execute our strategy, capitalize on our strengths and achieve our execution priorities in all three of our segments. Our Three Key Execution Priorities 1 Maximizing wallet share and growing financing activities in Global Banking & Markets 2 Growing management and other fees in Asset & Wealth Management 3 Scaling Platform Solutions to deliver profitability Segment Performance Global Banking & Markets Global Banking & Markets is an extraordinary franchise. We’ve been #1 in global completed M&A for 23 of the last 24 years,3 and once again this year we were the advisor of choice. We were also #2 in equity and equity-related underwriting as well as in high-yield debt underwriting. And yet, over the past three years, we’ve seen significant growth. We’ve increased wallet share by 370 basis points.4 We’ve increased our financing activities in FICC and Equities at a 16 percent compound annual growth rate (CAGR) to more than $7 billion in net revenues for 2022. And we’re now ranked in the top 3 with 77 of the top 100 institutional clients across FICC and Equities, up from a base of 51 at our first Investor Day.5 We had a very good business and we’ve made it better. In 2022, GBM generated revenues of $32.5 billion, a 12 percent decline from 2021, as significantly higher FICC net revenues were more than offset by a steep decline in Investment banking fees. Advisory net revenues, however, were $4.7 billion, the second highest in our history. Asset & Wealth Management In Asset & Wealth Management, we’ve taken several disparate businesses inside the firm and combined them into one powerful platform. Today, we are a top 5 global active asset manager6 and a top 5 global alternatives manager6 with a premier wealth management franchise. We now have more than $2.5 trillion in assets under supervision (AUS). We had a record year in alternatives fundraising in 2022, with $72 billion raised across our franchise. Overall, we’ve raised nearly $180 billion since 2019, making real progress toward our revised target of $225 billion. Of that $72 billion in alternatives, $27 billion came through our wealth platform. And we now have loan penetration7 with approximately 30 percent of our U.S. private wealth clients, leaving us plenty of room for growth. Our total client assets8 in Wealth management stand at more than $1 trillion. In 2022, our Asset & Wealth Management business generated net revenues of $13.4 billion, a 39 percent decline from 2021. A steep drop in the net revenues related to Equity and Debt investments offset an additional $1 billion of Management and other fees and a strong increase in Private banking and lending net revenues. Full-year Management and other fees were $8.8 billion, putting us well on track to hit our 2024 target of more than $10 billion. Platform Solutions In 2022, we decided to significantly narrow our ambitions for our consumer strategy. Now we have a smaller set of emerging businesses. We are working to drive them to profitability, and we’re also considering strategic alternatives for our Consumer platforms. ANNUAL REPORT 2022LETTER TO SHAREHOLDERS7 Firmwide Expenses Total operating expenses for the year were $31.2 billion, down by 2 percent from 2021. Compensation and benefits expenses fell by 15 percent, despite a 10 percent increase in headcount, and were largely offset by higher non-compensation expenses. The increase in non-compensation expenses was primarily related to acquisitions, transaction-based costs and continued investments in technology. In addition, client-related market development costs were higher following lower levels during the pandemic. We remain highly focused on operating efficiency. We are actively engaged in expense mitigation efforts as we look to appropriately calibrate the firm for the operating environment. Balance Sheet Our balance sheet ended the year at $1.4 trillion, down by $114 billion versus the third quarter and relatively flat year over year as we focused on actively managing our resources. Deposits ended the year at $387 billion, up by approximately $23 billion year over year, reflecting growth in private bank and consumer deposits and transaction banking deposits. At the end of the fourth quarter, our standardized CET1 ratio was 15.0 percent, up by 80 basis points year over year. This represents a 120-basis- point buffer to our new capital requirement of 13.8 percent in the beginning of 2023. We returned $6.7 billion to common shareholders, including common stock repurchases of $3.5 billion and common stock dividends of $3.2 billion. Focused on the Forward We believe our strategy positions us well to meet our financial targets through the cycle. And, while in tougher environments we may not hit our return targets, our actions over the past several years have raised the floor of our returns, while retaining the upside in more conducive markets and lowering the overall volatility. Across all our businesses, we are focused on the forward. The integration of our #1 Investment Banking franchise9 with our leading FICC and Equities businesses positions Global Banking & Markets to continue delivering strong returns. Now we are focused on capturing share, particularly in favorable environments, while maintaining resource discipline. The size, breadth and diversity of our mix of activities have made revenues relatively stable over time. Our share gains and higher financing revenues over the past few years have further increased durability. This is a great business, and we are performing for clients at the highest level. In Asset & Wealth Management, our franchise benefits from the Goldman Sachs ecosystem that gives clients access to a wide breadth of products and solutions as well as our unique market insight and expertise. We’re focused on investment performance and client experience to drive a more durable revenue stream from fees and Private banking and lending. We are keeping ourselves accountable with our new medium-term targets on revenue growth, margin and ROE. This is the ANNUAL REPORT 2022LETTER TO SHAREHOLDERS9 We’ve also made important changes to better align employee incentives. All our Management Committee members receive 100 percent of their annual stock-based compensation in performance-based shares that are earned based on future results. This is intended specifically to enhance collaboration and align our entire leadership team with long-term shareholder value creation. Beyond that, many of our employees are shareholders as well. We are united in driving shareholder value. Our People In addition to serving our clients and delivering for shareholders, we’re also focused on taking care of our people. We have a longstanding commitment to recruiting, developing and promoting the best talent available with the widest range of backgrounds, experiences and perspectives. We have made headway with our diverse representation goals at the analyst, associate and vice president levels. We were proud that our 2022 partner class was the most diverse to date. That said, we still have much work to do to build and retain a pipeline of diverse leadership. area where there is the most significant growth opportunity for us, and where we are already operating at scale. And in Platform Solutions, though this segment remains small in the context of the broader firm, we see potential in these emerging platforms. We believe these are attractive businesses that provide stable, more recurring revenue derived from net interest income and fees, and we offer innovative, tech-forward products for our end customers. Firmwide, we remain committed to delivering on our financial targets, and we are confident in our ability to do so, given the underlying strength of our franchise. In the past three years, our average ROE was 14.8 percent. This was in line with our targets and 320 basis points higher than the peer10 average. And, if you exclude the impact of litigation in 2020, our average ROE would have been roughly 130 basis points higher. As we look ahead, we are committed to making the firm more transparent and accountable to shareholders. This is just as important to us as our business level targets. We’ve made a conscious effort to be open and accessible, with enhanced disclosures, more frequent investor conferences and regular strategic updates. We’ve continued to lay out targets for our firm and our businesses, and we’ve provided robust disclosure of key performance indicators to measure our progress. We returned $6.7 billion to common shareholders $3.5B common stock repurchases $3.2B common stock dividends ANNUAL REPORT 2022 ANNUAL REPORT 2022 LETTER TO SHAREHOLDERS LETTER TO SHAREHOLDERS 11 11 “The path ahead is never certain, and there will be plenty of challenges along the way, but we head into 2023 energized, excited and determined to deliver for shareholders.” David Solomon Community Engagement We’re also continuing our long tradition of investing in our communities. In 2023, we mark the 15th anniversary of Goldman Sachs 10,000 Women, our ongoing initiative to foster economic growth by providing women entrepreneurs around the world with a business and management education and access to capital. The 10,000 Women in-person business education program was launched in 2008, and in 2018, the curriculum was made available online through Coursera, further democratizing access. In 2014, in partnership with the International Finance Corporation (IFC), 10,000 Women launched a first-of-its-kind global finance facility, the Women Entrepreneurs Opportunity Facility, to enable access to capital for more women entrepreneurs. As of March 2023, the facility had reached more than 164,000 women entrepreneurs, eclipsing the 100,000 target set when the initiative was launched, and contributing to an over $4.5 billion increase in the volume of loans on-lent by financial institutions to women-owned businesses. Overall, Goldman Sachs 10,000 Women has reached more than 200,000 women from over 150 countries. Building on what we learned from 10,000 Women, in 2009 we launched our signature entrepreneurship initiative, Goldman Sachs 10,000 Small Businesses. Today, the program has served more than 13,600 small businesses in all 50 states through our education program, and it has also partnered with select Community Development Financial Institutions to provide loans to small businesses. In 2020, we launched a new advocacy initiative, Goldman Sachs 10,000 Small Business Voices, to help small business owners in the U.S. advocate for policy changes that matter to them. In July 2022, we brought together more than 2,500 entrepreneurs at our summit in Washington, D.C. — the largest gathering of its kind — to hear from top business leaders, devise new strategies for business growth and meet with more than 300 members of Congress to call for policy action, specifically to modernize and reauthorize the Small Business Administration for the first time in more than 20 years. In 2021, we took what we had learned from both programs to launch our latest initiative, One Million Black Women. In the first two years, we’ve already seen progress and firmwide engagement. We’ve committed more than $1 billion of investment capital and more than $20 million in grant capital to 116 organizations, companies and projects, which puts us on track to directly impact the lives of more than 184,000 Black women and girls. Some examples include a growth equity investment in CareAcademy, a Black woman–led upskilling company; our Alternative Investment Management Black Equity Opportunities fund; and our people serving as executive coaches to Black women school principals through our partnership with New Leaders. From our experience, and with the guidance of our Advisory Council, we’ve learned that what we need most — more than good ideas — are partners. Only by combining our efforts can we hope to transform the economy we leave behind for the next generation. Sustainable Finance Another area where we’ve long been focused is sustainability. We have been a leading voice in the financial services industry addressing climate change and other critical environmental challenges going back to 2005, when we established our Environmental Policy Framework. In 2019, we set a target of $750 billion in financing, advisory and investing activity over the next 10 years across the themes of climate transition and inclusive growth. We have achieved approximately 55 percent of our target in three years. By connecting our experience as a financial institution with the insights gained through our work with clients and partners and our ongoing engagement with the public sector, we are enabling capital to move toward solutions that will help clients not only adapt but also take ownership to drive the transition to a low-carbon economy. At the same time, we cannot address market gaps at scale on our own, so we continue to identify strategic partners whose strengths and areas of focus complement our own. ANNUAL REPORT 2022LETTER TO SHAREHOLDERS 13 The Path Ahead When you look at our strategy, our culture, our talent and our track record, I think we’re incredibly well positioned to serve our clients. We are stewards of their trust — a trust that has been built up over a very long period of time. Goldman Sachs has a deep history of working with clients who have had a huge impact on the world, and we work hard to uphold that tradition of exceptional client service every day. As we go forward, we are focused on the success of our clients and our franchise so we can deliver for shareholders. We’re working hard to raise the floor on returns and achieve our through-the-cycle targets. Our leadership is focused on our key priorities to make the firm stronger and more diversified. And I believe if we stay true to our core values, our strategy and our people, the best days for Goldman Sachs are yet to come. David Solomon Chairman and Chief Executive Officer ANNUAL REPORT 2022LETTER TO SHAREHOLDERS15 15 Our Purpose We aspire to be the world’s most exceptional financial institution, united by our shared values of partnership, client service, integrity and excellence. Our Core Values We distilled our Business Principles into 4 core values that inform everything we do: Partnership Client Service Integrity Excellence Goldman Sachs Business Principles Our clients’ interests always come first. Our experience shows that if we serve our clients well, our own success will follow. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard. Our goal is to provide superior returns to our shareholders. Profitability is critical to achieving superior returns, building our capital, and attracting and keeping our best people. Significant employee stock ownership aligns the interests of our employees and our shareholders. We take great pride in the professional quality of our work. We have an uncompromising determination to achieve excellence in everything we undertake. Though we may be involved in a wide variety and heavy volume of activity, we would, if it came to a choice, rather be best than biggest. We stress creativity and imagination in everything we do. While recognizing that the old way may still be the best way, we constantly strive to find a better solution to a client’s problems. We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry. We make an unusual effort to identify and recruit the very best person for every job. Although our activities are measured in billions of dollars, we select our people one by one. In a service business, we know that without the best people, we cannot be the best firm. We offer our people the opportunity to move ahead more rapidly than is possible at most other places. Advancement depends on merit and we have yet to find the limits to the responsibility our best people are able to assume. For us to be successful, our people must reflect the diversity of the communities and cultures in which we operate. That means we must attract, retain and motivate people from many backgrounds and perspectives. Being diverse is not optional; it is what we must be. We stress teamwork in everything we do. While individual creativity is always encouraged, we have found that team effort often produces the best results. We have no room for those who put their personal interests ahead of the interests of the firm and its clients. The dedication of our people to the firm and the intense effort they give their jobs are greater than one finds in most other organizations. We think that this is an important part of our success. We consider our size an asset that we try hard to preserve. We want to be big enough to undertake the largest project that any of our clients could contemplate, yet small enough to maintain the loyalty, the intimacy and the esprit de corps that we all treasure and that contribute greatly to our success. We constantly strive to anticipate the rapidly changing needs of our clients and to develop new services to meet those needs. We know that the world of finance will not stand still and that complacency can lead to extinction. We regularly receive confidential information as part of our normal client relationships. To breach a confidence or to use confidential information improperly or carelessly would be unthinkable. Our business is highly competitive, and we aggressively seek to expand our client relationships. However, we must always be fair competitors and must never denigrate other firms. Integrity and honesty are at the heart of our business. We expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives. ANNUAL REPORT 2022 LETTER TO SHAREHOLDERS NOTES ABOUT THE LETTER TO SHAREHOLDERS Forward-Looking Statements This letter contains forward-looking statements, including statements about our financial targets, business initiatives, operating expense savings and sustainability goals. You should read the cautionary notes on forward-looking statements in our Form 10-K for the period ended December 31, 2022. 1 2 Data as of December 31, 2022, compared to December 31, 2019. Total shareholder return is sourced from Bloomberg. All other data is sourced from company filings. Peers include MS, JPM, BAC, C. ROTE is calculated by dividing net earnings applicable to common shareholders by average monthly tangible common shareholders’ equity. Tangible common shareholders’ equity is calculated as total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets. Management believes that ROTE is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed internally and that tangible common shareholders’ equity is meaningful because it is a measure that the firm and investors use to assess capital adequacy. ROTE and tangible common shareholders’ equity are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. The table below presents a reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity. $ in millions Total shareholders’ equity Preferred Stock Common shareholders’ equity Goodwill Identifiable intangible assets Average for the Year Ended December 2022 $ 115,990 ) (10,703 105,287 (5,726 (1,583 ) ) 2021 $ 101,705 (9,876 ) 91,829 (4,327 (536 ) ) 2020 $ 91,779 ) (11,203 80,576 (4,238 (617 ) ) Tangible common shareholders’ equity $ 97,978 $ 86,966 $ 75,721 3 4 5 6 7 8 9 10 Source: Dealogic Revenue wallet share 2022 vs. 2019. Data based on reported revenues for Advisory, Equity underwriting, Debt underwriting, FICC and Equities. Total wallet includes GS, MS, JPM, BAC, C, BARC, CS, DB, UBS. Source: Top 100 client list and rankings compiled by GS through Client Ranking/Scorecard/Feedback and/or Coalition Greenwich 1H22 Institutional Client Analytics Global Markets ranking. Baseline comparative result not adjusted for provider changes. Rankings as of 4Q22. Peer data compiled from publicly available company filings, earnings releases and supplements, and websites, as well as eVestment databases and Morningstar Direct. GS total Alternatives investments of $450 billion at year end 4Q22 includes $263 billion of Alternatives AUS and $187 billion of non-fee-earning Alternatives assets. Loans include bank loans and mortgages; exclude margin loans. Penetration measures PWM accounts with bank loan/mortgage products vs. total accounts. Includes both Ultra High Net Worth and High Net Worth client assets within Private Wealth Management and Workplace and Personal Wealth. Consists of AUS and brokerage assets. Based on reported FY 2022 Investment Banking revenues. Peers include MS, JPM, BAC, C, BARC, CS, DB, UBS. Sourced from company filings. Peers include MS, JPM, BAC, C. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Commission File Number: 001-14965 The Goldman Sachs Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 200 West Street, New York, NY (Address of principal executive offices) 13-4019460 (I.R.S. Employer Identification No.) 10282 (Zip Code) (212) 902-1000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common stock, par value $.01 per share Depositary Shares, Each Representing 1/1,000th Interest in a Share of Floating Rate Non-Cumulative Preferred Stock, Series A Depositary Shares, Each Representing 1/1,000th Interest in a Share of Floating Rate Non-Cumulative Preferred Stock, Series C Depositary Shares, Each Representing 1/1,000th Interest in a Share of Floating Rate Non-Cumulative Preferred Stock, Series D Depositary Shares, Each Representing 1/1,000th Interest in a Share of 5.50% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J Depositary Shares, Each Representing 1/1,000th Interest in a Share of 6.375% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K 5.793% Fixed-to-Floating Rate Normal Automatic Preferred Enhanced Capital Securities of Goldman Sachs Capital II Floating Rate Normal Automatic Preferred Enhanced Capital Securities of Goldman Sachs Capital III Medium-Term Notes, Series F, Callable Fixed and Floating Rate Notes due March 2031 of GS Finance Corp. Medium-Term Notes, Series F, Callable Fixed and Floating Rate Notes due May 2031 of GS Finance Corp. Securities registered pursuant to Section 12(g) of the Act: None Trading Symbol GS GS PrA GS PrC GS PrD GS PrJ GS PrK Exchange on which registered NYSE NYSE NYSE NYSE NYSE NYSE GS/43PE NYSE GS/43PF NYSE GS/31B GS/31X NYSE NYSE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ☐ Yes ☒ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No As of June 30, 2022, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $101.1 billion. As of February 10, 2023, there were 335,423,289 shares of the registrant’s common stock outstanding. Documents incorporated by reference: Portions of The Goldman Sachs Group, Inc.’s Proxy Statement for its 2023 Annual Meeting of Shareholders are incorporated by reference in the Annual Report on Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 INDEX Form 10-K Item Number Page No. Page No. PART I Item 1 Business Introduction Our Business Segments Global Banking & Markets Asset & Wealth Management Platform Solutions Business Continuity and Information Security Human Capital Management Sustainability Competition Regulation Information about our Executive Officers Available Information Forward-Looking Statements Item 1A Risk Factors Item 1B Unresolved Staff Comments Item 2 Properties Item 3 Legal Proceedings Item 4 Mine Safety Disclosures PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 1 1 1 1 2 4 5 5 6 8 9 10 24 25 25 28 55 55 55 55 56 56 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction Executive Overview Business Environment Critical Accounting Policies Use of Estimates Recent Accounting Developments Results of Operations Balance Sheet and Funding Sources Capital Management and Regulatory Capital Regulatory and Other Matters Off-Balance Sheet Arrangements Risk Management Overview and Structure of Risk Management Liquidity Risk Management Market Risk Management Credit Risk Management Operational Risk Management Model Risk Management Other Risk Management Item 7A Quantitative and Qualitative Disclosures About Market Risk 57 57 58 59 59 61 62 62 80 83 87 89 90 90 94 101 106 115 116 117 119 Goldman Sachs 2022 Form 10-K Page No. Page No. Supplemental Financial Information Common Stock Performance Statistical Disclosures Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A Controls and Procedures Item 9B Other Information Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III Item 10 Directors, Executive Officers and Corporate Governance Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13 Certain Relationships and Related Transactions, and Director Independence Item 14 Principal Accountant Fees and Services PART IV Item 15 Exhibit and Financial Statement Schedules SIGNATURES 228 228 228 232 232 232 232 232 232 232 233 233 233 233 233 238 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES INDEX Item 8 Financial Statements and Supplementary Data Management’s Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Financial Statements Consolidated Statements of Earnings Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Changes in Shareholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Note 1. Description of Business Note 2. Basis of Presentation Note 3. Significant Accounting Policies Note 4. Fair Value Measurements Note 5. Fair Value Hierarchy Note 6. Trading Assets and Liabilities Note 7. Derivatives and Hedging Activities Note 8. Investments Note 9. Loans Note 10. Fair Value Option Note 11. Collateralized Agreements and Financings Note 12. Other Assets Note 13. Deposits Note 14. Unsecured Borrowings Note 15. Other Liabilities Note 16. Securitization Activities Note 17. Variable Interest Entities Note 18. Commitments, Contingencies and Guarantees Note 19. Shareholders’ Equity Note 20. Regulation and Capital Adequacy Note 21. Earnings Per Common Share Note 22. Transactions with Affiliated Funds Note 23. Interest Income and Interest Expense Note 24. Income Taxes Note 25. Business Segments Note 26. Credit Concentrations Note 27. Legal Proceedings Note 28. Employee Benefit Plans Note 29. Employee Incentive Plans Note 30. Parent Company Goldman Sachs 2022 Form 10-K 119 119 120 123 123 123 124 125 126 127 127 127 128 133 138 151 152 158 161 170 172 176 179 180 182 183 185 188 192 195 204 204 205 205 208 210 210 223 224 226 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES PART I Item 1. Business Introduction The chart below presents our three business segments and their revenue sources. Goldman Sachs is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Our purpose is to advance financial opportunity. Our goal, reflected in our One Goldman Sachs initiative, is to deliver the full range of our services and expertise to support our clients in a more accessible, comprehensive and efficient manner, across businesses and product areas. sustainable economic growth and When we use the terms “Goldman Sachs,” “we,” “us” and “our,” we mean The Goldman Sachs Group, Inc. (Group Inc. or parent company), a Delaware corporation, and its consolidated subsidiaries. When we use the term “our subsidiaries,” we mean the consolidated subsidiaries of Group Inc. References to “this Form 10-K” are to our Annual Report on Form 10-K for the year ended December 31, 2022. All references to 2022, 2021 and 2020 refer to our years ended, or the dates, as the context requires, December 31, 2020, 2022, December respectively. and December 2021 31, 31, Group Inc. is a bank holding company (BHC) and a financial holding company (FHC) regulated by the Board of Governors of the Federal Reserve System (FRB). Our U.S. depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank. Our Business Segments and Commodities Income, Currency and and We manage and report our activities in three business segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Global Banking & Markets generates revenues from investment banking fees, including advisory, and equity and debt underwriting fees, Fixed (FICC) and Equities intermediation as as well intermediation relationship lending and acquisition financing (and related hedges) and investing activities related to our Global Banking & Markets activities. Asset & Wealth Management generates revenues from management and other fees, incentive fees, private banking and lending, equity investments and debt investments. Platform Solutions generates revenues from consumer platforms, and transaction banking and other platform businesses. activities activities, financing financing Prior to the fourth quarter of 2022, we managed and reported our activities in the following four business segments: Investment Banking, Global Markets, Asset Management and Consumer & Wealth Management. Beginning with the fourth quarter of 2022, consistent with our previously announced organizational changes, we began managing and reporting our activities in three new segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Our new segments reflect the following primary changes: • Global Banking & Markets is a new segment that includes the results previously reported in Investment Banking and Global Markets, and additionally includes the results from equity and debt investments related to our Global Banking & Markets activities, previously reported in Asset Management. reported • Asset & Wealth Management is a new segment that in Asset previously results the includes Management (previously and Wealth Management included in Consumer & Wealth Management), and from our direct-to- additionally includes the results lending, consumer banking business, which includes deposit-taking and investing, previously reported in Consumer & Wealth Management, as well as the results from middle-market asset management activities, previously reported in Investment Banking. related to our lending • Platform Solutions is a new segment that includes the results from our consumer platforms, such as partnerships offering credit cards and point-of-sale financing, previously reported in Consumer & Wealth Management, and the results from our transaction banking business, previously reported in Investment Banking. Goldman Sachs 2022 Form 10-K 1 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Global Banking & Markets Global Banking & Markets serves public and private sector clients and we seek to develop and maintain long-term relationships with a diverse global group of institutional including corporations, governments, states and clients, municipalities. Our goal is to deliver to our institutional clients all of our resources in a seamless fashion, with our advisory and underwriting activities serving as the main initial point of contact. We make markets and facilitate client transactions in fixed income, currency, commodity and equity products and offer market expertise on a global basis. In addition, we make markets in, and clear client transactions on, major stock, options and futures exchanges worldwide. Our clients include companies that raise capital and funding to grow and strengthen their businesses, and engage in mergers and acquisitions, divestitures, corporate defense, restructurings and spin-offs, as well as companies that are professional market participants, who buy and sell financial products and manage risk, and investment entities whose ultimate clients include individual investors investing for their retirement, buying insurance or saving surplus cash. As a market maker, we provide prices to clients globally across thousands of products in all major asset classes and markets. At times, we take the other side of transactions ourselves if a buyer or seller is not readily available, and at other times we connect our clients to other parties who want to transact. Our willingness to make markets, commit capital and take risk in a broad range of products is crucial to our client relationships. Market makers provide liquidity and play a critical role in price discovery, which contributes to the overall efficiency of the capital markets. In connection with our market-making activities, we maintain (i) market-making positions, typically for a short period of time, in response to, or in anticipation of, client demand, and (ii) positions to actively manage our risk exposures that arise from these market-making activities (collectively, inventory). We execute a high volume of transactions for our clients in large, highly liquid markets (such as markets for U.S. Treasury securities, stocks and certain agency mortgage pass- through securities). We also execute transactions for our clients in less liquid markets (such as mid-cap corporate bonds, emerging market currencies and certain non-agency mortgage-backed securities) for spreads and fees that are generally somewhat larger than those charged in more liquid markets. Additionally, we structure and execute transactions involving customized or tailor-made products that address our clients’ risk exposures, investment objectives or other complex needs, as well as derivative transactions related to client advisory and underwriting activities. 2 Goldman Sachs 2022 Form 10-K Through our global sales force, we maintain relationships with our clients, receiving orders and distributing investment research, trading ideas, market information and analysis. Much of this connectivity between us and our clients is maintained on technology platforms, including Marquee, and operates globally where markets are open for trading. Marquee provides investors with market intelligence, risk analytics, proprietary datasets and trade execution across multiple asset classes. institutional Our businesses are supported by our Global Investment Research business, which, as of December 2022, provided fundamental research on approximately 3,000 companies worldwide and on approximately 50 national economies, as well as on industries, currencies and commodities. Our activities are organized by asset class and include both “cash” and “derivative” instruments. “Cash” refers to trading the underlying instrument (such as a stock, bond or barrel of oil). “Derivative” refers to instruments that derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors (such as an option, which is the right or obligation to buy or sell a certain bond, stock or other asset on a specified date in the future at a certain price, or an interest rate swap, which is the agreement to convert a fixed rate of interest into a floating rate or vice versa). Global Banking & Markets generates revenues from the following: Investment banking fees. We provide advisory and underwriting services to our clients. Investment banking fees includes the following: • Advisory. We have been a leader for many years in including strategic advisory providing advisory services, assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs. In particular, we help clients execute large, complex transactions for which we provide multiple services, including cross-border structuring expertise. We also assist our clients in managing their asset and liability exposures and their capital. • Underwriting. We help companies raise capital to fund their businesses. As a financial intermediary, our job is to match the capital of our investing clients, who aim to grow the savings of millions of people, with the needs of our public and private sector clients, who need financing to generate growth, create jobs and deliver products and include public services. Our underwriting offerings and private placements of a wide range of securities and other financial instruments, including local and cross-border transactions and acquisition financing. Underwriting consists of the following: activities THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Equity underwriting. We underwrite common stock, preferred stock, convertible securities and exchangeable securities. We regularly receive mandates large, complex transactions and have held a leading position in worldwide public common stock offerings and worldwide initial public offerings for many years. for Debt underwriting. We originate and underwrite various types of debt instruments, including investment-grade and including in high-yield debt, bank and bridge loans, connection with acquisition financing, and emerging- and growth-market debt, which may be issued by, among others, corporate, sovereign, municipal and agency issuers. In addition, we underwrite and originate structured securities, which include mortgage-related securities and other asset-backed securities. FICC. FICC generates revenues from intermediation and financing activities. • FICC intermediation. Includes client execution activities related to making markets in both cash and derivative instruments, as detailed below. Interest Rate Products. Government bonds (including inflation-linked other government-backed securities, and interest rate swaps, options and other derivatives. across maturities, securities) Investment-grade high-yield Credit Products. corporate securities, credit derivatives, exchange-traded funds (ETFs), bank and bridge loans, municipal securities, distressed debt and trade claims. and and derivatives, Mortgages. Commercial mortgage-related securities, loans residential mortgage-related securities, loans and derivatives (including U.S. government agency-issued collateralized mortgage obligations and other securities and loans), and other asset-backed securities, loans and derivatives. Currencies. Currency options, spot/forwards and other derivatives on G-10 currencies and emerging-market products. Commodities. Commodity derivatives and, to a lesser extent, physical commodities, involving crude oil and petroleum products, natural gas, agricultural, base, precious and other metals, electricity, including renewable power, environmental products and other commodity products. • FICC financing. Includes secured lending to our clients through structured credit and asset-backed lending, including warehouse loans backed by mortgages (including residential and commercial mortgage loans), corporate loans and consumer loans (including auto loans and private loans). We also provide financing to clients student through securities purchased under agreements to resell (resale agreements). Equities. Equities generates revenues from intermediation and financing activities. securities, options, • Equities intermediation. We make markets in equity including ETFs, securities and equity-related products, futures and over-the- convertible counter (OTC) derivative instruments. As a principal, we facilitate client transactions by providing liquidity to our clients, including by transacting in large blocks of stocks or derivatives, requiring the commitment of our capital. We also structure and make markets in derivatives on indices, industry sectors, financial measures and individual company stocks. We develop strategies and provide information about portfolio hedging and restructuring and asset allocation transactions for our clients. We also work with our clients to create specially tailored instruments to enable sophisticated investors to establish or liquidate investment positions or undertake hedging strategies. We are one of the leading participants in the trading and development of equity derivative instruments. Our exchange-based market-making activities include making markets in stocks and ETFs, futures and options on major exchanges worldwide. We generate commissions and fees from executing and clearing institutional client transactions on major stock, options and futures exchanges worldwide, as well as OTC transactions. We provide our clients with access to a broad spectrum of equity execution services, including electronic “low-touch” access and more complex “high-touch” execution electronic through platforms, including Marquee. traditional both and • Equities financing. Includes prime brokerage and other equities financing activities, including securities lending, margin lending and swaps. We earn fees by providing clearing, settlement and custody services globally. In addition, we provide our hedge fund and other clients with a technology platform and reporting that enables them to monitor their security portfolios and manage risk exposures. Goldman Sachs 2022 Form 10-K 3 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES We provide services that principally involve borrowing and lending securities to cover institutional clients’ short sales and borrowing securities to cover our short sales and to make deliveries into the market. In addition, we are an active participant in broker-to-broker securities lending and third-party agency lending activities. We provide tailored wealth advisory services to clients across the wealth spectrum. We operate globally serving individuals, families, family offices, and foundations and endowments. Our relationships are established directly or introduced through companies that sponsor financial wellness programs for their employees. activities We provide financing to our clients for their securities trading are through margin collateralized by securities, cash or other acceptable collateral. We earn a spread equal to the difference between the amount we pay for funds and the amount we receive from our client. loans that We execute swap transactions to provide our clients with exposure to securities and indices. We also provide securities-based loans to individuals. including through Other. We lend to corporate clients, relationship lending and acquisition financing. The hedges related to this lending and financing activity are also reported as part of Other. Other also includes equity and debt investing activities related to our Global Banking & Markets activities. Asset & Wealth Management Asset & Wealth Management provides investment services to help clients preserve and grow their financial assets and achieve their financial goals. We provide these services to our clients, both institutional and individuals, including investors who primarily access our products through a network of third-party distributors around the world. alternative investments. Alternative We manage client assets across a broad range of investment strategies and asset classes, including equity, fixed income investments and primarily includes hedge funds, credit funds, private equity, real estate, currencies, commodities and asset allocation strategies. Our investment offerings include those managed on a fiduciary basis by our portfolio managers, as well as those managed by third-party managers. We offer our including investment solutions in a variety of structures, separately managed accounts, mutual funds, private partnerships and other commingled vehicles. We also provide customized investment advisory solutions designed to address our clients’ investment needs. These solutions begin with identifying clients’ objectives and continue through portfolio construction, ongoing asset allocation and risk management and investment realization. We draw from a variety of third-party managers, as well as our proprietary offerings, to implement solutions for clients. 4 Goldman Sachs 2022 Form 10-K trust and estate structuring, We offer personalized financial planning to individuals inclusive of income and liability management, compensation tax and benefits analysis, optimization, philanthropic giving, and asset protection. We also provide customized investment advisory solutions, and offer structuring and execution capabilities in securities and derivative products across all major global markets. We leverage a broad, open-architecture investment platform and our global execution capabilities to help clients achieve their investment goals. In addition, we offer clients a full range of including a variety of deposit private banking services, alternatives and loans that our clients use to finance investments in both financial and nonfinancial assets, bridge cash flow timing gaps or provide liquidity and flexibility for other needs. In addition to managing client assets, we invest in alternative investments across a range of asset classes that seek to deliver investing long-term accretive risk-adjusted returns. Our include longer-term, typically activities, which investments in corporate equity, credit, real estate and infrastructure assets. are We also raise deposits and have issued unsecured loans to consumers through Marcus by Goldman Sachs (Marcus). We have started a process to cease offering new loans through Marcus. Asset & Wealth Management generates revenues from the following: investing and wealth advisory • Management and other fees. We receive fees related to managing assets for institutional and individual clients, solutions, providing providing financial planning and counseling services via Ayco Personal Financial Management, and executing brokerage transactions for wealth management clients. The fees that we charge vary by asset class, client channel and services provided, and are affected by the types of investment performance, as well as asset inflows and redemptions. • Incentive fees. In certain circumstances, we also receive incentive fees based on a percentage of a fund’s or a separately managed account's return, or when the return exceeds a specified benchmark or other performance targets. Such fees include overrides, which consist of the increased share of the income and gains derived primarily from our private equity and credit funds when the return on a fund’s investments over the life of the fund exceeds certain threshold returns. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES • Private banking and lending. Our private banking and lending activities include issuing loans to our wealth management clients. Such loans are generally secured by commercial and residential real estate, securities and other assets. We also accept deposits (including savings and time including from wealth management clients, deposits) through Marcus, in GS Bank USA and Goldman Sachs International Bank (GSIB). We have also issued unsecured loans to consumers through Marcus and have started a process to cease offering new loans. Additionally, we provide investing services through Marcus Invest to U.S. customers. Private banking and lending revenues include net interest income allocated to deposits and net interest income earned on loans to individual clients. • Equity investments. Includes investing activities related to our asset management activities primarily related to public and private equity investments in corporate, real estate and infrastructure assets. We also make investments through consolidated investment entities, substantially all of which are engaged in real estate investment activities. • Debt investments. Includes lending activities related to including investing in our asset management activities, corporate debt, lending to middle-market clients, and providing financing for real estate and other assets. These activities include investments in mezzanine debt, senior debt and distressed debt securities. Platform Solutions Platform Solutions includes our consumer platforms, such as partnerships offering credit cards and point-of-sale financing, and transaction banking and other platform businesses. Platform Solutions generates revenues from the following: Consumer platforms. Our Consumer platforms business issues credit cards and provides point-of-sale financing to consumers to finance the purchases of goods or services. Consumer platforms revenues primarily includes net interest income earned on credit card lending and point-of-sale financing activities. Transaction banking and other. We provide transaction banking and other services, including cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. Transaction banking revenues include net interest income attributed to transaction banking deposits. Business Continuity and Information Security and coronavirus the work-from-home Business continuity and information security, including cybersecurity, are high priorities for us. Their importance has (COVID-19) been highlighted by (i) the arrangements pandemic implemented by companies worldwide in response, including us, (ii) numerous highly publicized events in recent years, including institutions, financial large consumer-based companies, governmental agencies, software and information technology service providers and other organizations, some of which have resulted in the unauthorized access to or disclosure of personal information and other sensitive or confidential information, the theft and destruction of corporate information and requests for ransom payments, and (iii) extreme weather events. against attacks cyber Our Business Continuity & Technology Resilience Program has been developed to provide reasonable assurance of business continuity in the event of disruptions at our critical facilities or of our systems, and to comply with regulatory requirements, including those of FINRA. Because we are a BHC, our Business Continuity & Technology Resilience Program is also subject to review by the FRB. The key elements of the program are crisis management, business continuity, recovery, assurance and verification, and process improvement. In the area of information security, we have developed and implemented a framework of principles, policies and technology designed to protect the information provided to us by our clients and our own information from cyber attacks and other misappropriation, corruption or loss. Safeguards are designed to maintain the confidentiality, integrity and availability of information. technology resilience, business Goldman Sachs 2022 Form 10-K 5 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Human Capital Management Our people are our greatest asset. We believe that a major strength and principal reason for our success is the quality, dedication, determination and collaboration of our people, which enables us to serve our clients, generate long-term value for our shareholders and contribute to the broader community. We invest heavily in developing and supporting our people throughout their careers, and we strive to maintain a work environment that fosters professionalism, excellence, high standards of business ethics, diversity, teamwork and cooperation among our employees worldwide. Diversity and Inclusion The strength of our culture, our ability to execute our strategy, and our relationships with clients all depend on a diverse workforce and an inclusive work environment that encourages a wide range of perspectives. We believe that diversity at all levels of our organization, from entry-level analysts to senior management, as well as the Board of Directors of Group Inc. to our sustainability. As of December 2022, approximately 57% of our Board was diverse by race, gender or sexual orientation. Our management team works closely with our Global Inclusion and Diversity Committee to continue to increase diversity of our global workforce at all levels. In addition, we have Inclusion and Diversity Committees across regions, that values different which promote an environment perspectives, challenges conventional thinking and maximizes the potential of all our people. essential (Board) is race, gender identity, ethnicity, imperative, We believe that increased diversity, including diversity of sexual experience, orientation, disability and veteran status, in addition to being a social to our commercial success through the creativity that it fosters. For this reason, we have established a comprehensive action plan with aspirational diversity hiring and representation goals which are set forth below and are an inclusive environment for all our colleagues. focused on cultivating is vital their career Diverse leadership is crucial to our long-term success and to driving innovation, and we have implemented and expanded outreach and career advancement programs for rising diverse executive talent. For example, we are focused on providing diverse vice presidents the necessary coaching, sponsorship trajectories and and advocacy to support strengthen their leadership platforms, including through programs, such as our Vice President Sponsorship Initiative focused on high-performing women, Black, Hispanic/Latinx, Asian and LGBTQ+ vice presidents across the globe. Many other career development initiatives are aimed at fostering diverse talent at the analyst and associate level, including the Black Analyst and Associate Initiative, the Hispanic/Latinx Analyst Initiative and the Women’s Career Strategies Initiative. Our global and regional Inclusion Networks and Interest Forums are open to all professionals at Goldman Sachs to promote and advance connectivity, understanding, inclusion and diversity. 6 Goldman Sachs 2022 Form 10-K Progress Toward Aspirational Goals. Reflecting our efforts to increase diversity, the composition of our most recent partnership class was 29% women professionals, 24% Asian professionals, 9% Black professionals, 3% Hispanic/ Latinx professionals, 3% LGBTQ+ professionals and 3% professionals who are military/veterans. The composition of our most recent managing director class was 30% women 5% Black professionals, professionals, 3% LGBTQ+ professionals and 3% professionals who are military/veterans. 28% Asian 5% Hispanic/Latinx professionals, professionals, We have also set forth the following aspirational goals: 70% of our annual hiring) • We aim for analyst and associate hiring (which accounts for over to achieve representation of 50% women professionals, 11% Black professionals and 14% Hispanic/Latinx professionals in the Americas, and 9% Black professionals in the U.K. In 2022, our analyst and associate hires included 44% women professionals, 10% Black professionals and 13% Hispanic/ Latinx professionals in the Americas, and 17% Black professionals in the U.K. • We aim for women professionals to represent 40% of our vice presidents globally by 2025 and 30% of senior talent (vice presidents and above) in the U.K. by 2023, while also endeavoring for women employees to comprise 50% of all of our employees globally over time. As of December 2022, women professionals represented 33% of our vice president population globally and 31% of (vice presidents and above) in the U.K., and women employees represented 41% of all of our employees globally. senior talent • We aim for Black professionals to represent 7% of our vice president population in the Americas and in the U.K., and for Hispanic/Latinx professionals to represent 9% of our vice president population in the Americas, both by 2025. As of December 2022, Black professionals represented 4% of our vice president population in the Americas and 5% in the U.K., and Hispanic/Latinx professionals represented 6% of our vice president population in the Americas. • We aim to double the number of campus hires in the U.S. recruited from Historically Black Colleges and Universities (HBCUs) by 2025 relative to 2020. The metrics above are based on self-identification. Talent Development and Retention We seek to help our people achieve their full potential by investing in them and supporting a culture of continuous individual development. Our goals are capabilities, and innovation, expand professional opportunities, and help our people contribute positively to their communities. commercial culture, reinforce our to maximize effectiveness increase THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Instilling our culture in all employees is a continuous process, in which training plays an important part. We offer our employees in ongoing the opportunity to participate educational offerings and periodic seminars facilitated by our Learning & Engagement team. To accelerate their integration into the firm and our culture, new hires have the opportunity to receive training before they start working and orientation programs with an emphasis on culture and networking, and nearly all employees participate in at least one training event each year. For our more senior employees, we provide guidance and training on how to manage people and projects effectively, exhibit strong leadership and exemplify our culture. We are also focused on developing a high performing, diverse leadership pipeline and career planning for our next generation of leaders. We maintain a variety of programs aimed at employees’ professional growth and including initiatives, such as our leadership development, Leadership President Vice Acceleration Initiatives and Partner Development Initiative. and Managing Director Enhancing our people’s experience of internal mobility is a key focus, as we believe that this will inspire employees, help retain top talent and create diverse experiences to build future leaders. instilling our culture is our Another important part of review process. Employees are employee performance reviewed by supervisors, co-workers and employees whom they supervise in a 360-degree review process that is integral to our team approach and includes an evaluation of an employee’s performance with respect to risk management, protecting our reputation, adherence to our code of conduct, compliance, and diversity and inclusion principles. Our approach to evaluating employee performance centers on timely and actionable feedback that providing robust, facilitates professional development. We have directed our managers, as leaders at the firm, to take an active coaching role with their teams. We have also implemented “The Three Conversations at GS” through which managers establish goals with their team members at the start of the year, check in mid-year on progress and then close out the year with a conversation on performance against goals. through completing local We believe that our people value opportunities to contribute to their communities and that these opportunities enhance their job satisfaction. We also believe that being able to volunteer together with colleagues and support community service projects organizations strengthens our people’s bond with us. Community TeamWorks, our signature volunteering initiative, enables our people team-based volunteer opportunities, including projects coordinated with hundreds of nonprofit partner organizations worldwide. During 2022, our people volunteered approximately 86,000 hours of service globally through Community TeamWorks, with approximately 17,000 employees partnering with approximately 500 nonprofit organizations on approximately 1,200 community projects. in high-impact, to participate Wellness We recognize that for our people to be successful in the workplace they need support in their personal, as well as their professional, lives. We have created a strong support framework for wellness, which is intended to enable employees to better balance their roles at work and their responsibilities at home. We provide a number of policies for our employees that support taking time away from the office when needed, including 20 weeks of parental leave, family care leave and bereavement leave. In 2022, we also enhanced our vacation policies for our employees, allowing managing directors to take time off, when needed, without a fixed vacation day entitlement and adding a minimum of two additional vacation days for all other employees, as well as setting a minimum annual expected vacation usage of 15 days. For longer-tenured employees, we offer an unpaid sabbatical leave. We also continue to advance our resilience programs, offering our people a range of counseling, coaching, medical advisory and personal wellness services. We increased the availability of these resources during the COVID-19 pandemic, and strengthen virtual offerings to enhance access to support, with the aim of maintaining the physical and mental well- being of our people, and enhancing their effectiveness and productivity. and continued to evolve to support the financial wellness of our In addition, employees, we offer a variety of resources that help them manage their personal financial health and decision-making, including financial education information sessions, live and on-demand webinars, articles and interactive digital tools. Global Reach and Strategic Locations As a firm with a global client base, we take a strategic approach to attracting, developing and managing a global workforce. Our clients are located worldwide and we are an active participant in financial markets around the world. As of December 2022, we had headcount of 48,500, offices in over 35 countries and 52% of our headcount was based in the Americas, 19% in EMEA and 29% in Asia. Our employees come from over 180 countries and speak more than 150 languages as of December 2022. In addition to maintaining offices in major financial centers around the world, we have established key strategic locations, including in Bengaluru, Salt Lake City, Dallas, Singapore, Warsaw and Hyderabad. We continue to evaluate the expanded use of strategic locations, including cities in which we do not currently have a presence. As of December 2022, 41% of our employees were working in strategic locations. We believe our investment in these strategic locations enables us to build centers of excellence around specific capabilities support our business initiatives. that Goldman Sachs 2022 Form 10-K 7 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Sustainability We have a long-standing commitment to sustainability. Our two priorities in this area are helping clients across industries decarbonize their businesses to support their transition to a low-carbon economy (Climate Transition) and to advance solutions that expand access, increase affordability, and drive outcomes to support sustainable economic growth (Inclusive Growth). Our strategy is to advance these two priorities through our work with our clients, and with strategic partners whose strengths and areas of focus complement our own, as well as through our supply chain. firm, across our We have established a Sustainable Finance Group, which serves as the centralized group that drives climate strategy including and sustainability efforts commercial efforts alongside our businesses, to advance Climate Transition and Inclusive Growth. We have also created the role of Global Head of Sustainability and Inclusive Growth, which, like our One Goldman Sachs initiative, is intended to facilitate the application of our full capabilities across both Climate Transition and Inclusive Growth. Our sustainable finance-related efforts continue to evolve. For example, we recently launched the Sustainable Banking Group, a group focused on supporting our corporate clients in reducing their direct and indirect carbon emissions. the Board in its oversight of our Our activities relating to sustainability present both financial and nonfinancial risks, and we have processes for managing these risks, similar to the other risks we face. We have integrated oversight of climate-related risks into our risk management governance structure, from senior management to our Board and its committees, including the Risk and Public Responsibilities committees. The Risk Committee of the Board oversees firmwide financial and nonfinancial risks, which include climate risk, and, as part of its oversight, receives updates on our risk management approach to climate risk. The Public Responsibilities Committee of the Board assists firmwide sustainability strategy and sustainability risks affecting us, including with respect to climate change. As part of its oversight, the Public Responsibilities Committee receives periodic updates on our sustainability strategy, and also periodically reviews our governance and related policies and processes for sustainability and climate change-related risks. We have also implemented an Environmental Policy Framework to guide our overall approach to sustainability this Framework when evaluating issues. We transactions for environmental and social risks and impacts. training with respect Our to environmental and social risks, including for sectors and industries that we believe have higher potential for these risks. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Other Risk Management — Climate Risk Management” in Part II, Item 7 of this Form 10-K for further information about our climate risk management. employees also receive apply 8 Goldman Sachs 2022 Form 10-K As a leading financial institution, we acknowledge the importance of Climate Transition and Inclusive Growth for our business. In February 2021, we issued our inaugural sustainability bond of $800 million, and in June 2022 we issued our second benchmark sustainability bond of $700 million. These issuances align with our sustainable finance framework for future issuances and fund a range of on- balance sheet sustainable finance activity. We believe we can advance sustainability by partnering with our clients across our businesses, including by developing new sustainability- linked financing solutions, offering strategic advice, or coinvesting alongside our clients in clean energy companies. We have announced a target to deploy $750 billion in sustainable financing, investing and advisory activity by the beginning of 2030. As of December 2022, we achieved approximately 55% of that goal, with the majority dedicated to Climate Transition. With respect to Climate Transition, we have announced our commitment to align our financing activities with a net-zero- by-2050 pathway. In that context, we have set an initial set of targets for 2030 focused on three sectors — power, oil and gas, and auto manufacturing — where we see an opportunity to proactively engage our clients and investors, deploy capital required for transition, and invest in new commercial solutions to drive decarbonization in the real economy. Carbon neutrality is also a priority for the operation of our firm and our supply chain. In 2015, we achieved carbon neutrality in our operations and business travel, ahead of our 2020 goal announced in 2009. We have expanded our operational carbon commitment to include our supply chain, targeting net-zero carbon emissions by 2030. In addition to Climate Transition, our approach to sustainability also centers on Inclusive Growth where we seek to drive solutions that expand access, increase affordability, and drive outcomes to advance sustainable economic growth. We have sponsored initiatives, such as One Million Black Women, Launch With GS, the Urban Investment Group, 10,000 Women and 10,000 Small Businesses. An overarching theme of our sustainability strategy is promoting diversity and inclusion as an imperative for us, as well as for our clients further strengthened by that we have strategic partnerships established in areas where we have identified gaps or believe we are able through collaboration. We believe our ability to achieve our sustainability objectives is critically dependent on the strengths and talents of our people, and we recognize that our people are able to maximize their impact by collaborating in a diverse and inclusive work environment. See “Business — Human Capital Management” for information about our human capital management goals, programs and policies. and their boards. These even greater to drive impact efforts are THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Competition The financial services industry and all of our businesses are intensely competitive, and we expect them to remain so. Our competitors provide investment banking, market-making and asset management services, private banking and lending, lending, point-of-sale financing, credit cards, commercial transaction banking, deposit-taking and other banking products and services, and make investments in securities, commodities, derivatives, loans and other financial assets. Our competitors include brokers and dealers, investment banking firms, commercial banks, credit card issuers, investment advisers, mutual funds, hedge funds, private equity funds, merchant banks, consumer finance companies and financial technology and other internet-based companies. Some of our competitors operate globally and others regionally, and we compete based including transaction execution, on a number of factors, client innovation, reputation and price. experience, products insurance companies, and services, real estate, We have faced, and expect to continue to face, pressure to retain market share by committing capital to businesses or transactions on terms that offer returns that may not be commensurate with their risks. In particular, corporate clients seek such commitments (such as agreements to participate in their loan facilities) from financial services firms in connection with investment banking and other assignments. Consolidation and convergence have significantly increased the capital base and geographic reach of some of our competitors and have also hastened the globalization of the securities and other financial services markets. As a result, we have had to commit capital to support our international operations and to execute large global transactions. To capitalize on some of our most significant opportunities, we will have to compete successfully with financial institutions that are larger and have more capital and that may have a stronger local presence and longer operating history outside the U.S. We also compete with smaller institutions that offer more targeted services, such as independent advisory firms. Some clients may perceive these firms to be less susceptible to potential conflicts of interest than we are, and, as described below, our ability to effectively compete with them could be affected by regulations and limitations on activities that apply to us but may not apply to them. A number of our businesses are subject to intense price competition. Efforts by our competitors to gain market share have resulted in pricing pressure in our investment banking, market-making, consumer, wealth management and asset management businesses. For example, the increasing volume of trades executed electronically, through the internet and through alternative trading systems, has increased the pressure on trading commissions, in that commissions for electronic trading are generally lower than those for non- electronic trading. It appears that this trend toward low- commission trading will continue. Price competition has also led to compression in the difference between the price at which a market participant is willing to sell an instrument and the price at which another market participant is willing to buy it (i.e., bid/offer spread), which has affected our market-making businesses. The increasing prevalence of passive investment strategies that typically have lower fees than other strategies we offer has affected the competitive and pricing dynamics for our asset management products and services. In addition, we believe that we will continue to experience competitive pressures in these and other areas in the future as some of our competitors seek to obtain market share by further reducing prices, and as we enter into or expand our presence in markets that rely more heavily on electronic trading and execution. We and other banks also compete for deposits on the basis of the rates we offer. Increases in short-term interest rates have resulted in and are expected to continue to result in more intense competition in deposit pricing. We also compete on the basis of the types of financial products and client experiences that we and our competitors offer. In some circumstances, our competitors may offer financial products that we do not offer and that our clients may prefer, including cryptocurrencies and other digital assets that we cannot or may choose not to provide. Our competitors may also develop technology platforms that provide a better client experience. that (Dodd-Frank Act), limitations on activities, The provisions of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act the requirements promulgated by the Basel Committee on Banking Supervision (Basel Committee) and other financial regulations could affect our competitive position to the extent increased fees and compliance costs or other regulatory requirements do not apply, or do not apply equally, to all of our competitors or are not implemented uniformly across different jurisdictions. For example, the provisions of the Dodd-Frank Act that prohibit proprietary trading and restrict investments in certain hedge and private equity funds differentiate between U.S.-based and non-U.S.-based banking organizations and give non-U.S.-based banking organizations greater flexibility to trade outside of the U.S. and to form and invest in funds outside the U.S. Goldman Sachs 2022 Form 10-K 9 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES the obligations with respect Likewise, to derivative transactions under Title VII of the Dodd-Frank Act depend, in part, on the location of the counterparties to the transaction. The impact of regulatory developments on our competitive position has depended and will continue to depend to a large extent on the manner in which the required rulemaking and regulatory guidance evolve, the extent of international convergence, and the development of market practice and structures under the evolving regulatory regimes, as described further in “Regulation” below. We also face intense competition in attracting and retaining qualified employees. Our ability to continue to compete effectively has depended and will continue to depend upon our ability to attract new employees, retain and motivate our existing employees and to continue to compensate employees competitively amid intense public and regulatory scrutiny on institutions. the compensation practices of large financial Our pay practices and those of certain of our competitors are subject to review by, and the standards of, the FRB and other regulators including the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in the U.K. We also compete for employees with institutions whose pay practices are not subject “Regulation — Compensation Practices” and “Risk Factors — Competition — Our businesses would be adversely affected if we are unable to hire and retain qualified employees” in Part I, Item 1A of this Form 10-K for further information about such regulation. inside and outside the U.S., to regulatory oversight. See Regulation subject to extensive As a participant in the global financial services industry, we are regulation and supervision worldwide. The regulatory regimes applicable to our operations have been, and continue to be, subject to significant changes. Group Inc. is a BHC under the U.S. Bank Holding Company Act of 1956 (BHC Act) and an FHC under amendments to the BHC Act effected by the U.S. Gramm-Leach-Bliley Act of 1999 (GLB Act), and is to supervision and examination by the FRB, which is our primary regulator. subject Under the system of “functional regulation” established under the GLB Act, the primary regulators of our U.S. non- bank subsidiaries directly regulate the activities of those subsidiaries, with the FRB exercising a supervisory role. Such “functionally regulated” subsidiaries include broker-dealers and security-based swap dealers registered with the SEC, such as our principal U.S. broker-dealer, entities registered with or regulated by the CFTC with respect to futures-related and swaps-related activities advisers registered with the SEC with respect to their investment advisory activities. and investment Our principal subsidiaries operating in the U.S. include GS Bank USA, Goldman Sachs & Co., LLC (GS&Co.), J. Aron & Company LLC (J. Aron) and Goldman Sachs Asset Management, L.P. GS Bank USA is our principal U.S. bank subsidiary and is supervised and regulated by the FRB, the FDIC, the New York State Department of Financial Services (NYDFS) and the Consumer Financial Protection Bureau (CFPB). GS Bank USA also has a London branch, which is regulated by the FCA and PRA, and a Tokyo branch, which is regulated by the Japan Financial Services Agency. We conduct a number of our activities partially or entirely through GS Bank USA and its subsidiaries, including: corporate loans (including leveraged lending); securities-based and collateralized loans; consumer loans (including installment loans, such as point- of-sale loans, and credit card loans); small business loans (including installment, lines of credit and credit cards); residential mortgages; transaction banking; deposit-taking; interest rate, credit, currency and other derivatives; and agency lending. New regulations have been adopted or are being considered by regulators and policy makers worldwide, as described below. The impacts of any changes to the regulations affecting our businesses, including as a result of the proposals described below, are uncertain and will not be known until such changes are finalized and market practices and structures develop under the revised regulations. GS&Co. is our principal U.S. broker-dealer and is registered as a broker-dealer, a securities-based swap dealer, a municipal advisor and an investment adviser with the SEC and as a broker-dealer in all 50 states and the District of Columbia. U.S. self-regulatory organizations, such as FINRA and the NYSE, have adopted rules that apply to, and examine, broker-dealers such as GS&Co. Our principal subsidiaries operating in Europe include: Goldman Sachs International (GSI), GSIB and Goldman Sachs Asset Management International (GSAMI); Goldman Sachs Bank Europe SE (GSBE); and Goldman Sachs Paris Inc. et Cie (GSPIC). 10 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES laws, Our E.U. subsidiaries are subject to various E.U. regulations, including those implementing as well as national European directives. GSBE is directly supervised by the European Central Bank (ECB) and additionally by BaFin and Deutsche Bundesbank in the context of the E.U. Single Supervisory Mechanism (SSM). GSBE’s London branch is regulated by the FCA. GSBE engages in certain activities primarily in the E.U., including underwriting and market making in debt and equity securities and derivatives, investment, asset and wealth management services, deposit- taking, lending (including securities lending), and financial advisory services. GSBE is also a primary dealer for government bonds issued by E.U. sovereigns. As a foreign bank subsidiary of GS Bank USA, GSBE is subject to limits on the nature and scope of its activities under the FRB’s Regulation K, including limits on its underwriting and market making in equity securities based on GSBE’s and/or GS Bank USA’s capital. firm regulated by the French GSPIC is an investment Prudential Supervision and Resolution Authority (ACPR) and the French Financial Markets Authority. GSPIC’s activities include certain activities that GSBE is prevented from undertaking. GSPIC's application to ACPR in October 2021 to become a credit institution remains pending. GSI is a U.K. broker-dealer and a designated investment firm, and GSIB is a U.K. bank. Both GSI and GSIB are regulated by the PRA and the FCA. As an investment firm, GSI is subject to prudential requirements applicable to banks, including capital and liquidity requirements. GSI provides broker- dealer services in and from the U.K. and is registered with the CFTC as a swap dealer and with the SEC as a securities- based swap dealer. GSIB engages in lending (including securities lending) and deposit-taking activities and is a primary dealer for U.K. government bonds. GSI and GSIB maintain branches outside of the U.K. and are subject to the laws and regulations of the jurisdictions where they are located. Our principal subsidiary operating in Asia is Goldman Sachs Japan Co., Ltd. (GSJCL). GSJCL is our regulated Japanese broker-dealer regulated by Japan’s Financial Services Agency, the Tokyo Stock Exchange, the Bank of Japan and the Ministry of Finance, among others. subsidiary and is Banking Supervision and Regulation The Basel Committee is the primary global standard setter for prudential bank regulation. However, the Basel standards do not become effective in a Committee’s jurisdiction until the relevant regulators have adopted rules its standards. The implications of Basel to implement Committee for our businesses depend to a large extent on their implementation by the relevant regulators globally, and the market practices and structures that develop. standards and related regulations Capital and Liquidity Requirements. We and GS Bank USA are subject to regulatory risk-based capital and leverage requirements that are calculated in accordance with the regulations of the FRB (Capital Framework). The Capital Framework is largely based on the Basel Committee’s framework for strengthening the regulation, supervision and risk management of banks (Basel III) and also implements certain provisions of the Dodd-Frank Act. Under the U.S. federal bank regulatory agencies’ tailoring framework, we and GS Bank USA are subject to “Category I” standards because we have been designated as a global systemically important bank (G-SIB). Accordingly, we and GS Bank USA are “Advanced approach” banking organizations. Under the Capital Framework, we and GS Bank USA must meet specific regulatory capital requirements that involve quantitative measures of assets, liabilities and certain off-balance sheet items. The sufficiency of our capital levels is also subject to qualitative judgments by regulators. We and GS Bank USA are also subject to liquidity requirements established by the U.S. federal bank regulatory agencies. risk, subject GSBE is to capital and liquidity requirements prescribed in the E.U. Capital Requirements Regulation, as amended (CRR), and the E.U. Capital Requirements Directive, as amended (CRD), which are largely based on Basel III. The most recent amendments to the CRR and CRD (respectively, CRR II and CRD V) include changes to the liquidity, market large exposures and leverage ratio frameworks. These changes have been applicable in the E.U. since June 2021. From June 2022, the CRR requires large institutions with securities traded on a regulated market of a member state to make qualitative to environmental, social and governance risks on an annual basis. Under an E.U. proposal, these requirements would apply to our E.U.-regulated entities beginning in January 2025. counterparty credit quantitative disclosures relating risk, and GSI and GSIB are subject to the U.K. capital and liquidity frameworks, which are also largely based on Basel III and are predominantly aligned with the E.U. capital and liquidity frameworks. The most recent amendments to the U.K. frameworks include changes to the liquidity, counterparty credit risk, large exposures and leverage ratio frameworks. The changes have been applicable in the U.K. since January 2022. Goldman Sachs 2022 Form 10-K 11 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES capital distributions requirements and additional Risk-Based Capital Ratios. As Advanced approach banking organizations, we and GS Bank USA calculate risk- based capital ratios in accordance with both the Standardized and Advanced Capital Rules. Both the Advanced Capital Rules and the Standardized Capital Rules include minimum capital risk-based capital conservation buffer requirements that must be satisfied solely with Common Equity Tier 1 (CET1) capital. Failure to satisfy a buffer requirement in full would result in constraints executive and on compensation. The severity of the constraints would depend on the amount of the shortfall and the organization’s “eligible retained income,” defined as the greater of (i) net income for the four preceding quarters, net of distributions and associated tax effects not reflected in net income; and (ii) the average of net income over the preceding four quarters. For Group Inc., the capital conservation buffer requirements consist of a 2.5% buffer (under the Advanced Capital Rules), a stress capital buffer (SCB) (under the Standardized Capital Rules), and both a countercyclical buffer and the G-SIB surcharge (under both Capital Rules). For GS Bank USA, the capital conservation buffer requirements consist of a 2.5% buffer and the countercyclical capital buffer. discretionary The SCB is based on the results of the Federal Reserve’s supervisory stress tests and our planned common stock dividends and is likely to change over time based on the results of the annual supervisory stress tests. See “Stress Tests and Capital Planning” below. The countercyclical capital buffer is designed to counteract systemic vulnerabilities and currently applies only to banking organizations subject to Category I, II or III standards, including us and GS Bank USA. Several other national supervisors also require countercyclical capital buffers. The G-SIB surcharge and countercyclical capital buffer applicable to us may change in the future, including due to additional guidance from our regulators and/or positional changes. As a result, the minimum capital ratios to which we are subject are likely to change over time. The U.S. federal bank regulatory agencies have a rule that implements the Basel Committee’s standardized approach for measuring counterparty credit risk exposures in connection with derivative rule, “Advanced approach” banking organizations are required to use SA-CCR for calculating their standardized risk-weighted assets (RWAs) and, with some adjustments, for purposes of determining their (SLRs) discussed below. supplementary leverage ratios (SA-CCR). Under contracts the and Results The capital requirements applicable to GSBE, GSI and GSIB include both minimum requirements and buffers. See “Management’s Discussion and Analysis of Financial Condition of Operations — Capital Management and Regulatory Capital” in Part II, Item 7 of this Form 10-K and Note 20 to the consolidated financial statements in Part this Form 10-K for Item 8 of information about our capital ratios and those of GS Bank USA, GSBE, GSI and GSIB. II, include guidelines ratio requirements for The Basel Committee standards calculating incremental for capital banking institutions that are systemically significant from a domestic but not global perspective (D-SIBs). Depending on how these guidelines are implemented by national regulators, they may apply, among others, to certain subsidiaries of G- SIBs. These guidelines are in addition to the framework for G-SIBs, but are more principles-based. The U.S. federal bank regulatory agencies have not designated any D-SIBs. The CRD and CRR provide that institutions that are systemically important at the E.U. or member state level, known as other systemically important institutions (O-SIIs), may be subject to additional capital ratio requirements, according to their degree of systemic importance (O-SII buffers). BaFin has identified GSBE as an O-SII in Germany and set an O-SII buffer. In the U.K., the PRA has identified Goldman Sachs Group UK Limited (GSG UK), the parent company of GSI and GSIB, as an O-SII but has not applied an O-SII buffer. finalized revisions to the The Basel Committee has framework for calculating capital requirements for market risk as part of its Fundamental Review of the Trading Book (FRTB). These revisions are expected to increase market risk capital requirements for most banking organizations and large broker-dealers subject to bank capital requirements. The revised framework, among other things, revises the standardized and internal model-based approaches used to calculate market risk requirements and clarifies the scope of positions subject to market risk capital requirements. The Basel Committee framework contemplates that national regulators will have implemented the revised framework by January 1, 2023. The U.S. federal bank regulatory agencies have not yet proposed rules implementing the revised framework. Under the CRR, E.U. institutions, including GSBE, commenced reporting their market risk calculations under the revised framework in the third quarter of 2021. In November 2022, the PRA issued a consultation paper to implement this framework. financial 12 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (Basel III Revisions). These standards set a floor on internally modeled capital requirements at a percentage of the capital requirements under the standardized approach. They also revise the Basel Committee’s standardized and internal model-based approaches for credit risk, provide a new standardized approach for operational risk capital and revise the frameworks for credit valuation adjustment (CVA) risk. The Basel Committee framework contemplates that national regulators will have implemented these standards and that the new floor will be phased in through January 1, 2028. The U.S. federal bank regulatory authorities have not yet proposed rules implementing the Basel III Revisions for purposes of their risk-based capital ratios. The European Commission proposed rules to implement III Revisions in October 2021 and in November 2022, the the E.U. adopted its general approach on Council of implementing the Basel III revisions. The proposed E.U. rules contemplate amendments to the CRR and the CRD, referred to as CRR III and CRD VI, generally taking effect in January 2025. In November 2022, the PRA issued a consultation on the implementation of III Revisions, with a the Basel proposed January 2025 effective date. Under the PRA consultation, our U.K. subsidiaries are not expected to be subject to a floor on internally modeled capital requirements. the Basel The Basel Committee has published an updated securitization framework and a revised G-SIB assessment methodology, but the U.S. federal bank regulatory agencies have not yet updated proposed securitization framework has been implemented in the E.U. and U.K. implementing them. The rules treatment of In December 2022, the Basel Committee published a final standard on the prudential cryptoasset exposures. The Basel Committee contemplates that national regulators will have incorporated the standard into local capital requirements by January 1, 2025. U.S. federal bank regulatory agencies and E.U. and U.K. authorities have not yet proposed rules implementing the standards. Leverage Ratios. Under the Capital Framework, we and GS Bank USA are subject to Tier 1 leverage ratios and SLRs established by the FRB. As a G-SIB, the SLR requirements applicable to us include both a minimum requirement and a buffer requirement, which operates in the same manner as the risk-based buffer requirements described above. In April 2018, the FRB and the OCC issued a proposed rule which would (i) replace the current 2% SLR buffer for G-SIBs, including us, with a buffer equal to 50% of their G-SIB for surcharge and (ii) revise the 6% SLR requirement Category I banks, such as GS Bank USA, to be “well capitalized” with a requirement equal to 3% plus 50% of their parent’s G-SIB surcharge. This proposal, together with the adopted rule requiring use of SA-CCR for purposes of calculating the SLR, would implement certain of the revisions to the leverage ratio framework published by the Basel Committee in December 2017. GSBE and certain of our U.K. entities are also subject to requirements relating to leverage ratios, which are generally based on the Basel Committee leverage ratio standards. and Results See “Management’s Discussion and Analysis of Financial of Operations — Capital Condition Management and Regulatory Capital” in Part II, Item 7 of this Form 10-K and Note 20 to the consolidated financial statements in Part this Form 10-K for Item 8 of information about our and GS Bank USA’s Tier 1 leverage ratios and SLRs, and GSI’s leverage ratio. II, Liquidity Ratios. The Basel Committee’s framework for liquidity risk measurement, standards and monitoring requires banking organizations to measure their liquidity against two specific liquidity tests: the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). The LCR rule issued by the U.S. federal bank regulatory agencies and applicable to both us and GS Bank USA is generally consistent with the Basel Committee’s framework and is designed to ensure that a banking organization maintains an adequate level of unencumbered, high-quality liquid assets equal to or greater than the expected net cash outflows under an acute short-term liquidity stress scenario. We and GS Bank USA are required to maintain a minimum LCR of 100%. See “Available Information” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Liquidity Risk Management — Liquidity Regulatory Framework” in Part this Form 10-K for information about our average daily LCR. Item 7 of II, GSBE is subject to the LCR rule approved by the European Parliament and Council, and GSI and GSIB are subject to the rules approved by the U.K. regulatory authorities' LCR rules. These rules are generally consistent with the Basel Committee’s framework. The NSFR is designed to promote medium- and long-term stable funding of the assets and off-balance sheet activities of banking organizations over a one-year time horizon. The Basel Committee’s NSFR framework requires banking organizations to maintain a minimum NSFR of 100%. We are subject to the U.S. NSFR rule and we will be required to publicly disclose our quarterly average daily NSFR semi- annually. We will begin doing so in August 2023. The CRR implements the NSFR for certain E.U. financial institutions, including GSBE. The NSFR requirement implemented in the U.K. is applicable to both GSI and GSIB. Goldman Sachs 2022 Form 10-K 13 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The FRB’s enhanced prudential standards require BHCs with $100 billion or more in total consolidated assets to comply with enhanced liquidity and overall risk management standards, which include maintaining a level of highly liquid assets based on projected funding needs for 30 days, and increased involvement by boards of directors in liquidity and overall risk management. Although the liquidity requirement under these rules has some similarities to the LCR, it is a separate requirement. GSBE also has its own liquidity planning process, which incorporates internally designed stress tests and those required under German regulatory requirements and the ECB Guide to Internal Liquidity Adequacy Assessment Process (ILAAP). GSI and GSIB have their own liquidity planning processes, which incorporate internally designed stress tests developed in accordance with the guidelines of the PRA’s ILAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Overview and Structure of Risk Management” and “— Liquidity Risk Management — Liquidity Regulatory Framework” in Part this Form 10-K for information about the LCR and NSFR, as well as our risk management practices and liquidity. Item 7 of II, and Capital Planning. The FRB’s Stress Tests Comprehensive Capital Analysis and Review (CCAR) is designed to ensure that large BHCs, including us, have sufficient capital to permit continued operations during times of economic and financial stress. As required by the FRB, we perform an annual capital stress test and incorporate the results into an annual capital plan, which we submit to the FRB for review. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital — Capital Planning and Stress Testing Process” in Part II, Item 7 of this Form 10- K for further information about our annual capital plan. As described in “Available Information” below, summary results of the annual stress test are published on our website. As part of the CCAR process, the FRB evaluates our plan to make capital distributions across a range of macroeconomic and company-specific assumptions, based on our and the FRB’s own stress tests. 14 Goldman Sachs 2022 Form 10-K stressed losses estimated under The FRB’s rule applicable to BHCs with $100 billion or more in total consolidated assets, including us, replaced the static 2.5% component of the capital conservation buffer required under the Standardized Capital Rules with the SCB. The SCB reflects the supervisory the CCAR stress tests, as severely adverse scenario of calculated by the FRB, and includes four quarters of planned common stock dividends. The SCB, which is subject to a 2.5% floor, is generally effective on October 1 of each year and remains in effect until October 1 of the following year, unless it is reset in connection with the resubmission of a capital plan. See “Available Information” below and “Management’s Discussion and Analysis of Financial of Operations — Capital Condition Management and Regulatory Capital” in Part II, Item 7 of this Form 10-K for information about our SCB requirement. and Results stock repurchase or other The SCB rule requires a BHC to receive the FRB’s approval capital for any dividend, distribution, other than a capital distribution on a newly issued capital instrument, if the BHC is required to resubmit its capital plan, which may occur if the BHC determines there has been or will be a “material change” in its risk profile, financial condition or corporate structure since the plan was last submitted, or if the FRB directs the BHC to revise and resubmit its capital plan. U.S. depository institutions with total consolidated assets of $250 billion or more that are subsidiaries of U.S. G-SIBs, such as GS Bank USA, are required to submit annual company-run stress test results to the FRB. GSBE also has its own capital and stress testing process, which incorporates internally designed stress tests and those required under German regulatory requirements and the ECB Guide to Internal Capital Adequacy Assessment Process (ICAAP). In addition, GSI and GSIB have their own capital planning and stress testing processes, which incorporate internally designed stress tests developed in accordance with the PRA’s ICAAP guidelines. Limitations on the Payment of Dividends. U.S. federal and state laws impose limitations on the payment of dividends by U.S. depository institutions, such as GS Bank USA. In general, the amount of dividends that may be paid by GS Bank USA is limited to the lesser of the amounts calculated under a recent earnings test and an undivided profits test. Under the recent earnings test, a dividend may not be paid if the total of all dividends declared by the entity in any calendar year is in excess of the current year’s net income combined with the retained net income of the two preceding years, unless regulatory the approval. Under the undivided profits test, a dividend may not be paid in excess of the entity’s undivided profits (generally, accumulated net profits that have not been paid out as dividends or transferred to surplus), unless the entity receives regulatory and stockholder approval. As a result of dividend payments from GS Bank USA to Group Inc. in connection with the acquisition of GSBE in July 2021, GS Bank USA cannot currently declare any dividends without regulatory approval. entity obtains THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The applicable U.S. banking regulators have authority to prohibit or limit the payment of dividends if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization. Source of Strength. The Dodd-Frank Act requires BHCs to act as a source of strength to their U.S. bank subsidiaries and to commit capital and financial resources to support those subsidiaries. This support may be required by the FRB at times when BHCs might otherwise determine not to provide it. Capital loans by a BHC to a U.S. subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In addition, if a BHC commits to a U.S. federal banking agency that it will maintain the capital of its bank subsidiary, whether in response to the FRB’s source-of-strength authority or in response to other regulatory measures, that commitment will be assumed by the bankruptcy trustee for the BHC and the bank will be entitled to priority payment in respect of that commitment, ahead of other creditors of the BHC. invoking its Transactions Between Affiliates. Transactions between GS Bank USA or its subsidiaries, including GSBE, and Group Inc. or its other subsidiaries and affiliates are subject to restrictions under the Federal Reserve Act and regulations issued by the FRB. These laws and regulations generally limit the types and amounts of transactions (such as loans and including credit exposure arising other credit extensions, from resale agreements, securities borrowing and derivative transactions, from GS Bank USA or its subsidiaries to Group Inc. or its other subsidiaries and affiliates and purchases of assets by GS Bank USA or its subsidiaries from Group Inc. or its other subsidiaries and affiliates) that may take place and generally require those transactions, to the extent permitted, to be on market terms or better to GS Bank USA or its subsidiaries. These laws and regulations generally do not apply to transactions between GS Bank USA and its subsidiaries. Similarly, German regulatory requirements provide that certain transactions between GSBE and GS Bank USA or its other affiliates, including Group Inc., must be on market terms and are subject to special internal approval requirements. PRA rules provide similar requirements for transactions between GSI and GSIB and their respective affiliates. leverage or Resolution and Recovery Plans. We are required by the FRB and the FDIC to submit a periodic plan for our rapid and orderly resolution in the event of material financial distress or failure (resolution plan). If these regulators jointly determine that an institution has failed to remediate identified shortcomings in its resolution plan or that its resolution plan, after any permitted resubmission, is not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, they may jointly impose more stringent capital, liquidity requirements or restrictions on growth, activities or operations, or may jointly order the institution to divest assets or operations, in order to facilitate orderly resolution in the event of failure. The FRB and FDIC require U.S. G-SIBs to submit resolution plans every two years (alternating between submissions of full plans select information). We submitted our 2021 resolution plan, which was a targeted submission, in June 2021, and the FRB and FDIC did not identify any deficiencies or shortcomings. Our next required submission is a full submission by July 1, 2023. See “Risk Factors — Legal and Regulatory —The application of Group Inc.’s proposed resolution strategy could result in greater losses for Group Inc.’s security holders” in Part I, Item 1A of this Form 10-K and “Available Information” in Part I, Item 1 of this Form 10-K for further information about our resolution plan. and targeted plans include only that We are also required by the FRB to submit, on a periodic basis, a global recovery plan that outlines the steps that we could take to reduce risk, maintain sufficient liquidity and conserve capital in times of prolonged stress. Certain of our recovery plan subsidiaries are also subject requirements. to similar GS Bank USA is required to provide a resolution plan to the FDIC that must, among other things, demonstrate that it is adequately protected from risks arising from our other entities. GS Bank USA’s most recent resolution plan was submitted in June 2018. In June 2021, the FDIC provided guidance on insured depository institution (IDI) resolution plans and divided IDIs with $100 billion or more in assets, including GS Bank USA, into two groups for purposes of the timing of resolution plan submissions. GS Bank USA is in the second group with a later submission date. Goldman Sachs 2022 Form 10-K 15 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The U.S. federal bank regulatory agencies have adopted rules imposing restrictions on qualified financial contracts (QFCs) entered into by G-SIBs. The rules are intended to facilitate the orderly resolution of a failed G-SIB by limiting the ability of the G-SIB to enter into a QFC unless (i) the counterparty waives certain default rights in such contract arising upon the entry of the G-SIB or one of its affiliates into resolution, (ii) the contract does not contain enumerated prohibitions on the transfer of such contract and/or any related credit the enhancement, and (iii) contract will be subject to the special resolution regimes set forth in the Dodd-Frank Act orderly liquidation authority (OLA) and the Federal Deposit Insurance Act of 1950 (FDIA), described below. GS Bank USA has achieved compliance by International Swaps and Derivatives adhering to the Association Universal Resolution Stay Protocol (ISDA Universal Protocol) and International Swaps and Derivatives Association 2018 U.S. Resolution Stay Protocol (U.S. ISDA Protocol) described below. the counterparty agrees that Certain of our other subsidiaries also adhere to these protocols. The ISDA Universal Protocol imposes a stay on certain cross-default and early termination rights within standard ISDA derivative contracts and securities financing transactions between adhering parties in the event that one of them is subject to resolution in its home jurisdiction, including a resolution under OLA or the FDIA in the U.S. The U.S. ISDA Protocol, which was based on the ISDA Universal Protocol, was created to allow market participants to comply with the final QFC rules adopted by the federal bank regulatory agencies. states to grant The E.U. Bank Recovery and Resolution Directive (BRRD), as amended by the BRRD II, establishes a framework for the recovery and resolution of financial institutions in the E.U., such as GSBE. The BRRD provides national supervisory authorities with tools and powers to pre-emptively address potential financial crises in order to promote financial stability and minimize taxpayers’ exposure to losses. The BRRD requires E.U. member certain resolution powers to national and, where relevant, E.U. resolution authorities, including the power to impose a temporary stay and to recapitalize a failing entity by writing down its unsecured debt or converting its unsecured debt into equity. Financial institutions in the E.U. must provide that contracts governed by non-E.U. those temporary stay and bail-in powers unless doing so would be impracticable. GSBE is under the direct authority of the Single Resolution Board for resolution planning. Regulatory authorities in the E.U. may require financial institutions in the E.U., including subsidiaries of non-E.U. groups, to submit recovery plans and to assist the relevant resolution authority in constructing resolution plans for the E.U. entities. GSBE’s primary regulator with respect to recovery planning is the ECB, and it is also regulated by BaFin and Deutsche Bundesbank. law recognize 16 Goldman Sachs 2022 Form 10-K certain U.K. institutions. Further, The U.K. Special Resolution Regime confers substantially the same powers on the Bank of England, as the U.K. resolution authority, and substantially the same requirements on U.K. financial financial institutions, including GSI and GSIB, are required to meet the Bank of England’s expectations contained in the U.K. Resolution Assessment Framework, including with respect to loss absorbency, contractual stays, operational continuity and funding in resolution. They are also required by the PRA to submit solvent wind-down plans on how they could be wound down in a stressed environment. The PRA is also the regulatory authority in the U.K. that supervises recovery planning, and GSI and GSIB are each required to submit recovery plans to the PRA. implementation of Total Loss-Absorbing Capacity (TLAC). The FRB's rule addresses U.S. the Financial Stability Board’s (FSB’s) TLAC principles and term sheet on minimum TLAC requirements for G-SIBs. The rule, among other things, establishes minimum TLAC requirements, establishes minimum requirements for “eligible long-term debt” (i.e., debt that is unsecured, has a maturity of at least one year from issuance and satisfies certain additional criteria) and caps the amount of parent company liabilities that are not eligible long-term debt. The rule also prohibits a BHC that has been designated as a U.S. G-SIB from (i) guaranteeing subsidiaries’ liabilities that are subject to early termination provisions if the BHC enters into an insolvency or receivership proceeding, subject to an exception for guarantees permitted by rules of the U.S. federal banking agencies imposing restrictions on QFCs; (ii) incurring liabilities guaranteed by subsidiaries; (iii) issuing to third parties; or (iv) entering into short-term debt derivatives and certain other financial contracts with external counterparties. Additionally, the rule caps, at 5% of the value of the parent company’s eligible TLAC, the amount of unsecured non- contingent third-party liabilities that are not eligible long- term debt that could rank equally with or junior to eligible long-term debt. implement The CRR, the BRRD and U.K. financial services regime are designed to, among other things, the FSB’s minimum TLAC requirement for G-SIBs. For example, the CRR requires E.U. subsidiaries of a non-E.U. G-SIB that exceed the threshold of 5% of the G-SIB’s RWAs, operating income or leverage exposure, such as GSBE, to meet internal TLAC requirements. Under services regime, GSG UK exceeds the applicable thresholds and therefore, it is subject to internal TLAC requirements. the U.K. financial THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES financial institution subsidiaries, The CRD requires a non-E.U. group with more than €40 billion of assets in the E.U., such as us, to establish an E.U. intermediate holding company (E.U. IHC) by December 30, 2023 if it has, as in our case, two or more of certain types of E.U. including broker- dealers and banks. A non-E.U. group may have two E.U. IHCs if a request for a second is approved. GSBE and GSPIC will be subject to the single E.U. IHC requirement unless an exemption is granted. The CRR requires E.U. IHCs to satisfy capital and liquidity requirements, a minimum requirement for own funds and eligible liabilities (MREL), and certain other prudential requirements at a consolidated level. The U.K. has not implemented a similar requirement to establish an IHC; however, the PRA has introduced a requirement that certain U.K. financial holding companies or a designated U.K. group entity be responsible for the U.K. group’s regulatory compliance. We have designated GSI for that responsibility. The BRRD II and the U.K. resolution regime subject institutions to an MREL, which is generally consistent with the FSB’s TLAC standard. GSI is required to maintain a minimum level of internal MREL and provide the Bank of England the right to exercise bail-in triggers over certain intercompany regulatory capital and senior debt instruments issued by GSI. These triggers enable the Bank of England to write down such instruments or convert such instruments to equity. The triggers can be exercised by the Bank of England if it determines that GSI has reached the point of non- viability and the FRB and the FDIC have not objected to the similar bail-in or if Group Inc. enters bankruptcy or proceedings. The Single Resolution Board’s internal MREL requirements applicable to GSBE are required to be phased in through January 2024. for the Insolvency of a BHC or IDI. The Dodd-Frank Act created a resolution regime, OLA, for BHCs and their affiliates that are systemically important. Under OLA, the FDIC may be systemically important receiver appointed as institution and its failed non-bank subsidiaries if, upon the recommendation of applicable regulators, the U.S. Secretary of the Treasury determines, among other things, that the institution is in default or in danger of default, that the institution’s failure would have serious adverse effects on the U.S. financial system and that resolution under OLA would avoid or mitigate those effects. If the FDIC is appointed as receiver under OLA, then the powers of the receiver, and the rights and obligations of creditors and other parties who have dealt with the institution, would be determined under OLA, and not under the bankruptcy or insolvency law that would otherwise apply. The powers of the receiver under OLA are generally based on the powers of the FDIC as receiver for depository institutions under the FDIA, described below. Substantial differences in the rights of creditors exist between OLA and the U.S. Bankruptcy Code, including the right of the FDIC under OLA to disregard the strict priority of creditor claims the use of an in some circumstances, administrative claims procedure to determine creditors’ claims (as opposed to the judicial procedure utilized in bankruptcy proceedings), and the right of the FDIC to transfer claims to a “bridge” entity. In addition, OLA limits the ability of creditors to enforce certain contractual cross- defaults against affiliates of the institution in receivership. The FDIC has issued a notice that it would likely resolve a failed FHC by transferring its assets to a “bridge” holding company under its “single point of entry” or “SPOE” strategy pursuant to OLA. Under the FDIA, if the FDIC is appointed as conservator or receiver for an IDI such as GS Bank USA, upon its insolvency or in certain other events, the FDIC has broad powers, including the power: • To transfer any of the IDI’s assets and liabilities to a new obligor, including a newly formed “bridge” bank, without the approval of the depository institution’s creditors; • To enforce the IDI’s contracts pursuant to their terms triggered by the regard to any provisions without appointment of the FDIC in that capacity; or • To repudiate or disaffirm any contract or lease to which the IDI is a party, the performance of which is determined by the FDIC to be burdensome and the repudiation or disaffirmance of which is determined by the FDIC to promote the orderly administration of the IDI. In addition, the claims of holders of domestic deposit liabilities and certain claims for administrative expenses against an IDI would be afforded a priority over other including deposits at non-U.S. general unsecured claims, branches and claims of debtholders of in the “liquidation or other resolution” of such an institution by any receiver. As a result, whether or not the FDIC ever sought to repudiate any debt obligations of GS Bank USA, the debtholders (other than depositors at U.S. branches) would be treated differently from, and could receive, if the depositors at U.S. anything, substantially less than, branches of GS Bank USA. the IDI, Goldman Sachs 2022 Form 10-K 17 The prompt corrective action regulations do not apply to BHCs. However, the FRB is authorized to take appropriate action at the BHC level, based upon the undercapitalized status of the BHC’s depository institution subsidiaries. In certain instances, relating to an undercapitalized depository the BHC would be required to institution subsidiary, guarantee undercapitalized subsidiary’s capital restoration plan and might be liable for civil money damages for failure to fulfill its commitments on that guarantee. Furthermore, in the event of the bankruptcy of the BHC, the guarantee would take priority over the BHC’s general unsecured creditors, as described in “Source of Strength” above. performance the the of Volcker Rule and Other Restrictions on Activities. As a BHC, we are subject to limitations on the types of business activities in which we may engage. Volcker Rule. The Volcker Rule prohibits “proprietary trading,” but permits activities such as underwriting, market making and risk-mitigation hedging, requires an extensive compliance program and includes additional reporting and record-keeping requirements. In addition, the Volcker Rule limits the sponsorship of, and investment in, “covered funds” (as defined in the rule) by banking entities, including us. It also limits certain types of transactions between us and our sponsored and advised funds, similar to the limitations on transactions between depository institutions and their affiliates. Covered funds include our private equity funds, certain of our credit and real estate funds, our hedge funds and certain other investment structures. The limitation on investments in covered funds requires us to limit our investment in each such fund to 3% or less of the fund’s net asset value, and to limit our aggregate investment in all such funds to 3% or less of our Tier 1 capital. The FRB has granted our request for additional time until July 2023 to conform our investments in, and relationships with, certain legacy “illiquid funds” (as defined in the Volcker Rule) that were in place prior to December 2013. See Note 8 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for further information about our investments in such funds. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Deposit Insurance. Deposits at GS Bank USA have the benefit of FDIC insurance up to the applicable limits. The FDIC’s Deposit Insurance Fund is funded by assessments on IDIs. GS Bank USA’s assessment (subject to adjustment by the FDIC) is currently based on its average total consolidated assets less its average tangible equity during the assessment period, its supervisory ratings and specified forward-looking financial measures used to calculate the assessment rate. The deposits of GSBE are covered by the German statutory deposit protection program to the extent provided by law. In addition, GSBE has elected to participate in the German voluntary deposit protection program which provides insurance for certain eligible deposits not covered by the German statutory deposit program. Eligible deposits at GSIB and the London branch of GS Bank USA are covered by the U.K. Financial Services Compensation Scheme up to the applicable limits. In October 2022, the FDIC adopted a rule applicable to all FDIC-insured banks increased initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023. that corrective Prompt Corrective Action. The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires the U.S. federal bank regulatory agencies to take “prompt in respect of depository institutions that do not meet specified capital requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as GS Bank USA: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. action” An institution may be downgraded to, or deemed to be in, a capital category that is lower than is indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, as the capital category the capital of an institution declines. Failure to meet requirements could also require a depository institution to raise undercapitalized institutions are subject to the appointment of a receiver or conservator, as described in “Insolvency of an IDI or a BHC” above. capital. Ultimately, critically 18 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Other Restrictions. FHCs generally can engage in a broader range of financial and related activities than are otherwise permissible for BHCs as long as they continue to meet the eligibility requirements for FHCs. The broader range of permissible activities for FHCs includes underwriting, dealing and making markets in securities and making investments in non-FHCs (merchant banking activities). In addition, certain FHCs, including us, are permitted to engage in certain commodities activities in the U.S. that may otherwise be impermissible for BHCs, so long as the assets held pursuant to these activities do not equal 5% or more of their consolidated assets. The FRB, however, has the authority to limit an FHC’s ability to conduct activities that would otherwise be permissible, and will likely do so if the FHC does not satisfactorily meet certain requirements of the FRB. For example, if an FHC or any of its U.S. depository institution subsidiaries ceases to maintain its status as well-capitalized or well-managed, the FRB may impose corrective capital and/or managerial requirements, as well as additional limitations or the FHC may be conditions. required to divest its U.S. depository institution subsidiaries or to cease engaging in activities other than the business of banking and certain closely related activities. the deficiencies persist, If If any IDI subsidiary of an FHC fails to maintain at least a “satisfactory” rating under the Community Reinvestment Act (CRA), the FHC would be subject to restrictions on certain new activities and acquisitions. In addition, we are required to obtain prior FRB approval before certain acquisitions and before engaging in certain banking and other financial activities both within and outside the U.S. U.S. G-SIBs, like us, are also required to comply with a rule regarding single counterparty credit limits, which imposes more stringent requirements for credit exposures among major financial institutions. The New York State banking law imposes lending limits (which take into account credit exposure from derivative transactions) and other requirements that could impact the manner and scope of GS Bank USA’s activities. The U.S. federal bank regulatory agencies have issued guidance that focuses on transaction structures and risk frameworks and that outlines high-level management principles for safe-and-sound leveraged lending, including underwriting standards, valuation and stress testing. This guidance has, among other things, limited the percentage amount of debt that can be included in certain transactions. As a German credit institution, GSBE will become subject to Volcker Rule-type prohibitions under German banking law and regulations on December 31, 2023 because its financial assets exceeded certain thresholds. Prohibited activities include (i) proprietary trading, (ii) high-frequency trading at a German trading venue, and (iii) lending and guarantee businesses with German hedge funds, German funds of hedge funds or any non-German substantially leveraged alternative investment funds, unless an exclusion or an exemption applies. See “Volcker Rule” above for further information. U.K. banks that have over £25 billion of core retail deposits are required to separate their retail banking services from activities, their commonly known as “ring-fencing.” GSIB is not currently subject to the ring-fencing requirement. and international banking investment subsidiaries, Broker-Dealer and Securities Regulation including GS&Co., are Our broker-dealer subject to regulations that cover all aspects of the securities business, including sales methods, trade practices, the use and safekeeping of clients’ funds and securities, capital structure, record-keeping, the financing of clients’ purchases, and the conduct of directors, officers and employees. In the U.S., the SEC is the federal agency responsible for the administration of the federal securities laws. capital U.S. state securities and other U.S. regulators also have regulatory or oversight authority over GS&Co. For a description of net to GS&Co., see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital — U.S. Regulated Broker-Dealer Subsidiaries” in Part II, Item 7 of this Form 10- K. requirements applicable The SEC issued a proposed rule in November 2021 which, if adopted, would require lenders of securities to provide the material to a registered national securities association, such as FINRA. lending transactions terms of securities The SEC requires broker-dealers to act in the best interest of their customers. SEC rules require broker-dealers to provide a standardized, short-form disclosure highlighting services offered, applicable standards of conduct, fees and costs, the differences between brokerage and advisory services, and any conflicts of interest. In addition, several states have adopted or proposed adopting uniform fiduciary duty standards applicable to broker-dealers. Goldman Sachs 2022 Form 10-K 19 In the E.U. and the U.K., the European Markets in Financial Instruments Directive (MiFID II) established trading venue categories for the purposes of discharging the obligation to trade OTC derivatives on a trading platform, enhanced pre- and post-trade transparency covering a wide range of financial instruments, placed volume caps on non-transparent liquidity trading for equities trading venues, limited the use of broker-dealer equities crossing networks and created a regime for systematic internalizers, which are investment firms that execute client equity transactions outside a trading venue. Additional control requirements apply to algorithmic trading, high frequency trading and direct electronic access. Commodities trading firms are required to calculate their positions and adhere to specific position limits. MiFID II also requires enhanced transaction reporting, the publication of best execution data by investment firms and trading venues, transparency on costs and charges of service to investors, restrictions on the way investment managers can pay for the receipt of investment research, rules limiting the payment and receipt of soft commissions and other forms of inducements, and mandatory unbundling for broker-dealers between execution and other major services. Certain of our non-U.S. subsidiaries, including GSBE and GSI, are subject to risk retention requirements in connection with securitization activities. GSJCL, our regulated Japanese broker-dealer, is subject to capital requirements imposed by Japan’s Financial Services Agency. GSJCL is also regulated by the Tokyo Stock Exchange, the Bank of Japan and the Ministry of Finance, among others. The Securities and Futures Commission in Hong Kong, the China Securities Regulatory Commission, the Reserve Bank of India, the Securities and Exchange Board of India, the Australian Securities and Investments Commission, the Australian Securities Exchange, the Monetary Authority of Singapore, the Korean Financial Supervisory Service and the Central Bank of Brazil, among others, regulate various of our subsidiaries and also have capital standards and other requirements comparable to the rules of the U.S. regulators. Our exchange-based market-making activities are subject to extensive regulation by a number of securities exchanges. As a market maker on exchanges, we are required to maintain orderly markets in the securities to which we are assigned. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES In December 2022, the SEC issued four proposals to reform structure. The SEC proposed the U.S. equity market establishing a broker-dealer best execution standard, which would require broker-dealers to use reasonable diligence to ascertain the best market for a customer order so that the resultant price to the customer is as favorable as possible under prevailing market conditions. The best execution standard applies to all securities and supplements, but does not replace, the existing FINRA and Municipal Securities Rulemaking Board (MSRB) best execution rules. The SEC also proposed, among other things, to require that individual investor orders routed through broker-dealers be exposed to order-by-order competition in qualified auctions; to update the minimum pricing increments, with variable price increments based on the trading characteristics of stocks; and to revise and expand reporting and disclosure requirements relating to execution quality. involved in the In January 2023, the SEC proposed a rule that would prohibit participants creation of asset-backed securities, including any underwriter, placement agent, initial purchaser or sponsor of an asset-backed security (or any affiliate or subsidiary), from engaging in any transaction that would involve or result in a material conflict of interest between the securitization participant and an investor in an asset-backed security, including reducing its exposure to the asset-backed securities, subject to certain exceptions. have in various non-U.S. The SEC, FINRA and regulators and conduct-based jurisdictions both to research disclosure-based requirements with respect reports and research analysts and may impose additional regulations. imposed GS&Co. and other U.S. subsidiaries are also subject to rules adopted by U.S. federal agencies pursuant to the Dodd-Frank Act that require any person who organizes or initiates certain asset-backed securities to retain a portion transactions (generally, at least five percent) of any credit risk that the person conveys to a third party. For certain securitization transactions, retention by third-party purchasers may satisfy this requirement. including In Europe, we provide broker-dealer services, through GSBE, GSPIC and GSI, that are subject to oversight by European and national regulators. These services are regulated in accordance with E.U., U.K. and other national laws and regulations. These laws require, among other things, compliance with certain capital adequacy and liquidity standards, customer protection requirements and market conduct and trade reporting rules. Certain of our European subsidiaries are also regulated by the securities, derivatives and commodities exchanges of which they are members. 20 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Swaps, Derivatives and Commodities Regulation The commodity futures, commodity options and swaps industry in the U.S. is subject to regulation under the U.S. Commodity Exchange Act (CEA). The CFTC is the U.S. federal agency charged with the administration of the CEA. In addition, the SEC is the U.S. federal agency charged with the regulation of security-based swaps. The rules and regulations of various self-regulatory organizations, such as the Chicago Mercantile Exchange, other futures exchanges also govern and the National Futures Association, commodity futures, commodity options and swaps activities. The terms “swaps” and “security-based swaps” include a wide variety of derivative instruments in addition to those conventionally referred to as (including certain forward contracts and options), and relate to a wide variety of underlying assets or obligations, including currencies, commodities, interest or other monetary rates, yields, indices, securities, credit events, loans and other financial obligations. swaps these those particularly requirements, CFTC rules require registration of swap dealers, mandatory clearing and execution of interest rate and credit default swaps and real-time public reporting and adherence to business conduct standards for all in-scope swaps. A number of regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. GS&Co. and other subsidiaries, including GS Bank USA, GSBE, GSI and J. Aron, are registered with the CFTC as swap dealers. The CFTC has rules establishing capital requirements for swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB. The CFTC also has financial reporting requirements for covered swap entities and capital rules for CFTC-registered futures commission merchants that for proprietary provide positions in swaps and security-based swaps that are not cleared by a clearing organization. Certain of our registered swap dealers, including J. Aron, are subject to the CFTC’s capital requirements. requirements explicit capital Our affiliates registered as swap dealers are subject to the margin rules issued by the CFTC (in the case of our non-bank swap dealers) and the FRB (in the case of GS Bank USA and GSBE). Inter-affiliate transactions under the CFTC and FRB margin rules are generally exempt from initial margin requirements. SEC rules govern the registration and regulation of security- based swap dealers. Security-based swaps are defined as swaps on single securities, single loans or narrow-based baskets or indices of securities. The SEC has adopted a number of rules for security-based swap dealers, including (i) capital, margin and segregation requirements; (ii) record- keeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the application of risk mitigation techniques to uncleared portfolios of security-based swaps. Certain of our subsidiaries, including GS&Co., GS Bank USA and GSBE, are registered with the SEC as security-based swap dealers and subject to the SEC’s regulations regarding security-based swaps. The SEC has proposed additional that would, regulations regarding security-based swaps among other large positions in security-based swaps. require public reporting of things, GS Bank USA is also subject to the FRB’s swaps margin rules. These rules require the exchange of initial and variation margin in connection with transactions in swaps and security-based swaps that are not cleared through a registered or exempt clearinghouse. GS Bank USA is required to post and collect margin in connection with transactions with swap dealers, security-based swap dealers, major swap participants and major security-based swap participants, or financial end users. The CFTC and the SEC have adopted rules relating to cross- border regulation of swaps and securities-based swaps, and business conduct and registration requirements. The CFTC and the SEC have entered into agreements with certain non- U.S. regulators regarding the cross-border regulation of derivatives and the mutual recognition of cross-border execution facilities and clearinghouses, and have approved substituted compliance with certain non-U.S. regulations related to certain business conduct requirements and margin rules. The U.S. prudential regulators have not yet made a determination with respect to substituted compliance for transactions subject to non-U.S. margin rules. Similar types of regulation have been proposed or adopted in including in the E.U. and jurisdictions outside the U.S., Japan. Under the European Market Infrastructure Regulation (EMIR), for example, the E.U. and the U.K. have established regulatory requirements relating to portfolio reconciliation clearing certain OTC derivatives and and reporting, margining for uncleared derivatives activities. In addition, under Instruments Directive and Regulation, transactions in certain types of derivatives are required to be executed on regulated platforms or exchanges. the European Markets in Financial Goldman Sachs 2022 Form 10-K 21 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The CFTC has adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control. The CFTC position limits apply to futures on physical commodities and options on such futures, apply to both physically and cash settled positions and to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and non-spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that non-spot month limits will at some point be adopted for futures, options on futures and swaps on other categories of physical commodities. J. Aron is authorized by the U.S. Federal Energy Regulatory Commission (FERC) to sell wholesale physical power at market-based rates. As a FERC-authorized power marketer, J. Aron is subject to regulation under the U.S. Federal Power Act and FERC regulations and to the oversight of FERC. As a is also an result of our investing activities, Group Inc. “exempt holding company” under the U.S. Public Utility Holding Company Act of 2005 and applicable FERC rules. In addition, as a result of our power-related and commodities activities, we are subject to energy, environmental and other governmental laws and regulations, as described in “Risk Factors — Legal and Regulatory — Our commodities activities, particularly our physical commodities activities, to extensive regulation and involve certain subject us potential risks, including environmental, reputational and other risks that may expose us to significant liabilities and costs” in Part I, Item 1A of this Form 10-K. GS&Co. is registered with the CFTC as a futures commission merchant, and several of our subsidiaries, including GS&Co., are registered with the CFTC and act as commodity pool operators and commodity trading advisors. Goldman Sachs Financial Markets, L.P. is registered with the SEC as an OTC derivatives dealer. and Wealth Management Asset Management Regulation Our asset management and wealth management businesses are subject to extensive oversight by regulators around the world relating to, among other things, the fair treatment of clients, safeguarding of client assets, offerings of funds, marketing activities, transactions among affiliates and our management of client funds. 22 Goldman Sachs 2022 Form 10-K The federal securities laws impose fiduciary duties on including GS&Co., Goldman Sachs investment advisers, Asset Management, L.P. and our other U.S. registered investment adviser subsidiaries. Additionally, SEC rules require investment advisers to provide a standardized, short- form disclosure highlighting services offered, applicable standards of conduct, fees and costs, the differences between brokerage and advisory services, and any conflicts of interest. Several states have adopted or proposed adopting uniform fiduciary duty standards applicable to advisers. and organizational, marketing Certain of our European subsidiaries, including GSBE in the E.U. and GSAMI in the U.K., are subject to MiFID II and/or legislation making related regulations (including the U.K. law), which govern the such regulations part of U.K. approval, reporting requirements of E.U. or U.K.-based investment managers and the ability of investment fund managers located outside the E.U. or the U.K. to access those markets. NNIP B.V. is subject to similar requirements as a management company licensed under for Collective the E.U. Undertakings Investment in Transferable Securities (UCITS) Directive and the E.U. Alternative Investment Fund Managers (AIFM) Directive with additional authorizations for certain activities regulated under MiFID II. Our asset management business in the E.U. and the U.K. significantly depends on our ability to delegate parts of our activities to other affiliates. GSAMI is also subject to the prudential regime for U.K. investment firms, the Investment Firms Prudential Regime (IFPR), which governs the prudential requirements for U.K. investment firms prudentially regulated by the FCA. subject Consumer Regulation Our U.S. to consumer-oriented activities are supervision and regulation by the CFPB with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. Our consumer-oriented activities are also subject to various state and local consumer protection laws, rules and regulations, which, among other things, impose obligations relating to marketing, origination, servicing and collections activities in our consumer businesses. Many of these laws, rules and regulations also apply to our small business lending activities, which are also subject to supervision and regulation by federal and state regulators. In addition, our U.K. consumer deposit-taking activities are subject to U.K. consumer protection laws and regulations. Compensation Practices Our compensation practices are subject to oversight by the FRB and, with respect to some of our subsidiaries and employees, by other regulatory bodies worldwide. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES to are that respect incentive encourage The FSB has released standards for implementation by local sound designed regulators compensation practices at banks and other financial companies. The U.S. federal bank regulatory agencies have also provided guidance designed to ensure that incentive compensation arrangements at banking organizations take into account risk and are consistent with safe and sound practices. The guidance sets forth the following three key principles with compensation to arrangements: (i) the arrangements should provide employees with incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations the arrangements should be compatible with effective controls and risk management; and (iii) the arrangements should be supported by strong corporate governance. The guidance provides that supervisory findings with respect to incentive compensation will be incorporated, as appropriate, into the organization’s supervisory ratings, which can affect its ability to make acquisitions or perform other actions. The guidance also notes that enforcement actions may be taken against a banking compensation its incentive related risk management, control or arrangements or governance processes pose a risk to the organization’s safety and soundness. to imprudent organization risk; (ii) if The Dodd-Frank Act requires U.S. financial regulators, including the FRB and SEC, to adopt rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets. The U.S. financial regulators proposed revised rules in 2016, which have not been finalized. In October 2022, the SEC adopted a final rule requiring securities exchanges to adopt rules mandating, in the case of a restatement, the recovery or “clawback” of excess incentive-based compensation paid to current or former executive officers and requiring listed issuers to disclose any recovery a restatement. analysis where triggered by recovery is that any incentive The NYDFS’ guidance emphasizes compensation arrangements tied to employee performance indicators at banking institutions regulated by the NYDFS, including GS Bank USA, must be subject to effective risk management, oversight and control. In the E.U., certain provisions in the CRR and CRD are designed to meet the FSB’s compensation standards. These provisions limit the ratio of variable to fixed compensation of all employees at GSBE and of certain employees at our other operating subsidiaries in the E.U., including those employees identified as having a material impact on the risk profile of regulated entities. CRR II and CRD V amended certain aspects of these rules, including, by increasing minimum variable compensation deferral periods. Substantially similar requirements apply in the U.K. in relation to GSI and GSIB. The E.U. and the U.K. have each also introduced investment firm regimes, including rules regulating compensation for certain persons providing services to certain investment funds. Anti-Money Laundering and Anti-Bribery Rules and Regulations The U.S. Bank Secrecy Act, as amended (BSA), including by the USA PATRIOT Act of 2001, contains anti-money laundering and financial transparency laws and authorizes or mandates the promulgation of various regulations applicable to financial including standards for verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities. Through these and other provisions, the BSA seeks, among other things, to promote the identification of parties that may be involved in terrorism, money laundering or other suspicious activities. institutions, financial The Anti-Money Laundering Act of 2020 (AMLA), which amends the BSA, is intended to comprehensively reform and modernize U.S. anti-money laundering laws. Among other things, the AMLA codifies a risk-based approach to anti- money laundering compliance for institutions; requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards by the U.S. Department of the Treasury for testing technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including a significant expansion in the available sanctions for certain BSA violations; and expands BSA whistleblower incentives and protections. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will and depend implementation guidance. The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury has issued the priorities for anti-money laundering and countering the financing of terrorism policy, as required under corruption, cybercrime, terrorist financing, fraud, transnational crime, drug and proliferation financing. trafficking, human trafficking the AMLA. The priorities rulemaking include: among things, other on, corrupt We are subject to other laws and regulations worldwide relating to anti-money laundering and financial transparency, including the E.U. Anti-Money Laundering Directives. In addition, we are subject to the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act and other laws and regulations worldwide illegal regarding payments, or providing anything of value, for the benefit of government officials and others. The scope of the types of payments or other benefits covered by these laws is very broad. These laws and regulations include requirements relating to the identification of clients, monitoring for and reporting suspicious transactions, monitoring direct and indirect payments to politically exposed persons, providing information to regulatory authorities and law enforcement agencies, and sharing information with other financial institutions. and Goldman Sachs 2022 Form 10-K 23 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES the Information Protection Act, Privacy and Cybersecurity Regulation Our businesses are subject to numerous laws and regulations relating to the privacy of information regarding clients, employees and others. These include, but are not limited to, the GLB Act, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (CCPA), the E.U.’s General Data Protection Regulation (GDPR), the U.K.’s Data Protection Act 2018, the Japanese Personal Personal Information Protection Law of the People’s Republic of China (PIPL), and the Hong Kong Personal Data (Privacy) Ordinance. Among other the CCPA imposes compliance obligations with regard to the collection, use and disclosure of personal information. In addition, several other jurisdictions have enacted, or are states and non-U.S. proposing, privacy and data protection laws similar to the the GDPR has GDPR and the CCPA. Furthermore, heightened our privacy compliance obligations, impacted certain of our businesses’ collection, processing and retention of personal data and imposed strict standards for reporting data breaches. The GDPR also provides for significant penalties for non-compliance. The PIPL limits the legal bases for processing personal information, contains heightened notice and consent requirements for the handling of certain types of personal information and imposes special cross- border data transfer rules under certain circumstances. things, Our businesses are also subject to laws and regulations governing cybersecurity and related risks, and which require regulatory disclosures of certain security incidents. The NYDFS also requires financial institutions regulated by the NYDFS, including GS Bank USA, to, among other things, (i) establish and maintain a cybersecurity program designed to ensure the confidentiality, integrity and availability of their information systems; (ii) implement and maintain a written cybersecurity policy setting forth policies and procedures for the protection of their information systems and nonpublic information; and (iii) designate a Chief Information Security Officer. In January 2023, the E.U. Digital Operational Resilience Act (DORA) became effective, and will apply from January 2025. DORA requires E.U. financial entities, such as GSBE, to have a comprehensive governance and control framework for the management of information and communications technology (ICT) risk. In addition, in March 2022, the SEC proposed new rules that would require disclosures about material cybersecurity incidents on Form 8-K and updated disclosures about previously disclosed cybersecurity incidents on Forms 10-Q and 10-K. 24 Goldman Sachs 2022 Form 10-K Information about our Executive Officers Set forth below are the name, age, present title, principal occupation and certain biographical information for the executive officers who have been appointed by, and serve at the pleasure of, Group Inc.’s Board. Philip R. Berlinski, 46 Mr. Berlinski has been Global Treasurer since October 2021; he also serves as Chief Executive Officer of Goldman Sachs Bank USA. He had previously served as Chief Operating Officer of Global Equities from May 2019. Prior to that, he was Co-Head of Global Equities Trading and Execution Services from September 2016 to May 2019. Denis P. Coleman III, 49 Mr. Coleman has been Chief Financial Officer since January 2022. He had previously served as Deputy Chief Financial Officer from September 2021 and, prior to that, Co-Head of the Global Financing Group from June 2018 to September 2021. From 2016 to June 2018, he was Head of the EMEA Financing Group, and from 2009 to 2016 he was Head of EMEA Credit Finance in London. Sheara J. Fredman, 47 Ms. Fredman has been Controller and Chief Accounting Officer since November 2019. She had previously served as Head of Regulatory Controllers from September 2017 and, prior to that, she had served as Global Product Controller. Brian J. Lee, 56 Mr. Lee has been Chief Risk Officer since November 2019. He had previously served as Controller and Chief Accounting Officer from March 2017 and, prior to that, he had served as Deputy Controller from 2014. Ericka T. Leslie, 52 Ms. Leslie has been Chief Administrative Officer since February 2022. She had previously served as Global Head of Operations and Platform Engineering for the Global Markets Division from March 2020, as Global Head of Operations for the Securities Division from January 2019 and as Head of Global Operations for the Commodities business from September 2008. John F.W. Rogers, 66 Mr. Rogers has been an Executive Vice President since April 2011 and Chief of Staff and Secretary to the Board since December 2001. Kathryn H. Ruemmler, 51 Ms. Ruemmler has been the Chief Legal Officer, General Counsel and Secretary since March 2021, and was previously Global Head of Regulatory Affairs from April 2020. From June 2014 to April 2020, Ms. Ruemmler was a Litigation Partner at Latham & Watkins LLP, a global law firm, where she was Global Chair of the White Collar Defense and Investigations practice. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES David Solomon, 61 Mr. Solomon has been Chairman of the Board since January 2019 and Chief Executive Officer and a director since October 2018. He had previously served as President and Chief or Co-Chief Operating Officer from January 2017 and Co-Head of the Investment Banking Division from July 2006 to December 2016. John E. Waldron, 53 Mr. Waldron has been President and Chief Operating Officer since October 2018. He had previously served as Co-Head of the Investment Banking Division from December 2014. Prior to that he was Global Head of Investment Banking Services/ Client Coverage for the Investment Banking Division and had oversight of the Investment Banking Services Leadership Group, and from 2007 to 2009 was Global Co-Head of the Financial Sponsors Group. Available Information Our internet address is www.goldmansachs.com and the investor relations section of our website is located at www.goldmansachs.com/investor-relations, where we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Also posted on our website, and available in print upon request of any shareholder to our Investor Relations Department (Investor Relations), are our certificate of incorporation and by-laws, charters for our Audit, Risk, Compensation, Corporate Governance and Nominating, and Public Responsibilities Committees, our Policy Regarding Director Independence Determinations, our Policy on Reporting of Concerns Regarding Accounting and Other Matters, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics governing our directors, officers and employees. Within the time period required by the SEC, we will post on our website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer. Our website also includes information about (i) purchases and sales of our equity securities by our executive officers and directors; (ii) disclosure relating to certain non-GAAP financial measures (as defined in the SEC’s Regulation G) that we may make public orally, telephonically, by webcast, by broadcast or by other means; (iii) our U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act Stress Tests results; (iv) the public portion of our resolution plan submission; (v) our Pillar 3 disclosure; (vi) our average daily LCR; (viii) our Sustainability Report; and (ix) our Task Force on Climate- Related Financial Disclosures (TCFD) Report. (vii) our People Strategy Report; 10282, Attn: Investor Relations can be contacted at The Goldman Sachs Group, Inc., 200 West Street, 29th Floor, New York, New York telephone: 212-902-0300, e-mail: gs-investor-relations@gs.com. We use the following, as well as other social media channels, to disclose public information to investors, the media and others: Investor Relations, • Our website (www.goldmansachs.com); • Our Twitter account (twitter.com/GoldmanSachs); and • Our Instagram account (instagram.com/GoldmanSachs). Our officers may use similar social media channels to disclose public information. It is possible that certain information we or our officers post on our website and on social media could be deemed material, and we encourage investors, the media and others interested in Goldman Sachs to review the business and financial information we or our officers post on our website and on the social media channels identified above. The information on our website and those social media channels is not incorporated by reference into this Form 10-K. Forward-Looking Statements We have included in this Form 10-K, and our management may make, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. facts or Forward-looking statements are not historical statements of current conditions, but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results, financial condition, liquidity and capital actions may differ, possibly materially, from the anticipated results, financial condition, in these forward-looking liquidity and capital actions statements. Important factors that could cause our results, financial condition, liquidity and capital actions to differ from those in these statements include, among others, those described below and in “Risk Factors” in Part I, Item 1A of this Form 10-K. Goldman Sachs 2022 Form 10-K 25 Statements about our target return on average common shareholders’ equity (ROE), return on average tangible common shareholders’ equity (ROTE), efficiency ratio and expense savings, and how they can be achieved, are based on our current expectations regarding our business prospects and are subject to the risk that we may be unable to achieve our targets due to, among other things, changes in our business mix, lower profitability of new business initiatives, increases in technology and other costs to launch and bring new business initiatives to scale, and increases in liquidity requirements. Statements about our target ROE, ROTE and CET1 capital ratio, and how they can be achieved, are based on our current expectations regarding the capital requirements applicable to us and are subject to the risk that our actual capital requirements may be higher than currently anticipated because of, among other factors, changes in the regulatory capital requirements applicable to us resulting from changes in regulations or the interpretation or application of existing regulations or changes in the nature and composition of our activities. Statements about our firmwide AUS inflows targets regarding our are based on our current expectations fundraising prospects and are subject to the risk that actual inflows may be lower than expected due to, among other factors, competition from other asset managers, changes in investment preferences and changes in economic or market conditions. Statements about the timing, costs, profitability, benefits and other aspects of business and expense savings initiatives, the level and composition of more durable revenues and increases in market share are based on our current expectations regarding our ability to implement these initiatives and actual from current results may differ, possibly materially, expectations due to, among other things, a delay in the timing of these initiatives, increased competition and an inability to reduce expenses and grow businesses with durable revenues. Statements about the level of future compensation expense, including as a percentage of both operating expenses and revenues, net of provision for credit losses, and our efficiency ratio as our platform solutions business reaches scale are subject to the risks that the compensation and other costs to operate our businesses, including platform initiatives, may be greater than currently expected. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES in or growth opportunities income and interest expense, These statements may relate to, among other things, (i) our future plans and results, including our target ROE, ROTE, efficiency ratio, CET1 capital ratio and firmwide assets under supervision (AUS) inflows, and how they can be achieved, (ii) trends for our businesses, including the timing, costs, profitability, benefits and other aspects of business and strategic initiatives and their impact on our efficiency ratio, (iii) our level of future compensation expense, including as a percentage of both operating expenses and revenues, net of provision for credit losses, (iv) our Investment banking fees backlog and future results, (v) our (vi) our expected interest expense savings and strategic locations initiatives, (vii) expenses we may incur, including future litigation expense and expenses from investing in our platform solutions business, (viii) the projected growth of our deposits and other funding, asset liability management and funding strategies (ix) our business and related interest expense savings, initiatives, including transaction banking and new products in our consumer platforms business, (x) our planned 2023 benchmark debt issuances, (xi) the amount, composition and location of global core liquid assets (GCLA) we expect to hold, (xii) our credit exposures, (xiii) our expected provisions for credit losses, (xiv) the adequacy of our allowance for credit losses, (xv) the projected growth of our platform solutions business, (xvi) the objectives and effectiveness of our business continuity planning, information security program, risk management and liquidity policies, (xvii) our resolution plan and strategy and their implications for the design and effectiveness of our stakeholders, resolution capital and liquidity models and triggers and alerts framework, (xix) the results of stress tests, the effect of changes to regulations, and our future status, activities or reporting under banking and financial regulation, (xx) our expected tax rate, (xxi) the future state of our liquidity and regulatory capital capital distributions (including dividends and repurchases), (xxii) legal our expected SCB and G-SIB surcharge, proceedings, other investigations governmental contingencies, (xxiv) the asset recovery guarantee and our remediation activities related to our 1Malaysia Development the replacement of Berhad (1MDB) Interbank Offered Rates and our transition to alternative risk-free reference rates, (xxvi) the impact of the COVID-19 pandemic on our business, results, financial position and liquidity, (xxvii) the effectiveness of our management of our human capital, including our diversity goals, (xxviii) our sustainability and carbon neutrality targets and goals, (xxix) future inflation and (xxx) the impact of Russia’s invasion of Ukraine and related sanctions and other developments on our business, results and financial position. ratios, and our prospective (xxiii) or settlements, (xviii) (xxv) 26 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Statements about our Investment banking fees backlog and future results are subject to the risk that such transactions may be modified or may not be completed at all, and related net revenues may not be realized or may be materially less than expected. Important factors that could have such a result include, for underwriting transactions, a decline or weakness in general economic conditions, an outbreak or worsening of hostilities, escalation or continuation of the war between Russia and Ukraine, continuing volatility in the securities markets or an adverse development with respect to the issuer of the securities and, for advisory transactions, a decline in the securities markets, an inability to obtain adequate financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval. For information about other that could adversely affect our Investment banking fees, see “Risk Factors” in Part I, Item 1A of this Form 10-K. important including factors the funding, asset Statements about the projected growth of our deposits and other liability management and funding strategies and related interest expense savings, and our platform solutions business, are subject to the risk that actual growth and savings may differ, possibly materially, from that currently anticipated due to, among other things, changes in interest rates and competition from other similar products. Statements about planned 2023 benchmark debt issuances and the amount, composition and location of GCLA we expect to hold are subject to the risk that actual issuances and GCLA levels may differ, possibly materially, from that currently expected due to changes in market conditions, business opportunities or our funding and projected liquidity needs. Statements about our expected provisions for credit losses are subject to the risk that actual credit losses may differ and our expectations may change, possibly materially, from that currently anticipated due to, among other things, changes to the composition of our loan portfolio and changes in the economic environment in future periods and our forecasts of future economic conditions, as well as changes in our models, policies and other management judgments. Statements about our future effective income tax rate are subject to the risk that it may differ from the anticipated rate indicated in such statements, possibly materially, due to, among other things, changes in the tax rates applicable to us, changes in our earnings mix, our profitability and entities in which we generate profits, the assumptions we have made in forecasting our expected tax rate, the interpretation or application of existing tax statutes and regulations, as well as any corporate tax legislation that may be enacted or any guidance that may be issued by the U.S. Internal Revenue Service. liquidity, regulatory the future state of our ratios Statements about liquidity and (including our SCB and G-SIB regulatory capital surcharge), and our prospective capital distributions (including dividends and repurchases), are subject to the risk that our actual and capital distributions may differ, possibly materially, from what is currently expected due to, among other things, the need to use capital to support clients, increased regulatory requirements resulting from changes in regulations or the interpretation or application of existing regulations, results of applicable supervisory stress tests, changes to the composition of our balance sheet and the impact of taxes on share repurchases. capital ratios from assets Statements about the risk exposure related to the asset recovery guarantee provided to the Government of Malaysia are subject to the risk that the actual value of, or credit received for, assets seized and returned to the and proceeds Government of Malaysia may be than currently anticipated. Statements about the progress or the status of remediation activities relating to 1MDB are based on our expectations remediation plans. Accordingly, our ability to complete the remediation activities may change, possibly materially, is currently expected. regarding our from what current less Statements about our objectives in management of our human capital, including our diversity goals, are based on our current expectations and are subject to the risk that we may not achieve these objectives and goals due to, among other things, competition in recruiting and attracting diverse candidates and unsuccessful efforts in retaining diverse employees. Statements about our sustainability and carbon neutrality targets and goals are based on our current expectations and are subject to the risk that we may not achieve these targets and goals due to, among other things, global socio-demographic lack of technological and economic trends, energy prices, innovations, climate-related conditions and weather events, legislative and regulatory changes, consumer behavior and demand, and other unforeseen events or conditions. Statements about future inflation are subject to the risk that actual inflation may differ, possibly materially, due to, among other things, changes in economic growth, unemployment or consumer demand. Statements about the impact of Russia’s invasion of Ukraine and related sanctions and other developments on our business, results and financial position are subject to the risks that hostilities may escalate and expand, that sanctions may impact may differ, possibly increase and that materially, from what is currently expected. the actual Goldman Sachs 2022 Form 10-K 27 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Item 1A. Risk Factors We face a variety of risks that are substantial and inherent in our businesses. The following is a summary of some of the more important factors that could affect our businesses: Market • Our businesses have been and may in the future be adversely affected by conditions in the global financial markets and broader economic conditions. • Our businesses have been and may in the future be adversely affected by declining asset values, particularly where we have net “long” positions, receive fees based on the value of assets managed, or receive or post collateral. • Our market-making activities have been and may in the future be affected by changes in the levels of market volatility. • Our investment banking, client intermediation, asset management and wealth management businesses have been adversely affected and may in the future be adversely affected by market uncertainty or lack of confidence among investors and CEOs due to declines in economic activity and other unfavorable economic, geopolitical or market conditions. • Our asset management and wealth management businesses have been and may in the future be adversely affected by the poor investment investment performance of our products or a client preference for products other than those which we offer or for products that generate lower fees. Credit • Our businesses, profitability and liquidity may be adversely affected by deterioration in the credit quality of or defaults by third parties. • Concentration of risk increases the potential for significant losses in our market-making, underwriting, investing and financing activities. • Derivative transactions and delayed documentation or settlements may expose us to credit risk, unexpected risks and potential losses. Operational • A failure in our operational systems or human error, malfeasance or other misconduct, could impair our liquidity, disrupt our businesses, result in the disclosure of confidential information, damage our reputation and cause losses. • A failure or disruption in our infrastructure, or in the operational systems or infrastructure of third parties, could impair our liquidity, disrupt our businesses, damage our reputation and cause losses. • A failure to protect our computer systems, networks and information, and our clients’ information, against cyber attacks and similar threats could impair our ability to conduct our businesses, result in the disclosure, theft or destruction of confidential information, damage our reputation and cause losses. • We may incur losses as a result of management processes and strategies. ineffective risk • Inflation has had, and could continue to have, a negative effect on our business, results of operations and financial condition. Legal and Regulatory • Our businesses and those of our clients are subject to extensive and pervasive regulation around the world. Liquidity • Our liquidity, profitability and businesses may be adversely affected by an inability to access the debt capital markets or to sell assets. • Our businesses have been and may in the future be adversely affected by disruptions or lack of liquidity in the credit markets, including reduced access to credit and higher costs of obtaining credit. • Reductions in our credit ratings or an increase in our credit spreads may adversely affect our liquidity and cost of funding. • Group Inc. is a holding company and its liquidity depends on payments and loans from its subsidiaries, many of which are subject to legal, regulatory and other restrictions on providing funds or assets to Group Inc. 28 Goldman Sachs 2022 Form 10-K • A failure to appropriately identify and address potential conflicts of interest could adversely affect our businesses. • We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity. • Substantial criminal civil or significant regulatory action against us could have material adverse financial effects or cause us significant reputational harm, which in turn could seriously harm our business prospects. liability or • In conducting our businesses around the world, we are subject to political, legal, regulatory and other risks that are inherent in operating in many countries. • The application of regulatory strategies and requirements jurisdictions to facilitate the in the U.S. and non-U.S. orderly resolution of institutions could create greater risk of loss for Group Inc.’s security holders. large financial • The application of Group Inc.’s proposed resolution strategy could result in greater losses for Group Inc.’s security holders. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES • Our commodities activities, particularly our physical commodities activities, subject us to extensive regulation and including environmental, reputational and other risks that may expose us to significant liabilities and costs. potential involve certain risks, Competition • Our results have been and may in the future be adversely affected by the composition of our client base. • The financial services industry is highly competitive. • The growth of electronic trading and the introduction of new products and technologies, including trading and distributed ledger technologies, including cryptocurrencies, has increased competition. • Our businesses would be adversely affected if we are unable to hire and retain qualified employees. Developments and General Market Environment • Our businesses, financial condition, liquidity and results of operations have been and may in the future be adversely affected by unforeseen or catastrophic events, including pandemics, terrorist attacks, extreme weather events or other natural disasters. Business • Climate change could disrupt our businesses and adversely affect client activity levels and the creditworthiness of our clients and counterparties, and our efforts to address concerns relating to climate change could result in damage to our reputation. • Our business, financial condition, liquidity and results of operations may be adversely affected by disruptions in the global economy caused by Russia’s invasion of Ukraine and related sanctions and other developments. • Certain of our businesses, our funding instruments and financial products may be adversely affected by changes in or the discontinuance of Interbank Offered Rates (IBORs), in particular USD LIBOR. • Certain of our businesses and our funding instruments may be adversely affected by changes in other reference rates, currencies, indexes, baskets or ETFs to which products we offer or funding that we raise are linked. • Our business, financial condition, liquidity and results of operations may be adversely affected by disruptions in the global economy caused by escalating tensions between the U.S. and China. • We face enhanced risks as new business initiatives and acquisitions lead us to engage in new activities, operate in new locations, transact with a broader array of clients and counterparties and expose us to new asset classes and markets. • We may not be able to fully realize the expected benefits or synergies from acquisitions or other business initiatives in the time frames we expect, or at all. The following are detailed descriptions of our Risk Factors summarized above: Market Our businesses have been and may in the future be adversely affected by conditions in the global financial markets and broader economic conditions. Many of our businesses, by their nature, do not produce predictable earnings, and all of our businesses are materially affected by conditions in the global financial markets and economic conditions generally, both directly and through their impact on client activity levels and creditworthiness. These conditions can change suddenly and negatively. Our financial performance is highly dependent on the environment in which our businesses operate. A favorable business environment is generally characterized by, among other factors, high global gross domestic product growth, regulatory and market conditions that result in transparent, liquid and efficient capital markets, low inflation, business, consumer and investor stable geopolitical confidence, conditions and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by: low levels of or declines in economic growth, business activity or investor, business or consumer confidence; concerns over a potential recession; changes in spending or borrowing patterns; pandemics; consumer limitations on the availability or increases in the cost of credit and capital; illiquid markets; increases in inflation, interest rates, exchange rate or basic commodity price volatility or default rates; high levels of inflation or stagflation; concerns about sovereign defaults; uncertainty concerning fiscal or monetary policy, government shutdowns, debt ceilings or the extent of and uncertainty about potential funding; regulatory changes; in tax rates and other increases limitations on international laws and regulations that limit trading in, or the issuance of, securities of issuers outside their domestic markets; outbreaks of domestic or international tensions or hostilities, terrorism, nuclear proliferation, cybersecurity threats or attacks and other forms of disruption to or curtailment of global communication, transportation energy transmission or instability or uncertainty; networks or other geopolitical corporate, political or other scandals that reduce investor confidence in capital markets; extreme weather events or other natural disasters; or a combination of these or other factors. trade and travel; The financial services industry and the securities and other financial markets have been materially and adversely affected in the past by significant declines in the values of nearly all asset classes, by a serious lack of liquidity and by high levels of borrower defaults. In addition, concerns about actual or potential inflation and other borrowing costs, a resurgence of COVID-19 cases, European sovereign debt risk and its impact on the European banking system, and limitations on international trade, have, at times, negatively impacted the levels of client activity. increases in interest rates, Goldman Sachs 2022 Form 10-K 29 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES General uncertainty about economic, political and market activities, and the scope, timing and impact of regulatory reform, as well as weak consumer, investor and CEO confidence resulting in large part from such uncertainty, has in the past negatively impacted client activity, which can adversely affect many of our businesses. Periods of low volatility and periods of high volatility combined with a lack of liquidity, have at times had an unfavorable impact on our market-making businesses. Changes, or proposed changes, to U.S. international trade and investment policies, particularly with important trading partners, have in recent years negatively impacted financial markets. Continued or escalating tensions may result in further actions taken by the U.S. or other countries that could disrupt international trade and investment and adversely affect financial markets. Those actions could include, among others, the implementation of sanctions, tariffs or foreign exchange measures, the large-scale sale of U.S. Treasury trade, securities or other investment, or transfer of information or technology. Any such developments could adversely affect our or our clients’ businesses. restrictions on cross-border Financial institution returns may be negatively impacted by increased funding costs due in part to the lack of perceived government support of such institutions in the event of future financial crises relative to financial institutions in countries in In addition, which governmental support liquidity in the financial markets has in the past been, and could in the future be, negatively impacted as market participants and market practices and structures adjust to evolving regulatory frameworks. is maintained. and limit including Treasury securities In January 2023, the outstanding debt of the U.S. reached its statutory the U.S. Treasury Department commenced taking extraordinary measures to prevent the U.S. from defaulting on its obligations. If Congress does not the U.S. could default on its raise the debt ceiling, obligations, that play an integral role in financial markets. A default by the U.S. could result in unprecedented market volatility and illiquidity, heightened operational risks relating to the clearance and settlement of transactions, margin and other disputes with clients and counterparties, an adverse impact to investors including money market funds that invest in U.S. Treasuries, downgrades in the U.S. credit rating, further increases in interest rates and borrowing costs and a recession in the U.S. or other economies. Even if the U.S. does not default, continued uncertainty relating to the debt ceiling could result in downgrades of the U.S. credit rating, which could adversely affect market conditions, lead to margin disputes, further increases in interest rates and borrowing costs and necessitate significant operational changes among market participants, the federal including us. A downgrade of rating could also materially and government’s adversely affect for repurchase agreements, securities borrowing and lending, and other financings collateralized by U.S. Treasury or typically agency obligations. Further, liquidity and credit the fair value, ratings of securities issued by, or other obligations of, agencies of the U.S. government or related to the U.S. government or its agencies, as well as municipal bonds could be similarly adversely affected. the market credit 30 Goldman Sachs 2022 Form 10-K affected Our businesses have been and may in the future be values, adversely particularly where we have net “long” positions, receive fees based on the value of assets managed, or receive or post collateral. declining asset by Many of our businesses have net “long” positions in debt securities, loans, derivatives, mortgages, equities (including private equity and real estate) and most other asset classes. These include positions we take when we act as a principal to facilitate our clients’ activities, including our exchange-based market-making activities, or commit large amounts of capital to maintain positions in interest rate and credit products, as well as through our currencies, commodities, equities and mortgage-related activities. In addition, we invest in similar asset classes. Substantially all of our investing and market- making positions and a portion of our loans are marked-to- market on a daily or other periodic basis and declines in asset values directly and promptly impact our earnings, unless we have effectively “hedged” our exposures to those declines. In certain circumstances (particularly in the case of credit products, including leveraged loans, and private equities or other securities that are not freely tradable or lack established it may not be possible or and liquid trading markets), economic to hedge our exposures and to the extent that we do so the hedge may be ineffective or may greatly reduce our ability to profit from increases in the values of the assets. Sudden declines and significant volatility in the prices of assets have in the past substantially curtailed or eliminated, and may in the future substantially curtail or eliminate, the trading markets for certain assets, which may make it difficult to sell, hedge or value such assets. We may incur losses from time to time as trading markets deteriorate or cease to loan commitments we have made or securities offerings we have underwritten. The inability to sell or effectively hedge assets reduces our ability to limit losses in such positions and the difficulty in valuing assets has in the past negatively affected, and may in the future negatively affect, our capital, liquidity or leverage ratios, our funding costs and our ability to deploy capital. including with respect to function, In our exchange-based market-making activities, we are obligated by stock exchange rules to maintain an orderly market, including by purchasing securities in a declining market. In markets where asset values are declining and in volatile markets, this results in losses and an increased need for liquidity. We receive asset-based management fees based on the value of our clients’ portfolios or investment in funds managed by us and, in some cases, we also receive incentive fees based on increases in the value of such investments. Declines in asset values would ordinarily reduce the value of our clients’ portfolios or fund assets, which in turn would typically reduce the fees we earn for managing such assets. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES if possible, We post collateral to support our obligations and receive collateral that supports the obligations of our clients and counterparties. When the value of the assets posted as collateral or the credit ratings of the party posting collateral decline, the party posting the collateral may need to provide trading additional collateral or, position. An example of such a situation is a “margin call” in connection with a brokerage account. Therefore, declines in the value of asset classes used as collateral mean that either the cost of funding positions is increased or the size of If we are the party providing is decreased. positions collateral, this can increase our costs and reduce our profitability and if we are the party receiving collateral, this can also reduce our profitability by reducing the level of business done with our clients and counterparties. reduce its In addition, volatile or less liquid markets increase the difficulty of valuing assets, which can lead to costly and time- consuming disputes over asset values and the level of required collateral, as well as increased credit risk to the recipient of the collateral due to delays in receiving adequate collateral. In cases where we foreclose on collateral, sudden declines in the value or liquidity of the collateral have in the past resulted in and may in the future, despite credit monitoring, over- collateralization, the ability to call for additional collateral or the ability to force repayment of the underlying obligation, result in significant losses to us, especially where there is a single type of collateral In addition, we have been and may in the future be subject to claims that the foreclosure was not permitted under the legal documents, was conducted in an improper manner, including in violation of law, or caused a client or counterparty to go out of business. supporting the obligation. Our market-making activities have been and may in the future be affected by changes in the levels of market volatility. Certain of our market-making activities depend on market volatility to provide trading and arbitrage opportunities to our clients, and decreases in volatility have reduced and may in the future reduce these opportunities and the level of client activity associated with them and adversely affect the results of these activities. Increased volatility, while it can increase trading volumes and spreads, also increases risk as measured by Value-at-Risk (VaR) and may expose us to increased risks in connection with our market-making activities or may cause us to reduce our inventory in order to avoid increasing our VaR. Limiting the size of our market-making positions can adversely affect our profitability. In periods when volatility is increasing, but asset values are declining significantly, it may not be possible to sell assets at all or it may only be possible to do so at steep discounts. In those circumstances, we have been and may in the future be forced to either take on additional risk or to realize losses in order to decrease our VaR. In addition, increases in volatility increase the level of our RWAs, which increases our capital requirements. Our investment banking, client intermediation, asset management and wealth management businesses have been adversely affected and may in the future be adversely affected by market uncertainty or lack of confidence among investors and CEOs due to declines in economic activity and other unfavorable economic, geopolitical or market conditions. is derived banking revenues Our investment banking business has been and may in the future be adversely affected by market conditions. Poor conditions and other uncertain geopolitical economic conditions may adversely affect and have in the past adversely affected investor and CEO confidence, resulting in significant industry-wide declines in the size and number of underwritings and of advisory transactions, which would likely have an adverse effect on our revenues and our profit margins. In particular, because a significant portion of our investment from our participation in large transactions, a decline in the number of large transactions has in the past and would in the future adversely affect our investment banking business. Similarly, in recent years, cross-border initial public offerings and other securities offerings have significant proportion of new issuance activity. Legislative, regulatory or other changes that limit trading in, or the issuance of, securities outside the issuers’ domestic markets, that result in or could result in the delisting or removal of securities from exchanges or indices, have in the past adversely affected and would in the future adversely affect our underwriting and client intermediation businesses. Furthermore, changes, or proposed changes, to international trade and investment policies of the U.S. and other countries could negatively affect market activity levels and our revenues. accounted for a In certain circumstances, market uncertainty or general declines in market or economic activity may adversely affect our client intermediation businesses by decreasing levels of overall activity or by decreasing volatility, but at other times market uncertainty and even declining economic activity may result in higher trading volumes or higher spreads or both. volatility and adverse Market uncertainty, economic conditions, as well as declines in asset values, may cause our clients to transfer their assets out of our funds or other products or their brokerage accounts and result in reduced net revenues, principally in our asset management and wealth management businesses. Even if clients do not withdraw their funds, they may invest them in products that generate less fee income. Goldman Sachs 2022 Form 10-K 31 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Our asset management and wealth management businesses have been and may in the future be adversely investment performance of our investment products or a client preference for products other than those which we offer or for products that generate lower fees. affected poor the by Poor investment returns in our asset management and wealth management businesses, due to either general market conditions or underperformance (relative to our competitors or to benchmarks) by funds or accounts that we manage or investment products that we design or sell, affect our ability to retain existing assets and to attract new clients or additional assets from existing clients. This could affect the management and incentive fees that we earn on AUS or the commissions and net spreads that we earn for selling other investment products, such as structured notes or derivatives. To the extent that our clients choose to invest in products that we do not currently offer, we will suffer outflows and a if, due to changes in loss of management fees. Further, investor sentiment or the relative performance of certain asset classes or otherwise, clients continue to invest in products that generate lower fees (e.g., passively managed or fixed income products), our average effective management fee would continue to decline and our asset management and wealth management businesses could be adversely affected. Inflation has had, and could continue to have, a negative effect on our business, results of operations and financial condition. Inflationary pressures have affected economies, financial markets and market participants worldwide. Inflationary pressures have increased certain of our operating expenses, and have adversely affected consumer sentiment and CEO confidence. Central bank responses to inflationary pressures have also resulted in higher market interest rates, which, in turn, have contributed to lower activity levels across financial markets, in particular for debt underwriting transactions and mortgage originations, and resulted in lower values for certain financial assets which have adversely affected our equity and debt investments. Higher interest rates increase our borrowing costs and have required us to increase interest paid on our deposits. If inflationary pressures persist, our expenses may increase further; we may be unable to achieve our efficiency ratio target; activity levels for certain of our businesses, in particular debt underwriting and mortgages, may remain at low levels or decline further; our interest expense could increase faster than our interest income, reducing our net interest income and net interest margin; certain of our investments could continue to incur losses or generally low levels of returns; AUS could decline, reducing management and other fees; economies worldwide could experience recessions; and we could continue to operate in a generally unfavorable economic and market environment. 32 Goldman Sachs 2022 Form 10-K Liquidity Our liquidity, profitability and businesses may be adversely affected by an inability to access the debt capital markets or to sell assets. the failures of Liquidity is essential to our businesses. It is of critical importance to us, as most of financial institutions have occurred in large part due to insufficient liquidity. Our liquidity may be impaired by an inability to access secured and/or unsecured debt markets, an inability to raise or retain deposits, an inability to access funds from our subsidiaries or otherwise allocate liquidity optimally, an inability to sell assets or redeem our investments, lack of timely settlement of transactions, unusual deposit outflows, or other unforeseen outflows of cash or collateral, such as in March 2020, when corporate clients drew on revolving credit facilities in response to the COVID-19 pandemic. This situation may arise due to circumstances that we may be unable to control, such as a general market or economic disruption or an operational problem that affects third parties or us, or even by the perception among market participants that we, or other market participants, are experiencing greater liquidity risk. We employ structured products to benefit our clients and hedge our own risks. The financial instruments that we hold and the contracts to which we are a party are often complex, and these complex structured products often do not have readily available markets to access in times of liquidity stress. Our investing and financing activities may lead to situations where represent a significant portion of specific markets, which could restrict liquidity for our positions. from these activities the holdings Further, our ability to sell assets may be impaired if there is not generally a liquid market for such assets, as well as in circumstances where other market participants are seeking to sell similar otherwise generally liquid assets at the same time, as is likely to occur in a liquidity or other market crisis or in response to changes to rules or regulations. For example, in 2021, an investment management firm with large positions with several institutions defaulted, resulting in rapidly declining prices in the securities underlying those positions. In addition, clearinghouses, exchanges and other financial institutions with which we interact may exercise set- off rights or the right to require additional collateral, including in difficult market conditions, which could further impair our liquidity. financial on large liquidity Numerous regulations have been adopted that impose more stringent financial requirements institutions, including us. These regulations require us to hold large amounts of highly liquid assets and reduce our flexibility to source and deploy funding. In addition, our need to manage our operations in light of certain regulatory requirements when applicable thresholds are met has in the past limited and may in the future limit our ability to raise deposits in GSIB or other funding, which could adversely affect our liquidity or ability to respond efficiently to liquidity stress. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Our businesses have been and may in the future be adversely affected by disruptions or lack of liquidity in the credit markets, including reduced access to credit and higher costs of obtaining credit. Widening credit spreads, as well as significant declines in the availability of credit, have in the past adversely affected our ability to borrow on a secured and unsecured basis and may do so in the future. We fund ourselves on an unsecured basis by issuing long-term debt and commercial paper, by raising deposits at our bank subsidiaries, by issuing hybrid financial instruments and by obtaining loans or lines of credit from commercial or other banking entities. We seek to finance many of our assets on a secured basis. Any disruptions in the credit markets may make it harder and more expensive to obtain funding for our businesses. If our available funding is limited or we are forced to fund our operations at a higher cost, these conditions may require us to curtail our business activities and increase our cost of funding, both of which could reduce our profitability, particularly in our businesses that involve investing, lending and market making. Our clients engaging in mergers, acquisitions and other types of strategic transactions often rely on access to the secured and unsecured credit markets to finance their transactions. A lack of available credit or an increased cost of credit can adversely affect the size, volume and timing of our clients’ merger and acquisition transactions, particularly large and transactions, underwriting businesses. and adversely affect our advisory Our credit businesses have been and may in the future be negatively affected by a lack of liquidity in credit markets. A lack of liquidity reduces price transparency, increases price volatility and decreases transaction volumes and size, all of which can increase the profitability of these businesses. transaction risk or decrease Reductions in our credit ratings or an increase in our credit spreads may adversely affect our liquidity and cost of funding. Our credit ratings are important to our liquidity. A reduction in our credit ratings could adversely affect our liquidity and competitive position, increase our borrowing costs, limit our access to the capital markets or trigger our obligations under certain provisions in some of our trading and collateralized financing contracts. Under these provisions, counterparties could be permitted to terminate contracts with us or require us to post additional collateral. Termination of our trading and collateralized financing contracts could cause us to sustain losses and impair our liquidity by requiring us to find other sources of financing or to make significant cash payments or securities movements. As of December 2022, our counterparties could have called for additional collateral or termination payments related to our net derivative liabilities under bilateral agreements in an aggregate amount of $343 million in the event of a one-notch downgrade of our credit ratings and $1.12 billion in the event of a two-notch downgrade of our credit ratings. A downgrade by any one rating agency, depending on the agency’s relative ratings of us at the time of the downgrade, may have an impact which is comparable to the impact of a downgrade by all rating agencies. For further information about our credit ratings, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Liquidity Risk Management — Credit Ratings” in Part II, Item 7 of this Form 10-K. this funding. Changes Our cost of obtaining long-term unsecured funding is directly related to our credit spreads (the amount in excess of the interest rate of benchmark securities that we need to pay). Increases in our credit spreads can significantly increase our spreads are cost of continuous, market-driven, to times unpredictable and highly volatile movements. Our credit spreads are also influenced by market perceptions of our creditworthiness and movements in the costs to purchasers of credit default swaps referenced to our long-term debt. The market for credit default swaps has proven to be extremely volatile and at times has lacked a high degree of transparency or liquidity. and subject in credit at Goldman Sachs 2022 Form 10-K 33 Furthermore, Group Inc. has guaranteed the payment obligations of certain of its subsidiaries, including GS&Co. and GS Bank USA, subject to certain exceptions. In addition, Group Inc. guarantees many of the obligations of its other consolidated subsidiaries on a transaction-by-transaction basis, as negotiated with counterparties. These guarantees may require Group Inc. to provide substantial funds or assets to its subsidiaries or their creditors or counterparties at a time when Group Inc. is in need of liquidity to fund its own obligations. recovery and resolution plans The requirements for us and certain of our subsidiaries to develop and submit to regulators, and the incorporation of feedback received from regulators, may require us to increase capital or liquidity levels or issue additional long-term debt at Group Inc. or particular subsidiaries or otherwise incur additional or duplicative operational or other costs at multiple entities, and may reduce our ability to provide Group Inc. guarantees of the obligations of our subsidiaries or raise debt at Group Inc. Resolution planning may also impair our ability to structure our intercompany and external activities in a manner that we efficient. may Furthermore, arrangements resolution planning may cause us to be subject to additional taxes. Any such limitations or requirements would be in addition to the legal and regulatory restrictions described above on our ability to engage in capital actions or make intercompany dividends or payments. operationally to facilitate our deem most otherwise See “Business — Regulation” in Part I, Item 1 of this Form 10-K for further information about regulatory restrictions. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Group Inc. is a holding company and its liquidity depends on payments and loans from its subsidiaries, many of which are subject to legal, regulatory and other restrictions on providing funds or assets to Group Inc. Group Inc. is a holding company and, therefore, depends on dividends, distributions, loans and other payments from its subsidiaries to fund share repurchases and dividend payments including debt and to fund payments on its obligations, obligations. Many of our subsidiaries, including our broker- dealer and bank subsidiaries, are subject to laws that restrict dividend payments or authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to Group Inc. In addition, our broker-dealer and bank entities and their subsidiaries are subject to restrictions on their ability to lend or transact with affiliates and to minimum regulatory capital and other requirements, as well as restrictions on their ability to use funds deposited with them in brokerage or bank accounts to fund their businesses. Additional restrictions on increased capital and liquidity related-party transactions, requirements and additional limitations on the use of funds on deposit in bank or brokerage accounts, as well as lower earnings, can reduce the amount of funds available to meet the obligations of Group Inc., including under the FRB’s source of strength requirement, and even require Group Inc. to provide to such subsidiaries. funding Restrictions or regulatory action of that kind could impede access to funds that Group Inc. needs to make payments on its obligations, including debt obligations, or dividend payments. In addition, Group Inc.’s right to participate in a distribution of assets upon a subsidiary’s liquidation or the reorganization is subsidiary’s creditors. to the prior claims of additional subject There has been a trend towards increased regulation and supervision of our subsidiaries by the governments and regulators in the countries in which those subsidiaries are located or do business. Concerns about protecting clients and creditors of financial institutions that are controlled by persons or entities located outside of the country in which such entities are located or do business have caused or may cause a number of governments and regulators to take additional steps to “ring fence” or require internal total loss- absorbing capacity (which may also be subject to “bail-in” powers, as described below) at those entities in order to protect clients and creditors of those entities in the event of financial difficulties involving those entities. The result has been and may continue to be additional limitations on our ability to efficiently move capital and liquidity among our affiliated entities, or to Group Inc., including in times of stress, thereby increasing the overall level of capital and liquidity required by us on a consolidated basis. 34 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Credit Our businesses, profitability and liquidity may be adversely affected by deterioration in the credit quality of or defaults by third parties. Concentration of for significant losses in our market-making, underwriting, investing and financing activities. risk increases the potential We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. A failure of a significant market participant, or even concerns about a default by such an institution, could lead to significant liquidity problems, losses or defaults by other institutions, which in turn could adversely affect us. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. In addition, deterioration in the credit quality of third parties including a whose securities or obligations we hold, deterioration in the value of collateral posted by third parties to secure their obligations to us under derivative contracts and loan agreements, could result in losses and/or adversely affect our ability to rehypothecate or otherwise use those securities or obligations for liquidity purposes. A significant downgrade in the credit ratings of our counterparties could also have a negative impact on our results. While in many cases we are permitted to require additional collateral from counterparties that experience financial difficulty, disputes may arise as to the amount of collateral we are entitled to receive and the value of pledged assets. The termination of contracts and the foreclosure on collateral may subject us to claims for the improper exercise of our rights. Default rates, downgrades and disputes with counterparties as to the valuation of collateral typically increased increase significantly in times of market stress, volatility and illiquidity. As part of our clearing and prime brokerage activities, we finance our clients’ positions, and we could be held responsible for the defaults or misconduct of our clients. Although we have limits and regularly review credit exposures to specific clients and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. and size of activities. The number Concentration of risk increases the potential for significant investing and losses in our market-making, underwriting, financing these transactions has affected and may in the future affect our results of operations in a given period. Moreover, because of concentrated risk, we may suffer losses even when economic and market conditions are generally favorable for our competitors. Disruptions in the credit markets can make it difficult to hedge these credit exposures effectively or economically. In addition, we extend large commitments as part of our credit origination activities. Disruptions in the credit markets have in the past substantially curtailed or eliminated, and may in the future substantially curtail or eliminate, the trading markets for loans we originate. These disruptions may make it difficult for us to sell or value such assets, which may result in losses for us from time to time. transactions Rules adopted under the Dodd-Frank Act, and similar rules adopted in other jurisdictions, require issuers of certain asset- backed securities and any person who organizes and initiates certain asset-backed securities to retain economic exposure to the asset, which has affected the cost of and structures used in connection with these securitization activities. Our inability to reduce our credit risk by selling, syndicating or securitizing these positions, including during periods of market stress, could negatively affect our results of operations due to a decrease in the fair value of the positions, including due to the insolvency or bankruptcy of borrowers, as well as the loss of revenues associated with selling such securities or loans. In the ordinary course of business, we may be subject to a concentration of credit risk to a particular counterparty, borrower, issuer (including sovereign issuers) or geographic area or group of related countries, such as the E.U., and a failure or downgrade of, or default by, such entity could negatively impact our businesses, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities, industries, countries function as we have anticipated. and regions may not Regulatory reform, including the Dodd-Frank Act, has led to increased centralization of trading activity through particular clearinghouses, central agents or exchanges, which has significantly increased our concentration of risk with respect to these entities. While our activities expose us to many and countries, we different counterparties transactions with routinely execute a high volume of services activities, engaged in financial counterparties including banks, clearinghouses, exchanges and investment funds. This has resulted in significant credit concentration with respect to these counterparties. commercial industries, dealers, brokers and Goldman Sachs 2022 Form 10-K 35 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Derivative transactions and delayed documentation or settlements may expose us to credit risk, unexpected risks and potential losses. are and negotiated individually We are party to a large number of derivative transactions, these derivative including credit derivatives. Many of instruments non- standardized, which can make exiting, transferring or settling positions difficult. Many credit derivatives require that we deliver to the counterparty the underlying security, loan or other obligation in order to receive payment. In a number of cases, we do not hold the underlying security, loan or other obligation and may not be able to obtain the underlying security, loan or other obligation. This could cause us to forfeit the payments due to us under these contracts or result in settlement delays with the attendant credit and operational risk, as well as increased costs to us. the risk involve transactions that also Derivative documentation has not been properly executed, that executed agreements may not be enforceable against the counterparty, or that obligations under such agreements may not be able to be “netted” against other obligations with such counterparty. In addition, counterparties may claim that such transactions were not appropriate or authorized. able As a signatory to the ISDA Universal Protocol or U.S. ISDA Protocol (ISDA Protocols) and being subject to the FRB’s and FDIC’s rules on QFCs and similar rules in other jurisdictions, we may not be against counterparties and, as this regime has not yet been tested, we may suffer risks or losses that we would not have expected to suffer if we could immediately close out transactions upon a termination event. The ISDA Protocols and these rules and regulations extend to repurchase agreements and other instruments that are not derivative contracts. to exercise remedies transactions, contracts and other Derivative including secondary bank loan purchases and sales, entered into with third parties are not always confirmed by the counterparties or settled on a timely basis. While the transaction remains unconfirmed or during any delay in settlement, we are subject to heightened credit and operational risk and in the event of a default may find it more difficult to enforce our rights. In addition, as new complex derivative products are created, covering a wider array of underlying credit and other instruments, disputes about the terms of the underlying contracts could arise, which could impair our ability to effectively manage our risk exposures from these products and subject us to increased costs. The provisions of the Dodd-Frank Act credit requiring central derivatives and other OTC derivatives, or a market shift toward standardized derivatives, could reduce the risk associated with these certain circumstances could also limit our ability to develop derivatives that best suit the needs of our clients and to hedge our own risks, and could adversely affect our profitability. In addition, these provisions have increased our credit exposure to central clearing platforms. transactions, but under clearing of 36 Goldman Sachs 2022 Form 10-K Operational A failure in our operational systems or human error, malfeasance or other misconduct, could impair our liquidity, disrupt our businesses, in the result information, damage our disclosure of confidential reputation and cause losses. Our businesses are highly dependent on our ability to process and monitor, on a daily basis, a very large number of transactions, many of which are highly complex and occur at high volumes and frequencies, across numerous and diverse markets in many currencies. These transactions, as well as the information technology services we provide to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards. rules to execute transactions and report and regulations worldwide govern our Many such obligations transactions and other information to regulators, exchanges and investors. Compliance with these legal and reporting requirements can be challenging, and we have been and may in the future be subject to regulatory fines and penalties for failing to follow these rules or to report timely, accurate and complete information in accordance with these rules. As reporting requirements expand, compliance with these rules and regulations has become more challenging. and increase, developing exchanges) As our client base, including through our consumer businesses, and our geographical reach expand and the volume, speed, frequency and complexity of transactions, especially electronic transactions (as well as the requirements to report such transactions on a real-time basis to clients, regulators and maintaining our operational systems and infrastructure has become more challenging, and the risk of systems or human error in connection with such transactions has increased, as have the potential consequences of such errors due to the speed and volume of transactions involved and the potential difficulty associated with discovering errors quickly enough to limit risks are exacerbated in times of increased volatility. As with other similarly situated institutions, we utilize credit underwriting including our models in connection with our businesses, consumer-oriented publicity, or whether or not accurate, that our underwriting decisions do not treat consumers or clients fairly, or comply with the applicable law or regulation, can result in negative publicity, reputational damage and governmental and regulatory scrutiny, investigations and enforcement actions. resulting consequences. These activities. Allegations the THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES financial, Our accounting, data processing or other operational systems and facilities may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, such as a spike in transaction volume, adversely affecting our ability to process these transactions or provide these services. We must continuously update these systems to support our operations and growth and to respond to changes in regulations and markets, and invest heavily in systemic controls and training to pursue our objective of ensuring that such transactions do not violate applicable rules and regulations or, due to errors in processing such transactions, adversely affect markets, our clients and counterparties or us. Enhancements and updates to systems, as well as the requisite training, including in connection with the integration of new businesses, entail significant associated with create implementing new systems and integrating them with existing ones. costs risks and The use of computing devices and phones is critical to the work done by our employees and the operation of our systems and businesses and those of our clients and our third- party service providers and vendors. Their importance has continued to increase, in particular in light of work-from- home arrangements. Computers and computer networks are subject to various risks, including, among others, cyber attacks, inherent technological defects, system failures and human error. For example, fundamental security flaws in computer chips found in many types of these computing devices and phones have been reported in the past and may occur in the future. The use of personal devices by our employees or by our vendors for work-related activities also presents risks related to potential violations of record retention and other requirements. Cloud technologies are also critical to the operation of our systems and platforms and our reliance on cloud technologies is growing. Service disruptions have resulted, and may result in the future, in delays in accessing, or the loss of, data that is important to our businesses and may hinder our clients’ access to our platforms. There have been a number of widely publicized cases of outages to cloud computing providers. Addressing these and similar issues could be costly and affect the performance of these businesses and systems. Operational risks may be incurred in applying fixes and there may still be residual security risks. in connection with access technology Notwithstanding and the proliferation of technology-based risk and control systems, our businesses ultimately rely on people as our greatest resource, and, from time to time, they have in the past and may in the future make mistakes or engage in violations of applicable policies, laws, rules or procedures that are not always caught immediately by our technological processes or by our controls and other procedures, which are intended to prevent and detect such errors or violations. These have in the past and may in the future include calculation errors, mistakes in addressing emails, errors in software or model development or implementation, or simple errors in judgment, as well as intentional efforts to ignore or circumvent applicable policies, laws, rules or procedures. Human errors, malfeasance and other misconduct, including the intentional misuse of client information in connection with insider trading or for other purposes, even if promptly discovered and remediated, has in the past resulted and may in the future result in reputational damage and losses and liabilities for us. The majority of the employees in our primary locations, including the New York metropolitan area, London, Bengaluru, Hyderabad, Hong Kong, Tokyo, Salt Lake City and Dallas, work in close proximity to one another. Our headquarters is located in the New York metropolitan area, and we have our largest employee concentration occupying the Hudson River two principal office buildings near waterfront. They are subject to potential catastrophic events, including, but not terrorist attacks, extreme weather, or other hostile events that could negatively affect to maintain our business. Notwithstanding our efforts business continuity, business disruptions impacting our offices and employees could lead to our employees’ inability to occupy the offices, communicate with or travel to other office locations or work remotely. As a result, our ability to service and interact with clients may be adversely impacted, due to our failure or inability to successfully implement business contingency plans. limited to, Goldman Sachs 2022 Form 10-K 37 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES A failure or disruption in our infrastructure, or in the operational systems or infrastructure of third parties, could impair our liquidity, disrupt our businesses, damage our reputation and cause losses. failure or We face the risk of operational significant operational delay, termination or capacity constraints of any of the clearing agents, exchanges, clearinghouses or other financial intermediaries we use to facilitate our securities and derivatives transactions, and as our interconnectivity with our clients grows, we increasingly face the risk of operational failure or significant operational delay with respect to our clients’ systems. termination or There has been significant consolidation among clearing agents, exchanges and clearinghouses and an increasing number of derivative transactions are cleared on exchanges, which has increased our exposure to operational failure or significant operational delay, capacity constraints of the particular financial intermediaries that we use and could affect our ability to find adequate and cost- effective alternatives in the event of any such failure, delay, termination or constraint. Industry consolidation, whether intermediaries, among market participants or increases significant operational delay as disparate complex systems need to be integrated, often on an accelerated basis. the risk of operational failure or financial The interconnectivity of multiple financial institutions with central agents, exchanges and clearinghouses, and the increased centrality of these entities, increases the risk that an operational failure at one institution or entity may cause an failure that could materially industry-wide operational impact our ability to conduct business. Interconnectivity of financial institutions with other companies through, among other things, application programming interfaces or APIs termination or presents similar risks. Any such failure, constraint could adversely affect our ability to effect transactions, service our clients, manage our exposure to risk or expand our businesses or result in financial loss or liability to our clients, impairment of our liquidity, disruption of our businesses, regulatory intervention or reputational damage. Despite our resiliency plans and facilities, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities where we are located. This may include a disruption involving electrical, satellite, undersea cable or transportation or other internet, other communications, facilities used by us, our employees or third parties with which we cloud service providers. These disruptions may occur as a result of events that affect only our buildings or systems or those of such third parties, or as a result of events with a broader impact globally, regionally or in the cities where those buildings or systems are located, including, but not limited to, natural disasters, war, civil unrest, terrorism, economic or political developments, pandemics and weather events. conduct business, including 38 Goldman Sachs 2022 Form 10-K In addition, although we seek to diversify our third-party vendors to increase our resiliency, we are exposed to risks if our vendors operate in the same area and are also exposed to the risk that a disruption or other information technology event at a common service provider to our vendors could impede their ability to provide products or services to us. We may not be able to effectively monitor or mitigate operational risks relating to our vendors’ use of common service providers. although the prevalence involving financial products and scope of Additionally, applications of distributed ledger technology, cryptocurrency and similar technologies is growing, the technology is nascent and may be vulnerable to cyber attacks or have other inherent weaknesses. We are exposed to risks, and may become exposed to additional risks, related to distributed including through our facilitation of ledger technology, that use clients’ activities blockchain, distributed cryptocurrencies or other digital assets, our investments in companies seek to develop platforms based on distributed ledger technology, the use of distributed ledger technology by third-party vendors, clients, counterparties, clearinghouses and other financial intermediaries, and the receipt of cryptocurrencies or other digital assets as collateral. The market volatility that financial products using distributed ledger technology have recently experienced may increase these risks. technology, ledger such that as A failure to protect our computer systems, networks and information, and our clients’ information, against cyber attacks and similar threats could impair our in the ability to conduct our businesses, disclosure, confidential theft or destruction of information, damage our reputation and cause losses. result services companies, Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks and those of our vendors. There have been a number of highly publicized cases consumer-based involving financial companies, software and information technology service providers, governmental agencies and other organizations reporting the unauthorized access or disclosure of client, customer or other confidential information in recent years, as well as cyber attacks involving the dissemination, theft and destruction of corporate information or other assets, as a result of inadequate procedures or the failure to follow procedures by employees or contractors or as a result of including actions by foreign actions by third parties, governments. There have also been several highly publicized cases where hackers have requested “ransom” payments in exchange for not disclosing customer information or for restoring access to information or systems. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES We are regularly the target of attempted cyber attacks, including denial-of-service attacks, and must continuously monitor and develop our systems to protect the integrity and functionality of our technology infrastructure and access to and the security of our data. We have faced a high volume of cyber attacks as we expand our mobile- and other internet- based products and services, as well as our usage of mobile and cloud technologies, and as we provide more of these services to a greater number of individual consumers. The migration of our communication from devices we provide to employee-owned devices presents additional risks of cyber attacks, as do work-from-home arrangements . In addition, due to our interconnectivity with third-party vendors (and their respective service providers), central agents, exchanges, clearinghouses and other financial institutions, we could be adversely impacted if any of them is subject to a successful cyber attack or other information security event. These impacts could include the loss of access to information or services from the third party subject to the cyber attack or other in unauthorized access to or disclosure of client, customer or other in turn, interrupt certain of our businesses or adversely affect our results of operations and reputation. information security event or information, which could, could result confidential the used because including techniques Despite our efforts to ensure the integrity of our systems and information, we may not be able to anticipate, detect or implement effective preventive measures against all cyber threats, are increasingly sophisticated, change frequently and are often not recognized until launched. Cyber attacks can originate from a variety of sources, including third parties who are affiliated with or sponsored by foreign governments or are involved with organized crime or terrorist organizations. Third parties may also attempt to place individuals in our offices or induce employees, clients or other users of our systems to disclose sensitive information or provide access to our data or that of our clients, and these types of risks may be difficult to detect or prevent. Although we take protective measures proactively and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, misuse, computer viruses or other malicious code, cyber attacks on our vendors and other events that could have a security impact. Risks relating to cyber attacks on our vendors have been increasing given the greater frequency and severity in recent years of supply chain attacks affecting software and information technology service providers. Due to the complexity and interconnectedness of our the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues. In addition, protective measures that we employ to compartmentalize our data may reduce our visibility into, and adversely affect our ability to respond to, cyber threats and issues with our systems. systems, transmitted through our computer If one or more of these types of events occur, it potentially could jeopardize our, our clients’, our counterparties’ or third parties' confidential and other information processed, stored in, or systems and networks, or otherwise cause interruptions or malfunctions in our operations or those of our clients, counterparties or third parties, which could impact their ability to transact with us or otherwise result in legal or regulatory action, significant losses or reputational damage. In addition, such an event could persist for an extended period of time before being properly detected or escalated, and, following detection or escalation, it could take considerable time for us to obtain full and reliable information about the extent, amount and type of information compromised. During the course of an investigation, we may not know the full impact of the event and how to remediate it, and actions, decisions and mistakes that are taken or made may further increase the negative effects of the event on our business, results of operations and reputation. Moreover, potential new regulations may require us to disclose information about a material cybersecurity incident before it has been resolved or fully investigated. We have expended, and expect to continue to expend, significant resources on an ongoing basis to modify our protective measures and to investigate and remediate vulnerabilities or other exposures, but these measures may be ineffective and we may be subject to legal or regulatory action, as well as financial losses that are either not insured against or not fully covered through any insurance maintained by us. Our clients’ confidential information may also be at risk from the compromise of clients’ personal electronic devices or as a result of a data security breach at an unrelated company. Losses due to unauthorized account activity could harm our reputation and may have adverse effects on our business, financial condition and results of operations. The increased use of mobile and cloud technologies can heighten these and other operational risks, as can work-from- home arrangements. Certain aspects of the security of such technologies are unpredictable or beyond our control, and the failure by mobile technology and cloud service providers to adequately safeguard their systems and prevent cyber attacks in misappropriation, corruption or loss of confidential and other information. In addition, there is a risk that encryption and other protective measures, despite their sophistication, may be defeated, particularly to the extent that new computing technologies vastly increase the speed and computing power available. could disrupt our operations and result Goldman Sachs 2022 Form 10-K 39 In addition, the use of models in connection with risk management and numerous other critical activities presents risks that the models may be ineffective, either because of poor design, ineffective testing, or improper or flawed inputs, as well as unpermitted access to the models resulting in unapproved or malicious changes to the model or its inputs. To the extent that we have positions through our market- making or origination activities or we make investments directly through our investing activities, including private equity, that do not have an established liquid trading market or are otherwise subject to restrictions on sale or hedging, we may not be able to reduce our positions and therefore reduce our risk associated with those positions. In addition, to the extent permitted by applicable law and regulation, we invest our own capital in private equity, credit, real estate and hedge funds that we manage and limitations on our ability to withdraw some or all of our investments in these funds, whether for legal, reputational or other reasons, may make it more difficult for us to control the risk exposures relating to these investments. Prudent risk management, as well as regulatory restrictions, may cause us to limit our exposure to counterparties, geographic areas or markets, which may limit our business opportunities and increase the cost of our funding or hedging activities. As we have expanded and intend to continue to expand the product and geographic scope of our offerings of credit and investment products to consumers, we are presented with risk different monitoring and mitigation activities to account for these business activities. A failure to adequately assess and control such risk exposures could result in losses to us. risks and must expand and adapt our For further information about our risk management policies and procedures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management” in Part II, Item 7 of this Form 10-K. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES We routinely transmit and receive personal, confidential and proprietary information by email and other electronic means. We have discussed and worked with clients, vendors, service providers, counterparties and other third parties to develop secure transmission capabilities and protect against cyber attacks, but we do not have, and may be unable to put in place, secure capabilities with all of our clients, vendors, service providers, counterparties and other third parties and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information. An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a client, vendor, service provider, in legal counterparty or other third party could result liability, regulatory action and reputational harm. We may incur losses as a result of ineffective risk management processes and strategies. We seek to monitor and control our risk exposure through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational, compliance and legal reporting systems, internal controls, management review processes and other mechanisms. Our risk management process seeks to balance our ability to profit from market-making, investing or lending positions, and underwriting activities, with our exposure to potential losses. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the judgments that accompany their application cannot anticipate every economic and financial outcome or the specifics and timing of such outcomes. Thus, in the course of our activities, we have incurred and may in the future incur losses. Market conditions in recent years have involved the limitations unprecedented dislocations and highlight inherent in using historical data to manage risk. about reflect assumptions The models that we use to assess and control our risk exposures the degrees of correlation or lack thereof among prices of various asset classes or other market indicators. In times of market stress or other unforeseen circumstances, previously uncorrelated indicators may become correlated, or conversely previously correlated indicators may move in different directions. These types of market movements have at times limited the effectiveness of our hedging strategies and have caused us to incur significant losses, and they may do so in the future. These changes in correlation have been and may in the future be exacerbated where other market participants are using risk or trading models with assumptions or algorithms that are similar to ours. In these and other cases, it may be difficult to reduce our risk positions due to the activity of other market participants or widespread market dislocations, including circumstances where asset values are declining significantly or no market exists for certain assets. 40 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Legal and Regulatory Our businesses and those of our clients are subject to extensive and pervasive regulation around the world. authorities, things, as a result of As a participant in the financial services industry and a systemically important financial institution, we are subject to extensive regulation in jurisdictions around the world. We face the risk of significant intervention by law enforcement, regulatory and taxing authorities, as well as private litigation, in all jurisdictions in which we conduct our businesses. In many cases, our activities have been and may continue to be subject to overlapping and divergent regulation in different jurisdictions. Among other law regulators or private parties enforcement challenging our and regulations, we or our employees have been, and could be, fined, criminally charged or sanctioned; prohibited from engaging in some of our business activities; subjected to limitations or conditions on our business activities, including higher subjected to new or substantially higher taxes or other governmental charges in connection with the conduct of our businesses or with respect to our employees. These limitations or conditions may limit our our and profitability. compliance with existing requirements; or negatively activities business impact capital laws tax total leverage, liquidity, planning, requirements long-term debt, relating burdens to recovery and If there are new laws or regulations or changes in the interpretation or enforcement of existing laws or regulations applicable to our businesses or those of our clients, including loss- capital, absorbing capacity and margin requirements, restrictions on leveraged lending or other business practices, reporting requirements, and compensation resolution restrictions, that are imposed on a limited subset of financial institutions (whether based on size, method of funding, activities, geography or other criteria), compliance with these new laws or regulations, or changes in the enforcement of existing laws or regulations, could adversely affect our ability to compete effectively with other institutions that are not affected in the same way. In addition, regulation imposed on financial institutions or market participants generally, such as taxes on stock transfers, share repurchases and other levels of financial transactions, could adversely impact market activity more broadly, and thus impact our businesses. Changes to laws or regulations, such as tax laws, could also have a disproportionate impact on us, based on the way those laws or regulations are applied to financial services and financial firms or due to our corporate structure or where these services are provided. In addition to the impact on the scope and profitability of our business activities, day-to-day compliance with existing laws and regulations has involved and will continue to involve significant amounts of time, including that of our senior leaders and that of a large number of dedicated compliance and other reporting and operational personnel, all of which may negatively impact our profitability. Our revenues and profitability and those of our competitors have been and will continue to be impacted by requirements relating to capital, leverage, minimum liquidity and long- term funding levels, requirements related to resolution and recovery planning, derivatives clearing and margin rules and levels of regulatory oversight, as well as limitations on which and, if permitted, how certain business activities may be carried out by financial institutions. The laws and regulations that apply to our businesses are often complex and, in many cases, we must make interpretive decisions regarding the application of those laws and regulations to our business activities. Changes in interpretations, whether in response to conventions, our own regulatory reassessments or otherwise, could adversely affect our results of operations or ability to satisfy businesses, applicable regulatory requirements, such as capital or liquidity requirements. guidance, industry These developments could impact our profitability in the affected jurisdictions, or even make it uneconomic for us to continue to conduct all or certain of our businesses in those jurisdictions, or could cause us to incur significant costs associated with changing our business practices, restructuring our businesses, moving all or certain of our businesses and our employees locations or complying with applicable capital requirements, including reducing dividends or share repurchases, liquidating assets or raising capital in a manner funding costs or otherwise adversely affects our shareholders and creditors. that adversely increases our to other Goldman Sachs 2022 Form 10-K 41 We are also subject to laws and regulations, such as the GDPR and the California Consumer Privacy Act, relating to the privacy of the information of clients, employees or others, and any failure to comply with these laws and regulations could expose us to liability and/or reputational damage. As new privacy-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance and reporting obligations in the case of data breaches, may significantly increase. Further, the CRD requires certain non-E.U. groups with more than €40 billion of assets in the E.U., such as us, to establish an E.U. IHC by December 30, 2023. A non-E.U. group may have two E.U. IHCs if a request for a second is approved. If we are unable to obtain approval to have two E.U. IHCs, we would be required to limit our European subsidiary activities to those that are permissible for GSBE. In addition, our businesses are increasingly subject to laws and regulations relating to surveillance, encryption and data on-shoring in the jurisdictions in which we operate. Compliance with these laws and regulations may require us to change our policies, procedures and technology for information security, which could, among other things, make us more vulnerable to cyber attacks and misappropriation, corruption or loss of information or technology. subjects us to numerous We have entered into consumer-oriented deposit-taking, lending and credit card businesses, and we may expand the product and geographic scope of our offerings. Entering into additional these businesses regulations in the jurisdictions in which these businesses operate. Not only are these regulations extensive, but they involve types of regulations and supervision, as well as that have not historically regulatory compliance risks, applied to us. The level of regulatory scrutiny and the scope of regulations affecting financial interactions with consumers is often much greater than that associated with doing business with institutions and high-net-worth individuals. Complying with these regulations is time-consuming, costly and presents new and increased risks. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES transactions; requirements U.S. and non-U.S. regulatory developments, in particular the Dodd-Frank Act and Basel III, have significantly altered the regulatory framework within which we operate and have adversely affected and may in the future adversely affect our profitability. Among the aspects of the Dodd-Frank Act that have affected or may in the future affect our businesses are: increased capital, liquidity and reporting requirements; limitations on activities in which we may engage; increased regulation of and restrictions on OTC derivatives markets limitations on incentive compensation; and transactions; limitations on affiliate to reorganize or limit activities in connection with recovery and resolution planning; increased deposit insurance assessments; and increased standards of care for broker-dealers and investment clients. The implementation of higher requirements, more stringent requirements relating to liquidity, long-term debt loss-absorbing capacity and the prohibition on and total proprietary trading and the sponsorship of, or investment in, covered funds by the Volcker Rule may continue to adversely affect our profitability and competitive position, particularly if these requirements do not apply equally to our competitors or are not implemented uniformly across jurisdictions. We may also become subject to higher and more stringent capital and other the implementation of Basel Committee standards, including the credit and operational risk capital standards published in December 2017 and the market standard published in January 2019. regulatory requirements as a result of dealing with risk capital advisers capital in As described in “Business — Regulation — Banking Supervision and Regulation” in Part I, Item 1 of this Form 10- K, the SCB has replaced the capital conservation buffer under the Standardized Capital Rules and resulted in higher Standardized capital ratio requirements. Failure to comply with these requirements could limit our ability to, among other things, repurchase shares, pay dividends and make certain discretionary compensation payments. In addition, if, as in 2020, we are required to resubmit our capital plan, we generally may not make capital distributions, such as share repurchases or dividends, without the prior approval of the FRB. Dividends and repurchases are also subject to oversight by the FRB, which can result in limitations. Limitations on our ability to make capital distributions could, among other things, prevent us from returning capital to our shareholders and impact our return on equity. Additionally, as a G-SIB, we are subject to the G-SIB surcharge. Our G-SIB surcharge is updated annually based on financial data from the prior year. Expansion of our businesses, growth in our balance sheet and increased reliance on short-term wholesale funding have resulted in increases and in the future may result in further increases in our G-SIB surcharge and a corresponding increase in our capital requirements. 42 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Our expansion into consumer-oriented activities will result in a change to GS Bank USA's CRA requirements later in 2023, such that GS Bank USA will no longer be assessed as a “wholesale bank” for CRA compliance purposes and, instead, will be assessed pursuant to the framework applicable to large commercial banks or pursuant to an approved strategic plan. Any failure to comply with different or expanded CRA requirements as a result of this change in assessment methods could negatively impact GS Bank USA's CRA ratings, cause reputational harm and result in limits on our ability to make future acquisitions or engage in certain new activities. institutions or Increasingly, regulators and courts have sought to hold financial institutions liable for the misconduct of their clients where they have determined that the financial institution should have detected that the client was engaged in wrongdoing, even though the financial institution had no direct knowledge of the activities engaged in by its client. Regulators and courts have also increasingly found liability as a “control person” for activities of entities in which financial controlled by financial funds institutions have an investment, but which they do not actively manage. In addition, regulators and courts continue to seek to establish “fiduciary” obligations to counterparties to which no such duty had been assumed to exist. To the extent that such efforts are successful, the cost of, and liabilities associated with, engaging in brokerage, clearing, market-making, prime brokerage, investing and other similar activities could increase significantly. To the extent that we have fiduciary obligations in connection with acting as a financial adviser or investment adviser or in other roles for individual, institutional, sovereign or investment fund clients, any breach, or even an alleged breach, of such obligations regulatory and could have materially negative reputational consequences. legal, For information about the extensive regulation to which our businesses are subject, see “Business — Regulation” in Part I, Item 1 of this Form 10-K. A failure to appropriately identify and address potential conflicts of interest could adversely affect our businesses. Due to the broad scope of our businesses and our client base, we regularly address potential conflicts of interest, including situations where our services to a particular client or our own investments or other interests conflict, or are perceived to conflict, with the interests of that client or another client, as well as situations where one or more of our businesses have access to material non-public information that may not be shared with our other businesses and situations where we may be a creditor of an entity with which we also have an advisory or other relationship. In addition, our status as a BHC subjects us to heightened regulation and increased regulatory scrutiny by the FRB with respect to transactions between GS Bank USA and its subsidiaries and entities that are or could be viewed as affiliates of ours and, under the Volcker Rule, transactions between us and covered funds. We have extensive procedures and controls that are designed to identify and address conflicts of interest, including those designed to prevent the improper sharing of information among our businesses. However, appropriately identifying and dealing with conflicts of interest is complex and difficult, and our reputation, which is one of our most important assets, could be damaged and the willingness of clients to enter into transactions with us may be adversely affected if we fail, or appear to fail, to identify, disclose and deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. Additionally, our One Goldman Sachs initiative aims to increase collaboration among our businesses, which may increase the potential for actual or perceived conflicts of interest and improper information sharing. The realignment of our businesses, reflected in our new segments beginning with the fourth quarter of 2022, presents similar risks. Goldman Sachs 2022 Form 10-K 43 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES We may be increased governmental and regulatory scrutiny or negative publicity. affected by adversely Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to compensation, our business practices, our past actions and other matters remains at high levels. Political and public sentiment regarding financial institutions has in the past resulted and may in the future result in a significant amount of adverse press coverage, as well as adverse statements or charges by regulators or other government officials. Press coverage and other public statements that assert some form of wrongdoing (including, in some cases, press coverage and public statements that do not directly involve us) often result in some type of investigation by regulators, legislators and law enforcement officials or in lawsuits. Responding to these investigations and lawsuits, regardless of the ultimate outcome of the proceeding, is time-consuming and expensive and can divert the time and effort of our senior management from our business. Penalties and fines sought by regulatory authorities have increased substantially and certain regulators have been more likely in recent years to commence enforcement actions or to support legislation targeted at the financial services industry. Governmental authorities may also be more likely to pursue criminal or other actions, including seeking admissions of wrongdoing or guilty pleas, in connection with the resolution of an inquiry or investigation to the extent a company is viewed as having previously regulatory or other misconduct. Adverse publicity, governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations. Further, we are subject to regulatory settlements, orders and feedback that require significant remediation activities, which require us to commit significant resources, including hiring, as well as testing the operation and effectiveness of new controls, policies and procedures. engaged in criminal, The financial services industry generally and our businesses in particular have been subject to negative publicity. Our reputation and businesses may be adversely affected by negative publicity or information regarding our businesses and personnel, whether or not accurate or true, that may be posted on social media or other internet forums or published by news organizations. Postings on these types of forums may also adversely impact risk positions of our clients and other parties that owe us money, securities or other assets and increase the chance that they will not perform their obligations to us or reduce the revenues we receive from their use of our services. The speed and pervasiveness with which information can be disseminated through these channels, in particular social media, may magnify risks relating to negative publicity. 44 Goldman Sachs 2022 Form 10-K Substantial civil or criminal liability or significant regulatory action against us could have material adverse financial effects or cause us significant reputational harm, which in turn could seriously harm our business prospects. We face significant legal risks in our businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions remain high. See Notes 18 and 27 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for information about certain of our legal and regulatory proceedings and investigations. We have seen legal claims by consumers and clients increase in a market downturn and employment-related claims increase following periods reduced our headcount. Additionally, governmental entities have been plaintiffs and are parties in certain of our legal proceedings, and we may face future civil or criminal actions or claims by the same or other governmental entities, as well as follow-on civil litigation that regulatory settlements. is often commenced after in which we have Significant settlements by several large financial institutions, including, in some cases, us, with governmental entities have been publicly announced. The trend of large settlements with governmental entities may adversely affect the outcomes for other financial institutions, including, in some cases, us, in similar actions, especially where governmental officials have announced that the large settlements will be used as the basis or a template for other settlements. The uncertain regulatory enforcement environment makes it difficult to estimate probable losses, which can lead to substantial disparities between legal reserves and subsequent actual settlements or penalties. Claims of collusion or anti-competitive conduct have become more common. Financial institutions (including us) have been subject to civil cases and investigatory demands relating to alleged bid-rigging, group boycotts or other anti-competitive practices. Antitrust laws generally provide for joint and several liability and treble damages. These claims have resulted in significant settlements and fines in the past and may do so in the future. We are subject to laws and regulations worldwide, including the FCPA and the U.K. Bribery Act, relating to corrupt and illegal payments to, and hiring practices with regard to, government officials and others. Violation of these or similar laws and regulations have in the past resulted in and could in the future result in significant monetary penalties. Such violations could also result in severe restrictions on our activities and damage to our reputation. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Certain law enforcement authorities have recently required in some cases, criminal admissions of wrongdoing, and, pleas, as part of the resolutions of matters brought against financial institutions or their employees. See for example, “1MDB-Related Matters” in Note 27 to the consolidated financial statements in Part II, Item 8 of this Form 10-K. Any such resolution of a criminal matter involving us or our employees could lead to increased exposure to civil litigation, could adversely affect our in penalties or limitations on our ability to conduct our activities generally or in certain circumstances and could have other negative effects. Further, as a result of this type of settlement, we are no longer a “well-known seasoned issuer,” which places limitations on the manner in which we can market our securities. reputation, could result In conducting our businesses around the world, we are subject to political, legal, regulatory and other risks that are inherent in operating in many countries. restrictive governmental actions. For In conducting our businesses and supporting our global operations, we are subject to risks of possible nationalization, expropriation, price controls, capital controls, exchange controls, communications and other content restrictions, and other example, sanctions have been imposed by the U.S. and the E.U. on certain individuals and companies in Russia and Venezuela. In many countries, the laws and regulations applicable to the securities and financial services industries and many of the transactions in which we are involved are uncertain and evolving, and it may be difficult for us to determine the exact requirements of local laws in every market. We have been in some cases subject to divergent and conflicting laws and regulations across markets, and we are increasingly subject to the risk that the jurisdictions in which we operate have implemented or may implement laws and regulations that directly conflict with those of another jurisdiction. Any determination by local regulators that we have not acted in compliance with the application of local laws in a particular market or our to develop effective working relationships with local regulators could have a significant and negative effect not only on our businesses in that market, in some but also on our reputation generally. Further, jurisdictions a failure, or alleged failure, to comply with laws and regulations has subjected and may in the future subject us and our personnel not only to civil actions, but also criminal actions and other sanctions. We are also subject to the enhanced risk that transactions we structure might not be legally enforceable in all cases. failure laws While business and other practices throughout the world differ, our principal entities are subject in their operations worldwide to rules and regulations relating to corrupt and illegal payments, hiring practices and money laundering, as well as relating to doing business with certain individuals, groups and countries, such as the FCPA, the BSA and the U.K. Bribery Act. While we have invested and continue to invest significant resources in training and in compliance monitoring, the geographical diversity of our operations, employees, clients and consumers, as well as the vendors and other third parties that we deal with, greatly increases the risk that we may be found in violation of such rules or regulations and any such violation could subject us to significant penalties or adversely affect our reputation. See for example, “1MDB-Related Matters” in Note 27 to the consolidated financial statements in Part II, Item 8 of this Form 10-K. In addition, there have been a number of highly publicized cases around the world, involving actual or alleged fraud or other misconduct by employees in the financial services industry, and we have had and may in the future have employee misconduct. This misconduct has included and may also in the future include intentional efforts to ignore or circumvent applicable policies, rules or procedures or misappropriation of funds and the theft of proprietary information, including proprietary software. It is not always possible to deter or prevent employee misconduct and the precautions we take to prevent and detect this activity have not been and may not be effective in all cases, as reflected by the settlements relating to 1MDB. Goldman Sachs 2022 Form 10-K 45 OLA also provides the FDIC with authority to cause the financial company in creditors and shareholders of receivership to bear losses before taxpayers are exposed to such losses, and amounts owed to the U.S. government would generally receive a statutory payment priority over the claims of private creditors, including senior creditors. In addition, under OLA, claims of creditors (including debtholders) could be satisfied through the issuance of equity or other securities in a bridge entity to which Group Inc.’s assets are transferred. If such a securities-for-claims exchange were implemented, there can be no assurance that the value of the securities of the bridge entity would be sufficient to repay or satisfy all or any part of the creditor claims for which the securities were exchanged. While the FDIC has issued regulations to implement OLA, not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible. In addition, certain jurisdictions, including the U.K. and the E.U., have implemented resolution regimes to provide resolution authorities with the ability to recapitalize a failing entity by writing down its unsecured debt or converting its unsecured debt into equity. Such “bail-in” powers are intended to enable the recapitalization of a failing institution by allocating losses to its shareholders and unsecured debtholders. For example, the Bank of England requires a certain amount of intercompany funding that we provide to our material U.K. subsidiaries to contain a contractual trigger to expressly permit the Bank of England to exercise such the certain “bail-in” intercompany funding we provide to our subsidiaries is “bailed in,” Group Inc.’s claims on its subsidiaries would be subordinated to the claims of the subsidiaries’ third-party creditors or written down. U.S. regulators are considering and non-U.S. authorities have adopted requirements that certain subsidiaries of large financial institutions maintain minimum amounts of loss-absorbing capacity that would pass losses up from the subsidiaries to the top-tier BHC and, ultimately, to security holders of the top-tier BHC in the event of failure. circumstances. powers total in If THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES of regulatory application The and requirements in the U.S. and non-U.S. jurisdictions to facilitate the orderly resolution of large financial institutions could create greater risk of loss for Group Inc.’s security holders. strategies As described in “Business — Regulation — Banking Supervision and Regulation — Insolvency of an IDI or a BHC,” if the FDIC is appointed as receiver under OLA, the rights of Group Inc.’s creditors would be determined under OLA, and substantial differences exist in the rights of creditors between OLA and the U.S. Bankruptcy Code, including the right of the FDIC under OLA to disregard the strict priority of creditor claims in some circumstances, which could have a material adverse effect on our debtholders. The FDIC has announced that a single point of entry strategy may be a desirable strategy under OLA to resolve a large financial institution in a manner that would, among other things, impose losses on shareholders, debtholders and other creditors of the top-tier BHC (in our case, Group Inc.), while the BHC’s subsidiaries may continue to operate. It is possible that the application of the single point of entry strategy under OLA, in which Group Inc. would be the only entity to enter resolution proceedings (and its material broker-dealer, bank and other operating entities would not enter resolution proceedings), would result in greater losses to Group Inc.’s security holders (including holders of our fixed rate, floating rate and indexed debt securities), than the losses that would result from the application of a bankruptcy proceeding or a different resolution strategy, such as a multiple point of entry resolution strategy for Group Inc. and certain of its material subsidiaries. Assuming Group Inc. entered resolution proceedings and that support from Group Inc. or other available resources to its subsidiaries was sufficient to enable the subsidiaries to remain solvent, the subsidiary level would be losses at transferred to Group Inc. and ultimately borne by Group Inc.’s security holders, third-party creditors of Group Inc.’s subsidiaries would receive full recoveries on their claims, and Group Inc.’s security holders (including our shareholders, debtholders and other unsecured creditors) could face significant and possibly complete losses. In that case, Group Inc.’s security holders would face losses while the third-party creditors of Group Inc.’s subsidiaries would incur no losses because the subsidiaries would continue to operate and would not enter resolution or bankruptcy proceedings. In addition, holders of Group Inc.’s eligible long-term debt and holders of Group Inc.’s other debt securities could face losses ahead of its other similarly situated creditors in a resolution under OLA if the FDIC exercised its right, described above, to disregard the priority of creditor claims. 46 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES The application of Group Inc.’s proposed resolution strategy could result in greater losses for Group Inc.’s security holders. In our resolution plan, Group Inc. would be resolved under the U.S. Bankruptcy Code. The strategy described in our resolution plan is a variant of the single point of entry strategy: Group Inc. and Goldman Sachs Funding LLC (Funding IHC), a wholly-owned, direct subsidiary of Group Inc., would recapitalize and provide liquidity to certain major subsidiaries, of through intercompany indebtedness, the extension of the maturities of intercompany indebtedness and the extension of additional intercompany loans. If this strategy were successful, creditors of some or all of Group Inc.’s major subsidiaries would receive full recoveries on their claims, while Group Inc.’s security holders could face significant and possibly complete losses. forgiveness including the If Group Inc.’s proposed resolution strategy were successful, Group Inc.’s security holders could face losses while the third-party creditors of Group Inc.’s major subsidiaries would incur no losses because those subsidiaries would continue to operate and not enter resolution or bankruptcy proceedings. As part of the strategy, Group Inc. could also seek to elevate the priority of its guarantee obligations relating to its major subsidiaries’ derivative contracts or transfer them to another entity so that cross-default and early ISDA termination rights would be Protocols, as applicable, which would result in holders of Group Inc.’s eligible long-term debt and holders of Group Inc.’s other debt securities incurring losses ahead of the beneficiaries of those guarantee obligations. It is also possible that holders of Group Inc.’s eligible long-term debt and other debt securities could incur losses ahead of other similarly situated creditors of Group Inc.’s major subsidiaries. stayed under the To facilitate the execution of our resolution plan, we formed Funding IHC. In exchange for an unsecured subordinated funding note and equity interest, Group Inc. transferred certain intercompany receivables and substantially all of its GCLA to Funding IHC, and agreed to transfer additional GCLA above prescribed thresholds. forgiven, We also put in place a Capital and Liquidity Support Agreement (CLSA) among Group Inc., Funding IHC and our major subsidiaries. Under the CLSA, Funding IHC has provided Group Inc. with a committed line of credit that allows Group Inc. to draw sufficient funds to meet its cash needs during the ordinary course of business. In addition, if our financial resources deteriorate so severely that resolution may be imminent, (i) the committed line of credit will automatically terminate and the unsecured subordinated (ii) all funding note will automatically be intercompany receivables owed by the major subsidiaries to Group Inc. will be transferred to Funding IHC or their maturities will be extended to five years, (iii) Group Inc. will be obligated to transfer substantially all of its remaining intercompany receivables and GCLA (other than an amount to fund anticipated bankruptcy expenses) to Funding IHC, and (iv) Funding IHC will be obligated to provide capital and liquidity support to the major subsidiaries. Group Inc.’s and Funding IHC’s obligations under the CLSA are secured pursuant to a related security agreement. Such actions would materially and adversely affect Group Inc.’s liquidity. As a result, during a period of severe stress, Group Inc. might commence bankruptcy proceedings at an earlier time than it otherwise would if the CLSA and related security agreement had not been implemented. If Group Inc.’s proposed resolution strategy were not financial condition would be successful, Group Inc.’s adversely impacted and Group Inc.’s security holders, including debtholders, may as a consequence be in a worse position than if the strategy had not been implemented. In all cases, any payments to debtholders are dependent on our ability to make such payments and are therefore subject to our credit risk. As a result of our recovery and resolution planning processes, including incorporating feedback from our regulators, we may incur increased operational, funding or other costs and face limitations on our ability to structure our internal organization or engage in internal or external activities in a manner that we may otherwise deem most operationally efficient. Our commodities activities, particularly our physical commodities activities, subject us to extensive regulation and involve risks, including environmental, reputational and other risks that may expose us to significant liabilities and costs. certain potential As part of our commodities business, we purchase and sell certain physical commodities, arrange for their storage and transport, and engage in market making of commodities. The commodities involved in these activities may include crude oil, refined oil products, natural gas, liquefied natural gas, electric power, agricultural products, metals (base and precious), minerals (including unenriched uranium), emission credits, coal, freight and related products and indices. We make investments in and finance entities that engage in the production, storage and transportation of numerous commodities, including many of the commodities referenced above. Goldman Sachs 2022 Form 10-K 47 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES These activities subject us and/or the entities in which we invest to extensive and evolving federal, state and local energy, environmental, antitrust and other governmental laws and regulations worldwide, including environmental laws and regulations relating to, among others, air quality, transportation of water quality, waste management, hazardous substances, natural resources, site remediation and health and safety. Additionally, rising climate change concerns have led to additional regulation that could increase the operating costs and adversely affect the profitability of certain of our investments. There may be substantial costs in complying with current or future laws and regulations relating to our commodities- related activities and investments. Compliance with these laws and regulations could require significant commitments of capital toward environmental monitoring, renovation of storage facilities or transport vessels, payment of emission fees and carbon or other taxes, and application for, and holding of, permits and licenses. Competition Our results have been and may in the future be adversely affected by the composition of our client base. Our client base is not the same as that of our major competitors. Our businesses may have a higher or lower percentage of clients in certain industries or markets than some or all of our competitors. Therefore, unfavorable industry developments or market conditions affecting certain industries or markets have resulted in the past and may result in the future in our businesses underperforming relative to similar businesses of a competitor if our businesses have a higher concentration of clients in such industries or markets. For example, our market-making businesses have a higher percentage of clients with actively managed assets than some of our competitors and such clients have in the past been and may in the future be disproportionately affected by low volatility. leaks, spills or transport vessels, release of hazardous Commodities involved in our intermediation activities and investments are also subject to the risk of unforeseen or catastrophic events, which are likely to be outside of our including those arising from the breakdown or control, failure of storage facilities or other equipment or processes or other mechanical malfunctions, fires, substances, performance below expected levels of output or efficiency, terrorist attacks, extreme weather events or other natural disasters or other hostile or catastrophic events. In addition, we rely on third-party suppliers or service providers to perform their contractual obligations and any failure on their part, including the failure to obtain raw materials at reasonable prices or to safely transport or store commodities, could expose us to costs or losses. Also, while we seek to insure against potential risks, we may not be able to obtain insurance to cover some of these risks and the insurance that we have may be inadequate to cover our losses. The occurrence of any of such events may prevent us from performing under our agreements with clients, may impair our operations or in litigation, regulatory action, negative publicity or other reputational harm. results and may result financial We may also be required to divest or discontinue certain of these activities for regulatory or legal reasons or due to the transition to a less carbon-dependent economy in response to climate change. 48 Goldman Sachs 2022 Form 10-K or less simply favorable Correspondingly, adverse developments or market conditions involving industries or markets in a business where we have a lower concentration of clients in such industry or market have also resulted in the past and may result in the future in our underperforming relative to a similar business of a competitor that has a higher concentration of clients in such industry or market. For example, we have a smaller corporate client base in our market-making businesses than some of our peers and therefore those competitors may benefit more from increased clients. Similarly, we have not activity by corporate historically engaged in retail equities intermediation to the same extent as other financial institutions, which has in the past affected and could in the future adversely affect our market share in equities execution. The financial services industry is highly competitive. The financial services industry and all of our businesses are intensely competitive, and we expect them to remain so. We compete on the basis of a number of factors, including transaction execution, our products and services, innovation, reputation, creditworthiness and price. There has been substantial consolidation and convergence among companies in the financial services industry. This has hastened the globalization of the securities and other financial services markets. As a result, we have had to commit capital to support our international operations and to execute large global transactions. As we have expanded into new business areas and new geographic regions, we have faced competitors with more experience and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect our ability to expand our businesses. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Governments and regulators have adopted regulations, adopted compensation restrictions or imposed taxes, otherwise put forward various proposals that have impacted or may impact our ability to conduct certain of our businesses in a cost-effective manner or at all in certain or all jurisdictions, including proposals relating to restrictions on the type of activities in which financial institutions are permitted to engage. These or other similar rules, many of which do not apply to all our U.S. or non-U.S. competitors, could impact our ability to compete effectively. Pricing and other competitive pressures in our businesses have continued to increase, particularly in situations where some of our competitors may seek to increase market share by reducing prices. For example, in connection with investment banking and other assignments, in response to competitive pressure we have experienced, we have extended and priced credit at levels that in some cases have not fully compensated us for the risks we undertook. The financial services industry is highly interrelated in that a significant volume of transactions occur among a limited number of members of that industry. Many transactions are syndicated to other financial institutions, and financial institutions are often counterparties in transactions. This has led to claims by other market participants and regulators that such institutions have colluded in order to manipulate markets or market prices, including allegations that antitrust laws have been violated. While we have extensive procedures and controls that are designed to identify and prevent such activities, they may not be effective. Allegations of such activities, particularly by regulators, can have a negative reputational impact and can subject us to large fines and settlements, and potentially significant penalties, including treble damages. The growth of electronic trading and the introduction of new products and technologies, including trading and including ledger cryptocurrencies, has increased competition. technologies, distributed Technology is fundamental to our business and our industry. The growth of electronic trading and the introduction of new technologies is changing our businesses and presenting us futures and options with new challenges. Securities, transactions are increasingly occurring electronically, both on our own systems and through other alternative trading systems, and it appears that the trend toward alternative trading systems will continue. Some of these alternative trading systems compete with us, particularly our exchange- based market-making activities, and we may experience continued competitive pressures in these and other areas. In low-cost the increased use by our clients of addition, electronic trading systems and direct electronic access to trading markets could cause a reduction in commissions and spreads. As our clients increasingly use our systems to trade directly in the markets, we may incur liabilities as a result of their use of our order routing and execution infrastructure. We have invested significant resources into the development of electronic trading systems and expect to continue to do so, but there is no assurance that the revenues generated by these systems will yield an adequate return, particularly given the generally lower commissions arising from electronic trades. In addition, the emergence, adoption and evolution of new technologies, including distributed ledgers, such as digital assets and blockchain, have required us to invest resources to adapt our existing products and services, and we expect to continue to make such investments, which could be material. The adoption and evolution of such new technologies may also increase our compliance and regulatory costs. Further, technologies, such as those based on distributed ledgers, that do not require intermediation could also significantly disrupt payments processing and other financial services. Regulatory limitations on our involvement in products and platforms involving digital assets and distributed ledger technologies may not apply equally or in some cases at all to certain of our competitors. We may not be as timely or successful in developing or integrating, or even able to develop or integrate, new products and technologies, such as those built into our existing products and on distributed ledgers, services, adapting to changes in consumer preferences or achieving market acceptance of our products and services, any of which could affect our ability to attract or retain clients, cause us to lose market share or result in service disruptions and in turn reduce our revenues or otherwise adversely affect us. Our businesses would be adversely affected if we are unable to hire and retain qualified employees. Our performance is largely dependent on the talents and efforts of highly skilled people; therefore, our continued ability to compete effectively in our businesses, to manage our businesses effectively and to expand into new businesses and geographic areas depends on our ability to attract new talented and diverse employees and to retain and motivate our existing employees. Factors that affect our ability to attract and retain such employees include the level and composition of our compensation and benefits, and our reputation as a successful business with a culture of fairly hiring, training and promoting qualified employees. As a significant portion of the compensation that we pay to our employees form of year-end discretionary compensation, a significant portion of which is in the form of deferred equity-related awards, declines in our profitability, or in the outlook for our future profitability, as well as regulatory limitations on compensation levels and terms, can negatively impact our ability to hire and retain highly qualified employees. in the is Goldman Sachs 2022 Form 10-K 49 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Competition from within the financial services industry and from businesses outside the financial services industry, including the technology industry, for qualified employees has often been intense. We have experienced increased competition in hiring and retaining employees to address the demands of our expanding consumer-oriented businesses and our technology initiatives. This is also the case in emerging and growth markets, where we are often competing for qualified employees with entities that have a significantly greater presence or more extensive experience in the region. Laws or regulations in jurisdictions in which our operations are located that affect taxes on our employees’ income or the amount or composition of compensation, or that require us to disclose our or our competitors’ compensation practices, may also adversely affect our ability to hire and retain qualified employees in those jurisdictions. in “Business — Regulation — As described further Compensation Practices” in Part I, Item 1 of this Form 10-K, our compensation practices are subject to review by, and the standards of, the FRB. As a large global financial and to limitations on banking institution, we are subject compensation practices (which may or may not affect the companies with which we compete for talent) by the FRB, the PRA, the FCA, the FDIC and other regulators worldwide. These limitations have shaped our compensation practices, which has, in some cases, adversely affected our ability to attract and retain talented employees, in particular in relation to companies not subject to these limitations, and future legislation or regulation may have similar adverse effects. Our operating expenses and efficiency ratio depend, in part, on our overall headcount and the proportion of our employees located in strategic locations. Our future human capital resource requirements and the benefits provided by strategic locations are uncertain, and we may not realize the benefits we anticipate. Market Developments and General Business Environment financial condition, Our businesses, liquidity and results of operations have been and may in the future be adversely affected by unforeseen or catastrophic events, attacks, pandemics, extreme weather events or other natural disasters. including terrorist (or catastrophic concerns over events, The occurrence of unforeseen or such as COVID-19, or other including pandemics, widespread health emergencies the possibility of such an emergency), terrorist attacks, extreme weather events, solar events or other natural disasters, could adversely affect our business, financial condition, liquidity and results of operations. These events could have such effects through economic or financial market disruptions or challenging economic or market conditions more generally, the deterioration of our creditworthiness or that of our counterparties, changes in consumer sentiment and consumer borrowing, spending and savings patterns, liquidity stress, or operational difficulties limitations and (such as limitations on occupancy in our offices) that impair our ability to manage our businesses. travel The COVID-19 pandemic created economic and financial disruptions that have in the past adversely affected and may in the future adversely affect our business, financial condition, liquidity and results of operations. The extent to which the COVID-19 pandemic will negatively affect our businesses, liquidity and results of future operations will depend on, among other things, developments, including any resurgence of COVID-19 cases, the emergence of new variants of COVID-19 and the effectiveness of vaccines and treatments over the long term and against new variants, which are highly uncertain and cannot be predicted. financial condition, affect Climate change could disrupt our businesses and and the adversely creditworthiness of our clients and counterparties, and our efforts to address concerns relating to climate change could result in damage to our reputation. activity levels client clients, adversely affect Climate change may cause extreme weather events that disrupt operations at one or more of our primary locations, which may negatively affect our ability to service and interact with our the value of our investments, including our real estate investments, and reduce the availability or increase the cost of insurance. Climate change and the transition to a less carbon-dependent economy may also have a negative impact on the operations or financial condition of our clients and counterparties, which may decrease revenues from those clients and counterparties and increase the credit risk associated with loans and other credit exposures to those clients and counterparties. In addition, climate change may impact the broader economy. 50 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES example, our We are also exposed to risks resulting from changes in public laws and regulations, or market and public policy, perceptions and preferences in connection with the transition to a less carbon-dependent economy. These changes could adversely affect our business, results of operations and reputation and client reputation. For relationships may be damaged as a result of our or our clients’ involvement in, or decision not to participate in, certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. If we are unable to achieve our objectives relating to climate change or our response to climate change is perceived to be insufficient or otherwise inappropriate, our ineffective, business, to recruit and retain employees may suffer. reputation and efforts and authorities, supervisory shareholders New regulations or guidance relating to climate change, as well as the perspectives of government officials, regulators, shareholders, employees and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products. Federal and state, and non-U.S. banking regulators and other stakeholders have increasingly viewed financial institutions as playing an important role in helping to address risks related to climate change, both directly and with respect to their clients, which may result in financial institutions coming under increased requirements and expectations regarding the disclosure and management of their climate risks and related lending, investment and advisory activities. The FRB has announced that we are among the six U.S. financial institutions participating in a pilot climate scenario analysis exercise in 2023, and we also are subject to new or heightened regulatory requirements relating to climate change, such as requirements relating to operational resiliency or stress testing for various climate stress scenarios. Any such new or heightened requirements could result in increased regulatory, compliance or other costs or higher capital requirements. The risks associated with, and the perspective of regulators, shareholders, employees and other stakeholders regarding, climate change are continuing to evolve rapidly, which can make it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties, and we expect that climate change-related risks will increase over time. Our business, financial condition, liquidity and results affected by of operations may be disruptions in the global economy caused by Russia’s invasion of Ukraine and related sanctions and other developments. adversely The war between Russia and Ukraine has negatively affected the global economy. Governments around the world have responded to Russia’s invasion by imposing economic sanctions and export controls on certain industry sectors, including price caps on Russian oil, and parties in Russia. sanctions and restrictions Compliance with economic imposed by governments has increased our costs and otherwise adversely affected our business and may continue to do so. Russia has responded with its own restrictions against investors and countries outside Russia and has proposed additional measures aimed at non-Russia owned businesses. Businesses in the U.S. and globally have experienced shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative effects of the war on the global economy. The escalation or continuation of the war between Russia and Ukraine or other hostilities could result in, among other things, further increased risk of cyber attacks, an increased frequency and volume of securities transactions, supply chain disruptions, higher inflation, lower consumer demand and increased volatility in commodity, currency and other financial markets. to settle failures The extent and duration of the war, sanctions and resulting market disruptions are impossible to predict, and the consequences for our business could be significant. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Credit Risk Management — Selected Exposures — Country Exposures” for further information about our credit exposure to Russia and Ukraine. Goldman Sachs 2022 Form 10-K 51 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Certain of our businesses, our funding instruments and financial products may be adversely affected by changes in or the discontinuance of Interbank Offered Rates (IBORs), in particular USD LIBOR. On January 1, 2022, the publication of all EUR, CHF, JPY and GBP LIBOR (non-USD LIBOR) settings along with certain USD LIBOR settings ceased. The publication of the most commonly used USD LIBOR settings as representative rates will cease after June 2023. The FCA proposed that those USD LIBOR settings continue to be certain of published on a synthetic basis through September 2024. The FCA has allowed the publication and use of synthetic rates for certain GBP LIBOR settings in legacy GBP LIBOR-based derivative contracts through March 2024. The International Swaps and Derivatives Association (ISDA) 2020 IBOR Fallbacks Protocol (IBOR Protocol) has provided derivatives market participants with amended fallbacks for legacy and new derivative contracts to mitigate legal or economic uncertainty. Both counterparties have to adhere to the IBOR Protocol or engage in bilateral amendments for the terms to be effective for derivative contracts. ISDA has confirmed that the FCA’s formal announcement to cease both non-USD and USD LIBOR settings fixed the spread adjustment for all LIBOR rates and as a result fallbacks applied automatically for non-USD LIBOR settings following December 31, 2021 and will apply automatically for USD LIBOR settings following June 30, 2023. The Adjustable Interest Rate (LIBOR) Act (LIBOR Act), that was enacted in March 2022, provides a statutory framework to replace USD LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (SOFR) for contracts governed by U.S. law that have no fallbacks or fallbacks that would require the use of a poll or LIBOR-based rate. In December 2022, the FRB adopted a final rule that implements the LIBOR Act, which will become effective on February 27, identifies different SOFR-based 2023. The replacement cash contracts, instruments such as floating-rate notes and preferred stock, for consumer contracts, for certain government-sponsored enterprise loan securitizations that lack a fallback to an alternative rate when USD LIBOR ceases to be published on June 30, 2023. As the transition from LIBOR is ongoing, there continues to be uncertainty as to the ultimate effect of the transition on the financial markets for LIBOR-linked financial instruments. Similar developments have occurred with respect to other IBORs. rule for derivative final rates contracts student certain and for for The language in our contracts and financial instruments that define IBORs, in particular LIBOR, have developed over time and have various events that trigger when a successor rate to the designated rate would be selected. Once a trigger is satisfied, contracts and financial instruments often give the calculation agent (which may be us) discretion over the successor rate or benchmark to be selected. Although the LIBOR Act includes safe harbors if the FRB-identified SOFR- based replacement rate is selected, these safe harbors are untested. As a result, and despite the enactment of the LIBOR Act, for the most commonly used USD LIBOR settings, the selection of a successor rate could result in client disputes and litigation surrounding the proper interpretation of our IBOR- instruments. Discretionary based contracts and financial actions taken in connection with the implementation of fallback provisions could also result in client disputes and litigation particularly for derivatives and other synthetic instruments. Changes in, the discontinuation of, or changes in market acceptance of any IBOR, particularly USD LIBOR, as a reference rate may adversely affect certain of our businesses, our funding instruments and financial products. of our businesses Certain funding instruments may be adversely affected by changes in other reference rates, currencies, indexes, baskets or ETFs to which products we offer or funding that we raise are linked. and our that In the event Many of the products that we own or that we offer, such as structured notes, warrants, swaps or security-based swaps, pay interest or determine the principal amount to be paid at maturity or in the event of default by reference to rates or by reference to an index, currency, basket, ETF or other the financial metric (the underlier). composition of the underlier is significantly changed, by reference to rules governing such underlier or otherwise, the underlier ceases to exist (for example, in the event that a country withdraws from the Euro or links its currency to or delinks its currency from another currency or benchmark, an index or ETF sponsor materially alters the composition of an index or ETF, or stocks in a basket are delisted or become impermissible to be included in the index or ETF), the underlier ceases to be recognized as an acceptable market benchmark or there are legal or regulatory constraints on linking a financial instrument to the underlier, we may experience adverse effects. 52 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Our business, financial condition, liquidity and results affected by of operations may be disruptions in the global economy caused by escalating tensions between the U.S. and China. adversely Continued or escalating tensions between the U.S. and China have resulted in and may result in additional changes to U.S. international trade and investment policies, which could disrupt international trade and investment, adversely affect financial markets, including market activity levels, and adversely impact our revenues. Continued or escalating tensions may also lead to the U.S., China or other countries taking other actions, which could include the implementation of sanctions, tariffs or foreign exchange measures, the large- scale sale of U.S. Treasury securities or restrictions on cross- border trade, information or investment or transfer of technology. Any such developments could adversely affect our or our clients’ businesses, as well as our financial liquidity and results of operations, possibly condition, materially. A conflict, or concerns about a potential conflict, involving China and Taiwan, the U.S. or other countries could negatively impact financial markets and our or our clients’ businesses. Trade restrictions by the U.S. or other countries in response to a conflict or potential conflict involving China, including financial and economic sanctions and export controls against certain organizations or individuals, or actions taken by China in response to trade restrictions, could negatively impact our or our clients’ ability to conduct business in certain countries or with certain counterparties and could negatively impact regional and global financial markets and economic conditions. Any of the foregoing could adversely affect our business, financial condition, liquidity and results of operations, possibly materially. We face enhanced risks as new business initiatives and acquisitions lead us to engage in new activities, operate in new locations, transact with a broader array of clients and counterparties and expose us to new asset classes and new markets. including existing businesses, A number of our recent and planned business initiatives and expansions of through acquisitions and partnership arrangements, could continue to bring us into contact, directly or indirectly, with individuals and entities that are not within our traditional client and counterparty base, expose us to new asset classes and new markets, and present us with integration challenges. For example, we continue to transact business and invest in new including a wide range of emerging and growth regions, markets, and we expect this trend to continue. Various emerging and growth market countries have experienced severe including economic their currencies, defaults or significant devaluations of threatened defaults on sovereign debt, capital and currency exchange controls, and low or negative growth rates in their economies. The possible effects of any of these conditions include an adverse impact on our businesses and increased volatility in financial markets generally. and financial disruptions, Furthermore, in a number of our businesses, including where we make markets, invest and lend, we own interests in, or otherwise become affiliated with the ownership and operation of, public services, such as airports, toll roads and shipping ports, as well as physical commodities and commodities infrastructure components, both within and outside the U.S. We have increased our consumer-oriented deposit-taking and lending activities. For example, we now issue credit cards to consumers and through our acquisition of GreenSky, Inc. (GreenSky), we expanded our offering of point-of-sale financing. To the extent we engage in those and other consumer-oriented activities, we have faced, and would continue to face, additional compliance, legal and regulatory risk, increased reputational risk and increased operational risk due to, among other things, higher transaction volumes and significantly increased retention and transmission of information. Acquisitions and new consumer and client products can also expose us to new or different types of risks. For example, providing point-of-sale financing through GreenSky also subjects us to risks relating to retaining and attracting merchants and servicing loans for other banks, as well as potential liability for remediation costs if merchants fail to fulfill their obligations to consumers. We are also subject including with respect to suitability and consumer protection (for example, Regulation Best Interest, fair lending laws and regulations and privacy laws and regulations). Further, identity fraud may increase and credit reporting practices may change in a manner that makes it more difficult for financial institutions, such as us, to evaluate the creditworthiness of consumers. legal requirements, to additional Goldman Sachs 2022 Form 10-K 53 In recent years, we have invested, and may continue to invest, more in businesses that we expect will generate a higher level of more consistent revenues. In order to develop and be able to offer consumer financial products that compete effectively, we have made and may continue to make significant investments in technology and human capital resources in connection with our consumer-oriented activities. Such investments and acquisitions may not be successful or have returns similar to our other businesses. We may not be able to fully realize the expected benefits or synergies from acquisitions or other business initiatives in the time frames we expect, or at all. We have engaged in selective acquisitions and may continue to do so in the future and these acquisitions may, individually or in the aggregate, be material to us. Any future acquisitions could involve the issuance of common stock and/or the payment of cash as consideration. The success of our acquisitions will depend, in part, on our ability to integrate the acquired businesses and realize anticipated synergies, cost savings and growth opportunities. We may face numerous risks and uncertainties in combining and integrating the relevant businesses and systems, including the need to combine or separate accounting and data processing systems and management controls and to integrate relationships with clients, counterparties, regulators and others in connection with acquisitions. Integration of acquired businesses is time- consuming and could disrupt our ongoing businesses, produce unforeseen regulatory or operating difficulties, cause us to incur incremental expenses or require incremental financial, management and other resources. It is also possible that an acquisition, once announced, may not close due to the failure to satisfy applicable closing conditions, such as the receipt of necessary shareholder or regulatory approvals. There is no assurance that any of our acquisitions will be successfully integrated or yield all of the expected benefits and synergies in the time frames that we expect, or at all. If we are not able to integrate our acquisitions successfully, our results of operations, financial condition and cash flows could be adversely affected. There is no assurance that the reorganization of our business segments will yield all of the expected benefits in the time frames that we expect, or at all. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES We have increased and intend to further increase our transaction banking activities. As a result, we expect to face additional compliance, legal and regulatory risk, including with respect to know-your-customer, anti-money laundering and reporting requirements and prohibitions on transfers of property belonging to countries, entities and individuals subject to sanctions by U.S. or other governmental authorities. risks including associated with New business initiatives expose us to new and enhanced risks, dealing with governmental entities, reputational concerns arising from dealing with different types of clients, business partners, counterparties and investors, greater regulatory scrutiny of these activities, increased credit-related, market, sovereign and operational risks, risks arising from accidents or acts of terrorism, and reputational concerns with the manner in which certain assets are being operated or held or in which partners, we counterparties and reputational risks may also exist in connection with activities and transactions involving new products or markets where there is regulatory uncertainty or where there are different or conflicting regulations depending on the regulator or the jurisdiction involved, particularly where transactions in such products may involve multiple jurisdictions. these investors. Legal, interact with and regulatory business clients, We have developed and pursued new business and strategic initiatives, including acquisitions, and expect to continue to do so. If and to the extent we are unable to successfully execute those initiatives, we may incur unanticipated costs and losses, and face other adverse consequences, such as negative reputational effects. In addition, the actual effects of pursuing those initiatives may differ, possibly materially, from the benefits that we expect to realize from them, such as generating additional revenues, achieving expense savings, reducing operational risk exposures or using capital and funding more efficiently. Engaging in new activities exposes us to a variety of risks, including that we may be unable to successfully develop new, competitive, efficient and effective systems and processes, and hire and retain the necessary personnel. Due to our lack of historical experience with unsecured consumer lending, our loan loss assumptions may prove to be incorrect and we may incur losses significantly above those which we originally anticipated in entering the business or in expanding the product offerings for the business. 54 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Item 1B. Unresolved Staff Comments Item 3. Legal Proceedings We are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of our businesses. Many of these proceedings are in early stages, and many of these cases seek an indeterminate amount of damages. We have estimated the upper end of the range of reasonably possible aggregate loss for matters where we have been able to estimate a range and we believe, based on currently available information, that the results of matters where we have not been able to estimate a range of reasonably possible loss, in the aggregate, will not have a material adverse effect on our financial condition, but may be material to our operating results in a given period. Given the range of litigation and investigations presently under way, our litigation expenses may remain high. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Use of Estimates” in Part II, Item 7 of this Form 10-K. See Notes 18 and 27 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for information about our reasonably possible aggregate loss estimate and judicial, regulatory and legal proceedings. Item 4. Mine Safety Disclosures Not applicable. There are no material unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year relating to our periodic or current reports under the Exchange Act. Item 2. Properties In the U.S. and elsewhere in the Americas, we have offices consisting of approximately 6.7 million square feet of leased and owned space. Our principal executive offices are located at 200 West Street, New York, New York and consist of approximately 2.1 million square feet. The building is located on a parcel leased from Battery Park City Authority pursuant to a ground lease. Under the lease, Battery Park City Authority holds title to all improvements, including the office building, subject to our right of exclusive possession and use until June 2069, the expiration date of the lease. Under the terms of the ground lease, we made a lump sum ground rent payment in June 2007 of $161 million for rent through the term of the lease. In Europe, the Middle East and Africa, we have offices consisting of approximately 1.8 million square feet of leased and owned space. Our European headquarters is located in London at Plumtree Court, consisting of approximately 826,000 square feet under a lease which can be terminated in 2039. In Asia, Australia and New Zealand, we have offices consisting of approximately 2.8 million square feet, including our offices in India, and regional headquarters in Tokyo and Hong Kong. In India, we have offices with approximately 1.7 million square feet, the majority of which have leases that will expire in 2028. In the preceding paragraphs, square footage figures are provided only for properties that are used in the operation of our businesses. We regularly evaluate our space capacity in relation to current and projected headcount. We may incur exit costs in the future if we (i) reduce our space capacity or (ii) commit to, or occupy, new properties in locations in which we operate and dispose of existing space that had been held for potential growth. These costs may be material to our operating results in a given period. Goldman Sachs 2022 Form 10-K 55 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES PART II Market Item 5. for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities through December The principal market on which our common stock is traded is the NYSE under the symbol “GS.” Information relating to the performance of our common stock from December 31, 2017 forth in 31, is “Supplemental Financial Information – Common Stock Performance” in Part II, Item 8 of this Form 10-K. As of February 10, 2023, there were 5,750 holders of record of our common stock. 2022 set The table below presents purchases made by or on behalf of Group Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the fourth quarter of 2022. Total Shares Purchased 1,368,286 $ 2,816,047 $ — 4,184,333 Average Price Paid Per Share 328.88 372.86 — October November December Total Total Shares Purchased as Part of a Publicly Announced Program 1,368,286 2,816,047 — 4,184,333 Maximum Shares That May Yet Be Purchased Under the Program 27,092,986 24,276,939 24,276,939 existing share Since March 2000, our Board had approved a repurchase program authorizing repurchases of up to 605 million shares of our common stock. In February 2023, our Board approved a new share repurchase program authorizing repurchases of up to $30 billion (in aggregate value and inclusive of shares repurchased in 2023) of our common stock. This program repurchase program. The replaces our repurchase program is effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 and accelerated share the amounts and timing of which are repurchases), determined primarily by our current and projected capital position, but which may also be influenced by general market conditions and the prevailing price and trading volumes of our common stock. The repurchase program has no set expiration or termination date. Information relating to compensation plans under which our equity securities are authorized for issuance is presented in Part III, Item 12 of this Form 10-K. 56 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction corporation, is a leading global The Goldman Sachs Group, Inc. (Group Inc. or parent together with its company), a Delaware financial consolidated subsidiaries, institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, we are headquartered in New York and maintain offices in all major financial centers around the world. We manage and report our activities in three business segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. See “Results of Operations” for further information about our business segments. When we use the terms “we,” “us” and “our,” we mean Group Inc. and its consolidated subsidiaries. When we use the term “our subsidiaries,” we mean the consolidated subsidiaries of Group Inc. References to “this Form 10-K” are to our Annual Report on Form 10-K for the year ended December 31, 2022. All references to “the consolidated Financial financial Information” are to Part II, Item 8 of this Form 10-K. All references to 2022, 2021 and 2020 refer to our years ended, or the dates, as the context requires, December 31, 2022, December 31, 2021 and December 31, 2020, respectively. Any reference to a future year refers to a year ending on December 31 of that year. “Supplemental statements” or Group Inc. is a bank holding company (BHC) and a financial holding company regulated by the Board of Governors of the Federal Reserve System (FRB). In this discussion and analysis of our financial condition and results of operations, we have included information that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results, financial condition, liquidity and capital actions may differ, possibly materially, from the anticipated results, financial condition, liquidity and capital actions in these forward-looking statements. Important factors that could cause our results, financial condition, liquidity and capital actions to differ from those in these statements include, among others, those described in “Risk Factors” in Part I, Item 1A of this Form 10-K and “Forward-Looking Statements” in Part I, Item 1 of this Form 10-K. Goldman Sachs 2022 Form 10-K 57 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis (ii) trends These statements may relate to, among other things, (i) our future plans and results, including our target ROE, ROTE, efficiency ratio, Common Equity Tier 1 (CET1) capital ratio and firmwide assets under supervision (AUS) inflows, and in or growth how they can be achieved, opportunities for our businesses, including the timing, costs, profitability, benefits and other aspects of business and strategic initiatives and their impact on our efficiency ratio, (iii) our level of future compensation expense, including as a percentage of both operating expenses and revenues, net of provision for credit losses, (iv) our Investment banking fees backlog and future results, (v) our expected interest income and interest expense, (vi) our expense savings and strategic locations initiatives, (vii) expenses we may incur, including future litigation expense and expenses from investing in our platform solutions business, (viii) the projected growth of our deposits and other funding, asset liability management and funding strategies and related interest expense savings, (ix) our business initiatives, including transaction banking and new products in our consumer platforms business, (x) our planned 2023 benchmark debt issuances, (xi) the amount, composition and location of global core liquid assets (GCLA) we expect to hold, (xii) our credit exposures, (xiii) our expected provisions for credit losses, (xiv) the adequacy of our allowance for credit losses, (xv) the projected growth of our platform solutions business, (xvi) the objectives and effectiveness of our business continuity planning (BCP), information security program, risk management and liquidity policies, (xvii) our resolution plan and strategy and their the design and implications effectiveness of our resolution capital and liquidity models and triggers and alerts framework, (xix) the results of stress tests, the effect of changes to regulations, and our future status, activities or reporting under banking and financial regulation, (xx) our expected tax rate, (xxi) the future state of our liquidity and regulatory capital ratios, and our prospective capital distributions (including dividends and repurchases), (xxii) our expected SCB and global systemically important bank (G-SIB) surcharge, (xxiii) legal proceedings, governmental investigations or other contingencies, (xxiv) the asset recovery guarantee and our remediation activities related to our 1Malaysia Development Berhad (1MDB) settlements, IBORs and our the replacement of transition to alternative risk-free reference rates, (xxvi) the impact of the coronavirus (COVID-19) pandemic on our business, results, financial position and liquidity, (xxvii) the effectiveness of our management of our human capital, including our diversity goals, (xxviii) our sustainability and carbon neutrality targets and goals, (xxix) future inflation and (xxx) the impact of Russia’s invasion of Ukraine and related sanctions and other developments on our business, results and financial position. stakeholders, (xviii) (xxv) for 58 Goldman Sachs 2022 Form 10-K Executive Overview We generated net earnings of $11.26 billion for 2022, compared with $21.64 billion for 2021. Diluted earnings per common share (EPS) was $30.06 for 2022, compared with $59.45 for 2021. Return on average common shareholders’ equity (ROE) was 10.2% for 2022, compared with 23.0% for 2021. Book value per common share was $303.55 as of December 2022, 6.7% higher compared with December 2021. Net revenues were $47.37 billion for 2022, 20% lower than a strong 2021, reflecting significantly lower net revenues in Asset & Wealth Management and lower net revenues in Global Banking & Markets, partially offset by significantly higher net revenues in Platform Solutions. Net revenues in Asset & Wealth Management primarily reflected significantly lower net in Equity investments and Debt investments. Net revenues in Global Banking & Markets primarily reflected significantly lower Investment banking fees compared with a strong prior year, partially offset by significantly higher net revenues in Fixed Income, Currency, and Commodities (FICC). Net revenues in Platform Solutions were significantly higher, primarily reflecting significantly higher net revenues in Consumer platforms. revenues Provision for credit losses was $2.72 billion for 2022, compared with $357 million for 2021. Provisions for 2022 primarily reflected growth in the credit card portfolio, the impact of macroeconomic and geopolitical concerns and net charge-offs. Provisions for 2021 reflected growth in the credit largely offset by reserve card and wholesale portfolios, reductions as the broader economic environment continued to improve following the initial impact of the COVID-19 pandemic. Operating expenses were $31.16 billion for 2022, 2% lower than 2021, primarily due to lower compensation and benefits expenses (reflecting a decline in operating performance compared with a strong prior year). This decrease was partially offset by higher non-compensation expenses, reflecting the inclusion of NN Investment Partners (NNIP) and GreenSky, Inc. (GreenSky) and increases in transaction based expenses and technology expenses. Our efficiency ratio (total operating expenses divided by total net revenues) was 65.8% for 2022, compared with 53.8% for 2021. During 2022, we returned a total of $6.70 billion to shareholders, including common stock repurchases of $3.50 billion and common stock dividends of $3.20 billion. As of December 2022, our CET1 capital ratio was 15.1% under the Standardized Capital Rules and 14.4% under the Advanced Capital Rules. See Note 20 to the consolidated financial statements for further information about our capital ratios. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Business Environment In 2022, the global economy was impacted by persistent broad macroeconomic and geopolitical concerns, including Russia’s invasion of Ukraine and the ongoing war, and inflationary and labor market pressures. Governments around the world responded to Russia’s invasion of Ukraine by imposing economic sanctions, and global central banks sought to address inflation by increasing policy interest rates several times over the course of the year. These factors contributed to increased market volatility during the year, as well as a decrease in global equity and bond prices and wider corporate credit spreads compared with the end of 2021. The economic outlook remains uncertain, reflecting concerns about the continuation or escalation of the war between Russia and Ukraine and other geopolitical risks, inflation, and supply chain complications. See “Results of Operations — Segment Assets and Operating Results — Segment Operating Results” for the information about further operating environment for each of our business segments. Critical Accounting Policies Fair Value Fair Value Hierarchy. Trading assets and liabilities, certain investments and loans, and certain other financial assets and liabilities, are included in our consolidated balance sheets at fair value (i.e., marked-to-market), with related gains or losses generally recognized in our consolidated statements of earnings. The use of fair value to measure financial instruments is fundamental to our risk management practices and is our most critical accounting policy. in an orderly transaction The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date. We measure certain financial assets and liabilities as a portfolio (i.e., based on its net exposure to market and/or credit risks). In determining the hierarchy under U.S. generally accepted fair value, the highest accounting principles (U.S. GAAP) gives (i) priority to unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities (level 1 inputs), (ii) the next priority to inputs other than level 1 inputs that are observable, either directly or indirectly (level 2 inputs), and (iii) the lowest priority to inputs that cannot be observed in market activity (level 3 inputs). In evaluating the significance of a valuation input, we consider, among other factors, a input. Assets and portfolio’s net risk exposure to that liabilities are classified in their entirety based on the lowest level of fair value measurement. significant to their input that is The fair values for substantially all of our financial assets and liabilities are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Certain level 2 and level 3 financial assets and liabilities may require appropriate valuation adjustments that a market participant would require to arrive at fair value for factors, such as counterparty and our credit quality, funding risk, transfer restrictions, liquidity and bid/offer spreads. Instruments classified in level 3 of the fair value hierarchy are those which require one or more significant inputs that are not observable. Level 3 financial assets represented 1.8% as of December 2022 and 1.6% as of December 2021 of our total assets. See Notes 4 and 5 to the consolidated financial statements for further information about level 3 financial assets, including changes in level 3 financial assets and related fair value measurements. Absent evidence to the contrary, instruments classified in level 3 of the fair value hierarchy are initially valued at transaction price, which is considered to be the best initial estimate of fair value. Subsequent to the transaction date, we use other methodologies to determine fair value, which vary based on the type of instrument. Estimating the fair value of level 3 financial instruments requires judgments to be made. These judgments include: • Determining the appropriate valuation methodology and/ or model for each type of level 3 financial instrument; • Determining model inputs based on an evaluation of all relevant empirical market data, including prices evidenced interest rates, credit spreads, by market volatilities and correlations; and transactions, • Determining appropriate valuation adjustments, including those related to illiquidity or counterparty credit quality. Regardless of the methodology, valuation inputs and assumptions are only changed when corroborated by substantive evidence. Instruments. Controls Over Valuation of Financial Market makers and investment professionals in our revenue- producing units are responsible for pricing our financial instruments. Our control infrastructure is independent of the revenue-producing units and is fundamental to ensuring that all of our financial instruments are appropriately valued at market-clearing levels. In the event that there is a difference of opinion in situations where estimating the fair value of financial instruments requires judgment (e.g., calibration to market comparables or trade comparison, as described the final valuation decision is made by senior below), managers risk oversight and control functions. This independent price verification is critical to ensuring that our financial instruments are properly valued. in independent Goldman Sachs 2022 Form 10-K 59 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Price Verification. All financial instruments at fair value classified in levels 1, 2 and 3 of the fair value hierarchy are subject to our independent price verification process. The objective of price verification is to have an informed and independent opinion with regard to the valuation of financial instruments under review. Instruments that have one or more significant inputs which cannot be corroborated by external market data are classified in level 3 of the fair value hierarchy. Price verification strategies utilized by our independent risk oversight and control functions include: • Trade Comparison. Analysis of trade data (both internal and external, where available) is used to determine the most relevant pricing inputs and valuations. • External Price Comparison. Valuations and prices are compared to pricing data obtained from third parties (e.g., brokers or dealers, S&P Global Services, Bloomberg, ICE Data Services, Pricing Direct, TRACE). Data obtained from various sources is compared to ensure consistency and validity. When broker or dealer quotations or third- party pricing vendors are used for valuation or price verification, greater priority is generally given to executable quotations. • Calibration to Market Comparables. Market-based transactions are used to corroborate the valuation of and positions with components. characteristics, similar risks • Relative Value Analyses. Market-based transactions are analyzed to determine the similarity, measured in terms of risk, liquidity and return, of one instrument relative to another or, for a given instrument, of one maturity relative to another. • Collateral Analyses. Margin calls on derivatives are analyzed to determine implied values, which are used to corroborate our valuations. • Execution of Trades. Where appropriate, market-making desks are instructed to execute trades in order to provide evidence of market-clearing levels. • Backtesting. Valuations are corroborated by comparison to values realized upon sales. See Note 4 to the consolidated financial statements for further information about fair value measurements. Review of Net Revenues. Independent risk oversight and control functions ensure adherence to our pricing policy through a combination of daily procedures, including the explanation and attribution of net revenues based on the underlying factors. Through this process, we independently validate net revenues, identify and resolve potential fair value or trade booking issues on a timely basis and seek to ensure that risks are being properly categorized and quantified. 60 Goldman Sachs 2022 Form 10-K Review of Valuation Models. Our independent model risk management group (Model Risk), consisting of quantitative professionals who are separate from model developers, performs an independent model review and validation process of our valuation models. New or changed models are reviewed and approved prior to implementation. Models are reviewed annually to assess the impact of any changes in the product or market and any market developments in pricing “Risk Management — Model Risk theories. Management” for further information about the review and validation of our valuation models. See Allowance for Credit Losses We estimate and record an allowance for credit losses related to our loans held for investment that are accounted for at amortized cost. To determine the allowance for credit losses, we classify our loans accounted for at amortized cost into and consumer portfolios. These portfolios wholesale represent the level at which we have developed and documented our methodology to determine the allowance for credit losses. The allowance for credit losses is measured on a risk collective basis characteristics using a modeled approach and on an asset- specific basis for loans that do not share similar risk characteristics. exhibit similar loans that for losses takes into account the The allowance for credit weighted average of a range of forecasts of future economic conditions over the expected life of the loans and lending commitments. The expected life of each loan or lending commitment is determined based on the contractual term adjusted for extension options or demand features, or is modeled in the case of revolving credit card loans. The forecasts include baseline, favorable and adverse economic scenarios over a three-year period. For loans with expected lives beyond three years, the model reverts to historical loss information based on a non-linear modeled approach. We apply judgment scenarios each in weighting individual quarter based on a variety of factors, including our internally recent derived economic outlook, market macroeconomic trends. The forecasted economic scenarios consider a number of risk factors relevant to the wholesale and consumer portfolios. Risk factors for wholesale loans include internal credit ratings, industry default and loss data, expected life, macroeconomic indicators (e.g., unemployment rates and financial GDP), obligations, the borrower’s country of risk and industry, loan seniority and collateral type. In addition, for loans backed by real estate, risk factors include loan-to-value ratio, debt for service ratio and home price index. Risk factors installment and credit Isaac Corporation (FICO) credit scores, delinquency status, loan vintage and macroeconomic indicators. capacity to meet the borrower’s and industry include Fair card loans consensus, conditions its THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The allowance for credit losses also includes qualitative components which allow management to reflect the uncertain nature uncertainty forecasting, regarding model inputs, and account for model imprecision and concentration risk. economic capture of at the losses entails reporting dates, judgment about Our estimate of credit collectability are and there uncertainties inherent in those judgments. The allowance for credit losses is subject to a governance process that involves review and approval by senior management within our independent risk oversight and control functions. Personnel within our independent risk oversight and control functions are responsible for forecasting the economic variables that underlie the economic scenarios that are used in the modeling of expected credit losses. While we use the best information available to determine this estimate, future adjustments to the allowance may be necessary based on, among other things, changes in the economic environment or variances between actual results and the original assumptions used. Loans are charged off against the allowance for loan losses when deemed to be uncollectible. We also record an allowance for credit losses on lending that are commitments which are held for accounted for at amortized cost. Such allowance is determined using the same methodology as the allowance for loan losses, while also taking into consideration the probability of drawdowns or funding, and whether such commitments are cancellable by us. investment of an the impact estimate potential To adverse macroeconomic environment on our allowance for credit losses, we, among other things, compared the expected credit losses under the weighted average forecast used in the calculation of allowance for credit losses as of December 2022 (which was weighted towards the baseline and adverse economic scenarios) to the expected credit losses under a 100% weighted adverse economic scenario. The adverse economic scenario of the forecast model reflects a global recession in 2023 and a more aggressive tightening of monetary policy by central banks, resulting in an economic contraction and rising unemployment rates. A 100% weighting to the adverse economic scenario would have resulted in an approximate $1.0 billion increase in our allowance for credit losses as of December 2022. This hypothetical increase does not take into consideration any potential adjustments to qualitative reserves. The forecasts of macroeconomic conditions are inherently uncertain and do not take into account any other offsetting or correlated effects. The actual credit loss in an adverse macroeconomic environment may differ significantly from this estimate. See Note 9 to the consolidated financial statements for further information about the allowance for credit losses. Use of Estimates U.S. GAAP requires us to make certain estimates and assumptions. In addition to the estimates we make in connection with fair value measurements and the allowance for credit losses on loans and lending commitments held for investment and accounted for at amortized cost, the use of estimates and assumptions is also important in determining the accounting for goodwill and identifiable intangible assets, provisions for losses that may arise from litigation and regulatory governmental investigations), and accounting for income taxes. proceedings (including for impairment, Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events occur or circumstances indicate an impairment may exist. When change that assessing goodwill first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its carrying value. If the results of the qualitative assessment are not conclusive, a quantitative test goodwill is performed. Alternatively, a quantitative test can be performed without performing a goodwill qualitative assessment. Estimating the fair value of our reporting units requires judgment. Critical inputs to the fair value estimates include projected earnings and allocated inherent uncertainty in the projected equity. There is earnings. The carrying value of each reporting unit reflects an allocation of total shareholders’ equity and represents the estimated amount of total shareholders’ equity required to support the activities of the reporting unit under currently applicable regulatory capital requirements. The estimated fair value of our Consumer platforms reporting unit, which represents approximately 7.5% of our goodwill, was not substantially in excess of its carrying value. This reporting unit has been adversely impacted by the recent operating environment broad macroeconomic concerns. We will continue to closely monitor it to determine whether an impairment is required in the future. As of December 2022, the goodwill related to the Consumer platforms reporting unit was $482 million. See Note 12 to the consolidated financial statements for further information about goodwill. If we experience a prolonged or severe period of weakness in the business environment, financial markets, the performance of one or more of our reporting units or our common stock price, or additional increases in capital requirements, our goodwill could be impaired in the future. characterized generally by Identifiable intangible assets are tested for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Judgment is required to evaluate whether indications of potential impairment have occurred, and to test identifiable intangible assets for impairment, if required. An impairment the estimated undiscounted cash flows is recognized if than the relating to the asset or asset group is corresponding to the value. consolidated financial statements for further information about identifiable intangible assets. See Note less 12 carrying Goldman Sachs 2022 Form 10-K 61 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis We also estimate and provide for potential losses that may arise out of litigation and regulatory proceedings to the extent that such losses are probable and can be reasonably estimated. In addition, we estimate the upper end of the range of reasonably possible aggregate loss in excess of the related reserves for litigation and regulatory proceedings where we believe the risk of loss is more than slight. See Notes 18 and 27 to the consolidated financial statements for information about certain judicial, litigation and regulatory proceedings. Significant judgment is required in making these estimates and our liabilities may ultimately be materially different. Our total estimated liability in respect of litigation and regulatory proceedings is determined on a case- by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case, proceeding or investigation, our experience and the experience of others in similar cases, proceedings or investigations, and the opinions and views of legal counsel. final to different In accounting for income taxes, we recognize tax positions in the financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. As of December 2022, our net liability for unrecognized tax benefits was $1.22 billion. We use estimates to recognize current and deferred income taxes in the U.S. federal, state and local and non-U.S. jurisdictions in which we operate. The income tax laws in these jurisdictions are complex and can be subject interpretations between taxpayers and taxing authorities. Disputes may arise over these interpretations and can be settled by audit, administrative proceedings. Our interpretations are reevaluated quarterly based on guidance currently available, tax examination experience and the opinions of legal counsel, among other factors. We recognize deferred taxes based on the amount that will more likely than not be realized in the future based on enacted income tax laws. As of December 2022, we had $8.93 billion of deferred tax assets with a related valuation allowance of $1.57 billion. Our estimate for deferred taxes includes estimates for future taxable earnings, including the level and character of those earnings, and various tax planning strategies. See Note 24 to the consolidated financial statements for further information about income taxes. appeals judicial or Recent Accounting Developments See Note 3 to the consolidated financial statements for information about Recent Accounting Developments. 62 Goldman Sachs 2022 Form 10-K Results of Operations The composition of our net revenues has varied over time as financial markets and the scope of our operations have changed. The composition of net revenues can also vary over the shorter term due to fluctuations in U.S. and global economic and market conditions. See “Risk Factors” in Part I, Item 1A of this Form 10-K for further information about the impact of economic and market conditions on our results of operations. Financial Overview The table below presents an overview of our financial results and selected financial ratios. Year Ended December $ in millions, except per share amounts Net revenues Pre-tax earnings Net earnings Net earnings to common Diluted EPS ROE ROTE Net earnings to average assets Return on shareholders’ equity Average equity to average assets Dividend payout ratio In the table above: 2022 2021 $ 47,365 $ 59,339 $ 13,486 $ 27,044 $ 11,261 $ 21,635 $ 10,764 $ 21,151 59.45 $ 23.0% 24.3% 1.6% 21.3% 7.4% 10.9% 30.06 $ 10.2% 11.0% 0.7% 9.7% 7.5% 29.9% 2020 $ 44,560 $ 12,479 9,459 $ 8,915 $ 24.74 $ 11.1% 11.8% 0.8% 10.3% 8.2% 20.2% • Net earnings to common represents net earnings applicable to common shareholders, which is calculated as net earnings less preferred stock dividends. • ROE is calculated by dividing net earnings to common by average monthly common shareholders’ equity. Tangible common shareholders’ total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets. calculated as equity is • Return on average tangible common shareholders' equity (ROTE) is calculated by dividing net earnings to common by average monthly tangible common shareholders’ equity. We believe that tangible common shareholders’ equity is meaningful because it is a measure that we and investors use to assess capital adequacy and that ROTE is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed internally. Tangible common shareholders’ equity and ROTE are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our average equity and the reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity. $ in millions Total shareholders’ equity Preferred stock Common shareholders’ equity Goodwill Identifiable intangible assets $ Tangible common shareholders’ equity $ Average for the Year Ended December 2022 115,990 $ (10,703) 105,287 (5,726) (1,583) 97,978 $ 2021 101,705 (9,876) 91,829 (4,327) (536) 86,966 $ $ 2020 91,779 (11,203) 80,576 (4,238) (617) 75,721 • Net earnings to average assets is calculated by dividing net earnings by average total assets. • Return on shareholders’ equity is calculated by dividing net earnings by average monthly shareholders’ equity. • Average equity to average assets is calculated by dividing average total shareholders’ equity by average total assets. • Dividend payout ratio is calculated by dividing dividends declared per common share by diluted EPS. Net Revenues The table below presents our net revenues by line item. $ in millions Investment banking Investment management Commissions and fees Market making Other principal transactions Total non-interest revenues Interest income Interest expense Net interest income Total net revenues Year Ended December 2022 7,360 $ 9,005 4,034 18,634 654 39,687 29,024 21,346 7,678 47,365 $ $ $ 2021 14,136 8,171 3,590 15,357 11,615 52,869 12,120 5,650 6,470 59,339 $ 2020 9,100 6,986 3,539 15,428 4,756 39,809 13,689 8,938 4,751 $ 44,560 In the table above: • Investment banking consists of revenues (excluding net interest) and underwriting assignments. These activities are included in Global Banking & Markets. from financial advisory • Investment management consists of revenues (excluding net interest) from providing asset management and wealth advisory services across all major asset classes to a diverse set of clients. These activities are included in Asset & Wealth Management. • Commissions and fees consists of revenues from executing and clearing client transactions on major stock, options and futures exchanges worldwide, as well as over-the- counter (OTC) these transactions. Substantially all of activities are included in Global Banking & Markets. • Market making consists of revenues (excluding net interest) from client execution activities related to making markets in interest rate products, credit products, mortgages, currencies, commodities and equity products. These activities are included in Global Banking & Markets. • Other consists principal transactions revenues (excluding net interest) from our equity investing activities, including revenues related to our consolidated investments (included in Asset & Wealth Management), and debt investing and lending activities (included across our three segments). of concerns and market Operating Environment. During 2022, the operating environment was characterized by broad macroeconomic and volatility, which geopolitical contributed to a decrease in global equity and bond prices and wider corporate credit spreads compared with the end of 2021. These factors contributed to solid market-making activity levels and a decline in industry-wide investment banking activity, particularly for underwriting. In the U.S., the rate of unemployment remained low and consumer spending increased slightly compared with 2021. including If concerns about the economic outlook grow, those about the continuation or escalation of geopolitical concerns, inflation and supply chain complications, and the persistence of COVID-19-related effects, it may lead to a continued decline in asset prices, or a decline in market- making activity levels, or a continued decline in investment banking activity levels, and net revenues and provision for credit losses would likely be negatively impacted. See “Segment Assets and Operating Results — Segment Operating Results” for information about the operating environment and material trends and uncertainties that may impact our results of operations. 2022 versus 2021 Net revenues in the consolidated statements of earnings were $47.37 billion for 2022, 20% lower than a strong 2021, primarily principal revenues and investment banking revenues, transactions partially offset by significantly higher market making revenues. lower other significantly reflecting Non-Interest Revenues. Investment banking revenues in the consolidated statements of earnings were $7.36 billion for 2022, 48% lower than a strong 2021, due to significantly lower revenues in both equity and debt underwriting, reflecting a significant decline in industry-wide volumes, and lower revenues in advisory, reflecting a decline in industry- wide completed mergers and acquisitions transactions from elevated activity levels in the prior year. Goldman Sachs 2022 Form 10-K 63 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis revenues consolidated Investment management statements of earnings were $9.01 billion for 2022, 10% higher than 2021, due to higher management and other fees, reflecting the inclusion of NNIP and a reduction in fee waivers on money market funds. in the Commissions and fees in the consolidated statements of earnings were $4.03 billion for 2022, 12% higher than 2021, primarily due to higher commissions and fees in Equities, reflecting generally higher volumes. Market making revenues in the consolidated statements of earnings were $18.63 billion for 2022, 21% higher than 2021, primarily reflecting significantly higher revenues in interest rate products, currencies and commodities, partially offset by lower revenues in equity products. Other principal transactions revenues in the consolidated statements of earnings were $654 million for 2022, compared with $11.62 billion for 2021, primarily reflecting significantly lower net gains in private equities, significant mark-to-market net losses from investments in public equities and net mark-downs in debt investments compared with net mark-ups in 2021. from investments income interest Interest Income. Net in the Net consolidated statements of earnings was $7.68 billion for 2022, 19% higher than 2021, reflecting an increase in interest income primarily related to collateralized agreements, other interest-earning assets and deposits with banks, each reflecting the impact of higher average interest rates, and loans, reflecting the impact of higher average balances and higher average interest rates. The increase in interest income was partially offset by an increase in interest expense primarily liabilities, collateralized financings, and borrowings, each reflecting the rates, and deposits, impact of higher average interest reflecting the impact of higher average interest rates and higher average balances. See “Statistical Disclosures – Distribution of Assets, Liabilities and Shareholders’ Equity” for further information about our sources of net interest income. related to other interest-bearing 2021 versus 2020 Net revenues in the consolidated statements of earnings were $59.34 billion for 2021, 33% higher than 2020, reflecting significantly higher other principal transactions revenues, investment banking revenues and net interest income, and higher investment management revenues. Non-Interest Revenues. Investment banking revenues in the consolidated statements of earnings were $14.14 billion for 2021, 55% higher than 2020, due to significantly higher revenues in advisory, reflecting a significant increase in completed mergers and acquisitions volumes, in equity underwriting, primarily driven by strong industry-wide initial public offerings activity, and in debt underwriting, primarily reflecting elevated industry-wide leveraged finance activity. 64 Goldman Sachs 2022 Form 10-K in the revenues consolidated Investment management statements of earnings were $8.17 billion for 2021, 17% higher than 2020, primarily due to higher management and other fees, reflecting the impact of higher average assets under supervision, partially offset by higher fee waivers on incentive fees were money market significantly higher, primarily driven by harvesting. In addition, funds. Commissions and fees in the consolidated statements of earnings were $3.59 billion for 2021, essentially unchanged compared with 2020. Market making revenues in the consolidated statements of earnings were $15.36 billion for 2021, essentially unchanged compared with 2020, as significantly lower revenues in interest rate products and credit products were largely offset by significantly higher revenues in equity products (primarily in derivatives) and commodities, and improved results in mortgages. Other principal transactions revenues in the consolidated statements of earnings were $11.62 billion for 2021, compared with $4.76 billion for 2020, primarily reflecting significantly higher net gains from investments in private equities and in debt instruments, partially offset by net losses from investments in public equities compared with significant net gains in 2020. income interest deposits Interest liabilities, Income. Net in the Net consolidated statements of earnings was $6.47 billion for 2021, 36% higher than 2020, reflecting a decrease in interest expense, partially offset by a decrease in interest income. The decrease in interest expense is primarily related to other interest-bearing long-term borrowings, each reflecting the impact of lower interest rates. income primarily related to The decrease in interest collateralized agreements and trading assets, both reflecting the impact of lower interest rates, partially offset by the impact of higher See for Information — Statistical “Supplemental Disclosures — Distribution of Assets, Liabilities and Shareholders’ Equity” for further information about our sources of net interest income. average balances Financial loans. and Provision for Credit Losses Provision for credit losses consists of provision for credit losses on loans and lending commitments held for investment and accounted for at amortized cost. See Note 9 to the consolidated financial statements for further information about the provision for credit losses. The table below presents our provision for credit losses. $ in millions 2022 Provision for credit losses $ 2,715 $ 2021 357 2020 $ 3,098 Year Ended December THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis losses in the 2022 versus 2021. Provision for credit consolidated statements of earnings was $2.72 billion for 2022, compared with $357 million for 2021. Provisions for 2022 primarily reflected growth in the credit card portfolio, the impact of macroeconomic and geopolitical concerns and for 2021 reflected portfolio net charge-offs. Provisions growth in the credit card and wholesale portfolios, largely offset by reserve reductions as the broader economic environment continued to improve following the initial impact of the COVID-19 pandemic. 2021 versus 2020. Provision for credit losses in the consolidated statements of earnings was $357 million for 2021, compared with $3.10 billion for 2020. Provisions for 2021 reflected portfolio growth (primarily in credit cards, including approximately $185 million of provisions related to the commitment to acquire the General Motors co-branded credit card portfolio), largely offset by reserve reductions on continued wholesale improvement in the broader economic environment. This followed challenging conditions in the prior year as a result of the COVID-19 pandemic, which contributed to significant provisions in 2020. consumer reflecting loans and includes Operating Expenses Our operating expenses are primarily influenced by compensation, headcount and levels of business activity. Compensation and benefits salaries, year-end discretionary compensation, amortization of equity awards and other items such as benefits. Discretionary compensation is significantly impacted by, among other factors, the level of net revenues, net of provision for credit losses, overall financial performance, prevailing labor markets, business mix, the structure of our share-based compensation programs and the external environment. The table below presents our operating expenses by line item and headcount. Year Ended December $ in millions Compensation and benefits Transaction based Market development Communications and technology Depreciation and amortization Occupancy Professional fees Other expenses g p Total operating expenses p 2022 2021 2020 $15,148 $17,719 $13,309 4,141 4,710 401 553 1,347 1,573 1,902 2,015 960 981 1,306 1,648 5,617 2,739 $31,164 $31,938 $28,983 5,312 812 1,808 2,455 1,026 1,887 2,716 Headcount at period-end 48,500 43,900 40,500 2022 versus 2021. Operating expenses in the consolidated statements of earnings were $31.16 billion for 2022, 2% lower than 2021. Our efficiency ratio was 65.8% for 2022, compared with our medium-term target efficiency ratio of approximately 60%. Our efficiency ratio was 53.8% for 2021. The decrease in operating expenses compared with 2021 was primarily due to lower compensation and benefits expenses (reflecting a decline in operating performance compared with a strong prior year). This decrease was partially offset by higher non-compensation expenses, reflecting the inclusion of NNIP and GreenSky and increases in transaction based expenses and technology expenses. While certain expenses (e.g., compensation and benefits, occupancy and market development) were impacted by inflationary pressures, the overall impact of higher inflation was not material to our operating expenses for 2022. Net provisions for litigation and regulatory proceedings were $576 million for 2022 compared with $534 million for 2021. Headcount increased 10% during 2022, primarily reflecting investments in growth initiatives and the acquisitions of NNIP and GreenSky. 2021 versus 2020. Operating expenses in the consolidated statements of earnings were $31.94 billion for 2021, 10% higher than 2020. Our efficiency ratio was 53.8% for 2021, compared with 65.0% for 2020. In 2020, net provisions for litigation and regulatory proceedings increased our efficiency ratio by 7.6 percentage points. expenses (reflecting strong performance). The increase in operating expenses compared with 2020 primarily reflected significantly higher compensation and In benefits addition, technology expenses and professional fees were significantly higher and transaction based expenses were higher. These increases were partially offset by significantly lower net provisions for litigation and regulatory proceedings and lower expenses related to consolidated investments (including impairments). Net provisions for litigation and regulatory proceedings were $534 million for 2021 compared with $3.42 billion for 2020. Charitable contributions to Goldman Sachs Gives were approximately $250 million for 2021. Headcount increased 8% during 2021, reflecting investments in growth initiatives and an increase in technology professionals. Goldman Sachs 2022 Form 10-K 65 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Provision for Taxes The effective income tax rate for 2022 was 16.5%, down from the full year income tax rate of 20.0% for 2021, primarily due to an increase in the impact of permanent tax benefits, partially offset by changes in the geographic mix of earnings in 2022 compared with 2021. and branches, The U.K. Finance Act 2021 increased the corporate income tax rate by six percent and the Finance Act 2022 decreased the U.K. bank surcharge tax rate by five percent effective from April 1, 2023. As a result, beginning April 1, 2023, the U.K. tax rate for our U.K. regulated broker-dealer and bank subsidiaries including Goldman Sachs International (GSI) and Goldman Sachs International Bank (GSIB), will increase by one percent and the U.K. tax rate for all other U.K. subsidiaries and branches will increase by six percent. During 2022, following Royal Assent of Finance Act 2022, certain U.K. deferred tax assets and liabilities were remeasured and a net reduction in deferred tax assets of approximately $50 million was recognized. In August 2022, the Inflation Reduction Act of 2022 was signed into law. The Inflation Reduction Act of 2022 includes income tax incentives to encourage investments in clean energy and a new 15% corporate alternative minimum tax (CAMT). The CAMT applies to corporations with average annual profits over $1 billion and is calculated on their financial statement income, with certain adjustments, for years beginning after December 31, 2022. The legislation had no impact on our 2022 annual effective tax rate and based on our current understanding of the CAMT, is not expected to have a material impact on our 2023 annual effective tax rate. Segment Assets and Operating Results Segment Assets. The table below presents assets by segment. As of December $ in millions Global Banking & Markets Asset & Wealth Management Platform Solutions Total 2022 2021 $ 1,169,539 $1,201,996 221,150 40,842 $ 1,441,799 $1,463,988 214,970 57,290 The allocation process for segment assets is based on the activities of these segments. The allocation of assets includes allocation of GCLA (which consists of unencumbered, highly liquid securities and cash), which is generally included within cash and cash equivalents, collateralized agreements and trading assets on our balance sheet. Due to the integrated nature of these segments, estimates and judgments are made in allocating these assets. See “Risk Management — Liquidity Risk Management” for further information about our GCLA. 66 Goldman Sachs 2022 Form 10-K Segment Operating Results. The table below presents our segment operating results. $ in millions Global Banking & Markets Net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings to common Average common equity Return on average common equity Asset & Wealth Management Net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings to common Average common equity Return on average common equity Platform Solutions Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) Net earnings/(loss) to common Average common equity Return on average common equity Total Net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings to common Average common equity Return on average common equity Year Ended December 2022 2021 2020 468 17,851 $ 32,487 $36,734 (171) 19,542 $ 14,168 $17,363 $ 11,458 $13,535 $ 69,951 $60,064 16.4% 22.5% $ 30,469 1,216 18,884 $ 10,369 $ 7,428 $ 54,749 13.6% 519 11,550 $ 13,376 $21,965 (169) 11,406 1,307 $10,728 $ $ 979 $ 8,459 $ 31,762 $29,988 3.1% 28.2% $ 13,757 1,395 9,469 2,893 $ $ 2,083 $ 24,963 8.3% 640 $ 697 990 $ 1,502 $ 1,728 1,763 334 487 630 (783) (596) 864 (46.8)% (47.4)% (69.0)% $ (1,989) $(1,047) $ $ (1,673) $ (843) $ $ 3,574 $ 1,777 $ 2,715 31,164 $ 47,365 $59,339 357 31,938 $ 13,486 $27,044 $ 10,764 $21,151 $ 105,287 $91,829 10.2% 23.0% $ 44,560 3,098 28,983 $ 12,479 $ 8,915 $ 80,576 11.1% Net revenues in our segments include allocations of interest income and expense to specific positions in relation to the such cash generated by, or positions. See Note 25 to the consolidated financial statements information about our business segments. funding requirements of, further for The allocation of common shareholders’ equity and preferred stock dividends to each segment is based on the estimated amount of equity required to support the activities of the segment under relevant regulatory capital requirements. Net earnings for each segment is calculated by applying the firmwide tax rate to each segment’s pre-tax earnings. Compensation and benefits expenses within our segments reflect, among other factors, our overall performance, as well as the performance of individual businesses. Consequently, pre-tax margins in one segment of our business may be significantly affected by the performance of our other business segments. A description of segment operating results follows. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Global Banking & Markets Global Banking & Markets generates revenues from the following: Investment banking fees. We provide advisory and underwriting services and help companies raise capital to strengthen and grow their businesses. Investment banking fees includes the following: • Advisory. Includes strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs. • Underwriting. Includes public offerings and private placements of a wide range of securities and other financial instruments, including local and cross-border transactions and acquisition financing. FICC. FICC generates revenues from intermediation and financing activities. • FICC intermediation. Includes client execution activities related to making markets in both cash and derivative instruments, as detailed below. Interest Rate Products. Government bonds (including inflation-linked other government-backed securities, and interest rate swaps, options and other derivatives. across maturities, securities) Investment-grade high-yield Credit Products. corporate securities, credit derivatives, exchange-traded funds (ETFs), bank and bridge loans, municipal securities, distressed debt and trade claims. and and derivatives, Mortgages. Commercial mortgage-related securities, loans residential mortgage-related securities, loans and derivatives (including U.S. government agency-issued collateralized mortgage obligations and other securities and loans), and other asset-backed securities, loans and derivatives. Currencies. Currency options, spot/forwards and other derivatives on G-10 currencies and emerging-market products. Commodities. Commodity derivatives and, to a lesser involving crude oil and extent, physical commodities, petroleum products, natural gas, agricultural, base, precious and other metals, electricity, including renewable power, environmental products and other commodity products. • FICC financing. Includes secured lending to our clients through structured credit and asset-backed lending, including warehouse loans backed by mortgages (including residential and commercial mortgage loans), corporate loans and consumer loans (including auto loans and private student loans). We also provide financing to clients through securities purchased under agreements to resell (resale agreements). Equities. Equities generates revenues from intermediation and financing activities. • Equities intermediation. We make markets in equity including ETFs, securities and equity-related products, convertible securities, options, futures and OTC derivative instruments. We also structure and make markets in derivatives on indices, industry sectors, financial measures and individual company stocks. Our exchange-based market-making activities include making markets in stocks and ETFs, futures and options on major exchanges worldwide. In addition, we generate commissions and fees from executing and clearing institutional client transactions on major stock, options and futures exchanges worldwide, as well as OTC transactions. • Equities financing. Includes prime brokerage and other equities financing activities, including securities lending, margin lending and swaps. We earn fees by providing clearing, settlement and custody services globally. We provide services that principally involve borrowing and lending securities to cover institutional clients’ short sales and borrowing securities to cover our short sales and to make deliveries into the market. In addition, we are an active participant in broker-to-broker securities lending and third-party agency lending activities. We provide financing to our clients for their securities trading activities through margin loans that are collateralized by securities, cash or other acceptable collateral and provide securities- based loans to individuals. In addition, we execute swap transactions to provide our clients with exposure to securities and indices. Goldman Sachs 2022 Form 10-K 67 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Market-Making Activities As a market maker, we facilitate transactions in both liquid and less liquid markets, primarily for institutional clients, such as corporations, financial institutions, investment funds and governments, to assist clients in meeting their investment objectives and in managing their risks. In this role, we seek to earn the difference between the price at which a market participant is willing to sell an instrument to us and the price at which another market participant is willing to buy it from us, and vice versa (i.e., bid/offer spread). In addition, we maintain (i) market-making positions, typically for a short period of time, in response to, or in anticipation of, client demand, and (ii) positions to actively manage our risk exposures that arise from these market-making activities (collectively, inventory). Our inventory is recorded in trading assets (long positions) or trading liabilities (short positions) in our consolidated balance sheets. a by are results influenced combination Our of interconnected drivers, including (i) client activity levels and transactional bid/offer spreads (collectively, client activity), and (ii) changes in the fair value of our inventory and interest income and interest expense related to the holding, hedging and funding of our inventory (collectively, market-making inventory changes). Due to the integrated nature of our market-making activities, disaggregation of net revenues into client activity and market-making inventory changes is judgmental and has inherent complexities and limitations. The amount and composition of our net revenues vary over time as these drivers are impacted by multiple interrelated factors affecting economic and market conditions, including volatility and liquidity in the market, changes in interest rates, currency exchange rates, credit spreads, equity prices investor confidence, and other and commodity prices, macroeconomic concerns and uncertainties. In general, assuming all other market-making conditions remain constant, increases in client activity levels or bid/offer spreads tend to result in increases in net revenues, and decreases tend to have the opposite effect. However, changes in market-making conditions can materially impact client activity levels and bid/offer spreads, as well as the fair value of our inventory. For example, a decrease in liquidity in the market could have the impact of (i) increasing our bid/offer spread, (ii) decreasing investor confidence and thereby decreasing client activity levels, and (iii) widening of credit spreads on our inventory positions. Other. We lend to corporate clients, including through relationship lending and acquisition financing. The hedges related to this lending and financing activity are also reported as part of Other. Other also includes equity and debt investing activities related to our Global Banking & Markets activities. 68 Goldman Sachs 2022 Form 10-K The table below presents our Global Banking & Markets assets. $ in millions Cash and cash equivalents Collateralized agreements Customer and other receivables Trading assets Investments Loans Other assets Total As of December 2022 2021 167,203 $ 178,359 359,100 380,157 147,958 122,037 351,920 272,788 56,228 103,229 94,597 107,648 13,834 16,477 1,169,539 $ 1,201,996 $ $ The table below presents details about our Global Banking & Markets loans. $ in millions Corporate Real estate Securities-based Other collateralized Other Loans, gross Allowance for loan losses Total loans As of December 2022 25,776 $ 33,215 3,857 45,407 561 108,816 (1,168) 107,648 $ 2021 22,068 34,986 3,017 33,077 2,311 95,459 (862) 94,597 $ $ Our average Global Banking & Markets gross loans were $105.11 billion for 2022 and $74.34 billion for 2021. The table below presents our Global Banking & Markets operating results. Year Ended December $ in millions Advisory Equity underwriting Debt underwriting Investment banking fees FICC intermediation FICC financing FICC Equities intermediation Equities financing Equities Other Net revenues Provision for credit losses Operating expenses Pre-tax earnings Provision for taxes Net earnings Preferred stock dividends g Net earnings to common Average common equity Return on average common equity 2022 2021 $ 4,704 $ 5,654 4,985 3,497 14,136 848 1,808 7,360 11,890 2,786 8,714 1,897 14,676 10,611 6,662 4,326 7,707 4,015 10,988 11,722 (537) 32,487 468 17,851 14,168 2,338 11,830 372 265 36,734 (171) 19,542 17,363 3,473 13,890 355 $11,458 $13,535 $69,951 $60,064 16.4% 22.5% 2020 $ 3,064 3,376 2,660 9,100 10,106 1,347 11,453 7,069 2,815 9,884 32 30,469 1,216 18,884 10,369 2,509 7,860 432 $ 7,428 $54,749 13.6% THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our FICC and Equities net revenues by line item in the consolidated statements of earnings. The table below presents our unaudited quarterly Global Banking & Markets operating results. $ in millions Year Ended December 2022 Market making Commissions and fees Other principal transactions Net interest income Total Year Ended December 2021 Market making Commissions and fees Other principal transactions Net interest income Total Year Ended December 2020 Market making Commissions and fees Other principal transactions Net interest income Total In the table above: FICC Equities $12,422 $ 6,212 3,791 41 944 $14,676 $ 10,988 – 377 1,877 $ 7,690 $ 7,667 3,514 72 469 $10,611 $ 11,722 – 362 2,559 $ 8,941 $ 6,487 3,339 9 49 $11,453 $ 9,884 – 96 2,416 commissions • See “Net Revenues” for information about market making revenues, principal and transactions revenues and net interest income. See Note 25 to the consolidated financial statements for net interest income by segment. other fees, • The primary driver of net revenues for FICC intermediation for all periods was client activity. $ in millions 2022 Advisory Equity underwriting Debt underwriting Investment banking fees FICC intermediation FICC financing FICC Equities intermediation Equities financing Equities Other Net revenues Provision for credit losses Operating expenses Pre-tax earnings 2021 Advisory Equity underwriting Debt underwriting Investment banking fees FICC intermediation FICC financing FICC Equities intermediation Equities financing Equities Other Net revenues Provision for credit losses Operating expenses Pre-tax earnings 2020 Advisory Equity underwriting Debt underwriting Investment banking fees FICC intermediation FICC financing FICC Equities intermediation Equities financing Equities Other Net revenues Provision for credit losses Operating expenses Pre-tax earnings First Quarter Second Fourth Quarter Quarter Quarter Third 1,127 $ 276 741 2,144 1,197 $ 145 457 1,799 972 $ 1,408 183 244 328 282 1,873 1,544 4,099 631 4,730 2,178 1,061 3,239 2,921 721 3,642 1,767 1,177 2,944 2,896 721 3,617 1,608 1,124 2,732 1,974 713 2,687 1,109 964 2,073 (51) (43) (329) (114) 10,062 191 4,973 4,898 $ 8,342 7,564 6,519 208 63 6 4,223 4,224 4,431 3,703 $ 3,277 $ 2,290 1,117 $ 1,539 877 3,533 1,257 $ 1,649 $ 1,631 1,023 1,167 1,256 724 949 947 3,601 3,540 3,462 3,472 435 3,907 2,620 1,084 3,704 170 11,314 (99) 5,892 5,521 $ 780 $ 377 576 1,733 2,496 435 2,931 1,533 729 2,262 351 7,277 564 4,007 2,706 $ 1,922 395 2,317 1,795 887 2,682 2,007 512 2,519 1,949 1,207 3,156 1,313 555 1,868 1,343 837 2,180 239 (85) (59) 7,590 9,130 8,700 (16) (10) (46) 5,470 4,090 4,090 3,276 $ 5,050 $ 3,516 687 $ 1,050 988 2,725 3,831 302 4,133 2,217 900 3,117 506 $ 1,091 1,106 843 571 525 2,722 1,920 2,232 278 2,510 1,497 580 2,077 1,547 332 1,879 1,822 606 2,428 (151) (36) (132) 6,897 6,471 9,824 (41) (9) 702 7,777 3,590 3,510 1,345 $ 2,970 $ 3,348 $ $ $ $ $ $ The table below presents our underwriting transaction volumes. financial advisory and $ in billions Announced mergers and acquisitions Completed mergers and acquisitions Equity and equity-related offerings Debt offerings Year Ended December 2022 2021 $ 1,237 $ 1,771 $ 1,355 $ 1,588 140 33 $ $ 341 222 $ $ 2020 $ 904 $ 1,037 $ 115 $ 352 Goldman Sachs 2022 Form 10-K 69 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis In the table above: • Volumes are per Dealogic. • Announced and completed mergers and acquisitions volumes are based on full credit to each of the advisors in a transaction. Equity and equity-related and debt offerings are based on full credit for single book managers and equal credit for joint book managers. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal or a change in the value of a transaction. • Equity and equity-related offerings includes Rule 144A and public common stock offerings, convertible offerings and rights offerings. • Debt offerings includes non-convertible preferred stock, mortgage-backed securities, asset-backed securities and taxable municipal debt. It also includes publicly registered and Rule 144A issues and excludes leveraged loans. Operating Environment. During 2022, Global Banking & Markets operated in an environment generally characterized by broad macroeconomic and geopolitical concerns and market volatility, which negatively affected industry-wide for investment underwriting, but contributed to solid market-making activity levels. particularly banking activity levels, In investment banking, compared with 2021, industry-wide equity underwriting volumes were low amid volatile equity markets and a decline in prices, and industry-wide debt underwriting volumes declined across leveraged finance and rates. investment grade and Additionally, acquisitions transactions declined from elevated levels in the prior year. issuances amid rising interest completed mergers industry-wide For volatility, the average daily VIX was 30% higher the S&P 500 Index In equities, compared with 2021. decreased by 19% and the MSCI World Index decreased by 20%, compared with the end of 2021. Additionally, global central banks sought to address inflation by increasing policy interest rates several times over the course of the year. related to hedges on our In the future, if market and economic conditions deteriorate further, and activity levels or volatility decline, or credit relationship lending spreads portfolio tighten, net revenues in Global Banking & Markets would likely be negatively impacted. In addition, if economic conditions deteriorate further or if the creditworthiness of borrowers deteriorates, provision for credit losses would likely be negatively impacted. 70 Goldman Sachs 2022 Form 10-K 2022 versus 2021. Net revenues in Global Banking & Markets were $32.49 billion for 2022, 12% lower than a strong 2021. Investment banking fees were $7.36 billion, 48% lower than a strong 2021, due to significantly lower net revenues in both Equity and Debt underwriting, reflecting a significant decline in industry-wide volumes, and lower net in Advisory, reflecting a decline in industry-wide completed mergers and acquisitions transactions from elevated activity levels in the prior year. revenues As of December 2022, our Investment banking fees backlog decreased significantly compared with the end of 2021, primarily due to significantly lower estimated net revenues from both potential advisory transactions and potential debt underwriting transactions (primarily from leveraged finance transactions). the long term, impact our net Our backlog represents an estimate of our net revenues from future transactions where we believe that future revenue realization is more likely than not. We believe changes in our backlog may be a useful indicator of client activity levels revenues. which, over However, the time frame for completion and corresponding revenue recognition of transactions in our backlog varies based on the nature of the assignment, as certain transactions may remain in our backlog for longer periods of time. In addition, our backlog is subject to certain limitations, such as assumptions about individual client transactions will occur in the future. Transactions may be cancelled or modified, and transactions not included in the estimate may also occur. the likelihood that Net revenues in FICC were $14.68 billion, 38% higher than 2021, primarily reflecting significantly higher net revenues in FICC intermediation, driven by significantly higher net revenues and commodities, partially offset by significantly lower net revenues in mortgages and lower net revenues in credit products. In addition, net revenues in FICC financing were significantly higher, primarily driven by secured lending. currencies products, interest rate in The increase in FICC intermediation net revenues reflected significantly higher client activity as we supported clients environment. The amid an evolving macroeconomic following FICC our information intermediation net revenues by business, compared with 2021 results: provides about • Net revenues in interest rate products, currencies and commodities primarily reflected higher client activity. • Net revenues in mortgages and credit products primarily challenging market-making impact of reflected the conditions on our inventory. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Net revenues in Equities were $10.99 billion, 6% lower than 2021, due to lower net revenues in Equities intermediation, reflecting significantly lower net revenues in cash products and lower net revenues in derivatives. Net revenues in Equities financing were higher, primarily reflecting increased client activity. revenues Net in Other were $(537) million for 2022, compared with $265 million for 2021, reflecting significantly lower net gains from investments in equities and net mark- downs on acquisition financing activities. Provision for credit losses was $468 million for 2022, compared with a net benefit of $171 million for 2021. Provisions for 2022 primarily reflected the impact of broad macroeconomic and geopolitical concerns, while the net benefit for 2021 reflected reserve reductions as the broad economic environment continued to improve following the initial impact of the COVID-19 pandemic, partially offset by growth in the portfolio. Operating expenses were $17.85 billion for 2022, 9% lower than 2021, reflecting lower compensation and benefits expenses (reflecting a decline in operating performance compared with a strong prior year). Pre-tax earnings were $14.17 billion for 2022, 18% lower than 2021. 2021 versus 2020. Net revenues in Global Banking & Markets were $36.73 billion for 2021, 21% higher than 2020. Investment banking fees were $14.14 billion, 55% higher than 2020, due to significantly higher net revenues in Advisory, reflecting a significant increase in completed mergers and acquisitions volumes, in Equity underwriting, primarily driven by strong industry-wide initial public offerings activity, and in Debt underwriting, primarily reflecting elevated industry-wide leveraged finance activity. As of December 2021, our Investment banking fees backlog increased significantly compared with December 2020, due to significantly higher estimated net revenues from potential advisory transactions and potential debt underwriting finance transactions (particularly transactions), and higher estimated net from potential equity underwriting transactions. from leveraged revenues Net revenues in FICC were $10.61 billion, 7% lower than 2020, due to lower net revenues in FICC intermediation, reflecting significantly lower net revenues in interest rate products and credit products and slightly lower net revenues in currencies, partially offset by significantly higher net revenues in commodities. Net in FICC financing were reflecting significantly higher net significantly higher, by offset revenues significantly lower net revenues from resale agreements. and higher net from secured in mortgages revenues revenues partially lending, The decrease in FICC intermediation net revenues reflected strong but significantly lower client activity compared with very strong activity levels in the prior year due to high volatility amid the COVID-19 pandemic. This was partially offset by the impact of improved market-making conditions on our inventory compared with challenging conditions in the prior year. The following provides information about our FICC intermediation net revenues by business, compared with 2020 results: • Net revenues in interest rate products primarily reflected lower client activity. • Net revenues in credit products and currencies reflected lower client activity, partially offset by the impact of improved market-making conditions on our inventory. • Net revenues in mortgages reflected the impact of improved market-making conditions on our inventory. • Net revenues in commodities primarily reflected higher client activity. Net revenues in Equities were $11.72 billion, 19% higher than 2020, due to significantly higher net revenues in Equities financing, primarily reflecting increased activity (including higher average client balances), and higher net revenues in Equities intermediation, primarily reflecting higher net revenues in derivatives. Net revenues in Other were $265 million for 2021, compared with $32 million for 2020, primarily reflecting significantly higher net gains from investments in equities. Provision for credit losses was a net benefit of $171 million for 2021, compared with net provisions of $1.22 billion for 2020, primarily due to reserve reductions in the year reflecting continued improvement in the broad economic environment in 2020 resulting from the COVID-19 pandemic, partially offset by portfolio growth. following challenging conditions transaction based expenses, lower net provisions Operating expenses were $19.54 billion for 2021, 3% higher than 2020, primarily due to significantly higher compensation and benefits expenses (reflecting strong performance) and largely offset by higher significantly litigation and for regulatory proceedings. Pre-tax earnings were $17.36 billion, 67% higher than 2020. ROE was 22.5% for 2021, compared with 13.6% for 2020 (which included the impact of net provisions for litigation and regulatory proceedings that reduced ROE by 5.4 percentage points). Goldman Sachs 2022 Form 10-K 71 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Asset & Wealth Management Asset & Wealth Management provides investment services to help clients preserve and grow their financial assets and achieve their financial goals. We provide these services to our clients, both institutional and individuals, including investors who primarily access our products through a network of third-party distributors around the world. alternative investments. We We manage client assets across a broad range of investment strategies and asset classes, including equity, fixed income and investment solutions, including those managed on a fiduciary basis by our portfolio managers, as well as those managed by third- party managers. We offer our investment solutions in a variety of structures, including separately managed accounts, mutual funds, private partnerships and other commingled vehicles. provide We also provide tailored wealth advisory services to clients across the wealth spectrum. We operate globally serving individuals, families, family offices, and foundations and endowments. Our relationships are established directly or financial introduced through companies wellness programs for their employees. sponsor that We offer personalized financial planning to individuals and also provide customized investment advisory solutions, and offer structuring and execution capabilities in securities and derivative products across all major global markets. In addition, we offer clients a full range of private banking services, including a variety of deposit alternatives and loans that our clients use to finance investments in both financial and nonfinancial assets, bridge cash flow timing gaps or provide liquidity and flexibility for other needs. We invest in alternative investments across a range of asset classes that seek to deliver long-term accretive risk-adjusted returns. Our investing activities, which are typically longer- term, include investments in corporate equity, credit, real estate and infrastructure assets. We also raise deposits and have issued unsecured loans to consumers through Marcus by Goldman Sachs (Marcus). We have started a process to cease offering new loans through Marcus. 72 Goldman Sachs 2022 Form 10-K Asset & Wealth Management generates revenues from the following: investing and wealth advisory • Management and other fees. We receive fees related to managing assets for institutional and individual clients, providing solutions, providing financial planning and counseling services via Ayco Personal Financial Management, and executing brokerage transactions for wealth management clients. The majority of revenues in management and other fees consists of asset-based fees on client assets that we manage. For further information about assets under supervision, see “Assets Under Supervision” below. The fees that we charge vary by asset class, client channel and the types of services provided, and are affected by investment performance, as well as asset inflows and redemptions. • Incentive fees. In certain circumstances, we also receive incentive fees based on a percentage of a fund’s or a separately managed account’s return, or when the return exceeds a specified benchmark or other performance targets. Such fees include overrides, which consist of the increased share of the income and gains derived primarily from our private equity and credit funds when the return on a fund’s investments over the life of the fund exceeds certain threshold returns. • Private banking and lending. Our private banking and lending activities include issuing loans to our wealth management clients. We also accept deposits from wealth management clients, including through Marcus. We have also issued unsecured loans to consumers through Marcus and have started a process to cease offering new loans. Additionally, we provide investing services through Marcus Invest to U.S. customers. Private banking and lending revenues include net interest income allocated to deposits and net interest income earned on loans to individual clients. • Equity investments. Includes investing activities related to our asset management activities primarily related to public and private equity investments in corporate, real estate and infrastructure assets. We also make investments through (CIEs), substantially all of which are engaged in real estate investment activities. consolidated investment entities • Debt investments. Includes lending activities related to including investing in our asset management activities, corporate debt, lending to middle-market clients, and providing financing for real estate and other assets. These activities include investments in mezzanine debt, senior debt and distressed debt securities. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our Asset & Wealth Management assets. As of December The table below presents our Asset management and Wealth management net revenues by line item in Asset & Wealth Management. $ in millions Cash and cash equivalents Collateralized agreements Customer and other receivables Trading assets Investments Loans Other assets Total $ 2022 2021 54,065 $ 62,652 18,737 23,723 12,712 13,409 17,739 19,860 32,491 27,400 56,676 56,338 20,143 20,175 $ 214,970 $ 221,150 The table below presents details about our Asset & Wealth Management loans. $ in millions Corporate Real estate Securities-based Other collateralized Installment Other Loans, gross Allowance for loan losses Total loans As of December 2022 2021 14,359 $ 15,575 18,688 18,699 13,635 12,814 5,186 6,295 3,646 4,474 1,708 1,700 58,438 58,341 (1,762) (2,003) 56,338 $ 56,676 $ $ The average Asset & Wealth Management gross loans were $59.35 billion for 2022 and $56.85 billion for 2021. The table below presents our Asset & Wealth Management operating results. Year Ended December $ in millions Management and other fees Incentive fees Private banking and lending Equity investments Debt investments Net revenues Provision for credit losses Operating expenses Pre-tax earnings Provision for taxes Net earnings Preferred stock dividends Net earnings to common g 2022 2021 $ 8,781 $ 7,750 616 359 1,661 2,458 8,794 610 3,144 1,168 21,965 13,376 (169) 519 11,406 11,550 10,728 1,307 2,146 215 8,582 1,092 113 123 979 $ 8,459 $ 2020 $ 6,750 401 1,372 3,902 1,332 13,757 1,395 9,469 2,893 700 2,193 110 $ 2,083 Average common equity Return on average common equity $ 31,762 $ 29,988 28.2% 3.1% $24,963 8.3% $ in millions Asset management Wealth management Asset & Wealth Management Year Ended December 2022 Management and other fees $ Incentive fees Private banking and lending Equity investments Debt investments Total $ Year Ended December 2021 Management and other fees $ Incentive fees Private banking and lending Equity investments Debt investments Total $ Year Ended December 2020 Management and other fees $ Incentive fees Private banking and lending Equity investments Debt investments Total $ 3,817 $ 359 – 610 1,168 5,954 $ 2,918 $ 616 – 8,794 3,144 15,472 $ 2,782 $ 401 – 3,902 1,332 8,417 $ 4,964 $ – 2,458 – – 7,422 $ 4,832 $ – 1,661 – – 6,493 $ 3,968 $ – 1,372 – – 5,340 $ 8,781 359 2,458 610 1,168 13,376 7,750 616 1,661 8,794 3,144 21,965 6,750 401 1,372 3,902 1,332 13,757 In the table above, incentive fees previously included in Wealth management have been reclassified to Asset management to better reflect the activities of the reporting unit that generated the underlying revenues. Previously, incentive fees related to wealth management clients were reflected in Wealth management. Prior periods have been conformed to the current presentation. The table below presents our Equity investments net revenues by equity type and asset class. $ in millions Equity Type Private equity Public equity Total Asset Class Real estate Corporate Total Year Ended December 2022 2021 2020 $ 2,078 $ 8,826 (32) 610 $ 8,794 (1,468) $ $ 2,329 1,573 $ 3,902 $ 1,482 $ 2,489 (872) 6,305 610 $ 8,794 $ $ 1,621 2,281 $ 3,902 The table below presents details about our Debt investments net revenues. Year Ended December $ in millions Fair value net gains/(losses) Net interest income Total $ 2022 2021 (415) $ 1,216 1,928 $ 1,168 $ 3,144 1,583 $ 2020 (268) 1,600 $ 1,332 Goldman Sachs 2022 Form 10-K 73 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our unaudited quarterly Asset & Wealth Management operating results. $ in millions 2022 Management and other fees Incentive fees Private banking and lending Equity investments Debt investments Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) 2021 Management and other fees Incentive fees Private banking and lending Equity investments Debt investments Net revenues Provision for credit losses Operating expenses Pre-tax earnings 2020 Management and other fees Incentive fees Private banking and lending Equity investments Debt investments Net revenues Provision for credit losses Operating expenses First Quarter Second Fourth Quarter Quarter Quarter Third $ 2,035 $ 79 2,243 $ 2,255 $ 2,248 39 185 56 $ $ $ $ 492 (294) 291 2,603 203 2,409 538 (104) 317 3,179 149 2,823 675 721 326 4,033 (13) 2,955 753 287 234 3,561 180 3,363 (9) $ 207 $ 1,091 $ 18 1,839 $ 1,879 $ 1,985 $ 2,047 68 416 2,965 963 6,251 (140) 3,315 93 387 3,425 765 220 432 957 711 235 426 1,447 705 6,549 4,305 4,860 (159) 58 72 2,983 2,232 2,876 3,076 $ 3,725 $ 2,015 $ 1,912 1,603 $ 1,642 $ 1,708 $ 1,797 223 377 (56) (710) 1,437 281 2,307 44 245 896 557 35 341 99 409 1,377 1,685 728 757 3,384 4,189 4,747 781 203 130 2,471 2,550 2,141 Pre-tax earnings/(loss) $ (1,151) $ 132 $ 1,436 $ 2,476 in an operated environment Operating Environment. During 2022, Asset & Wealth Management generally characterized by broad macroeconomic and geopolitical concerns and market volatility, which contributed to a decrease in asset prices compared to the end of 2021, negatively affecting assets under supervision and investments. Additionally, global central banks sought to address inflation by increasing policy interest rates several times over the course of the year. In the future, if market and economic conditions deteriorate further, it may lead to a continued decline in asset prices, or investors transitioning to asset classes that typically generate lower fees or withdrawing their assets or deposits, and net revenues in Asset & Wealth Management would likely continue to be negatively impacted. 2022 versus 2021. Net revenues in Asset & Wealth Management were $13.38 billion for 2022, 39% lower than 2021, primarily reflecting significantly lower net revenues in Equity investments and Debt investments. 74 Goldman Sachs 2022 Form 10-K Broad macroeconomic and geopolitical concerns during the year led to a decline in global equity prices and wider credit spreads. As a result, net revenues in Equity investments reflected significantly lower net gains from investments in private equities and significant mark-to-market net losses from investments in public equities. The decrease in Debt investments net revenues reflected net mark-downs compared with net mark-ups in the prior year and lower net interest income. Incentive fees were significantly lower, primarily driven by harvesting in the prior year. Management and other fees were higher, reflecting the inclusion of NNIP and a reduction in fee waivers on money market funds. Private banking and lending net revenues were significantly higher, primarily reflecting higher deposit spreads, as well as higher loan and deposit balances. Provision for credit losses was $519 million for 2022, compared with a net benefit of $169 million for 2021. for 2022 primarily reflected the impact of Provisions macroeconomic and geopolitical concerns, while the net benefit for 2021 reflected reserve reductions as the broad economic environment continued to improve following the initial impact of the COVID-19 pandemic. Operating expenses were $11.55 billion for 2022, essentially unchanged compared with 2021, reflecting the inclusion of operating expenses related to NNIP, largely offset by lower compensation and benefits expenses. Pre-tax earnings were $1.31 billion for 2022, compared with $10.73 billion for 2021. 2021 versus 2020. Net revenues in Asset & Wealth Management were $21.97 billion for 2021, 60% higher than 2020, primarily reflecting significantly higher net revenues in Equity investments and Debt investments, and higher Management and other fees. investments net The increase in Equity investments net revenues reflected significantly higher net gains from investments in private equities, driven by company-specific events and improved corporate performance compared with 2020, partially offset by net losses from investments in public equities compared with significant net gains in the prior year. The increase in Debt reflected net mark-ups revenues compared with net mark-downs in the prior year, and significantly higher net interest income. The increase in management and other fees reflected the impact of higher average assets under supervision, partially offset by higher fee waivers on money market funds. Private banking and lending net revenues were higher, primarily reflecting higher deposit balances. Incentive fees were significantly higher, primarily driven by harvesting. Provision for credit losses was a net benefit of $169 million for 2021, compared with net provisions of $1.40 billion for 2020, primarily due to reserve reductions in the year reflecting continued improvement in the broad economic environment in 2020 resulting from the COVID-19 pandemic. following challenging conditions THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Operating expenses were $11.41 billion for 2021, 20% higher than 2020, primarily due to significantly higher compensation and benefits expenses (reflecting strong performance). Pre- tax earnings were $10.73 billion for 2021, compared with $2.89 billion for 2020. Assets Under Supervision. AUS includes our institutional clients’ assets, assets sourced through third-party distributors and high-net-worth clients’ assets where we earn a fee for managing assets on a discretionary basis. This includes net assets in our mutual funds, hedge funds, credit funds, private equity funds, real estate funds, and separately managed accounts for institutional and individual investors. AUS also includes client assets invested with third-party managers, private bank deposits and advisory relationships where we earn a fee for advisory and other services, but do not have investment discretion. AUS does not include the self-directed brokerage assets of our clients. The table below presents information about our firmwide period-end AUS by asset class, client channel, region and vehicle. $ in billions Asset Class Alternative investments Equity Fixed income Total long-term AUS Liquidity products Total AUS Client Channel Institutional Wealth management Third-party distributed Total AUS Region Americas EMEA Asia Total AUS Vehicle Separate accounts Public funds Private funds and other Total AUS In the table above: As of December 2022 2021 2020 $ $ $ $ $ $ $ $ 263 $ 563 1,010 1,836 711 2,547 $ 236 $ 613 940 1,789 681 2,470 $ 905 $ 712 930 2,547 $ 824 $ 751 895 2,470 $ 1,806 $ 548 193 2,547 $ 1,930 $ 354 186 2,470 $ 1,388 $ 862 297 2,547 $ 1,347 $ 811 312 2,470 $ 191 475 896 1,562 583 2,145 761 615 769 2,145 1,656 318 171 2,145 1,186 707 252 2,145 • Liquidity products includes money market funds and private bank deposits. • EMEA represents Europe, Middle East and Africa. The table below presents changes in our AUS. $ in billions Beginning balance Net inflows/(outflows): Alternative investments Equity Fixed income Total long-term AUS net inflows/(outflows) Liquidity products Total AUS net inflows/(outflows) Acquisitions Net market appreciation/(depreciation) Ending balance g Year Ended December 2022 2021 $ 2,470 $ 2,145 2020 $ 1,859 19 13 18 50 16 66 316 (305) 33 41 56 130 98 228 – 97 $ 2,547 $ 2,470 (1) (4) 47 42 121 163 – 123 $ 2,145 In the table above, acquisitions for 2022 included inflows from the acquisitions of NNIP and NextCapital Group, Inc., and from the acquisition of the assets of Bombardier Global Pension Asset Management Inc. For each, substantially all of the inflows were in fixed income and equity assets. The table below presents information about our average monthly firmwide AUS by asset class. $ in billions Asset Class Alternative investments Equity Fixed income Total long-term AUS Liquidity products Total AUS Average for the Year Ended December 2022 2021 2020 $ $ 253 $ 581 992 1,826 693 2,519 $ 211 547 919 1,677 625 2,302 $ $ 183 409 829 1,421 573 1,994 In addition to our AUS, we have discretion over alternative investments where we currently do not earn management fees (non-fee-earning alternative assets). We earn management fees on client assets that we manage and also receive incentive fees based on a percentage of a fund’s or a separately managed account’s return, or when the return exceeds a specified benchmark or other performance is targets. These incentive fees are recognized when it probable that a significant reversal of such fees will not occur. Our estimated unrecognized incentive fees were $3.33 billion as of December 2022, $3.39 billion as of December 2021 and $1.79 billion as of December 2020. Such amounts are based on the completion of the funds’ financial statements, which is generally one quarter in arrears. These fees will be recognized, assuming no decline in fair value, if and when it is probable that a significant reversal of such fees will not occur, which is generally when such fees are no longer subject to fluctuations in the market value of the assets. Our target is to achieve annual firmwide management and other fees of more than $10 billion (including more than $2 billion from alternatives) in 2024. Goldman Sachs 2022 Form 10-K 75 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our average effective management fee (which excludes non-asset-based fees) earned on our firmwide AUS by asset class. Effective fees (bps) Alternative investments Equity Fixed income Liquidity products Total average effective fee g Year Ended December 2022 64 57 17 14 31 2021 63 60 17 5 29 2020 61 58 18 14 29 In the table above, our average effective management fee for liquidity products increased during 2022 compared to 2021, primarily reflecting higher management fee waivers in 2021. The table below presents details about our monthly average AUS for alternative investments and the average effective management fee we earned on such assets. $ in billions Direct Strategies Fund of Funds Total $ Year Ended December 2022 Average AUS Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average AUS for alternative investments Effective Fees (bps) Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average effective fee $ $ Year Ended December 2021 Average AUS Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average AUS for alternative investments Effective Fees (bps) Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average effective fee $ $ Year Ended December 2020 Average AUS Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average AUS for alternative investments Effective Fees (bps) Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total average effective fee $ 76 Goldman Sachs 2022 Form 10-K 27 $ 36 10 45 118 $ 133 81 87 64 87 20 $ 18 8 43 89 $ 118 102 94 65 87 15 $ 13 7 37 72 $ 132 95 88 63 86 61 $ 2 8 22 93 $ $ 61 51 50 49 57 59 $ 2 7 19 87 $ $ 57 53 55 55 56 58 $ 2 6 17 83 $ $ 57 52 62 53 57 88 38 18 67 211 42 253 83 80 70 59 74 16 64 79 20 15 62 176 35 211 72 98 76 62 72 17 63 73 15 13 54 155 28 183 73 89 75 60 70 13 61 In the table above: • Direct strategies primarily includes our private equity, growth equity, private credit, liquid alternatives and real estate strategies. Fund of funds primarily includes our Alternative Investments & Manager Selection (AIMS) business. AIMS invests in leading private equity, hedge fund, real estate and credit third-party managers as a limited partner, secondary-market investor, co-investor or management company partner. • Certain AUS previously reported in Direct Strategies were reclassified to Fund of Funds to better reflect the nature of the underlying strategy. Prior periods amounts have been conformed to the current presentation. The table below presents information about our period-end AUS for alternative investments, non-fee-earning alternative investments and total alternative investments. $ in billions As of December 2022 Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total alternative investments As of December 2021 Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total alternative investments As of December 2020 Corporate equity Credit Real estate Hedge funds and other Funds and discretionary accounts Advisory accounts Total alternative investments In the table above: Non-fee-earning alternative assets Total alternative assets AUS $ 94 $ 44 18 65 221 42 $ 263 $ $ 87 $ 25 16 70 198 38 $ 236 $ $ 74 $ 18 13 56 161 30 $ 191 $ 76 $ 73 36 2 187 – 187 $ 78 $ 79 39 2 198 2 200 $ 50 $ 80 43 2 175 1 176 $ 170 117 54 67 408 42 450 165 104 55 72 396 40 436 124 98 56 58 336 31 367 • Corporate equity primarily includes private equity. • Total alternative investments included uncalled capital that is available for future investing of $54 billion as of December 2022, $42 billion as of December 2021 and $44 billion as of December 2020. • Non-fee-earning alternative investments primarily includes investments that we hold on our balance sheet, our unfunded commitments, unfunded commitments of our clients (where we do not charge fees on commitments), credit facilities collateralized by fund assets and employee funds. Our calculation of non-fee-earning alternative investments may not be comparable to similar calculations used by other companies. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis • Non-fee-earning alternative investments primarily includes including private equity, our direct investing strategies, growth equity, private credit and real estate strategies. We have announced a strategic objective of growing our third-party alternatives business, and have established a target of achieving gross inflows of $225 billion for alternative investments from 2020 through the end of 2024. third-party The table below presents information about commitments raised in our alternatives business from 2020 through 2022. $ in billions Included in AUS Included in non-fee-earning alternative assets Third-party commitments raised p y As of December 2022 118 61 179 $ $ In the table above, commitments included in non-fee-earning alternative investments included approximately $44 billion, which will begin to earn fees (and become AUS) if and when the commitments are drawn and assets are invested. The table below presents information about alternative investments in Asset & Wealth Management that we hold on our balance sheet. $ in billions As of December 2022 Corporate equity Credit Real estate Other Total As of December 2021 Corporate equity Credit Real estate Other Total As of December 2020 Corporate equity Credit Real estate Other Total Loans Debt securities Equity securities CIE investments and other Total $ $ $ $ $ $ – $ 14 5 – 19 $ – $ 15 7 – 22 $ – $ 16 9 – 25 $ – $ 11 1 – 12 $ – $ 11 2 – 13 $ – $ 12 2 – 14 $ 10 $ – 5 – 15 $ 14 $ – 4 – 18 $ 16 $ – 3 – 19 $ – $ – 12 1 13 $ – $ – 14 1 15 $ – $ – 19 1 20 $ 10 25 23 1 59 14 26 27 1 68 16 28 33 1 78 As we continue to grow our third-party alternatives business, we remain focused on our strategic objective to reduce the capital intensity of our alternative investments in Asset & Wealth Management that we hold on our balance sheet. During 2022, we reduced our on-balance sheet alternative investments by $9 billion to $59 billion. Loans and Debt Securities. The table below presents the concentration of securities within our alternative investments by accounting classification, region and industry. loans and debt As of December $ in billions Loans Debt securities Total Accounting Classification Debt securities at fair value Loans at amortized cost Loans at fair value Loans held for sale Total Region Americas EMEA Asia Total Industry Consumer & Retail Financial Institutions Healthcare Industrials Natural Resources & Utilities Real Estate Technology, Media & Telecommunications Other Total 2022 $19 12 $31 39% 49% 6% 6% 100% 51% 35% 14% 100% 10% 7% 13% 16% 2% 20% 25% 7% 100% 2021 $22 13 $35 38% 53% 9% — 100% 50% 34% 16% 100% 9% 6% 12% 16% 4% 25% 22% 6% 100% Equity Securities. The the concentration of equity securities within our alternative investments by region and industry. below presents table $ in billions y Equity securities q Region Americas EMEA Asia Total Industry Consumer & Retail Financial Institutions Healthcare Industrials Natural Resources & Utilities Real Estate Technology, Media & Telecommunications Other Total As of December 2022 $15 2021 $18 67% 15% 18% 100% 6% 10% 9% 7% 14% 30% 23% 1% 100% 57% 23% 20% 100% 8% 9% 11% 8% 11% 23% 29% 1% 100% Goldman Sachs 2022 Form 10-K 77 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis In the table above: • Equity securities included $13 billion as of December 2022 and $14 billion as of December 2021 of private equity positions, and $2 billion as of December 2022 and $4 billion as of December 2021 of public equity positions that converted from private equity upon the initial public offerings of the underlying companies. • The concentrations for real estate equity securities as of December 2022 were 9% for multifamily (5% as of December 2021), 5% for office (5% as of December 2021), 8% for mixed use (7% as of December 2021) and 8% for other real estate equity securities (6% as of December 2021). The table below presents securities within our alternative investments by vintage. the concentration of equity The table below presents the concentration of CIE assets, net of financings, within our alternative investments by vintage. As of December 2022 2015 or earlier 2016 - 2018 2019 - thereafter Total As of December 2021 2014 or earlier 2015 - 2017 2018 - thereafter Total Vintage 5% 45% 50% 100% 2% 29% 69% 100% Platform Solutions Platform Solutions includes our consumer platforms, such as partnerships offering credit cards and point-of-sale financing, and transaction banking and other platform businesses. Vintage Platform Solutions generates revenues from the following: As of December 2022 2015 or earlier 2016 - 2018 2019 - thereafter Total As of December 2021 2014 or earlier 2015 - 2017 2018 - thereafter Total 26% 26% 48% 100% 20% 32% 48% 100% CIE Investments and Other. CIE investments and other included assets held by CIEs of $12 billion as of December 2022 and $14 billion as of December 2021, which were funded with liabilities of approximately $6 billion as of December 2022 and $7 billion as of December 2021. Substantially all such liabilities were nonrecourse, thereby reducing our equity at risk. The table below presents the concentration of CIE assets, net of financings, within our alternative investments by region and asset class. $ in billions CIE assets, net of financings Region Americas EMEA Asia Total Asset Class Hospitality Industrials Multifamily Office Retail Senior Housing Student Housing Other Total 78 Goldman Sachs 2022 Form 10-K As of December 2022 $6 2021 $7 65% 25% 10% 100% 4% 10% 23% 22% 3% 14% 7% 17% 100% 63% 25% 12% 100% 4% 10% 23% 24% 5% 16% 6% 12% 100% Consumer platforms. Our Consumer platforms business issues credit cards and provides point-of-sale financing to consumers to finance the purchases of goods or services. Consumer platforms revenues primarily includes net interest income earned on credit card lending and point-of-sale financing activities. Transaction banking and other. We provide transaction banking and other services, including cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. Transaction banking revenues include net interest income attributed to transaction banking deposits. The table below presents our Platform Solutions assets. $ in millions Cash and cash equivalents Collateralized agreements Customer and other receivables Trading assets Loans Other assets Total As of December 2022 20,557 $ 10,278 2 8,597 15,300 2,556 57,290 $ 2021 20,025 6,637 3 6,257 7,289 631 40,842 $ $ The table below presents details about our Platform Solutions loans. $ in millions Installment Credit cards Loans, gross Allowance for loan losses Total loans As of December 2022 1,852 $ 15,820 17,672 (2,372) 15,300 $ $ $ 2021 26 8,212 8,238 (949) 7,289 average The $12.43 billion for 2022 and $5.51 billion for 2021. Platform Solutions gross loans were THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our Platform Solutions operating results. $ in millions Consumer platforms Transaction banking and other Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) Provision for taxes Net earnings/(loss) Preferred stock dividends Net earnings/(loss) to common g Year Ended December 2022 $ 1,176 $ 326 2021 424 216 1,502 1,728 1,763 (1,989) (328) (1,661) 12 640 697 990 (1,047) (210) (837) 6 $ (1,673) $ (843) $ 2020 188 146 334 487 630 (783) (189) (594) 2 $ (596) Average common equity Return on average common equity 864 $ 3,574 $ 1,777 (46.8)% (47.4)% (69.0)% $ The table below presents our unaudited quarterly Platform Solutions operating results. $ in millions 2022 Consumer platforms Transaction banking and other Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) 2021 Consumer platforms Transaction banking and other Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) 2020 Consumer platforms Transaction banking and other Net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) First Quarter Second Fourth Quarter Quarter Quarter Third $ $ $ $ $ $ 201 $ 67 268 167 334 (233) $ 90 $ 49 139 169 230 (260) $ 21 $ 8 29 92 144 (207) $ 252 $ 91 343 310 399 (366) $ 290 $ 88 378 465 525 (612) $ 90 $ 49 139 113 187 (161) $ 50 $ 37 87 107 166 (186) $ 119 $ 54 173 127 269 (223) $ 70 $ 51 121 84 144 (107) $ 433 80 513 786 505 (778) 125 64 189 288 304 (403) 47 50 97 204 176 (283) Operating Environment. During 2022, Platform Solutions operated in an environment generally characterized by broad macroeconomic rate of spending unemployment increased slightly compared with 2021. Additionally, global central banks sought to address inflation by increasing policy interest rates several times over the course of the year. the concerns. remained low and consumer In the U.S., In the future, if market and economic conditions deteriorate further, it may lead to a decrease in consumer spending or a deterioration in consumer credit, and net revenues and provision for credit losses in Platform Solutions would likely be negatively impacted. 2022 versus 2021. Net revenues in Platform Solutions were $1.50 billion for 2022, 135% higher than 2021, reflecting significantly higher net revenues in both Consumer platforms and Transaction banking and other. The increase in Consumer platforms net revenues primarily reflected significantly higher credit card balances. The increase in Transaction banking and other net revenues reflected higher deposit balances. losses was $1.73 billion for 2022, Provision for credit compared with $697 million for 2021. Provisions for 2022 primarily reflected growth in the credit card portfolio and net charge offs, while 2021 primarily reflected growth in the credit card portfolio, which was partially offset by reserve reductions as the broad economic environment continued to improve following the initial the COVID-19 pandemic. impact of Operating expenses were $1.76 billion for 2022, 78% higher than 2021, reflecting higher spend on growth initiatives in Consumer platforms, primarily from the inclusion of operating expenses related to GreenSky. Pre-tax loss was $1.99 billion for 2022, compared with $1.05 billion for 2021. 2021 versus 2020. Net revenues in Platform Solutions were $640 million for 2021, 92% higher than 2020, reflecting significantly higher net revenues in Consumer platforms and higher net revenues in Transaction banking and other. Net revenues in Consumer platforms reflected higher credit card balances. Net revenues in Transaction banking and other reflected higher deposit balances. Provision for credit losses was $697 million for 2021, 43% higher than 2020, primarily reflecting growth in the credit card portfolio, including approximately $185 million of the provisions related to the commitment to acquire the General Motors co-branded credit card portfolio, partially offset by reserve continued improvement in the broad economic environment following challenging conditions in 2020 resulting from the COVID-19 pandemic. reductions reflecting year the in Operating expenses were $990 million for 2021, 57% higher than 2020, primarily reflecting higher spend on growth initiatives in Consumer platforms. Pre-tax loss was $1.05 billion for 2021, compared with $783 million for 2020. Geographic Data See Note 25 to the consolidated financial statements for a summary of our total net revenues, pre-tax earnings and net earnings by geographic region. Goldman Sachs 2022 Form 10-K 79 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Balance Sheet and Funding Sources Balance Sheet Management One of our risk management disciplines is our ability to manage the size and composition of our balance sheet. While our asset base changes due to client activity, market fluctuations and business opportunities, size and composition of our balance sheet also reflects factors, including (i) our overall risk tolerance, (ii) the amount of capital we hold and (iii) our funding profile, among other factors. See “Capital Management and Regulatory Capital — Capital Management” for information about our capital management process. the Although our balance sheet fluctuates on a day-to-day basis, our total assets at quarter-end are generally not materially different from those occurring within our reporting periods. In order to ensure appropriate risk management, we seek to maintain a sufficiently liquid balance sheet and have processes in place to dynamically manage our assets and liabilities, which include (i) balance sheet planning, (ii) balance sheet limits, (iii) monitoring of key metrics and (iv) scenario analyses. Balance Sheet Planning. We prepare a balance sheet plan that combines our projected total assets and composition of assets with our expected funding sources over a three-year time horizon. This plan is reviewed quarterly and may be adjusted in response to changing business needs or market conditions. The objectives of this planning process are: • To develop our balance sheet projections, taking into account the general state of the financial markets and expected business activity levels, as well as regulatory requirements; • To allow Treasury and our independent risk oversight and control functions to objectively evaluate balance sheet limit requests from our revenue-producing units in the context including our of our overall balance sheet constraints, liability profile and capital levels, and key metrics; and • To inform the target amount, tenor and type of funding to raise, based on our projected assets and contractual maturities. Treasury and our independent risk oversight and control functions, along with our revenue-producing units, review current and prior period information and expectations for the year to prepare our balance sheet plan. The specific information reviewed includes asset and liability size and composition, risk and performance measures, and capital usage. limit utilization, 80 Goldman Sachs 2022 Form 10-K Our consolidated balance sheet plan, including our balance sheets by business, funding projections and projected key metrics, is reviewed and approved by the Firmwide Asset Liability Committee and the Firmwide Risk Appetite Committee. See “Risk Management — Overview and Structure of Risk Management” for an overview of our risk management structure. Balance Sheet Limits. The Firmwide Asset Liability Committee and the Firmwide Risk Appetite Committee have the responsibility to review and approve balance sheet limits. These limits are set at levels which are close to actual operating levels, rather than at levels which reflect our maximum risk appetite, in order to ensure prompt escalation and discussion among our revenue-producing units, Treasury and our independent risk oversight and control functions on a routine basis. Requests for changes in limits are evaluated after giving consideration to their impact on our key metrics. revenue- Compliance with limits producing units and Treasury, as well as our independent risk oversight and control functions. is monitored by our Monitoring of Key Metrics. We monitor key balance sheet metrics both by business and on a consolidated basis, limit including asset and liability size and composition, utilization and risk measures. We attribute assets to businesses and review and analyze movements resulting from new business activity, as well as market fluctuations. Scenario Analyses. We conduct various scenario analyses, including as part of the Comprehensive Capital Analysis and Review (CCAR) and U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act Stress Tests (DFAST), as well as our resolution and recovery planning. See “Capital Management and Regulatory Capital — Capital Management” for further information about these scenario analyses. These scenarios cover short- and long-term time horizons using various macroeconomic and firm-specific assumptions, based on a range of economic scenarios. We use these analyses to assist us in developing our longer-term balance sheet management strategy, including the level and composition of assets, funding and capital. Additionally, these analyses help us develop approaches for maintaining appropriate funding, liquidity and capital across a variety of situations, including a severely stressed environment. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Balance Sheet Analysis and Metrics As of December 2022, total assets in our consolidated balance sheets were $1.44 trillion, a decrease of $22.19 billion from December 2021, reflecting decreases in trading assets of $74.67 billion (primarily due to decreases in equity securities, corporate debt instruments, reflecting the impact of our and our clients' activities), customer and other receivables of $25.23 billion (primarily reflecting client activity), cash and cash equivalents of $19.21 billion (primarily reflecting our activity), partially offset by increases in investments of $41.91 billion (primarily due to an increase in U.S. government obligations accounted for as held-to-maturity), collateralized agreements of $29.68 billion (primarily reflecting the impact of our and our clients' activities), and loans of $20.72 billion (reflecting increases in other collateralized and consumer loans). As of December 2022, total liabilities in our consolidated balance sheets were $1.32 trillion, a decrease of $29.45 billion from December 2021, reflecting decreases in collateralized financings of $75.91 billion (primarily reflecting the impact of our and our clients' activities), partially offset by increases in deposits of $22.44 billion (primarily due to increases in transaction banking and private bank and consumer deposits, partially offset by other deposits), customer and other payables of $10.11 billion (primarily reflecting client activity), and trading liabilities of $9.90 billion (primarily due to an increase in equity securities, partially offset by a decrease in government obligations, both reflecting the impact of our and our clients' activities). total repurchase agreements, accounted for Our as collateralized financings, were $110.35 billion as of December 2022 and $165.88 billion as of December 2021, which were 15% lower as of December 2022 and 3% higher as of December 2021 than the average daily amount of repurchase agreements over the respective quarters, and 27% lower as of December 2022 and 14% higher as of December 2021 than the average daily amount of repurchase agreements over the respective years. As of December 2022, the decrease in our repurchase agreements relative to the average daily amount of repurchase agreements during the quarter and year resulted from lower levels of our and our clients’ activities at the end of the period. The level of our repurchase agreements fluctuates between and within periods, primarily due to providing clients with access to highly liquid collateral, such as certain government and agency obligations, through collateralized financing activities. The table below presents information about our balance sheet and leverage ratios. As of December $ in millions Total assets Unsecured long-term borrowings Total shareholders’ equity Leverage ratio Debt-to-equity ratio In the table above: 2022 2021 $ 1,441,799 $ 1,463,988 $ 247,138 $ 254,092 $ 117,189 $ 109,926 13.3x 2.3x 12.3x 2.1x • The leverage ratio equals total assets divided by total shareholders’ equity and measures the proportion of equity and debt we use to finance assets. This ratio is different from the leverage ratios included in Note 20 to the consolidated financial statements. • The debt-to-equity ratio equals unsecured long-term borrowings divided by total shareholders’ equity. table below presents The our shareholders’ equity and book value per common share, including the reconciliation of common shareholders’ equity to tangible common shareholders’ equity. information about As of December $ in millions, except per share amounts Total shareholders’ equity Preferred stock Common shareholders’ equity Goodwill Identifiable intangible assets Tangible common shareholders’ equity y g q 2022 2021 $ 117,189 $ 109,926 (10,703) 99,223 (4,285) (418) 94,520 (10,703) 106,486 (6,374) (2,009) 98,103 $ $ Book value per common share Tangible book value per common share $ $ 303.55 $ 279.66 $ 284.39 270.91 In the table above: • Tangible common shareholders’ equity is calculated as total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets. We believe that tangible common shareholders’ equity is meaningful because it is a measure that we and investors use to assess capital adequacy. Tangible common shareholders’ equity is a non- GAAP measure and may not be comparable to similar non- GAAP measures used by other companies. • Book value per common share and tangible book value per common share are based on common shares outstanding and restricted stock units granted to employees with no future service requirements and not subject to performance or market conditions (collectively, basic shares) of 350.8 million as of December 2022 and 348.9 million as of December 2021. We believe that tangible book value per common share (tangible common shareholders’ equity divided by basic shares) is meaningful because it is a measure that we and investors use to assess capital adequacy. Tangible book value per common share is a non- GAAP measure and may not be comparable to similar non- GAAP measures used by other companies. Goldman Sachs 2022 Form 10-K 81 for statements Secured Funding. We fund a significant amount of inventory and a portion of investments on a secured basis. Secured funding includes collateralized financings in the consolidated balance sheets. See Note 11 to the consolidated financial information about our further collateralized financings, including its maturity profile. We may also pledge our inventory and investments as collateral for securities borrowed under a securities lending agreement. We also use our own inventory and investments to cover transactions in which we or our clients have sold securities that have not yet been purchased. Secured funding is less sensitive to changes in our credit quality than unsecured funding, due to our posting of collateral to our lenders. Nonetheless, we analyze the refinancing risk of our secured funding activities, taking into account trade tenors, maturity profiles, counterparty concentrations, collateral eligibility and counterparty rollover probabilities. We seek to mitigate our refinancing risk by executing term trades with staggered maturities, diversifying counterparties, raising excess secured funding and pre-funding residual risk through our GCLA. We seek to raise secured funding with a term appropriate for the liquidity of the assets that are being financed, and we seek longer maturities for secured funding collateralized by asset classes that may be harder to fund on a secured basis, especially during times of market stress. Our secured funding, excluding funding collateralized by liquid government and agency obligations, is primarily executed for tenors of one month or greater and is primarily executed through term repurchase agreements and securities loaned contracts. Assets that may be harder to fund on a secured basis during times of market stress include certain financial instruments in the following categories: mortgage- and other asset-backed loans and securities, non-investment-grade corporate debt securities, equity securities and emerging market securities. We also raise financing through other types of collateralized financings, such as secured loans and notes. GS Bank USA has access to funding from the Federal Home Loan Bank. We had no outstanding borrowings from the Federal Home Loan Bank as of December 2022 and $100 million as of December 2021. Additionally, we have access to funding through the Federal Reserve discount window. However, we do not rely on this funding in our liquidity planning and stress testing. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Funding Sources Our primary sources of funding are deposits, collateralized financings, unsecured short- and long-term borrowings, and shareholders’ equity. We seek to maintain broad and across products, diversified funding programs, markets, currencies and creditors to avoid funding concentrations. globally sources The table below presents information about our sources. funding As of December $ in millions Deposits Collateralized financings Unsecured short-term borrowings Unsecured long-term borrowings Total shareholders’ equity Total 2022 $ 386,665 155,022 60,961 247,138 117,189 2021 40% $ 364,227 230,932 16% 46,955 6% 254,092 26% 109,926 12% 36% 23% 5% 25% 11% $ 966,975 100% $ 1,006,132 100% Our funding is primarily raised in U.S. dollar, Euro, British pound and Japanese yen. We generally distribute our funding products through our own sales force and third-party distributors to a large, diverse creditor base in a variety of markets in the Americas, Europe and Asia. We believe that our relationships with our creditors are critical to our governments, liquidity. Our insurance securities lenders, corporations, pension funds, companies, mutual funds and individuals. We have imposed various internal guidelines to monitor creditor concentration across our funding programs. include banks, creditors Deposits. Our deposits provide us with a diversified source of funding and reduce our reliance on wholesale funding. We raise deposits, including savings, demand and time deposits, from private bank clients, consumers, transaction banking clients, other institutional clients, and through internal and third-party broker-dealers. Substantially all of our deposits are raised through GS Bank USA, GSIB and Goldman Sachs Bank Europe SE (GSBE). See Note 13 to the consolidated information about our further financial deposits, including a maturity profile of our time deposits. statements for 82 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Unsecured Short-Term Borrowings. A significant portion of our unsecured short-term borrowings was originally long- term debt that is scheduled to mature within one year of the reporting date. We use unsecured short-term borrowings, including U.S. and non-U.S. hybrid financial instruments and commercial paper, to finance liquid assets and for other cash management purposes. In accordance with regulatory requirements, Group Inc. does not issue debt with an original maturity of less than one year, other than to its subsidiaries. See Note 14 to the consolidated financial statements for further information about our unsecured short-term borrowings. Unsecured Long-Term Borrowings. Unsecured long-term borrowings, including structured notes, are raised through syndicated U.S. registered offerings, U.S. registered and Rule 144A medium-term note programs, offshore medium-term note offerings and other debt offerings. We issue in different tenors, the diversification of our investor base. to maximize currencies products and The table below presents our quarterly unsecured long-term borrowings maturity profile. $ in millions As of December 2022 2024 2025 2026 2027 2028 - thereafter Total First Quarter Second Quarter Third Quarter Fourth Quarter Total $ 18,136 $ 11,053 $ 9,964 $ 11,858 $ 51,011 37,142 $ 12,131 $ 10,681 $ 6,443 $ 7,887 22,202 $ 5,862 $ 3,835 $ 3,278 $ 9,227 30,360 $ 8,580 $ 3,435 $ 6,568 $ 11,777 106,423 $ 247,138 long-term borrowings The weighted average maturity of our unsecured long-term borrowings as of December 2022 was approximately six years. To mitigate refinancing risk, we seek to limit the principal amount of debt maturing over the course of any monthly, quarterly, semi-annual or annual time horizon. We enter into interest rate swaps to convert a portion of our floating-rate unsecured obligations to manage our exposure to interest rates. See Note 14 to the consolidated financial statements for further information about our unsecured long-term borrowings. We issued approximately $28 billion of benchmark debt during 2022, and we intend to issue significantly less benchmark debt in 2023 compared to our benchmark debt issuance in 2022, though actual issuances may differ due to business needs and market opportunities. into Shareholders’ Equity. Shareholders’ equity is a stable and perpetual source of funding. See Note 19 to the consolidated financial information about our further statements shareholders’ equity. for Capital Management and Regulatory Capital Capital adequacy is of critical importance to us. We have in place a comprehensive capital management policy that provides a framework, defines objectives and establishes guidelines to assist us in maintaining the appropriate level and composition of capital in both business-as-usual and stressed conditions. Capital Management We determine the appropriate amount and composition of our capital by considering multiple factors, including our current and future regulatory capital requirements, the results of our capital planning and stress testing process, the results of resolution capital models and other factors, such as rating subsidiary capital agency guidelines, the business financial environment and conditions markets. requirements, in the We manage our capital requirements and the levels of our capital usage principally by setting limits on the balance sheet and/or limits on risk, in each case at both the firmwide and business levels. We principally manage the level and composition of our capital through issuances and repurchases of our common stock. We may issue, redeem or repurchase our preferred stock and subordinated debt or other forms of capital as business conditions warrant. or repurchases, we must receive approval from the FRB. See Notes 14 and 19 to the consolidated financial statements for further information about our preferred stock and subordinated debt. redemptions Prior such to Capital Planning and Stress Testing Process. As part of capital planning, we project sources and uses of capital given a range of business including stressed conditions. Our stress testing process is designed to identify and measure material risks associated with our business activities, including market risk, credit risk, operational risk and liquidity risk, as well as our ability to generate revenues. environments, Our capital planning process incorporates an internal capital adequacy assessment with the objective of ensuring that we are appropriately capitalized relative to the risks in our businesses. We incorporate stress scenarios into our capital planning process with a goal of holding sufficient capital to ensure we remain adequately capitalized after experiencing a severe stress event. Our assessment of capital adequacy is viewed in tandem with our assessment of liquidity adequacy and is integrated into our overall risk management structure, governance and policy framework. Goldman Sachs 2022 Form 10-K 83 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Our stress tests incorporate our internally designed stress scenarios, including our internally developed severely adverse scenario, and those required by the FRB, and are designed to capture our specific vulnerabilities and risks. We provide further information about our stress test processes and a summary of the results on our website as described in “Business — Available Information” in Part I, Item 1 of this Form 10-K. As required by the FRB’s CCAR rules, we submit an annual capital plan for review by the FRB. The purpose of the FRB’s review is to ensure that we have a robust, forward-looking capital planning process that accounts for our unique risks and that permits continued operation during times of economic and financial stress. The FRB evaluates us based, in part, on whether we have the capital necessary to continue operating under the baseline and severely adverse scenarios provided by the FRB and those developed internally. This evaluation also takes into account our process for identifying risk, our controls and governance for capital planning, and our guidelines for making capital planning decisions. In addition, the FRB evaluates our plan to make capital distributions (i.e., dividend payments and repurchases or redemptions of stock, subordinated debt or other capital securities) and issue capital, across the range of macroeconomic scenarios and firm-specific assumptions. The FRB determines the stress capital buffer (SCB) applicable to us based on its own annual stress test. The SCB under the Standardized approach is calculated as (i) the difference between our starting and minimum projected CET1 capital ratios under the supervisory severely adverse scenario and (ii) our planned common stock dividends for each of the fourth through seventh quarters of the planning horizon, expressed as a percentage of risk-weighted assets (RWAs). Based on our 2022 CCAR submission, the FRB reduced our SCB from 6.4% to 6.3% for the period from October 1, 2022 through September 30, 2023. As a result, beginning on October 1, 2022, our Standardized CET1 capital ratio requirement was 13.3%. Additionally, effective January 1, 2023, our G-SIB surcharge increased from 2.5% to 3.0%, resulting in a Standardized CET1 capital ratio requirement of further 13.8%. See “Share Repurchase Program” for information about common stock repurchases and dividends and further information about the G-SIB surcharge. We published a summary of our annual DFAST results in June 2022. See “Business — Available Information” in Part I, Item 1 of this Form 10-K. “Consolidated Regulatory Capital” for GS Bank USA is required to conduct stress tests on an annual basis and publish a summary of certain results. GS Bank USA published a summary of its annual DFAST results in June 2022. See “Business — Available Information” in Part I, Item 1 of this Form 10-K. 84 Goldman Sachs 2022 Form 10-K GSI, GSIB and GSBE also have their own capital planning and stress testing processes, which incorporate internally designed stress tests developed in accordance with the guidelines of their respective regulators. Contingency Capital Plan. As part of our comprehensive capital management policy, we maintain a contingency capital plan. Our contingency capital plan provides a framework for analyzing and responding to a perceived or limited to, actual capital deficiency, identification of drivers of a capital deficiency, as well as mitigants and potential actions. It outlines the appropriate communication procedures to follow during a crisis period, including internal dissemination of information, as well as timely communication with external stakeholders. including, but not Capital Attribution. We assess the capital usage of each of our businesses based on our attributed equity framework. including our This framework considers many factors, internal assessment of risks as well as the regulatory capital requirements related to our business activities. These regulatory capital requirements take into consideration our most binding capital constraints. Our most binding capital constraint is our CET1 capital ratio requirement under the Standardized Capital Rules. This requirement includes the SCB which is determined by the FRB based on its own annual stress test. open-market Share Repurchase Program. We use our share repurchase program to help maintain the appropriate level of common equity. The repurchase program is effected primarily through include purchases regular repurchase plans designed to comply with Rule 10b5-1 and accelerated share repurchases), the amounts and timing of which are determined primarily by our current and projected capital position and our capital plan submitted to the FRB as part of CCAR. The amounts and timing of the repurchases may also be influenced by general market conditions and the prevailing price and trading volumes of our common stock. (which may In the third quarter of 2022, the Board of Directors of Group Inc. (Board) approved an increase in our common stock dividend from $2.00 to $2.50 per share. During 2022, we returned a total of $6.70 billion to shareholders, including common stock repurchases of $3.50 billion and common stock dividends of $3.20 billion. During the fourth quarter of 2022, we returned a total of $2.38 billion to shareholders, including common stock repurchases of $1.50 billion and common stock dividends of $880 million. Consistent with our capital management philosophy, we will continue prioritizing deployment of capital for our clients where returns are attractive and return any excess capital to shareholders through dividends and share repurchases. During the first quarter of 2023 through February 23, 2023, our common stock repurchases were approximately $2.25 billion. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis for Registrant’s Common Equity, Related See “Market Stockholder Matters and Issuer Purchases of Equity Securities” in Part II, Item 5 of this Form 10-K and Note 19 to the consolidated financial statements for further information about our share repurchase program, and see above for information about our capital planning and stress testing process. In August 2022, the Inflation Reduction Act of 2022 introduced a one percent non-deductible excise tax (buyback tax) on the fair market value of certain corporate share repurchases after December 31, 2022. The fair market value of share repurchases subject to the tax is reduced by the fair market value of any stock issued during the calendar year, including stock issued to employees. Based on our current understanding, we do not expect the buyback tax to have a material results of operations or cash flows in 2023. financial condition, impact on our In connection with our Resolution Capital Models. resolution planning efforts, we have established a Resolution Capital Adequacy and Positioning framework, which is designed to ensure that our major subsidiaries (GS Bank USA, Goldman Sachs & Co. LLC (GS&Co.), GSI, GSIB, GSBE, Goldman Sachs Japan Co., Ltd. (GSJCL), Goldman Sachs Asset Management, L.P. and Goldman Sachs Asset Management International) have access to sufficient loss- absorbing capacity (in the form of equity, subordinated debt and unsecured senior debt) so that they are able to wind down following a Group Inc. bankruptcy filing in accordance with our preferred resolution strategy. In addition, we have established a triggers and alerts framework, which is designed to provide the Board with information needed to make an informed decision on whether and when to commence bankruptcy proceedings for Group Inc. Rating Agency Guidelines The credit rating agencies assign credit ratings to the obligations of Group Inc., which directly issues or guarantees substantially all of our senior unsecured debt obligations. GS&Co. and GSI have been assigned long- and short-term issuer ratings by certain credit rating agencies. GS Bank USA, GSIB and GSBE have also been assigned long- and short-term issuer ratings, as well as ratings on their long- and short-term In addition, credit rating agencies have bank deposits. to debt obligations of certain other assigned ratings subsidiaries of Group Inc. for The level and composition of our capital are among the many factors considered in determining our credit ratings. Each its own definition of eligible capital and agency has methodology and capital assessments are generally based on a combination of factors rather than a single calculation. See “Risk Management — Liquidity Risk Management — Credit Ratings” for further information about credit ratings of Group Inc., GS Bank USA, GSIB, GSBE, GS&Co. and GSI. evaluating adequacy, to are subject Consolidated Regulatory Capital We capital requirements which are calculated in accordance with the regulations of the FRB (Capital Framework). Under the Capital Framework, we are an “Advanced approaches” banking organization and have been designated as a G-SIB. consolidated regulatory the the capital conservation SCB (under requirements calculated under include The capital the Capital buffer Framework requirements, which are comprised of a 2.5% buffer (under the Advanced Capital Rules), the Standardized Capital Rules), a countercyclical capital buffer (under both Capital Rules) and the G-SIB surcharge (under both Capital Rules). Our G-SIB surcharge was 2.5% for 2022 and is 3.0% for 2023 and 2024. The G-SIB surcharge and countercyclical capital buffer in the future may differ due to additional guidance from our regulators and/or positional changes, and our SCB is likely to change from year to year based on the results of the annual supervisory stress tests. Our target to the regulatory requirements plus a buffer of 50 to 100 basis points. is to maintain capital ratios equal See Note 20 to the consolidated financial statements for further information about our risk-based capital ratios and leverage ratios, and the Capital Framework. Total Loss-Absorbing Capacity (TLAC) We are also subject to the FRB’s TLAC and related requirements. Failure to comply with the TLAC and related requirements would result in restrictions being imposed by the FRB and could limit our ability to repurchase shares, pay dividends and make certain discretionary compensation payments. Goldman Sachs 2022 Form 10-K 85 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents TLAC and external long-term debt requirements. • Leverage exposure consists of average adjusted total assets and certain off-balance sheet exposures. In the second half of 2022, based on regulatory feedback, we revised certain interpretations of the Capital Rules underlying the calculation of Standardized RWAs. As of December 2021, this change would have reduced our TLAC to RWAs ratio of 44.0% by 0.8 percentage points and our External long-term debt to RWAs ratio of 25.8% by 0.5 percentage points. See “Business — Regulation” in Part I, Item 1 of this Form 10-K for further information about TLAC. Subsidiary Capital Requirements Many of our subsidiaries, including our bank and broker- dealer subsidiaries, are subject to separate regulation and capital requirements of the jurisdictions in which they operate. Bank Subsidiaries. GS Bank USA is our primary U.S. banking subsidiary and GSIB and GSBE are our primary non- U.S. banking subsidiaries. These entities are subject to regulatory capital requirements. See Note 20 to the consolidated financial statements for further information about the regulatory capital requirements of our bank subsidiaries. U.S. Regulated Broker-Dealer Subsidiaries. GS&Co., our primary U.S. regulated broker-dealer subsidiary, is also a registered futures commission merchant and a registered swap dealer with the CFTC, and a registered security-based to swap dealer with the SEC, and therefore is subject regulatory capital requirements imposed by the SEC, the Financial Industry Regulatory Authority, Inc., the CFTC, the Chicago Mercantile Exchange and the National Futures Association. Rule 15c3-1 of the SEC and Rules 1.17 and Part 23 Subpart E of the CFTC specify uniform minimum net capital requirements, as defined, for their registrants, and also effectively require that a significant part of the registrants’ assets be kept in relatively liquid form. GS&Co. has elected to calculate its minimum capital requirements in accordance with the “Alternative Net Capital Requirement” as permitted by Rule 15c3-1 of the SEC. TLAC to RWAs TLAC to leverage exposure External long-term debt to RWAs External long-term debt to leverage exposure In the table above: Requirements 21.5% 9.5% 8.5% 4.5% • The TLAC to RWAs requirement included (i) the 18% minimum, (ii) the 2.5% buffer, (iii) the countercyclical capital buffer, which the FRB has set to zero percent and (iv) the 1.0% G-SIB surcharge (Method 1). Beginning in January 2023, our TLAC to RWAs requirement increased to 22.0%. • The TLAC to leverage exposure requirement includes (i) the 7.5% minimum and (ii) the 2.0% leverage exposure buffer. • The external to RWAs long-term debt requirement includes (i) the 6% minimum and (ii) the 2.5% G-SIB surcharge (Method 2). Beginning in January 2023, our external long-term debt to RWAs requirement increased to 9.0%. • The external long-term debt to total leverage exposure is the 4.5% minimum. The table below presents information about our TLAC and external long-term debt ratios. $ in millions TLAC External long-term debt RWAs Leverage exposure For the Three Months Ended or as of December 2022 297,100 $ 172,845 $ 679,450 $ 2021 297,765 $ 174,500 $ $ 676,863 $ 1,867,358 $ 1,910,521 TLAC to RWAs TLAC to leverage exposure External long-term debt to RWAs External long-term debt to leverage exposure 43.7% 15.9% 25.4% 9.3% 44.0% 15.6% 25.8% 9.1% In the table above: • TLAC includes common and preferred stock, and eligible long-term debt issued by Group Inc. Eligible long-term debt represents unsecured debt, which has a remaining maturity of at least one year and satisfies additional requirements. • External long-term debt consists of eligible long-term debt subject to a haircut if it is due to be paid between one and two years. • RWAs represent Advanced RWAs as of December 2022 and Standardized RWAs as of December 2021. In accordance with the TLAC rules, the higher of Advanced or Standardized RWAs are used in the calculation of TLAC and external ratios and applicable requirements. long-term debt 86 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis GS&Co. had regulatory net capital, as defined by Rule 15c3-1, of $22.21 billion as of December 2022 and $22.18 billion as of December 2021, which exceeded the amount required by $17.46 billion as of December 2022 and In addition to its $17.74 billion as of December 2021. alternative minimum net capital requirements, GS&Co. is also required to hold tentative net capital in excess of $5 billion and net capital in excess of $1 billion in accordance with Rule 15c3-1. GS&Co. is also required to notify the SEC in the event that its tentative net capital is less than $6 billion. As of both December 2022 and December 2021, GS&Co. had tentative net capital and net capital in excess of both the minimum and the notification requirements. Non-U.S. Regulated Broker-Dealer Subsidiaries. Our principal non-U.S. subsidiaries include GSI and GSJCL. regulated broker-dealer GSI, our U.K. broker-dealer, is regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). GSI to the U.K. capital framework, which is largely based on the Basel Committee capital on Banking framework for strengthening international capital standards (Basel III). (Basel Committee) Supervision’s subject is table The requirements. below presents GSI’s risk-based capital Risk-based capital requirements CET1 capital ratio Tier 1 capital ratio p Total capital ratio As of December 2022 2021 8.7% 10.7% 13.3% 8.1% 9.9% 12.4% the risk-based capital requirements In the table above, incorporate capital guidance received from the PRA and could change in the future. The table below presents information about GSI’s risk-based capital ratios. $ in millions Risk-based capital and risk-weighted assets CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs Risk-based capital ratios CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2022 2021 31,780 $ 40,080 $ 5,377 $ 45,457 $ 28,810 $ 37,110 $ 5,377 $ $ 42,487 $ 247,653 $ 269,762 12.8% 16.2% 18.4% 10.7% 13.8% 15.7% the risk-based capital ratios as of In the table above, December 2022 reflected profits after foreseeable charges that are still subject to audit by GSI’s external auditors and approval by GSI's Board of Directors for inclusion in risk- based capital. These profits contributed approximately 9 basis points to the CET1 capital ratio as of December 2022. is also subject to the minimum leverage ratio GSI requirement of 3.25% established by the PRA, which became effective in January 2023. GSI had a leverage ratio of 6.1% as of December 2022. The leverage ratio as of December 2022 reflected profits after foreseeable charges that are still subject to audit by GSI’s external auditors and approval by GSI's Board of Directors for inclusion in risk-based capital. These profits contributed approximately 7 basis points to the leverage ratio as of December 2022. GSI is a registered swap dealer with the CFTC and a registered security-based swap dealer with the SEC. As of both December 2022 and December 2021, GSI was subject to and in compliance with applicable capital requirements for swap dealers and security-based swap dealers. GSI is also subject to a minimum requirement for own funds and eligible liabilities issued to affiliates. This requirement is subject to a transitional period which began to phase in from January 2019 and became fully effective beginning in January 2022. As of both December 2022 and December 2021, GSI was in compliance with this requirement. GSJCL, our Japanese broker-dealer, is regulated by Japan’s Financial Services Agency. GSJCL and certain other non-U.S. subsidiaries are also subject requirements promulgated by authorities of the countries in which they operate. As of both December 2022 and December 2021, these subsidiaries were in compliance with their local capital requirements. to capital Regulatory and Other Matters Regulatory Matters to extensive regulation and Our businesses are subject supervision worldwide. Regulations have been adopted or are being considered by regulators and policy makers worldwide. Given that many of the new and proposed rules are highly complex, the full impact of regulatory reform will not be known until the rules are implemented and market practices develop under the final regulations. See “Business — Regulation” in Part I, Item 1 of this Form 10-K for further information about the laws, rules and regulations and proposed laws, rules and regulations that apply to us and our operations. Goldman Sachs 2022 Form 10-K 87 counterparties exchanges which Our risk exposure to USD LIBOR is primarily in connection with our derivative contracts and, to a lesser extent, our unsecured debt, preferred stock and loan portfolio. As of December 2022, the notional amount of our USD LIBOR- based derivative contracts was approximately $6 trillion, of which approximately $5 trillion will mature after June 2023 based on their contractual terms. Substantially all of such derivative contracts are with counterparties under bilateral agreements subject to the IBOR Protocol, or with central clearing have or incorporated fallbacks consistent with the IBOR Protocol in their rulebooks and have announced that they plan to convert USD LIBOR contracts to alternative risk-free reference rates. Our unsecured benchmark debt and preferred stock with USD LIBOR exposure was approximately $29.0 billion as of December 2022, of which $26.4 billion will contractually mature after June 2023 or is perpetual and has no stated maturity date. Under the FRB’s final rule and the LIBOR Act, we will replace our USD LIBOR-based unsecured benchmark debt and preferred stock with term SOFR plus the statutorily take place prescribed tenor spread. This transition will following USD LIBOR cessation on June 30, 2023. In addition, our USD LIBOR-based loans were approximately $33.1 billion as of December 2022, of which approximately $30.5 billion will mature after June 2023 based on their contractual terms. A vast majority of such loans contain fallback provisions in the related loan agreements and we are actively engaging with our clients and syndicate partners to remediate the remaining loans agreements. We have also issued debt and deposits linked to SOFR and Sterling Overnight Index Average (SONIA) and executed SOFR- and SONIA-based derivative contracts to make markets and facilitate client activities. When appropriate, we continue to execute transactions in the market to reduce our USD LIBOR exposures arising from hedges to our fixed-rate debt issuances and replace them with alternative risk-free reference rate exposures. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Other Matters Replacement of Interbank Offered Rates (IBORs), including LIBOR. On January 1, 2022, the publication of all EUR, CHF, JPY and GBP LIBOR (non-USD LIBOR) settings along with certain USD LIBOR settings ceased. The publication of the most commonly used USD LIBOR settings as representative rates will cease after June 2023. The FCA has allowed the publication and use of synthetic rates for certain GBP LIBOR settings in legacy GBP LIBOR-based derivative contracts through March 2024. The FCA has proposed to allow the publication and use of synthetic rates for certain USD LIBOR settings in legacy USD LIBOR-based derivative contracts through September 2024. The U.S. federal banking agencies’ guidance strongly encourages banking organizations to cease using USD LIBOR. The International Swaps and Derivatives Association (ISDA) 2020 IBOR Fallbacks Protocol (IBOR Protocol) has provided derivatives market participants with amended fallbacks for legacy and new derivative contracts to mitigate legal or economic uncertainty. Both counterparties have to adhere to the IBOR Protocol or engage in bilateral amendments for the terms to be effective for derivative contracts. ISDA has confirmed that the FCA’s formal announcement to cease both non-USD and USD LIBOR settings fixed the spread adjustment for all LIBOR rates and as a result fallbacks applied automatically for non-USD LIBOR settings following December 31, 2021 and will apply automatically for USD LIBOR settings following June 30, 2023. The Adjustable Interest Rate (LIBOR) Act, that was enacted in March 2022, provides a statutory framework to replace USD LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (SOFR) for contracts governed by U.S. law that have no fallbacks or fallbacks that would require the use of a poll or LIBOR-based rate. In December 2022, the FRB adopted a final rule that implements the LIBOR Act, which will become effective on February 27, 2023. The final rule identifies for derivative different SOFR-based replacement contracts, for cash instruments such as floating-rate notes and preferred stock, for consumer contracts, for certain government-sponsored enterprise contracts and for certain lack a fallback to an student alternative rate when USD LIBOR ceases to be published on June 30, 2023. loan securitizations that rates We facilitated an orderly transition from non-USD LIBORs to alternative risk-free reference rates and synthetic rates for us and our clients, and continue to make progress on our transition program as it relates to USD LIBOR. 88 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Off-Balance Sheet Arrangements In the ordinary course of business, we enter into various types of off-balance sheet arrangements. Our involvement in these arrangements can take many different forms, including: • Purchasing or retaining residual and other interests in special purpose entities, such as mortgage-backed and other asset-backed securitization vehicles; • Holding senior and subordinated debt, interests in limited and general partnerships, and preferred and common stock in other nonconsolidated vehicles; • Entering into interest foreign currency, equity, commodity and credit derivatives, including total return swaps; and rate, The table below presents where information about our various off-balance sheet arrangements may be found in this Form 10-K. In addition, see Note 3 to the consolidated financial statements for information about our consolidation policies. Off-Balance Sheet Arrangement Disclosure in Form 10-K and interests other Variable obligations, contingent including obligations, arising from variable interests nonconsolidated in variable interest entities (VIEs) See Note 17 to the consolidated financial statements. Guarantees, and lending and other commitments See Note 18 to the consolidated financial statements. • Providing guarantees, indemnifications, commitments, letters of credit and representations and warranties. Derivatives including securitizations. The We enter into these arrangements for a variety of business purposes, securitization vehicles that purchase mortgages, corporate bonds and other types of financial assets are critical to the functioning of several significant investor markets, including the mortgage- backed and other asset-backed securities markets, since they offer investors access to specific cash flows and risks created through the securitization process. transactions; We also enter into these arrangements to underwrite client secondary market securitization and performing liquidity; make nonperforming debt, distressed loans, power-related assets, equity securities, real estate and other assets; and provide investors with credit-linked and asset-repackaged notes. provide in investments “Risk Management — See Credit Risk Management — Credit Exposures — OTC Derivatives” and Notes 4, 5, 7 and 18 to the consolidated financial statements. Goldman Sachs 2022 Form 10-K 89 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Risk Management legal, credit, operational, model, Risks are inherent in our businesses and include liquidity, market, compliance, conduct, regulatory and reputational risks. For further information about our risk management processes, see “Overview and Structure of Risk Management,” and for information about our areas of risk, see “Liquidity Risk Management,” “Market Risk Management,” “Credit Risk Management,” “Operational Risk Management,” “Model Risk Management” and “Other Risk Management,” as well as “Risk Factors” in Part I, Item 1A of this Form 10-K. Overview and Structure of Risk Management Overview We believe that effective risk management is critical to our success. Accordingly, we have established an enterprise risk management framework that employs a comprehensive, integrated approach to risk management, and is designed to enable comprehensive risk management processes through which we identify, assess, monitor and manage the risks we assume in conducting our activities. Our risk management structure is built around three core components: governance, processes and people. Governance. Risk management governance starts with the Board, which both directly and through its committees, including its Risk Committee, oversees our risk management policies and practices implemented through the enterprise risk management framework. The Board is also responsible for the annual review and approval of our risk appetite statement. The risk appetite statement describes the levels and types of risk we are willing to accept or to avoid, in order to achieve our objectives included in our strategic business plan, while remaining in compliance with regulatory requirements. The Board reviews our strategic business plan and is ultimately responsible for overseeing and providing direction about our strategy and risk appetite. 90 Goldman Sachs 2022 Form 10-K The Board receives regular briefings on firmwide risks, including liquidity risk, market risk, credit risk, operational risk, model risk and climate risk, from our independent risk oversight and control functions, including the chief risk officer, and on compliance risk and conduct risk from Compliance, on legal and regulatory enforcement matters from the chief legal officer, and on other matters impacting our reputation from the chair and vice-chairs of our Firmwide Reputational Risk Committee. The chief risk officer reports to our chief executive officer and to the Risk Committee of the Board. As part of the review of the firmwide risk portfolio, the chief risk officer regularly advises the Risk Committee of the Board of relevant risk metrics and including risk limits and thresholds material exposures, established in our risk appetite statement. The implementation of our risk governance structure and core risk management processes is overseen by Enterprise Risk, which reports risk officer, and is to our chief responsible for ensuring that our enterprise risk management framework provides the Board, our risk committees and senior management with a consistent and integrated approach to managing our various risks in a manner consistent with our risk appetite. as well revenue-producing units, Our as Treasury, Engineering, Human Capital Management, Operations, and Corporate and Workplace Solutions, are considered our first line of defense. They are accountable for the outcomes of our risk-generating activities, as well as for assessing and managing those risks within our risk appetite. Our independent risk oversight and control functions are considered our second line of defense and provide independent assessment, oversight and challenge of the risks taken by our first line of defense, as well as lead and participate in risk committees. Independent risk oversight and control include Compliance, Conflicts Resolution, Controllers, Legal, Risk and Tax. functions Internal Audit is considered our third line of defense, and our director of Internal Audit reports to the Audit Committee of the Board and administratively to our chief executive officer. Internal Audit includes professionals with a broad range of audit and industry experience, including risk management expertise. Internal Audit is responsible for independently assessing and validating the effectiveness of key controls, including those within the risk management framework, and providing timely reporting to the Audit Committee of the Board, senior management and regulators. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis three lines of defense the The accountability of first line risk takers, provides a framework for effective challenge by the second line and empowers independent review from the third line. structure promotes Processes. We maintain various processes that are critical components of our risk management framework, including (i) risk appetite, (iii) risk metrics, reporting and monitoring, and (iv) risk decision-making. risk identification and control assessment, limit and threshold setting, (ii) including firmwide policies • Risk Identification and Control Assessment. We believe the identification of our risks and related control assessment is a critical step in providing our Board and senior management transparency and insight into the range and materiality of our risks. We have a comprehensive data collection process, and procedures that require all employees to report and escalate risk events. Our approach for risk identification and control assessment is comprehensive across all risk types, is dynamic and forward-looking to reflect and adapt to our changing risk profile and business environment, leverages subject matter expertise, and allows for prioritization of our most critical risks. This approach also encompasses our control assessment, led by our second line of defense, to review and challenge the control environment to ensure it supports our strategic business plan. To effectively assess our risks, we maintain a daily discipline of marking substantially all of our inventory to current market levels. We carry our inventory at fair value, with changes in valuation reflected immediately in our risk management systems and in net revenues. We do so because we believe this discipline is one of the most effective tools for assessing and managing risk and that it provides transparent and realistic insight into our inventory exposures. tail our risks, analysis highlight potential An important part of our risk management process is It allows us to quantify our firmwide stress testing. loss to exposure concentrations, undertake risk/reward analysis, and assess and mitigate our risk positions. Firmwide stress tests are performed on a regular basis and are designed to ensure a and of comprehensive idiosyncratic risks combining financial and nonfinancial risks, including, but not limited to, credit, market, liquidity and funding, operational and compliance, strategic, systemic and emerging risks into a single combined scenario. We also perform ad hoc in anticipation of market events or conditions. Stress tests are also used to assess capital adequacy as part of our capital “Capital planning Management and Regulatory Capital — Capital Management” for further information. testing process. vulnerabilities and stress stress tests See • Risk Appetite, Limit and Threshold Setting. We apply a rigorous framework of limits and thresholds to control and monitor risk across transactions, products, businesses and markets. The Board, directly or indirectly through its Risk Committee, approves limits and thresholds included in our risk appetite statement at firmwide, business and product levels. In addition, the Firmwide Risk Appetite Committee, from the through delegated authority Firmwide Enterprise Risk Committee, is responsible for approving our risk limits and thresholds policy, subject to the overall limits approved by the Risk Committee of the Board, and monitoring these limits. The Firmwide Risk Appetite Committee is responsible for approving limits at firmwide, business and product levels. Certain limits may be set at levels that will require periodic adjustment, rather than at levels that reflect our maximum risk appetite. This fosters an ongoing dialogue about risk among our first and second lines of defense, committees and senior management, as well as rapid escalation of risk- related matters. Additionally, through delegated authority from the Firmwide Risk Appetite Committee, Market Risk sets limits at certain product and desk levels, and Credit Risk sets limits for individual counterparties and their subsidiaries, industries and countries. Limits are reviewed regularly and amended on a permanent or temporary basis to reflect changing market conditions, business conditions or risk tolerance. • Risk Metrics, Reporting and Monitoring. Effective risk reporting and risk decision-making depends on our ability to get the right information to the right people at the right time. As such, we focus on the rigor and effectiveness of our risk systems, with the objective of ensuring that our technology systems provide us with risk management complete, accurate and timely information. Our risk metrics, reporting and monitoring processes are designed to take into account information about both existing and emerging risks, thereby enabling our risk committees and senior management to perform their responsibilities with the appropriate level of into risk exposures. Furthermore, our limit and threshold breach processes provide means for timely escalation. We evaluate changes in our risk profile and our businesses, including changes in business mix or jurisdictions in which we operate, by monitoring risk factors at a firmwide level. insight Goldman Sachs 2022 Form 10-K 91 Structure Ultimate oversight of risk is the responsibility of our Board. The Board oversees risk both directly and through its committees, including its Risk Committee. We also have a series of committees with specific risk management mandates that have oversight or decision-making responsibilities for risk management activities. Committee membership generally consists of senior managers from both our first and second lines of defense. We have established procedures for these committees to ensure that appropriate information barriers are in place. Our primary risk committees, most of which also have additional sub-committees, councils or working groups, are described below. In addition to these committees, we have other risk committees that provide oversight for different businesses, activities, products, regions and entities. All of our committees have responsibility for considering the impact on our reputation of the transactions and activities that they oversee. Membership of our risk committees is reviewed regularly and updated to reflect changes in the responsibilities of the committee members. Accordingly, the length of time that members serve on the respective committees varies as determined by the committee chairs and based on the responsibilities of the members. chart below presents an overview of our The management governance structure. risk Corporate Oversight Board of Directors Board Committees Senior Management Oversight Chief Executive Officer President/Chief Operating Officer Chief Financial Officer Director of Internal Audit Committee Oversight Management Committee Chief Risk Officer Firmwide Enterprise Risk Committee Firmwide Asset Liability Committee THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis on governance • Risk Decision-Making. Our risk management structure provides the protocol and responsibility for decision- making ensures implementation of those decisions. We make extensive use of risk committees that meet regularly and serve as an important means and foster ongoing discussions to manage and mitigate risks. to facilitate issues and We maintain strong and proactive communication about risk and we have a culture of collaboration in decision- making among our first and second lines of defense, committees and senior management. While our first line of defense is responsible for management of their risk, we dedicate extensive resources to our second line of defense in order to ensure a strong oversight structure and an appropriate segregation of duties. We regularly reinforce our strong culture of escalation and accountability across all functions. People. Even the best technology serves only as a tool for helping to make informed decisions in real time about the risks we are taking. Ultimately, effective risk management requires our people to interpret our risk data on an ongoing and timely basis and adjust risk positions accordingly. The experience of our professionals, and their understanding of the nuances and limitations of each risk measure, guides us in assessing exposures and maintaining them within prudent levels. We reinforce a culture of effective risk management, in our training and consistent with our risk appetite, development programs, as well as in the way we evaluate performance, and recognize and reward our people. Our training and development programs, including certain sessions led by our most senior leaders, are focused on the importance of risk management, client relationships and reputational excellence. As part of our performance review process, we assess reputational excellence, including how an employee exercises good risk management and reputational judgment, and adheres to our code of conduct and compliance policies. Our review and reward processes are designed to communicate and reinforce to our professionals the link between behavior and how people are recognized, the need to focus on our clients and our reputation, and the need to always act in accordance with our highest standards. 92 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Management Committee. The Management Committee oversees our global activities. It provides this oversight directly and through authority delegated to committees it has established. This committee consists of our most senior leaders, and is chaired by our chief executive officer. Most members of the Management Committee are also members of other committees. The following are the committees that are principally involved in firmwide risk management. initiatives strategic business risk management capabilities. Additionally, Firmwide Enterprise Risk Committee. The Firmwide Enterprise Risk Committee is responsible for overseeing all of our financial and nonfinancial risks. As part of such oversight, the committee is responsible for the ongoing review, approval and monitoring of our enterprise risk management framework, as well as our risk limits and thresholds policy, through delegated authority to the Firmwide Risk Appetite Committee. This committee also to reviews new significant determine whether they are consistent with our risk appetite and the Firmwide Enterprise Risk Committee performs enhanced the top residual and reviews of significant risk events, emerging risks, and the overall risk and control environment in each of our business units in order to propose uplifts, identify elements that are common to all business units and analyze the consolidated residual risks that we face. This committee, which reports to the Management Committee, is co-chaired by our president and chief operating officer and our chief risk officer, who are appointed as chairs by our chief executive officer, and the vice-chair is our chief financial officer, who is appointed as vice-chair by the chairs of the Firmwide Enterprise Risk Committee. The following are the primary committees or councils that report to the Firmwide Enterprise Risk Committee (unless otherwise noted): for • Firmwide Risk Council. The Firmwide Risk Council is responsible relevant financial risks and related risk limits at the firmwide, business and product levels. This council is co-chaired by our chief financial officer and our chief risk officer. the ongoing monitoring of • Firmwide New Activity Committee. The Firmwide New Activity Committee is responsible for reviewing new activities and for establishing a process to identify and review previously approved activities that are significant and that have changed in complexity and/or structure or present different reputational and suitability concerns over remain time appropriate. This committee is co-chaired by our controller and chief accounting officer and our chief operating and strategy officer for Engineering, who are appointed as chairs by the chairs of the Firmwide Enterprise Risk Committee. consider whether activities these to • Firmwide is and Risk Operational Resilience Committee. The Firmwide Operational Risk and Resilience Committee for overseeing responsible operational risk, and for ensuring our business and operational resilience. To assist the Firmwide Operational Risk and Resilience Committee in carrying out its mandate, other for risk committees with dedicated oversight technology-related risks, including cybersecurity matters, report into the Firmwide Operational Risk and Resilience Committee. This committee is co-chaired by our chief administrative officer for EMEA and our head of Operational Risk, who are appointed as chairs by the chairs of the Firmwide Enterprise Risk Committee. • Firmwide Conduct Committee. The Firmwide Conduct Committee is responsible for the ongoing approval and monitoring of the frameworks and policies which govern our conduct risks. Conduct risk is the risk that our people fail to act in a manner consistent with our Business Principles and related core values, policies or codes, or applicable laws or regulations, thereby falling short in fulfilling their responsibilities to us, our clients, colleagues, other market participants or the broader community. This committee is chaired by our chief legal officer, who is appointed as chair by the chairs of the Firmwide Enterprise Risk Committee. • Firmwide Risk Appetite Committee. The Firmwide Risk Appetite Committee (through delegated authority from the Firmwide Enterprise Risk Committee) is responsible for the ongoing approval and monitoring of risk frameworks, policies and parameters related to our core risk management processes, as well as limits and thresholds, at firmwide, business and product levels. In addition, this committee is responsible for overseeing our financial risks and reviews the results of stress tests and scenario analyses. To assist the Firmwide Risk Appetite Committee in carrying out its mandate, a number of other risk committees with dedicated oversight for stress testing, model risks, Volcker Rule compliance, as well as our investments or other capital commitments that may give rise to financial risk, report into the Firmwide Risk Appetite Committee. This committee is chaired by our chief risk officer, who is appointed as chair by the chairs of the Firmwide Enterprise Risk Committee. The Firmwide Capital Committee Firmwide Commitments Committee to the Firmwide Risk Appetite Committee. report and Firmwide Capital Committee. The Firmwide Capital Committee provides approval and oversight of debt-related transactions, including principal commitments of our capital. This committee aims to ensure that business, reputational and suitability standards for underwritings and capital commitments are maintained on a global basis. This committee is co-chaired by our head of Credit Risk and a co-head of our Global Financing Group, who are appointed as chairs by the chair of the Firmwide Risk Appetite Committee. Goldman Sachs 2022 Form 10-K 93 responsibility for asset Firmwide Asset Liability Committee. The Firmwide Asset Liability Committee reviews and approves the strategic direction for our financial resources, including capital, liquidity, funding and balance sheet. This committee has liability management, oversight including interest rate and currency risk, funds transfer pricing, capital allocation and incentives, and credit ratings. This to any liability management and financial adjustments to asset resource allocation in light of risks, exposures, and regulatory requirements and approves related policies. This committee is co-chaired by our chief financial officer and our global treasurer, who are appointed as chairs to the chief by our Management Committee. executive officer, and reports committee makes recommendations current events, as Liquidity Risk Management Overview Liquidity risk is the risk that we will be unable to fund ourselves or meet our liquidity needs in the event of firm- specific, broader industry or market liquidity stress events. We have in place a comprehensive and conservative set of liquidity and funding policies. Our principal objective is to be able to fund ourselves and to enable our core businesses to continue to serve clients and generate revenues, even under adverse circumstances. Treasury, which reports to our chief financial officer, has and primary executing our liquidity and funding strategy within our risk appetite. for developing, managing responsibility independent of our revenue- Liquidity Risk, which is producing units and Treasury, and reports to our chief risk officer, has primary responsibility for identifying, monitoring and managing our liquidity risk through firmwide oversight across our global businesses and the establishment of stress testing and limits frameworks. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Firmwide Commitments Committee. The Firmwide Commitments Committee reviews our underwriting and distribution activities with respect to equity and equity- related product offerings, and sets and maintains policies and procedures designed to ensure that legal, reputational, regulatory and business standards are maintained on a global basis. In addition to reviewing specific transactions, this committee periodically conducts general strategic reviews of sectors and products and establishes policies in connection with transaction practices. This committee is co-chaired by our chief equity underwriting officer for the Americas, co-chairman of our Global Financial Institutions Group and a co-head of our Global Investment Grade Capital Markets and Risk Management Group in Global Banking & Markets, who are appointed as chairs by the chair of the Firmwide Risk Appetite Committee. a • Firmwide committee committee leadership. This Reputational Risk Committee. The Firmwide Reputational Risk Committee is responsible for assessing reputational risks arising from transactions that have been identified as having potential heightened reputational risk pursuant to the criteria established by the Firmwide Reputational Risk Committee and as determined by also responsible for overseeing client-related business standards and addressing client-related reputational risk. This committee is chaired by our president and chief operating officer, who is appointed as chair by our chief executive officer, and the vice-chairs are our chief legal officer and the head of Conflicts Resolution, who are appointed as vice-chairs by the chair of the Firmwide Reputational Risk Committee. This committee periodically provides updates to, and receives guidance from, the Public Responsibilities Committee of the Board. The Firmwide Suitability Committee reports to the Firmwide Reputational Risk Committee. is Firmwide Suitability Committee. The Firmwide Suitability Committee is responsible for setting standards and policies for product, transaction and client suitability and providing a forum for consistency across functions, regions and products on suitability assessments. This committee also reviews suitability matters escalated from other committees. This committee is co-chaired by our chief compliance officer, and the head of Net Zero Transition Solutions in Global Banking & Markets, who are appointed as chairs by the chair of the Firmwide Reputational Risk Committee. 94 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Liquidity Risk Management Principles We manage liquidity risk according to three principles: (i) hold sufficient excess liquidity in the form of GCLA to cover outflows during a stressed period, (ii) maintain appropriate Asset-Liability Management and (iii) maintain a viable Contingency Funding Plan. GCLA. GCLA is liquidity that we maintain to meet a broad range of potential cash outflows and collateral needs in a stressed environment. A primary liquidity principle is to pre- fund our estimated potential cash and collateral needs during a liquidity crisis and hold this liquidity in the form of unencumbered, highly liquid securities and cash. We believe that the securities held in our GCLA would be readily convertible to cash in a matter of days, through liquidation, by entering into repurchase agreements or from maturities of resale agreements, and that this cash would allow us to meet immediate obligations without needing to sell other assets or depend on additional funding from credit-sensitive markets. Our GCLA reflects the following principles: • The first days or weeks of a liquidity crisis are the most critical to a company’s survival; • Focus must be maintained on all potential cash and collateral outflows, not just disruptions to financing flows. Our businesses are diverse, and our liquidity needs are determined by many factors, including market movements, collateral requirements and client commitments, all of which can change dramatically in a difficult funding environment; • During a liquidity crisis, credit-sensitive funding, including unsecured debt, certain deposits and some types of secured financing agreements, may be unavailable, and the terms (e.g., interest rates, collateral provisions and tenor) or availability of other types of secured financing may change and certain deposits may be withdrawn; and • As a result of our policy to pre-fund liquidity that we estimate may be needed in a crisis, we hold more unencumbered securities and have larger funding balances than our businesses would otherwise require. We believe that our liquidity is stronger with greater balances of highly liquid unencumbered securities, even though it increases our total assets and our funding costs. We maintain our GCLA across Group Inc., Goldman Sachs Funding LLC (Funding IHC) and Group Inc.’s major broker- dealer and bank subsidiaries, asset types and clearing agents to provide us with sufficient operating liquidity to ensure timely settlement in all major markets, even in a difficult funding environment. In addition to the GCLA, we maintain cash balances and securities in several of our other entities, entities or primarily jurisdictions where we do not have immediate access to parent company liquidity. in specific currencies, for use liquidity Asset-Liability Management. Our risk management policies are designed to ensure we have a sufficient amount of financing, even when funding markets experience persistent stress. We manage the maturities and diversity of our funding across markets, products and counterparties, and seek to maintain a diversified funding profile with an appropriate tenor, taking into consideration the characteristics and liquidity profile of our assets. Our approach to asset-liability management includes: • Conservatively managing the overall characteristics of our funding book, with a focus on maintaining long-term, diversified sources of funding in excess of our current requirements. See “Balance Sheet and Funding Sources — Funding Sources” for further information; • Actively managing and monitoring our asset base, with particular focus on the liquidity, holding period and ability to fund assets on a secured basis. We assess our funding requirements and our ability to liquidate assets in a stressed environment while appropriately managing risk. This enables us to determine the most appropriate funding products and tenors. See “Balance Sheet and Funding Sources — Balance Sheet Management” for further information about our balance sheet management process and “— Funding Sources — Secured Funding” for further information about asset classes that may be harder to fund on a secured basis; and • Raising secured and unsecured financing that has a long tenor relative to the liquidity profile of our assets. This reduces the risk that our liabilities will come due in advance of our ability to generate liquidity from the sale of our assets. Because we maintain a highly liquid balance sheet, the holding period of certain of our assets may be materially shorter than their contractual maturity dates. Goldman Sachs 2022 Form 10-K 95 invested in GS&Co., Group Inc. has provided substantial amounts of equity and subordinated indebtedness, directly or indirectly, to its regulated subsidiaries. For example, as of December 2022, Group Inc. had $39.33 billion of equity and subordinated its principal U.S. indebtedness registered broker-dealer; $47.74 billion invested in GSI, a regulated U.K. broker-dealer; $2.62 billion invested in GSJCL, a regulated Japanese broker-dealer; $52.55 billion invested in GS Bank USA, a regulated New York State- chartered bank; and $4.25 billion invested in GSIB, a regulated U.K. bank. Group Inc. also provides financing, in the form of: $108.14 billion of directly or indirectly, unsubordinated of $52.93 billion) and $30.16 billion of collateral and cash deposits to these entities as of December 2022. In addition, as of December 2022, Group Inc. had significant amounts of capital regulated subsidiaries. invested in and loans to its other (including secured loans loans Contingency Funding Plan. We maintain a contingency funding plan to provide a framework for analyzing and responding to a liquidity crisis situation or periods of market stress. Our contingency funding plan outlines a list of potential risk factors, key reports and metrics that are reviewed on an ongoing basis to assist in assessing the severity of, and managing through, a liquidity crisis and/or market dislocation. The contingency funding plan also describes in detail our potential responses if our assessments indicate that we have entered a liquidity crisis, which include pre-funding for what we estimate will be our potential cash and collateral needs, as well as utilizing secondary sources of liquidity. Mitigants and action items to address specific risks which may arise are also described and assigned to individuals responsible for execution. coordination, The contingency funding plan identifies key groups of individuals and their responsibilities, which include fostering effective of control information, implementing liquidity maintenance activities and managing internal and external communication, all of which are critical in the management of a crisis or period of market stress. distribution and THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Our goal is to ensure that we maintain sufficient liquidity to fund our assets and meet our contractual and contingent obligations in normal times, as well as during periods of market sheet stress. Through our dynamic balance management process, we use actual and projected asset balances to determine secured and unsecured funding requirements. Funding plans are reviewed and approved by the Firmwide Asset Liability Committee. In addition, our independent risk oversight and control functions analyze, and the Firmwide Asset Liability Committee reviews, our consolidated total capital position (unsecured long-term borrowings plus total shareholders’ equity) so that we maintain a level of long-term funding that is sufficient to meet our long-term financing requirements. In a liquidity crisis, we would first use our GCLA in order to avoid reliance on asset sales (other than our GCLA). However, we recognize that orderly asset sales may be prudent or necessary in a severe or persistent liquidity crisis. financing, Subsidiary Funding Policies The majority of our unsecured funding is raised by Group Inc., which provides the necessary funds to Funding IHC and other subsidiaries, some of which are regulated, to meet their asset In liquidity and capital addition, Group Inc. provides its regulated subsidiaries with the necessary capital to meet their regulatory requirements. The benefits of this approach to subsidiary funding are enhanced control and greater flexibility to meet the funding requirements of our subsidiaries. Funding is also raised at the including subsidiary level through a variety of products, deposits, secured funding and unsecured borrowings. requirements. Our intercompany funding policies assume that a subsidiary’s funds or securities are not freely available to its parent, Funding IHC or other subsidiaries unless (i) legally provided for and (ii) there are no additional regulatory, tax or other restrictions. In particular, many of our subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to Group Inc. or Funding IHC. Regulatory action of that kind could impede access to funds that Group Inc. needs to make payments on its obligations. Accordingly, we assume that the capital provided to our regulated subsidiaries is not available to Group Inc. or other subsidiaries and any other financing provided to our regulated subsidiaries is not available to Group Inc. or Funding IHC until the maturity of such financing. 96 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Stress Tests In order to determine the appropriate size of our GCLA, we model liquidity outflows over a range of scenarios and time horizons. One of our primary internal liquidity risk models, referred to as the Modeled Liquidity Outflow, quantifies our liquidity risks over a 30-day stress scenario. We also consider other factors, including, but not limited to, an assessment of our potential intraday liquidity needs through an additional liquidity risk model, referred to as the Intraday internal Liquidity Model, the results of our long-term stress testing models, our resolution liquidity models and other applicable regulatory requirements and a qualitative assessment of our condition, as well as the financial markets. The results of the Modeled Liquidity Outflow, the Intraday Liquidity Model, the long-term stress testing models and the resolution liquidity models are reported to senior management on a regular basis. We also perform firmwide stress tests. See “Overview and Structure of Risk Management” for information about firmwide stress tests. Modeled Liquidity Outflow. Our Modeled Liquidity Outflow is based on conducting multiple scenarios that include combinations of market-wide and firm-specific stress. These scenarios are characterized by the following qualitative elements: • Severely challenged market environments, which include low consumer and corporate confidence, financial and political instability, and adverse changes in market values, including potential declines in equity markets and widening of credit spreads; and • A firm-specific crisis potentially triggered by material litigation and/or a ratings losses, reputational damage, downgrade. The following are key modeling elements of our Modeled Liquidity Outflow: • Liquidity needs over a 30-day scenario; • A two-notch downgrade of our long-term senior unsecured credit ratings; • Changing conditions in funding markets, which limit our access to unsecured and secured funding; • No support from additional government funding facilities. Although we have access to various central bank funding programs, we do not assume reliance on additional sources of funding in a liquidity crisis; and • A combination of contractual outflows and contingent outflows arising from both our on- and off-balance sheet arrangements. Contractual outflows include, among other term things, upcoming maturities of unsecured debt, deposits and secured funding. Contingent outflows include, among other things, the withdrawal of customer credit balances in our prime brokerage business, increase in variation margin requirements due to adverse changes in the value of our exchange-traded and OTC-cleared derivatives, draws on unfunded commitments and withdrawals of deposits that have no contractual maturity. See notes to the consolidated financial statements for further information about contractual outflows, including Note 11 for collateralized financings, Note 13 for deposits, Note 14 for unsecured long-term borrowings and Note 15 for operating lease payments, and “Off-Balance Sheet Arrangements” for further information about our various types of off-balance sheet arrangements. Intraday Liquidity Model. Our Intraday Liquidity Model measures our intraday liquidity needs using a scenario analysis characterized by the same qualitative elements as our Modeled Liquidity Outflow. The model assesses the risk of increased intraday liquidity requirements during a scenario where access to sources of intraday liquidity may become constrained. Long-Term Stress Testing. We utilize longer-term stress tests to take a forward view on our liquidity position through prolonged stress periods in which we experience a severe liquidity stress and recover in an environment that continues to be challenging. We are focused on ensuring conservative asset-liability management to prepare for a prolonged period of potential stress, seeking to maintain a diversified funding profile with an appropriate tenor, taking into consideration the characteristics and liquidity profile of our assets. In connection with our Resolution Liquidity Models. resolution planning efforts, we have established our Resolution Liquidity Adequacy and Positioning framework, which estimates liquidity needs of our major subsidiaries in a stressed environment. The liquidity needs are measured using our Modeled Liquidity Outflow assumptions and include certain additional inter-affiliate exposures. We have also established our Resolution Liquidity Execution Need framework, which measures the liquidity needs of our major subsidiaries to stabilize and wind down following a Group Inc. bankruptcy filing in accordance with our preferred resolution strategy. In addition, we have established a triggers and alerts framework, which is designed to provide the Board with information needed to make an informed decision on whether and when to commence bankruptcy proceedings for Group Inc. Goldman Sachs 2022 Form 10-K 97 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Limits We use liquidity risk limits at various levels and across liquidity risk types to manage the size of our liquidity exposures. Limits are measured relative to acceptable levels of risk given our liquidity risk tolerance. See “Overview and Structure of Risk Management” for information about the limit approval process. Limits are monitored by Treasury and Liquidity Risk. Liquidity Risk is responsible for identifying and escalating to senior management and/or the appropriate risk committee, on a timely basis, instances where limits have been exceeded. GCLA and Unencumbered Metrics GCLA. Based on the results of our internal liquidity risk models, described above, as well as our consideration of other factors, including, but not limited to, a qualitative assessment of our condition, as well as the financial markets, we believe our liquidity position as of both December 2022 and December 2021 was appropriate. We strictly limit our GCLA to a narrowly defined list of securities and cash because they are highly liquid, even in a difficult funding environment. We do not include other potential sources of excess liquid less unencumbered securities or committed credit facilities. liquidity in our GCLA, such as The table below presents information about our GCLA. Average for the Three Months Ended December 2022 2021 Year Ended December 2022 2021 $312,414 $ 230,720 122,401 $408,818 $ 353,121 96,404 $281,427 $ 217,797 116,723 $398,082 $ 334,520 116,655 $217,141 $ 188,223 107,898 13,154 43,846 $408,818 $ 353,121 149,519 12,789 29,369 $228,203 $ 173,000 108,260 10,183 43,077 $398,082 $ 334,520 126,349 11,007 32,523 $ 69,386 $ 54,489 107,279 191,353 $408,818 $ 353,121 109,502 229,930 $ 64,579 $ 53,205 104,326 176,989 $398,082 $ 334,520 113,887 219,616 $ in millions Denomination U.S. dollar Non-U.S. dollar Total Asset Class Overnight cash deposits U.S. government obligations U.S. agency obligations Non-U.S. government obligations Total Entity Type Group Inc. and Funding IHC Major broker-dealer subsidiaries Major bank subsidiaries Total In the table above: • The U.S. dollar-denominated GCLA consists of (i) unencumbered U.S. government and agency obligations (including highly liquid U.S. agency mortgage-backed obligations), all of which are eligible as collateral in Federal Reserve open market operations and (ii) certain overnight U.S. dollar cash deposits. • The non-U.S. dollar-denominated GCLA consists of non- U.S. government obligations (only unencumbered German, French, Japanese and U.K. government obligations) and certain overnight cash deposits in highly liquid currencies. 98 Goldman Sachs 2022 Form 10-K We maintain our GCLA to enable us to meet current and potential liquidity requirements of our parent company, Group Inc., and its subsidiaries. Our Modeled Liquidity Outflow and Intraday Liquidity Model incorporate a for Group Inc., as well as a standalone requirement requirement for each of our major broker-dealer and bank subsidiaries. Funding IHC is required to provide the necessary liquidity to Group Inc. during the ordinary course of business, and is also obligated to provide capital and liquidity support to major subsidiaries in the event of our material financial distress or failure. Liquidity held directly in each of our major broker-dealer and bank subsidiaries is intended for use only by that subsidiary to meet its liquidity requirements and is assumed not to be available to Group Inc. or Funding IHC unless (i) legally provided for and (ii) there are no additional regulatory, tax or other restrictions. In addition, the Modeled Liquidity Outflow and Intraday Liquidity Model also incorporate a broader assessment of standalone liquidity requirements for other subsidiaries and we hold a portion of our GCLA directly at Group Inc. or Funding IHC to support such requirements. instruments, Other Unencumbered Assets. In addition to our GCLA, we have a significant amount of other unencumbered cash and financial including other government obligations, high-grade money market securities, corporate obligations, marginable equities, loans and cash deposits not included in our GCLA. The fair value of our unencumbered assets averaged $273.49 billion for the three months ended December 2022, $271.65 billion for the three months ended December 2021, $275.69 billion for the year ended December 2022 and $249.32 billion for the year ended December 2021. We do not consider these assets liquid enough to be eligible for our GCLA. regulatory agencies. The LCR rule Liquidity Regulatory Framework As a BHC, we are subject to a minimum Liquidity Coverage Ratio (LCR) under the LCR rule approved by the U.S. federal requires bank organizations to maintain an adequate ratio of eligible high- quality liquid assets (HQLA) to expected net cash outflows under an acute, short-term liquidity stress scenario. Eligible HQLA excludes HQLA held by subsidiaries that is in excess of their minimum requirement and is subject to transfer restrictions. We are required to maintain a minimum LCR of 100%. We expect that fluctuations in client activity, business mix and the market environment will impact our LCR. The table below presents information about our average daily LCR. $ in millions Total HQLA Eligible HQLA Net cash outflows LCR Average for the Three Months Ended December 2022 $ 401,836 $ 291,118 $ 226,532 September 2022 $ 407,969 $ 279,121 $ 224,408 December 2021 $ 342,047 $ 248,570 $ 203,623 129% 124% 122% THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis As a BHC, we are subject to a net stable funding ratio (NSFR) requirement established by the U.S. federal bank regulatory agencies, which requires large U.S. banking organizations to ensure they have access to stable funding time horizon. The rule also requires over a one-year disclosure of our quarterly average daily NSFR on a semi- annual basis and a description of the banking organization’s stable funding sources. We will begin doing so in August 2023. Our NSFR as of December 2022 exceeded the minimum requirement. Credit Ratings We rely on the short- and long-term debt capital markets to fund a significant portion of our day-to-day operations and the cost and availability of debt financing is influenced by our credit ratings. Credit ratings are also important when we are competing in certain markets, such as OTC derivatives, and when we seek to engage in longer-term transactions. See “Risk Factors” in Part I, Item 1A of this Form 10-K for information about the risks associated with a reduction in our credit ratings. The following provides information about our subsidiary liquidity regulatory requirements: The table below presents the unsecured credit ratings and outlook of Group Inc. • GS Bank USA. GS Bank USA is subject to a minimum LCR of 100% under the LCR rule approved by the U.S. federal bank regulatory agencies. As of December 2022, GS Bank USA’s LCR exceeded the minimum requirement. The NSFR requirement described above also applies to GS Bank USA. As of December 2022, GS Bank USA’s NSFR exceeded the minimum requirement. • GSI and GSIB. GSI and GSIB are subject to a minimum LCR of 100% under the LCR rule approved by the U.K. regulatory authorities. GSI’s and GSIB’s average monthly LCR for the trailing twelve-month period ended December 2022 exceeded the minimum requirement. GSI and GSIB are subject to the applicable NSFR requirement in the U.K. As of December 2022, both GSI’s and GSIB’s NSFR exceeded the minimum requirement. • GSBE. GSBE is subject to a minimum LCR of 100% under the LCR rule approved by the European Parliament and Council. GSBE’s average monthly LCR for the trailing twelve-month period ended December 2022 exceeded the minimum requirement. GSBE is subject to the applicable NSFR requirement in the E.U. As of December 2022, GSBE’s NSFR exceeded the minimum requirement. Short-term debt Long-term debt Subordinated debt Trust preferred Preferred stock Ratings outlook DBRS R-1 (middle) A (high) A A BBB (high) Stable In the table above: As of December 2022 Fitch Moody’s P-1 A2 Baa2 Baa3 Ba1 R&I a-1 A A- N/A N/A Stable Stable F1 A BBB+ BBB- BBB- Stable S&P A-2 BBB+ BBB BB+ BB+ Stable • The ratings and outlook are by DBRS, Inc. (DBRS), Fitch, Inc. (Fitch), Moody’s Investors Service (Moody’s), Rating and Investment Information, Inc. (R&I), and Standard & Poor’s Ratings Services (S&P). • The ratings for trust preferred relate to the guaranteed interests issued by Goldman Sachs preferred beneficial Capital I. • The DBRS, Fitch, Moody’s and S&P ratings for preferred stock include the APEX issued by Goldman Sachs Capital II and Goldman Sachs Capital III. • Other Subsidiaries. We monitor local subsidiaries regulatory to ensure liquidity requirements of our compliance. For many of our these requirements either have changed or are likely to change in the future due to the implementation of the Basel Committee’s framework for liquidity risk measurement, standards and monitoring, as well as other regulatory developments. subsidiaries, The implementation of these rules and any amendments adopted by the regulatory authorities could impact our liquidity and funding requirements and practices in the future. Goldman Sachs 2022 Form 10-K 99 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents the unsecured credit ratings and outlook of GS Bank USA, GSIB, GSBE, GS&Co. and GSI. GS Bank USA Short-term debt Long-term debt Short-term bank deposits Long-term bank deposits Ratings outlook GSIB Short-term debt Long-term debt Short-term bank deposits Long-term bank deposits Ratings outlook GSBE Short-term debt Long-term debt Short-term bank deposits Long-term bank deposits Ratings outlook GS&Co. Short-term debt Long-term debt Ratings outlook GSI Short-term debt Long-term debt Ratings outlook As of December 2022 Fitch Moody’s S&P F1 A+ F1+ AA- Stable F1 A+ F1 A+ Stable F1 A+ N/A N/A Stable F1 A+ Stable F1 A+ Stable P-1 A1 P-1 A1 Stable P-1 A1 P-1 A1 Stable P-1 A1 P-1 A1 Stable N/A N/A N/A P-1 A1 Stable A-1 A+ N/A N/A Stable A-1 A+ N/A N/A Stable A-1 A+ N/A N/A Stable A-1 A+ Stable A-1 A+ Stable We believe our credit ratings are primarily based on the credit rating agencies’ assessment of: • Our liquidity, market, credit and operational risk management practices; • Our level and variability of earnings; • Our capital base; • Our franchise, reputation and management; • Our corporate governance; and • The external operating and economic environment, including, in some cases, the assumed level of government support or other systemic considerations, such as potential resolution. Certain of our derivatives have been transacted under bilateral agreements with counterparties who may require us to post collateral or terminate the transactions based on changes in our credit ratings. We manage our GCLA to ensure we would, among other potential requirements, be termination able to make the additional collateral or payments that may be required in the event of a two-notch reduction in our long-term credit ratings, as well as collateral that has not been called by counterparties, but is available to them. features and the See Note 7 to the consolidated financial statements for further information about derivatives with credit-related contingent collateral or termination payments related to our net derivative liabilities under bilateral agreements that could have been called by counterparties in the event of a one- or two-notch downgrade in our credit ratings. 100 Goldman Sachs 2022 Form 10-K additional Cash Flows As a global financial institution, our cash flows are complex and bear little relation to our net earnings and net assets. Consequently, we believe that traditional cash flow analysis is less meaningful in evaluating our liquidity position than the liquidity and asset-liability management policies described above. Cash flow analysis may, however, be helpful in highlighting certain macro trends and strategic initiatives in our businesses. of purchases from net investments Year Ended December 2022. Our cash and cash equivalents decreased by $19.21 billion to $241.83 billion at the end of 2022, primarily due to net cash used for investing activities, partially offset by net cash provided by financing activities. The net cash used for investing activities primarily reflected (primarily U.S. government obligations accounted for as held-to-maturity) and an increase in net lending activities (reflecting increases in other collateralized and consumer loans). The net cash provided by financing activities primarily reflected cash inflows issuances of unsecured long-term borrowings and deposits (reflecting increases in transaction banking and private bank and consumer deposits, partially offset by a decrease in other deposits). The net cash provided by operating activities primarily reflected cash inflows from trading assets and liabilities, customer and other receivables and payables, net (reflecting both a decrease in customer and other receivables and an increase in customer and other payables), net earnings and loans held for sale, net, partially offset by cash outflows from collateralized transactions (reflecting both a decrease in collateralized financings and an increase in collateralized agreements). The decrease in cash and cash equivalents as a result of changes in foreign exchange rates was due to the U.S. dollar strengthening during the year. Such amount was $11.56 billion for 2022 ($3.42 billion for the three months ended March 2022, $10.34 billion for the six months ended June 2022 and $18.17 billion for the nine months ended September 2022). Year Ended December 2021. Our cash and cash equivalents increased by $105.19 billion to $261.04 billion at the end of 2021, primarily due to net cash provided by financing activities, partially offset by net cash used for investing activities. The net cash provided by financing activities primarily reflected an increase in net deposits (reflecting increases across channels) and net issuances of unsecured long-term borrowings. The net cash used for investing of investments and an increase in net lending activities, partially offset by sales and paydowns of investments. purchases primarily activities reflected For an analysis of cash flows for the year ended December 2020, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Market Risk Management Overview Market risk is the risk of an adverse impact to our earnings due to changes in market conditions. Our assets and liabilities that give rise to market risk primarily include positions held for market making for our clients and for our investing and financing activities, and these positions change based on client demands and our investment opportunities. We employ a variety of risk measures, each described in the respective sections below, to monitor market risk. Categories of market risk include the following: • Interest rate risk: results from exposures to changes in the level, slope and curvature of yield curves, the volatilities of interest rates, prepayment speeds and credit spreads; • Equity price risk: results from exposures to changes in prices and volatilities of individual equities, baskets of equities and equity indices; • Currency rate risk: results from exposures to changes in spot prices, forward prices and volatilities of currency rates; and • Commodity price risk: results from exposures to changes in spot prices, forward prices and volatilities of commodities, such as crude oil, petroleum products, natural gas, electricity, and precious and base metals. Market Risk, which is independent of our revenue-producing units and reports to our chief risk officer, has primary responsibility for assessing, monitoring and managing our market risk through firmwide oversight across our global businesses. Managers in revenue-producing units, Treasury and Market Risk discuss market information, positions and estimated loss scenarios on an ongoing basis. Managers in revenue- producing units and Treasury are accountable for managing risk within prescribed limits. These managers have in-depth knowledge of their positions, markets and the instruments available to hedge their exposures. Market Risk Management Process Our process for managing market risk includes the critical components of our risk management framework described in the “Overview and Structure of Risk Management,” as well as the following: • Monitoring compliance with established market risk limits and reporting our exposures; • Diversifying exposures; • Controlling position sizes; and • Evaluating mitigants, such as economic hedges in related securities or derivatives. Our market risk management systems enable us to perform an independent calculation of Value-at-Risk (VaR), Earnings- at-Risk (EaR) and other stress measures, capture risk measures at individual position levels, attribute risk measures to individual risk factors of each position, report many different views of the risk measures (e.g., by desk, business, product type or entity) and produce ad hoc analyses in a timely manner. Risk Measures them against We produce risk measures and monitor established market risk limits. These measures reflect an extensive range of scenarios and the results are aggregated at product, business and firmwide levels. We use a variety of risk measures to estimate the size of potential losses for both moderate and more extreme market moves over both short- and long-term time horizons. Our primary risk measures are VaR, EaR and other stress tests. Our risk reports detail key risks, drivers and changes for each desk and business, and are distributed daily to senior management of both our revenue-producing units and our independent risk oversight and control functions. Value-at-Risk. VaR is the potential loss in value due to adverse market movements over a defined time horizon with a specified confidence level. For assets and liabilities included in VaR, see “Financial Statement Linkages to Market Risk Measures.” We typically employ a one-day time horizon with a 95% confidence level. We use a single VaR model, which captures risks, including interest rates, equity prices, currency such, VaR facilitates rates and commodity prices. As comparison across portfolios of different risk characteristics. VaR also captures the diversification of aggregated risk at the firmwide level. Goldman Sachs 2022 Form 10-K 101 Earnings-at-Risk. Beginning in the fourth quarter of 2022, we started managing our interest rate risk using the EaR metric. EaR measures the estimated impact of changes in interest rates to our net revenues and preferred stock dividends over a defined time horizon. EaR complements the VaR metric, which measures the impact of interest rate changes that have an immediate impact on the fair values of our assets and liabilities (i.e., mark-to-market changes). Our exposure to interest rate risk occurs due to a variety of factors, including, but not limited to: • Differences in maturity or repricing dates of assets, liabilities, preferred stock and certain off-balance sheet instruments. • Differences in the amounts of assets, liabilities, preferred stock and certain off-balance sheet instruments with the same maturity or repricing dates. • Certain interest rate sensitive fees. Treasury manages the aggregated interest rate risk from all businesses through our investment securities portfolio and interest rate derivatives. We measure EaR over a one-year time horizon following a 100-basis point instantaneous parallel shock in both short- and long-term interest rates. This sensitivity is calculated relative to a baseline market scenario, which takes into consideration, among other things, the market’s expectation of forward rates, as well as our expectation of future business activity. This scenario includes contractual elements of assets, liabilities, preferred stock, and certain off-balance sheet instruments, such as rates of interest, principal repayment schedules, maturity and reset dates, and any interest rate ceilings or floors, as well as assumptions with respect to our balance sheet size and composition, deposit repricing and prepayment behavior. We to reduce potential volatility manage EaR with a goal resulting from changes in interest rates so it remains within our EaR risk appetite. Our EaR scenario is regularly evaluated and updated, if necessary, to reflect changes in our business plans, market conditions and other macroeconomic information factors. While management uses available to estimate EaR, actual results may differ materially as a result of, among other things, changes in the economic environment or assumptions used in the process. the best Risk, which is independent of our revenue-producing units, and Treasury, have primary responsibility for assessing and monitoring EaR through firmwide oversight, including oversight of EaR stress testing and assumptions, and the establishment of our EaR risk appetite. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis limitations to VaR and We are aware of therefore use a variety of risk measures in our market risk management process. Inherent limitations to VaR include: the inherent • VaR does not estimate potential losses over longer time horizons where moves may be extreme; • VaR does not take account of the relative liquidity of different risk positions; and • Previous moves in market risk factors may not produce accurate predictions of all future market moves. To comprehensively capture our exposures and relevant risks in our VaR calculation, we use historical simulations with full valuation of market factors at the position level by simultaneously shocking the relevant market factors for that position. These market factors include spot prices, credit spreads, funding spreads, yield curves, volatility and correlation, and are updated periodically based on changes in the composition of positions, as well as variations in market conditions. We sample from five years of historical data to generate the scenarios for our VaR calculation. The historical data is weighted so that the relative importance of the data reduces over time. This gives greater importance to more recent observations and reflects current asset volatilities, which improves the accuracy of our estimates of potential loss. As a result, even if our positions included in VaR were unchanged, our VaR would increase with increasing market volatility and vice versa. Given its reliance on historical data, VaR is most effective in estimating risk exposures in markets in which there are no sudden fundamental changes or shifts in market conditions. Our VaR measure does not include: • Positions that are not accounted for at fair value, such as held-to-maturity and unsecured borrowings that are accounted for at amortized cost; and loans, deposits securities • Available-for-sale related unrealized fair value gains and losses are included in accumulated other comprehensive income/(loss); for which securities the • Positions that are best measured and monitored using sensitivity measures; and • The impact of changes in counterparty and our own credit spreads on derivatives, as well as changes in our own credit spreads on financial liabilities for which the fair value option was elected. We perform daily backtesting of our VaR model (i.e., comparing daily net revenues for positions included in VaR to the VaR measure calculated as of the prior business day) at the firmwide level and for each of our businesses and major regulated subsidiaries. 102 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Stress Testing. Stress testing is a method of determining the effect of various hypothetical stress scenarios. In addition to EaR, we use other stress tests to examine risks of specific portfolios, as well as the potential impact of our significant risk exposures. We use a variety of stress testing techniques to calculate the potential loss from a wide range of market moves on our portfolios, including firmwide stress tests, sensitivity analysis and scenario analysis. The results of our risk various management purposes. See “Overview and Structure of Risk Management” for information about firmwide stress tests. analyzed together stress tests are for Sensitivity analysis is used to quantify the impact of a market move in a single risk factor across all positions (e.g., equity prices or credit spreads) using a variety of defined market shocks, ranging from those that could be expected over a one-day time horizon up to those that could take many months to occur. We also use sensitivity analysis to quantify the impact of the default of any single entity, which captures the risk of large or concentrated exposures. Scenario analysis is used to quantify the impact of a specified event, including how the event impacts multiple risk factors simultaneously. For example, for sovereign stress testing we calculate potential direct exposure associated with our sovereign positions, as well as the corresponding debt, equity and currency exposures associated with our non-sovereign positions that may be impacted by the sovereign distress. When conducting scenario analysis, we often consider a number of possible outcomes for each scenario, ranging from moderate to severely adverse market impacts. In addition, these stress tests are constructed using both historical events and forward-looking hypothetical scenarios. Unlike VaR measures, which have an implied probability because they are calculated at a specified confidence level, there may not be an implied probability that our stress testing scenarios will occur. Instead, stress testing is used to model both moderate and more extreme moves in underlying market factors. When estimating potential loss, we generally assume that our positions cannot be reduced or hedged (although experience demonstrates that we are generally able to do so). Limits We use market risk limits at various levels to manage the size of our market exposures. These limits are set based on VaR, EaR and on a range of stress tests relevant to our exposures. See “Overview and Structure of Risk Management” for information about the limit approval process. Limits are monitored by Treasury and Risk. Risk is to senior responsible management and/or the appropriate risk committee, on a timely basis, instances where limits have been exceeded (e.g., due to positional changes or changes in market conditions, such as increased volatilities or changes in correlations). Such instances are remediated by a reduction in the positions we hold and/or a temporary or permanent increase to the limit, if warranted. and escalating identifying for Metrics We analyze VaR at the firmwide level and a variety of more detailed levels, including by risk category, business and region. Diversification effect in the tables below represents the difference between total VaR and the sum of the VaRs for the four risk categories. This effect arises because the four market risk categories are not perfectly correlated. The table below presents our average daily VaR. $ in millions Categories Interest rates Equity prices Currency rates Commodity prices Diversification effect Total Year Ended December 2022 2021 $ $ 97 $ 33 32 47 (95) 114 $ 60 43 13 25 (55) 86 Our average daily VaR increased to $114 million in 2022 from $86 million in 2021, due to higher levels of volatility, partially offset by reduced exposures. The total increase was driven by increases in the interest rates, commodity prices and currency rates categories, partially offset by an increase in the diversification effect and a decrease in the equity prices category. The table below presents our period-end VaR. $ in millions Categories Interest rates Equity prices Currency rates Commodity prices Diversification effect Total As of December 2022 2021 $ $ 108 $ 27 35 18 (85) 103 $ 69 31 19 30 (58) 91 Our period-end VaR increased to $103 million as of December 2022 from $91 million as of December 2021, due to higher levels of volatility, partially offset by reduced increase was primarily driven by exposures. The total increases in the interest rates and currency rates categories, partially offset by an increase in the diversification effect and a decrease in the commodity prices category. During 2022, the firmwide VaR risk limit was exceeded on six occasions (all of which occurred during March 2022) primarily due to higher levels of volatility generally resulting from broad macroeconomic and geopolitical concerns. These limit breaches were resolved by temporary increases in the firmwide VaR risk limit and subsequent risk reductions. During this period, the firmwide VaR risk limit was also permanently increased due to higher levels of volatility. During 2021, the firmwide VaR risk limit was not exceeded and there were no permanent or temporary changes to the firmwide VaR risk limit. Goldman Sachs 2022 Form 10-K 103 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents our high and low VaR. $ in millions Categories Interest rates Equity prices Currency rates Commodity prices Firmwide VaR Year Ended December 2022 2021 High Low High Low $ $ $ $ 139 $ 48 $ 55 $ 82 $ 57 25 16 18 $ $ $ $ 74 $ 71 $ 20 $ 45 $ 49 30 8 14 $ 158 $ 76 $ 105 $ 69 The chart below presents our daily VaR for 2022. 210 180 150 120 90 60 30 0 R a V y l i a D ) s n o i l l i m n i ( During periods in which we have significantly more positive net revenue days than net revenue loss days, we expect to have fewer VaR exceptions because, under normal conditions, our business model generally produces positive net revenues. In periods in which our franchise revenues are adversely affected, we generally have more loss days, resulting in more VaR exceptions. The daily net revenues for positions included in VaR used to determine VaR exceptions reflect the impact of any intraday activity, including bid/offer net revenues, which are more likely than not to be positive by their nature. Sensitivity Measures Certain portfolios and individual positions are not included in VaR because VaR is not the most appropriate risk measure. Other sensitivity measures we use to analyze market risk are described below. 10% Sensitivity Measures. The table below presents our market risk by asset category for positions accounted for at fair value, that are not included in VaR. $ in millions Equity Debt Total As of December 2022 1,621 $ 1,986 3,607 $ 2021 1,953 2,244 4,197 $ $ First Quarter 2022 Second Quarter 2022 Third Quarter 2022 Fourth Quarter 2022 In the table above: The table below presents, by number of business days, the frequency distribution of our daily net revenues for positions included in VaR. • The market risk of these positions is determined by estimating the potential reduction in net revenues of a 10% decline in the value of these positions. $ in millions >$100 $75 – $100 $50 – $75 $25 – $50 $0 – $25 $(25) – $0 $(50) – $(25) $(75) – $(50) $(100) – $(75) <$(100) Total Year Ended December 2022 92 25 29 33 36 17 13 1 3 2 251 2021 53 45 42 33 45 24 6 2 1 1 252 Daily net revenues for positions included in VaR are compared with VaR calculated as of the end of the prior business day. Net losses incurred on a single day for such positions exceeded our 95% one-day VaR (i.e., a VaR exception) on two occasions during 2022 and on one occasion during 2021. • Equity positions relate to private and restricted public equity securities, including interests in funds that invest in corporate equities and real estate and interests in hedge funds. • Debt positions include interests in funds that invest in corporate mezzanine and senior debt instruments, loans backed by commercial and residential real estate, corporate bank loans and other corporate debt, including acquired portfolios of distressed loans. • Funded equity and debt positions are included in our consolidated balance sheets in investments and loans. See Note 8 to the consolidated financial statements for further information about investments and Note 9 to the consolidated financial statements for further information about loans. • These measures do not reflect the diversification effect risk across asset categories or across other market measures. 104 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Credit and Funding Spread Sensitivity on Derivatives and Financial Liabilities. VaR excludes the impact of changes in counterparty credit spreads, our own credit spreads and unsecured funding spreads on derivatives, as well as changes in our own credit spreads (debt valuation adjustment) on financial liabilities for which the fair value option was elected. The estimated sensitivity to a one basis point increase in credit spreads (counterparty and our own) and unsecured funding spreads on derivatives (including hedges) was a loss of $1 million as of both December 2022 and December 2021. In addition, the estimated sensitivity to a one basis point increase in our own credit spreads on financial liabilities for which the fair value option was elected was a gain of $37 million as of December 2022 and $33 million as of December 2021. However, the actual net impact of a change in our own credit spreads is also affected by the liquidity, duration and convexity (as the sensitivity is not linear to changes in yields) of those financial liabilities for which the fair value option was elected, as well as the relative performance of any hedges undertaken. Earnings-at-Risk. The table below presents the impact of a parallel shift in rates on our net revenues and preferred stock dividends over the next 12 months relative to the baseline scenario. $ in millions +100 basis points parallel shift in rates -100 basis points parallel shift in rates $ $ In the table above: As of December 2022 104 $ (104) 2021 782 N.M. • The EaR metric utilized various assumptions, including, among other things, balance sheet size and composition, deposit repricing and prepayment behavior, all of which have inherent uncertainties. The EaR metric does not represent a forecast of our net revenues and preferred stock dividends. • The change in our sensitivities as of December 2022 compared to December 2021 primarily reflects the impact of changes in our investment securities portfolio and interest rate derivatives. • The -100 basis points parallel shift in rates scenario was not meaningful as of December 2021 given the low interest rate environment. Other Market Risk Considerations We make investments in securities that are accounted for as available-for-sale, held-to-maturity or under the equity method which are included in investments in the consolidated balance sheets. See Note 8 to the consolidated financial statements for further information. Direct investments in real estate are accounted for at cost less accumulated depreciation. See Note 12 to the consolidated financial statements for further information about other assets. Linkages to Market Risk Financial Statement Measures We employ a variety of risk measures, each described in the respective sections above, to monitor market risk across the consolidated balance sheets and consolidated statements of earnings. The related gains and losses on these positions are included in market making, other principal transactions, interest income and interest expense in the consolidated statements of earnings, and debt valuation adjustment and unrealized gains/(losses) on available-for-sale securities in the consolidated statements of comprehensive income. The table below presents certain assets and liabilities accounted for at fair value in our consolidated balance sheets and the market risk measures used to assess those assets and liabilities. Assets or Liabilities Market Risk Measures Collateralized agreements and financings VaR Customer and other receivables 10% Sensitivity Measures Trading assets and liabilities Investments Loans VaR Credit Spread Sensitivity VaR 10% Sensitivity Measures VaR 10% Sensitivity Measures Other assets and liabilities VaR Deposits Unsecured borrowings VaR Credit Spread Sensitivity VaR Credit Spread Sensitivity In addition to the above, we measure the interest rate risk for all positions within our consolidated balance sheets using the EaR metric. Goldman Sachs 2022 Form 10-K 105 its financial to meet obligations. We also perform credit analyses, which incorporate initial and ongoing evaluations of the capacity and willingness of a counterparty For substantially all of our credit exposures, the core of our process is an annual counterparty credit evaluation or more frequently if deemed necessary as a result of events or changes in circumstances. We determine an internal credit rating for the counterparty by considering the results of the credit evaluations and assumptions with respect to the nature of and outlook for the counterparty’s industry and the economic environment. The internal credit rating does not take into consideration collateral received or other credit support arrangements. Senior personnel, with expertise in specific industries, inspect and approve credit reviews and internal credit ratings. Our risk assessment process may also include, where applicable, reviewing certain key metrics, including, but not limited to, delinquency status, collateral value, FICO credit scores and other risk factors. Our credit risk management systems capture credit exposure to individual counterparties and on an aggregate basis to counterparties and their subsidiaries. These systems also provide management with comprehensive information about our aggregate credit risk by product, internal credit rating, industry, country and region. current exposure represents Risk Measures We measure our credit risk based on the potential loss in the event of non-payment by a counterparty using current and potential exposure. For derivatives and securities financing transactions, the amount presently owed to us after taking into account applicable netting and collateral arrangements, while potential exposure represents our estimate of the future exposure that could arise over the life of a transaction based on market movements within a specified confidence level. Potential exposure also takes into account netting and collateral arrangements. For loans and lending commitments, the primary measure is a function of the notional amount of the position. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Credit Risk Management Overview Credit risk represents the potential for loss due to the default or deterioration in credit quality of a counterparty (e.g., an OTC derivatives counterparty or a borrower) or an issuer of securities or other instruments we hold. Our exposure to credit risk comes mostly from client transactions in OTC derivatives and loans and lending commitments. Credit risk also comes from cash placed with banks, securities financing transactions (i.e., resale and repurchase agreements and securities borrowing and lending activities) and customer and other receivables. Credit Risk, which is independent of our revenue-producing units and reports to our chief risk officer, has primary responsibility for assessing, monitoring and managing our credit risk through firmwide oversight across our global businesses. In addition, we hold other positions that give rise to credit risk (e.g., bonds and secondary bank loans). These credit risks are captured as a component of market risk measures, which are monitored and managed by Market Risk. We also enter into derivatives to manage market risk exposures. Such derivatives also give rise to credit risk, which is monitored and managed by Credit Risk. Credit Risk Management Process Our process for managing credit risk includes the critical components of our risk management framework described in the “Overview and Structure of Risk Management,” as well as the following: • Monitoring compliance with established credit risk limits credit credit exposures and our and reporting concentrations; • Establishing or approving underwriting standards; • Assessing the likelihood that a counterparty will default on its payment obligations; • Measuring our current and potential credit exposure and losses resulting from a counterparty default; • Using credit hedging; and risk mitigants, including collateral and • Maximizing recovery restructuring of claims. through active workout and 106 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis including shocks Stress Tests We conduct regular stress tests to calculate the credit exposures, including potential concentrations that would result from applying shocks to counterparty credit ratings or credit risk factors (e.g., currency rates, interest rates, equity prices). These shocks cover a wide range of moderate and more extreme market movements, to multiple risk factors, consistent with the occurrence of a severe market or economic event. In the case of sovereign default, we estimate the direct impact of the default on our sovereign credit exposures, changes to our credit exposures arising from potential market moves in response to the default, and the impact of credit market deterioration on corporate borrowers and counterparties that may result from the sovereign default. Unlike potential exposure, which is calculated within a specified confidence level, stress testing does not generally assume a probability of these events tests. See occurring. We also perform firmwide stress “Overview and Structure of Risk Management” for information about firmwide stress tests. To supplement these regular stress tests, as described above, we also conduct tailored stress tests on an ad hoc basis in response to specific market events that we deem significant. We also utilize these stress tests to estimate the indirect impact of certain hypothetical events on our country exposures, such as the impact of credit market deterioration on corporate borrowers and counterparties along with the shocks to the risk factors described above. The parameters of these shocks vary based on the scenario reflected in each stress test. We review estimated losses produced by the stress tests in order to understand their magnitude, highlight potential loss concentrations, and assess and mitigate our exposures where necessary. Limits We use credit risk limits at various levels, as well as underwriting standards to manage the size and nature of our credit exposures. Limits for industries and countries are based on our risk appetite and are designed to allow for regular monitoring, review, escalation and management of credit risk concentrations. See “Overview and Structure of Risk Management” for information about the limit approval process. Credit Risk is responsible for monitoring these limits, and identifying and escalating to senior management and/or the appropriate risk committee, on a timely basis, instances where limits have been exceeded. Risk Mitigants To reduce our credit exposures on derivatives and securities financing transactions, we may enter into netting agreements with counterparties that permit us to offset receivables and payables with such counterparties. We may also reduce credit risk with counterparties by entering into agreements that enable us to obtain collateral from them on an upfront or the contingent basis and/or to terminate transactions if counterparty’s credit rating falls below a specified level. We monitor the fair value of the collateral to ensure that our credit exposures are appropriately collateralized. We seek to minimize exposures where there is a significant positive correlation our counterparties and the market value of collateral we receive. creditworthiness between the of For loans and lending commitments, depending on the credit quality of the borrower and other characteristics of the transaction, we employ a variety of potential risk mitigants. Risk mitigants include collateral provisions, guarantees, covenants, structural seniority of the bank loan claims and, for certain lending commitments, provisions in the legal documentation that allow us to adjust loan amounts, pricing, structure and other terms as market conditions change. The employed can type significantly influence the degree of credit risk involved in a loan or lending commitment. and structure of risk mitigants visibility sufficient When we do not have into a counterparty’s financial strength or when we believe a counterparty requires support from its parent, we may obtain third-party guarantees of the counterparty’s obligations. We may also mitigate our credit risk using credit derivatives or participation agreements. Goldman Sachs 2022 Form 10-K 107 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Credit Exposures As of December 2022, our aggregate credit exposure decreased compared with December 2021, primarily reflecting decreases in receivables from clearing organizations and cash deposits with central banks, partially offset by an increase in loans and lending commitments. The percentage of our credit exposures arising from non-investment-grade counterparties (based on our internally determined public equivalents) decreased compared with rating December 2021, primarily reflecting a decrease in non- investment-grade loans and lending commitments. Our credit exposures are described further below. agency Cash and Cash Equivalents. Our credit exposure on cash and cash equivalents arises from our unrestricted cash, and includes both interest-bearing and non-interest-bearing deposits. To mitigate the risk of credit loss, we place substantially all of our deposits with highly rated banks and central banks. table below presents our The from unrestricted cash and cash equivalents, and the concentration by industry, region and internally determined public rating agency equivalents. exposure credit $ in millions Cash and Cash Equivalents q Industry Financial Institutions Sovereign Total Region Americas EMEA Asia Total Credit Quality (Credit Rating Equivalent) AAA AA A BBB Total As of December 2022 $224,889 2021 $236,168 6% 94% 100% 77% 19% 4% 100% 89% 5% 6% – 100% 5% 95% 100% 55% 36% 9% 100% 64% 24% 11% 1% 100% The table above excludes cash segregated for regulatory and other purposes of $16.94 billion as of December 2022 and $24.87 billion as of December 2021. OTC Derivatives. Our credit exposure on OTC derivatives arises primarily from our market-making activities. As a market maker, we enter into derivative transactions to provide liquidity to clients and to facilitate the transfer and hedging of their risks. We also enter into derivatives to manage market risk exposures. We manage our credit exposure on OTC derivatives using the credit risk process, measures, limits and risk mitigants described above. 108 Goldman Sachs 2022 Form 10-K that We generally enter into OTC derivatives transactions under require the daily bilateral collateral arrangements exchange of collateral. As credit risk is an essential component of fair value, we include a credit valuation adjustment (CVA) in the fair value of derivatives to reflect counterparty credit risk, as described in Note 7 to the consolidated financial statements. CVA is a function of the the probability of present value of expected exposure, counterparty default and the assumed recovery upon default. The table below presents our net credit exposure from OTC derivatives and the concentration by industry and region. $ in millions OTC derivative assets Collateral (not netted under U.S. GAAP) Net credit exposure p Industry Consumer & Retail Diversified Industrials Financial Institutions Funds Healthcare Municipalities & Nonprofit Natural Resources & Utilities Sovereign Technology, Media & Telecommunications Other (including Special Purpose Vehicles) Total Region Americas EMEA Asia Total As of December 2022 $53,399 (15,823) $37,576 2021 $58,637 (17,245) $41,392 3% 8% 20% 19% 1% 2% 34% 7% 4% 2% 100% 49% 43% 8% 100% 2% 10% 15% 13% 1% 5% 33% 8% 8% 5% 100% 53% 37% 10% 100% Our credit exposure (before any potential recoveries) to OTC derivative counterparties that defaulted during 2022 remained low, representing less than 2% of our total credit exposure from OTC derivatives. In the table above: • OTC derivative assets, included in the consolidated balance sheets, are reported on a net-by-counterparty basis (i.e., the net receivable for a given counterparty) when a legal right of setoff exists under an enforceable netting agreement (counterparty netting) and are accounted for at fair value, net of cash collateral received under enforceable credit support agreements (cash collateral netting). collateral, • Collateral represents cash collateral and the fair value of securities non-U.S. government and agency obligations, received under credit support agreements, that we consider when determining credit risk, but such collateral is not eligible for netting under U.S. GAAP. primarily U.S. and THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis The table below presents the distribution of our net credit exposure from OTC derivatives by tenor. $ in millions As of December 2022 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure As of December 2021 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure Investment- Grade Non-Investment- Grade / Unrated Total $ $ $ $ 23,112 $ 26,627 58,354 108,093 (83,531) 24,562 $ 27,668 $ 21,746 64,670 114,084 (89,244) 24,840 $ 8,812 $ 8,355 4,342 21,509 (8,495) 13,014 $ 31,924 34,982 62,696 129,602 (92,026) 37,576 11,203 $ 9,515 6,590 27,308 (10,756) 16,552 $ 38,871 31,261 71,260 141,392 (100,000) 41,392 In the table above: • Tenor is based on remaining contractual maturity. • Netting includes and counterparty netting tenor categories consider when determining credit risk (including collateral that is not eligible for netting under U.S. GAAP). Counterparty netting within the same tenor category is included within such tenor category. that we collateral across The tables below present the distribution of our net credit exposure from OTC derivatives by tenor and internally determined public rating agency equivalents. $ in millions As of December 2022 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure As of December 2021 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure $ in millions As of December 2022 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure As of December 2021 Less than 1 year 1 – 5 years Greater than 5 years Total Netting Net credit exposure Investment-Grade AAA AA A BBB Total $ 521 $ 2,113 $ 1,684 5,594 7,799 (5,025) 5,383 16,063 23,559 (20,582) $ 2,774 $ 2,977 $ 10,516 $ 9,057 21,060 40,633 (31,956) 9,962 $ 23,112 26,627 10,503 58,354 15,637 108,093 36,102 (83,531) (25,968) 8,677 $ 10,134 $ 24,562 $ 1,017 $ 4,926 $ 1,150 13,777 15,944 (13,535) 3,071 5,421 13,418 (9,501) 12,481 $ 8,298 23,867 44,646 (36,005) $ 2,409 $ 3,917 $ 8,641 $ 9,244 $ 27,668 21,746 9,227 64,670 21,605 114,084 40,076 (89,244) (30,203) 9,873 $ 24,840 Non-Investment-Grade / Unrated BB or lower Unrated Total $ $ $ $ 8,245 $ 8,150 4,232 20,627 (8,436) 12,191 $ 567 $ 8,812 8,355 205 4,342 110 21,509 882 (59) (8,495) 823 $ 13,014 10,446 $ 9,210 6,320 25,976 (10,683) 15,293 $ 757 $ 11,203 9,515 305 6,590 270 27,308 1,332 (10,756) (73) 1,259 $ 16,552 lending are positions, risk-managed as above. Other trading positions, Lending Activities. We manage our lending activities using the credit risk process, measures, limits and risk mitigants including described secondary a component of market risk. In the fourth quarter of 2022, we changed the classification of our lending portfolio to better reflect the nature of the underlying collateral. Loans and lending commitments types in the table below include the addition of securities-based and other collateralized, as well as the removal of wealth management. This also resulted in reclassifications of certain loans and lending commitments in corporate and other to other collateralized. Prior periods have been conformed to the current presentation. table The commitments. below presents our loans and lending $ in millions As of December 2022 Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total Allowance for loan losses As of December 2021 Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total Loans Lending Commitments Total $ 40,135 $ 28,879 23,035 16,671 51,702 139,718 $ 179,853 33,150 26,227 17,179 66,109 4,271 3,192 508 14,407 6,326 15,820 2,261 $ 184,829 $ 1,882 62,216 944 8,208 78,036 3,205 227,138 $ 411,967 (5,543) $ (774) $ (6,317) $ $ 37,643 $ 29,000 24,674 16,652 38,263 3,672 8,212 4,019 $ 162,135 $ 146,694 $ 184,337 35,736 28,705 17,106 55,516 6,736 4,031 454 17,253 9 35,932 443 3,681 44,144 4,462 211,552 $ 373,687 Allowance for loan losses $ (3,573) $ (776) $ (4,349) In the table above, lending commitments excluded $4.85 billion as of December 2022 and $4.14 billion as of December 2021 relating to issued letters of credit which are classified as guarantees in our consolidated financial statements. See Note 18 to the consolidated financial statements for further information about guarantees. See Note 9 to the consolidated financial statements for information about net charge-offs on wholesale and consumer loans, as well as past due and nonaccrual loans accounted for at amortized cost. Goldman Sachs 2022 Form 10-K 109 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Corporate. Corporate loans and lending commitments include term loans, revolving lines of credit, letter of credit facilities and bridge loans, and are principally used for operating and general corporate purposes, or in connection with acquisitions. Corporate loans are secured (typically by a senior lien on the assets of the borrower) or unsecured, depending on the loan purpose, the risk profile of the borrower and other factors. The table below presents our credit exposure from corporate loans and lending commitments, and the concentration by industry, region, internally determined public rating agency equivalents and other credit metrics. $ in millions As of December 2022 p Corporate Industry Consumer & Retail Diversified Industrials Financial Institutions Funds Healthcare Natural Resources & Utilities Real Estate Technology, Media & Telecommunications Other (including Special Purpose Vehicles) Total Region Americas EMEA Asia Total Credit Quality (Credit Rating Equivalent) AAA AA A BBB BB or lower Total As of December 2021 p Corporate Industry Consumer & Retail Diversified Industrials Financial Institutions Funds Healthcare Natural Resources & Utilities Real Estate Technology, Media & Telecommunications Other (including Special Purpose Vehicles) Total Region Americas EMEA Asia Total Credit Quality (Credit Rating Equivalent) AAA AA A BBB BB or lower Total 110 Goldman Sachs 2022 Form 10-K Lending Commitments Loans Total $40,135 $139,718 $179,853 10% 18% 7% 3% 10% 9% 11% 26% 6% 100% 57% 34% 9% 100% – 1% 5% 19% 75% 100% 13% 18% 8% 4% 12% 18% 5% 20% 2% 100% 77% 21% 2% 100% 2% 5% 21% 38% 34% 100% 12% 18% 8% 4% 12% 16% 7% 21% 2% 100% 73% 24% 3% 100% 1% 4% 18% 34% 43% 100% $37,643 $146,694 $184,337 11% 17% 7% 2% 10% 13% 10% 24% 6% 100% 52% 38% 10% 100% – 1% 6% 15% 78% 100% 14% 17% 7% 3% 10% 17% 5% 25% 2% 13% 17% 7% 3% 10% 16% 6% 25% 3% 100% 100% 76% 21% 3% 71% 25% 4% 100% 100% 1% 5% 17% 37% 40% 1% 4% 14% 33% 48% 100% 100% Commercial Real Estate. Commercial real estate includes originated loans and lending commitments that are directly or indirectly secured by hotels, retail stores, multifamily housing complexes and commercial and industrial properties. Commercial real estate also includes loans and lending commitments extended to clients who warehouse assets that are directly or indirectly backed by commercial real estate. In addition, commercial real estate includes loans purchased by us. table below presents our The from commercial real estate loans and lending commitments, and the concentration by region, internally determined public rating agency equivalents and other credit metrics. exposure credit $ in millions As of December 2022 Commercial Real Estate Lending Commitments Loans Total $28,879 $4,271 $33,150 Region Americas EMEA Asia Total 79% 16% 5% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Unrated Total 18% 82% – 100% 74% 17% 9% 100% 27% 72% 1% 100% 78% 16% 6% 100% 19% 80% 1% 100% As of December 2021 Commercial Real Estate $29,000 $6,736 $35,736 Region Americas EMEA Asia Total 82% 13% 5% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Unrated Total 22% 77% 1% 100% 78% 10% 12% 100% 20% 80% – 100% 81% 13% 6% 100% 21% 78% 1% 100% In the table above, credit exposure includes loans and lending commitments of $10.28 billion as of December 2022 and $11.65 billion as of December 2021 which are extended to clients who warehouse assets that are directly or indirectly backed by commercial real estate. In addition, we also have credit exposure to commercial real estate loans held for securitization of $119 million as of December 2022 and $922 million as of December 2021. Such loans are included in trading assets in our consolidated balance sheets. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Residential Real Estate. Residential real estate loans and lending commitments are primarily extended to wealth management clients and to clients who warehouse assets that are directly or indirectly secured by residential real estate. In addition, residential real estate includes loans purchased by us. estate The table below presents our credit exposure from residential real loans and lending commitments, and the concentration by region, internally determined public rating agency equivalents and other credit metrics. $ in millions As of December 2022 Residential Real Estate Loans Lending Commitments Total $23,035 $3,192 $26,227 Region Americas EMEA Asia Total 96% 3% 1% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Total 16% 61% 23% 100% 93% 7% – 100% 8% 91% 1% 100% 95% 4% 1% 100% 15% 64% 21% 100% As of December 2021 Residential Real Estate $24,674 $4,031 $28,705 Region Americas EMEA Asia Total 96% 2% 2% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Unrated Total 13% 65% 21% 1% 100% In the table above: 82% 16% 2% 100% 21% 70% 9% – 100% 94% 4% 2% 100% 14% 66% 19% 1% 100% • Credit exposure includes loans and lending commitments of $14.62 billion as of December 2022 and $16.89 billion as of December 2021 which are extended to clients who warehouse assets that are directly or indirectly secured by residential real estate. In addition, we also have credit exposure to residential real estate loans held for securitization of $8.07 billion as of December 2022 and $11.57 billion as of December 2021. Such loans are included in trading assets in our consolidated balance sheets. Securities-based includes loans and Securities-Based. lending commitments that are secured by stocks, bonds, mutual funds, and exchange-traded funds. These loans and extended to our wealth commitments management clients and used for purposes other than purchasing, carrying or trading margin stocks. Securities- based loans require borrowers to post additional collateral based on changes in the underlying collateral's fair value. are primarily The table below presents our credit exposure from securities- based loans and lending commitments, and the concentration by region, internally determined public rating agency equivalents and other credit metrics. $ in millions As of December 2022 Securities-based Region Americas EMEA Asia Total Lending Commitments Loans Total $16,671 $508 $17,179 83% 15% 2% 100% 98% 2% – 100% 18% 2% 80% 100% 83% 15% 2% 100% 76% 4% 20% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Total 77% 5% 18% 100% As of December 2021 Securities-based $16,652 $454 $17,106 Region Americas EMEA Asia Total 77% 16% 7% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Total 83% 3% 14% 100% 100% – – 100% 46% – 54% 100% 78% 15% 7% 100% 82% 3% 15% 100% • Other metrics category consists of loans where we use other key metrics to assess the borrower's credit quality, such as loan-to-value ratio, delinquency status, collateral value, expected cash flows and other risk factors. In the table above, other metrics category consists of loans where we use other key metrics to assess the borrower's credit loan-to-value ratio and quality, such as collateral value, delinquency status. Goldman Sachs 2022 Form 10-K 111 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Other Collateralized. Other collateralized includes loans and lending commitments that are backed by specific collateral (other than securities and real estate). Such loans and lending commitments are extended to clients who warehouse assets that are directly or indirectly secured by corporate loans, consumer loans and other assets. Other collateralized also includes loans and lending commitments to investment funds (managed by third parties) that are collateralized by capital commitments of the funds' investors or assets held by the fund, as well as other secured loans and lending commitments extended to our wealth management clients. The table below presents our credit exposure from other collateralized loans and lending commitments, and the concentration by region, internally determined public rating agency equivalents and other credit metrics. $ in millions As of December 2022 Other Collateralized Region Americas EMEA Asia Total Loans Lending Commitments Total $51,702 $14,407 $66,109 86% 12% 2% 100% 93% 7% – 100% 66% 31% – 3% 100% 87% 11% 2% 100% 65% 34% – 1% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Unrated Total 64% 35% 1% – 100% As of December 2021 Other Collateralized $38,263 $17,253 $55,516 Region Americas EMEA Asia Total 74% 23% 3% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Unrated Total 58% 41% 1% – 100% 92% 7% 1% 100% 69% 30% – 1% 100% 79% 18% 3% 100% 62% 38% – – 100% In the table above, credit exposure included loans and lending commitments extended to clients who warehouse assets of $16.89 billion as of December 2022 and $13.73 billion as of December 2021. 112 Goldman Sachs 2022 Form 10-K Installment and Credit Cards. We originate unsecured installment loans (including point-of-sale loans that we began to originate through the GreenSky platform in the third quarter of 2022) and credit card loans (pursuant to revolving lines of credit) to consumers in the Americas. The credit card lines are cancellable by us and therefore do not result in credit exposure. The tables below present our credit exposure from originated and the installment concentration by the five most concentrated U.S. states. card funded loans, and credit $ in millions As of December 2022 Loans, gross California Texas Florida New York Illinois Other Total As of December 2021 Loans, gross California Texas Florida New York Illinois Other Total $ in millions As of December 2022 Loans, gross California Texas New York Florida Illinois Other Total As of December 2021 Loans, gross California Texas New York Florida New Jersey Other Total Installment $6,326 10% 9% 7% 6% 4% 64% 100% $3,672 11% 9% 7% 7% 4% 62% 100% Credit Cards $15,820 16% 9% 8% 8% 4% 55% 100% $8,212 18% 9% 8% 8% 4% 53% 100% In addition, we had credit exposure of $1.88 billion as of December 2022 and $9 million as of December 2021 related to our commitments to provide unsecured installment loans to consumers. See Note 9 to the consolidated financial statements for further information about the credit quality indicators of installment and credit card loans. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Other. Other includes unsecured loans extended to wealth management clients and unsecured consumer and credit card loans purchased by us. The table below presents our credit exposure from other loans and lending commitments, and the concentration by region, agency equivalents and other credit metrics. determined internally public rating Lending Commitments Loans Total $2,261 $944 $3,205 Credit Quality (Credit Rating Equivalent) $ in millions As of December 2022 Other Region Americas EMEA Total Investment-grade Non-investment-grade Other metrics Total As of December 2021 Other Region Americas EMEA Total $4,019 $443 $4,462 89% 11% 100% 47% 26% 27% 100% 89% 11% 100% 99% 1% 100% 93% 7% – 100% 92% 8% 100% 60% 21% 19% 100% 100% – 100% 78% 14% – 8% 100% 90% 10% 100% 29% 22% 46% 3% 100% Credit Quality (Credit Rating Equivalent) Investment-grade Non-investment-grade Other metrics Unrated Total 24% 23% 51% 2% 100% In the table above, other metrics primarily includes consumer and credit card loans purchased by us. Our risk assessment process for such loans includes reviewing certain key metrics, such as expected cash flows, delinquency status and other risk factors. In addition, we also have credit exposure to other loans held for securitization of $1.76 billion as of December 2022 and $467 million as of December 2021. Such loans are included in trading assets in our consolidated balance sheets. Credit Hedges. To mitigate the credit risk associated with our lending activities, we obtain credit protection on certain loans and lending commitments through credit default swaps, both single-name and index-based contracts, and through the issuance of credit-linked notes. enter to cover into Securities Financing Transactions. We securities financing transactions in order to, among other things, facilitate client activities, invest excess cash, acquire securities short positions and finance certain activities. We bear credit risk related to resale agreements and securities borrowed only to the extent that cash advanced or the value of securities pledged or delivered to the counterparty exceeds the value of the collateral received. We also have credit exposure on repurchase agreements and securities loaned to the extent that the value of securities pledged or delivered to the these counterparty transactions exceeds the amount of cash or collateral received. Securities collateral for these transactions primarily and agency includes U.S. obligations. and non-U.S. government for The table below presents our credit exposure from securities financing transactions and the concentration by industry, region and internally determined public rating agency equivalents. $ in millions Securities Financing Transactions g Industry Financial Institutions Funds Municipalities & Nonprofit Sovereign Other (including Special Purpose Vehicles) Total Region Americas EMEA Asia Total Credit Quality (Credit Rating Equivalent) AAA AA A BBB BB or lower Total As of December 2022 $34,762 2021 $34,505 43% 23% 5% 28% 1% 100% 47% 34% 19% 100% 20% 31% 31% 8% 10% 100% 34% 23% 5% 35% 3% 100% 36% 44% 20% 100% 19% 28% 33% 9% 11% 100% The table above reflects both netting agreements and collateral that we consider when determining credit risk. Goldman Sachs 2022 Form 10-K 113 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Other Credit Exposures. We are exposed to credit risk from our receivables from brokers, dealers and clearing organizations and customers and counterparties. Receivables from brokers, dealers and clearing organizations primarily consist of initial margin placed with clearing organizations and receivables related to sales of securities which have traded, but not yet settled. These receivables generally have minimal credit risk due to the low probability of clearing organization default and the short-term nature of receivables related to securities settlements. Receivables from customers and counterparties collateralized receivables related to customer securities transactions and generally have minimal credit risk due to both the value of the collateral received and the short-term nature of these receivables. consist of generally The table below presents our other credit exposures and the concentration by industry, region and internally determined public rating agency equivalents. $ in millions Other Credit Exposures p Industry Financial Institutions Funds Other (including Special Purpose Vehicles) Total Region Americas EMEA Asia Total Credit Quality (Credit Rating Equivalent) AAA AA A BBB BB or lower Unrated Total As of December 2022 $48,916 2021 $61,187 80% 12% 8% 100% 41% 49% 10% 100% 7% 32% 33% 10% 16% 2% 100% 86% 9% 5% 100% 50% 43% 7% 100% 4% 47% 29% 6% 13% 1% 100% The table above reflects collateral that we consider when determining credit risk. Selected Exposures We have credit and market exposures, as described below, that have had heightened focus given recent events and broad market concerns. Credit exposure represents the potential for loss due to the default or deterioration in credit quality of a counterparty or borrower. Market exposure represents the potential for loss in value of our long and short positions due to changes in market prices. 114 Goldman Sachs 2022 Form 10-K Country Exposures. The Russian invasion of Ukraine continues to negatively affect the global economy and has resulted in significant disruptions in financial markets and increased macroeconomic uncertainty. Governments around the world have responded to Russia’s invasion by imposing economic sanctions and export controls on specific industry sectors, companies and individuals in Russia. Retaliatory restrictions against investors, non-Russian owned businesses and other sovereign states have been implemented by Russia. Businesses in the U.S. and globally continue to experience shortages in materials and increased costs for transportation, energy and raw materials due, in part, to the negative effects of the war on the global economy. The escalation or continuation of the war between Russia and Ukraine presents heightened risks relating to cyber attacks, limited ability to settle securities transactions, third-party and agent bank dependencies, supply chain disruptions, and inflation, as well for increased volatility in commodity, as the potential currency and other financial markets. Complying with economic sanctions and restrictions imposed by governments has resulted in increased operational risk. The extent and sanctions and resulting market duration of disruptions, as well as the potential adverse consequences for our business, liquidity and results of operations, are difficult to predict. the war, Our senior management, risk committees and the Board receive regular briefings from our independent risk oversight and control functions, including our chief risk officer, on Russian and Ukrainian exposures, as well as other relevant risk metrics. We have significantly reduced our exposure to Russia and Ukraine and have curtailed our operations in Russia to those necessary to meet our legal and regulatory obligations. The overall direct financial impact to our net revenues and Ukrainian counterparties, borrowers, issuers and related instruments was not material. We have established a firmwide working group to identify and assess the operational risk associated with complying with economic sanctions and restrictions as a result of this invasion. In addition, to mitigate the risk of increased cyber attacks, we liaise with government agencies in order to update our monitoring processes with the latest information. from Russian 2022 for total credit exposure Our to Russian or Ukrainian counterparties or borrowers and our total market exposure relating to Russian or Ukrainian issuers was not material as of December 2022. In addition, economic and/or political uncertainties in Argentina, Ethiopia, Ghana, Lebanon, Pakistan, Sri Lanka and Venezuela have led to concerns about their financial stability. Our credit exposure to counterparties or borrowers and our market exposure to issuers relating to each of these countries was not material as of December 2022. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis We have a comprehensive framework to monitor, measure and assess our country exposures and to determine our risk appetite. We determine the country of risk by the location of the counterparty, issuer’s assets, where they generate revenue, the country in which they are headquartered, the jurisdiction where a claim against them could be enforced, and/or the government whose policies affect their ability to repay their obligations. We monitor our credit exposure to a specific country both at the individual counterparty level, as well as at the aggregate country level. See “Stress Tests” for information about stress tests that are designed to estimate the direct and indirect impact of events involving the above countries. Operational Risk Management Overview Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes, people, systems or from external events. Our exposure to operational risk arises as processing extraordinary incidents, such as major systems failures or legal and regulatory matters. from routine as well errors, Potential types of loss events related to internal and external operational risk include: • Execution, delivery and process management; • Business disruption and system failures; • Employment practices and workplace safety; • Clients, products and business practices; • Damage to physical assets; • Internal fraud; and • External fraud. Operational Risk, which is independent of our revenue- producing units and reports to our chief risk officer, has primary responsibility for developing and implementing a and formalized framework for managing operational risk with the goal of maintaining our exposure to operational risk at levels that are within our risk appetite. assessing, monitoring Operational Risk Management Process Our process for managing operational risk includes the critical components of our risk management framework described in the “Overview and Structure of Risk Management,” including a comprehensive data collection process, as well as firmwide policies and procedures, for operational risk events. We combine top-down and bottom-up approaches to manage and measure operational risk. From a top-down perspective, our senior management assesses firmwide and business-level operational risk profiles. From a bottom-up perspective, our first and second lines of defense are responsible for risk identification and risk management on a day-to-day basis, including escalating operational risks and risk events to senior management. a well-controlled We maintain a comprehensive control framework designed to to minimize provide operational risks. The Firmwide Operational Risk and Resilience Committee overseeing operational risk, and for ensuring operational resilience of our business. environment responsible for is Our operational risk management framework is designed to comply with the operational risk measurement rules under the Capital Framework and has evolved based on the changing needs of our businesses and regulatory guidance. We have established policies that require all employees and consultants to report and escalate operational risk events. When operational risk events are identified, our policies require that the events be documented and analyzed to determine whether changes are required in our systems and/ or processes to further mitigate the risk of future events. We use operational risk management applications to capture, analyze, aggregate and report operational risk event data and key metrics. One of our key risk identification and control assessment tools is an operational risk and control self- assessment process, which is performed by our managers. This process consists of the identification and rating of operational risks, on a forward-looking basis, and the related controls. The results from this process are analyzed to evaluate operational risk exposures and identify businesses, activities or products with heightened levels of operational risk. Goldman Sachs 2022 Form 10-K 115 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Risk Measurement We measure our operational risk exposure using both statistical modeling and scenario analyses, which involve qualitative and quantitative assessments of internal and external operational risk event data and internal control factors risk measurement also incorporates an assessment of business environment factors, including: each of our businesses. Operational for • Evaluations of the complexity of our business activities; • The degree of automation in our processes; • New activity information; • The legal and regulatory environment; and • Changes in the markets for our products and services, including the diversity and sophistication of our customers and counterparties. The results from these scenario analyses are used to monitor changes in operational risk and to determine business lines that may have heightened exposure to operational risk. These analyses are used in the determination of the appropriate level of operational risk capital to hold. We also perform firmwide stress tests. See “Overview and Structure of Risk Management” for information about firmwide stress tests. reliance Types of Operational Risks Increased third-party relationships has resulted in increased operational risks, such as information and cybersecurity risk, third-party risk and business resilience risk. We manage those risks as follows: technology and on the risk of compromising Information and Cybersecurity Risk. Information and cybersecurity the risk is integrity or availability of our data and confidentiality, systems, leading to an adverse impact to us, our reputation, our clients and/or the broader financial system. We seek to minimize the occurrence and impact of unauthorized access, disruption or use of information and/or information systems. We deploy and operate preventive and detective controls and processes to mitigate emerging and evolving information security and cybersecurity threats, including monitoring our network for known vulnerabilities and signs of unauthorized attempts to access our data and systems. There is increased information risk through diversification of our data across external service providers, including use of a variety of cloud- provided or -hosted services and applications. See “Risk Factors” in Part I, Item 1A of this Form 10-K for further information about information and cybersecurity risk. 116 Goldman Sachs 2022 Form 10-K legal, include information Third-Party Risk. Third-party risk, including vendor risk, is the risk of an adverse impact due to reliance on third parties performing services or activities on our behalf. These risks security, may regulatory, in reputational, operational or any other risks inherent engaging a third party. We identify, manage and report key third-party risks and conduct due diligence across multiple risk and chain cybersecurity, dependencies. The Third-Party Risk Program monitors, reviews and reassesses third-party risks on an ongoing basis. See “Risk Factors” in Part I, Item 1A of this Form 10-K for further information about third-party risk. information and additional security supply including resilience domains, Business Resilience Risk. Business resilience risk is the risk of disruption to our critical processes. We monitor threats and assess risks and seek to ensure our state of readiness in the event of a significant operational disruption to the normal operations of our critical functions or their dependencies, such as critical facilities, systems, third parties, data and/or personnel. Our resilience framework defines the fundamental principles for BCP and crisis management to ensure that critical functions can continue to operate in the event of a disruption. program is comprehensive, consistent on a firmwide basis, and up-to- including updated date, resilience capabilities as and when they become available. Our resilience assurance program encompasses testing of response and recovery strategies on a regular basis with the significant objective operational disruptions. See “Business — Business Continuity and Information Security” in Part I, Item 1 of this Form 10-K for further information about business continuity. incorporating new information, of minimizing preventing continuity business The and Model Risk Management Overview Model risk is the potential for adverse consequences from decisions made based on model outputs that may be incorrect or used inappropriately. We rely on quantitative models across our business activities primarily to value certain financial assets and liabilities, to monitor and manage our risk, and to measure and monitor our regulatory capital. Model Risk, which is independent of our revenue-producing units, model developers, model owners and model users, and reports to our chief risk officer, has primary responsibility for assessing, monitoring and managing our model risk through firmwide oversight across our global businesses, and provides periodic updates to senior management, risk committees and the Risk Committee of the Board. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis Our model risk management framework is managed through a governance structure and risk management controls, which encompass standards designed to ensure we maintain a comprehensive model inventory, including risk assessment sound model development practices, and classification, independent review and model-specific usage controls. The Firmwide Model Risk Control Committee oversees our model risk management framework. Model Review and Validation Process Model Risk consists of quantitative professionals who perform an independent review, validation and approval of our models. This review includes an analysis of the model documentation, independent testing, an assessment of the appropriateness of the methodology used, and verification of compliance with model development and implementation standards. We regularly refine and enhance our models to reflect changes in market or economic conditions and our business mix. All models are reviewed on an annual basis, and new models or significant changes to existing models and their assumptions are approved prior to implementation. The model validation process incorporates a review of models and trade and risk parameters across a broad range of scenarios (including extreme conditions) in order to critically evaluate and verify: • The model’s conceptual the reasonableness of model assumptions, and suitability for intended use; soundness, including • The testing strategy utilized by the model developers to ensure that the models function as intended; • The suitability of the calculation techniques incorporated in the model; • The model’s accuracy in reflecting the characteristics of the related product and its significant risks; • The model’s consistency with models for similar products; and • The model’s assumptions. sensitivity to input parameters and See “Critical Accounting Policies — Fair Value — Review of Valuation Models,” “Liquidity Risk Management,” “Market and Risk Management,” “Operational Risk Management” for further information about our use of models within these areas. “Credit Risk Management” Other Risk Management In addition to the areas of risks discussed above, we also manage other risks, including capital, climate, compliance and conflicts. These areas of risks are discussed below. Capital Risk Management Capital risk is the risk that our capital is insufficient to support our business activities under normal and stressed market conditions or we face capital reductions or RWA increases, including from new or revised rules or changes in interpretations of existing rules, and are therefore unable to targets or external regulatory meet our internal capital critical requirements. Capital adequacy is of capital in place a to us. Accordingly, we have importance comprehensive capital management policy that provides a framework, defines objectives and establishes guidelines to maintain an appropriate level and composition of capital in both business-as-usual and stressed conditions. Our capital management framework is designed to provide us with the information needed to identify and comprehensively manage risk, and develop and apply projected stress scenarios that capture idiosyncratic vulnerabilities with a goal of holding sufficient capital to remain adequately capitalized even after experiencing a severe stress event. See “Capital Management and Regulatory Capital” for further information about our capital management process. the Board approves our We have established a comprehensive governance structure to manage and oversee our day-to-day capital management activities and to ensure compliance with capital rules and related policies. Our capital management activities are overseen by the Board and its committees. The Board is responsible for approving our annual capital plan and the Risk Committee of capital management policy, which details the risk committees and members of senior management who are responsible for the ongoing monitoring of our capital adequacy and evaluation of current and future regulatory capital requirements, the review of the results of our capital planning and stress tests processes, and the results of our capital models. In addition, our risk committees and senior management are responsible for the review of our contingency capital plan, key capital adequacy metrics, including regulatory capital ratios, and capital plan metrics, such as the payout ratio, as well as monitoring capital targets and potential breaches of capital requirements. regulatory for managing capital risk also includes Our process independent review by Risk that, among other things, assesses related interpretations, escalates certain interpretations to senior management and/or the appropriate risk committee, and performs calculation testing to corroborate alignment with applicable capital rules. policies capital and Climate Risk Management We categorize climate risk into physical risk and transition risk. Physical risk is the risk that asset values may decline or operations may be disrupted as a result of changes in the climate, while transition risk is the risk that asset values may decline because of changes in climate policies or changes in the underlying economy due to decarbonization. Goldman Sachs 2022 Form 10-K 117 Conflicts Management Conflicts of interest and our approach to dealing with them are fundamental to our client relationships, our reputation and our long-term success. The term “conflict of interest” does not have a universally accepted meaning, and conflicts can arise in many forms within a business or between businesses. The identifying potential conflicts, as well as complying with our policies and procedures, is shared by all of our employees. responsibility for risk. Our We have a multilayered approach to resolving conflicts and senior management addressing reputational in oversees policies related to conflicts resolution and, and conjunction with Conflicts Resolution, Compliance, and internal committees, formulates policies, standards and principles, and assists in making judgments regarding the appropriate resolution of particular conflicts. Resolving potential conflicts necessarily depends on the facts and circumstances of a particular situation and the application of experienced and informed judgment. Legal As a general matter, Conflicts Resolution reviews financing and advisory assignments in Global Banking & Markets and certain of our investing, lending and other activities. In addition, we have various transaction oversight committees, such as the Firmwide Capital, Commitments and Suitability Committees and other committees that also review new underwritings, loans, investments and structured products. These groups and committees work with internal and external counsel and Compliance to evaluate and address any conflicts. The head of Conflicts actual or potential Resolution reports to our chief legal officer, who reports to our chief executive officer. We regularly assess our policies and procedures that address conflicts of interest in an effort to conduct our business in accordance with the highest ethical standards and in compliance with all applicable laws, rules and regulations. further information about our “Overview and risk management For processes, of Risk Management” and “Risk Factors” in Part I, Item 1A of this Form 10-K. Structure see THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis financial the Board oversees institution, climate-related risks As a global manifest in different ways across our businesses and we have continued to make significant enhancements to our climate including steps to further framework, risk management risk management into our broader climate integrate processes. We have integrated oversight of climate-related risks into our risk management governance structure, from senior management to our Board and its committees, including the Risk and Public Responsibilities Committees. The Risk Committee of firmwide financial and nonfinancial risks, which include climate risk, and, as part of its oversight, receives updates on our risk management approach to climate including our approaches towards scenario analysis and integration into existing Public Responsibilities Committee of the Board assists the Board in its oversight of our firmwide sustainability strategy and sustainability issues affecting us, including with respect to climate change. As part of the Public Responsibilities Committee receives periodic updates on our sustainability strategy, and also periodically reviews our for policies governance sustainability and climate change-related risks. Senior management within Risk is responsible for the development of our climate risk program. risk management its oversight, processes. processes related risk, The and and We have begun incorporating climate risk into our credit evaluation and underwriting processes for select industries. Climate risk factors are now evaluated as part of transaction due diligence for select loan commitments. See “Business — Sustainability” in Part I, Item 1 and “Risk Factors” in Part I, Item 1A of this Form 10-K for information about our sustainability initiatives, including in relation to climate transition. Compliance Risk Management Compliance risk is the risk of legal or regulatory sanctions, material financial loss or damage to our reputation arising from our failure to comply with the requirements of applicable laws, rules and regulations, and our internal policies and procedures. Compliance risk is inherent in all activities through which we conduct our businesses. Our Compliance Risk Management Program, administered by Compliance, assesses our regulatory and reputational risk; monitors for compliance with new or amended laws, rules and regulations; designs and implements conducts controls, policies, procedures independent testing; investigates, surveils and monitors for compliance risks and breaches; and leads our responses to regulatory examinations, audits and inquiries. We monitor and review business practices to assess whether they meet or exceed minimum regulatory and legal standards in all markets and jurisdictions in which we conduct business. and training; compliance, 118 Goldman Sachs 2022 Form 10-K Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the firm; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the firm’s assets that could have a material effect on our financial statements. has been 2022 The firm’s internal control over financial reporting as of by December 31, PricewaterhouseCoopers LLP an independent registered public accounting firm, as stated in their report appearing on pages 120 to 122, which expresses an unqualified opinion on the effectiveness of the firm’s internal control over financial reporting as of December 31, 2022. (PCAOB ID 238), audited THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Item 7A. Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosures about market risk are set forth in “Management's Discussion and Analysis of Financial Condition and Results of Operations — Risk Management” in Part II, Item 7 of this Form 10-K. Item 8. Financial Statements and Supplementary Data Management’s Report on Internal Control over Financial Reporting Management of The Goldman Sachs Group, Inc., together with its consolidated subsidiaries (the firm), is responsible for establishing and maintaining adequate internal control over financial reporting. The firm’s internal control over financial reporting is a process designed under the supervision of the firm’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the firm’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. As of December 31, 2022, management conducted an assessment of the firm’s internal control over financial reporting based on the framework established in Internal issued by the Control – Integrated Framework (2013) Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the firm’s internal control over financial reporting as of December 31, 2022 was effective. Goldman Sachs 2022 Form 10-K 119 Basis for Opinions is for the included reporting, responsible reporting, and for the effectiveness of in The Company’s management these consolidated financial statements, for maintaining effective internal control over its financial internal control over assessment of financial accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. the consolidated financial Our audits of the consolidated financial statements included the risks of material performing procedures to assess misstatement of statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of The Goldman Sachs Group, Inc.: Opinions on the Financial Statements and Internal Control over Financial Reporting of earnings, statements consolidated We have audited the accompanying consolidated balance sheets of The Goldman Sachs Group, Inc. and its subsidiaries (the Company) as of December 31, 2022 and 2021, and the of related comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period including the related notes ended December 31, 2022, (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 9 to the consolidated financial statements, the Company changed the manner in which it accounts for credit losses on certain financial instruments in 2020. 120 Goldman Sachs 2022 Form 10-K Report of Independent Registered Public Accounting Firm Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide timely reasonable detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. regarding prevention or the assets of assurance internal control over Because of its inherent limitations, financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters statements The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated especially financial challenging, judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. and (ii) or involved our subjective, complex Valuation of Certain Level 3 Financial Instruments As described in Notes 4 and 5 to the consolidated financial statements, as of December 31, 2022, the Company carries financial instruments at fair value, which includes $26.0 billion of financial assets and $22.8 billion of financial liabilities classified in Level 3 of the fair value hierarchy, as one or more inputs to the financial instrument’s valuation technique are significant and unobservable. Significant unobservable inputs used by management to value certain of instruments included (i) industry these Level 3 financial multiples and public comparables, (ii) credit spreads or (iii) correlation. The principal considerations for our determination that performing procedures relating to the valuation of these certain Level 3 financial instruments is a critical audit matter are (i) the significant judgment by management in valuing the financial instruments, which in turn led to a high degree of in performing auditor judgment, subjectivity, and effort procedures and evaluating audit evidence related to the aforementioned significant unobservable inputs used in the valuation of certain Level 3 financial instruments, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge. the methods fair value or controls over Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of financial instruments, including and significant unobservable inputs used in the valuation of certain Level 3 instruments. These procedures also included, financial among others, for a sample of financial instruments, the involvement of professionals with specialized skill and knowledge to assist in (i) developing an independent estimate to of determine the fair value of instruments. Developing the independent estimate involved (i) testing the completeness and accuracy of data provided by management, (ii) significant unobservable inputs or developing independent significant unobservable inputs, and (iii) comparing management’s estimate to the independently developed estimate of fair value. Testing management’s process included evaluating the significant reasonableness unobservable inputs, evaluating the appropriateness of the techniques used, and testing the completeness and accuracy of data used by management to determine the fair value of these instruments. testing management’s process and utilizing management’s aforementioned these financial evaluating the (ii) of Goldman Sachs 2022 Form 10-K 121 also among included, Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. included testing the effectiveness of These procedures controls relating to the Company’s allowance for loan losses for the wholesale loan portfolio, including controls over the model, certain data, and significant assumptions. These testing procedures management’s process for estimating the allowance for loan losses for the wholesale loan portfolio using a modeled approach, which involved evaluating the appropriateness of the methodology and testing the completeness and accuracy of certain data used in estimating the allowance for loan losses. The procedures also involved the use of professionals with specialized skill and knowledge to assist in evaluating (i) the appropriateness of the model and methodology and (ii) the reasonableness of the internal credit ratings and the forecasted U.S. unemployment rates used in estimating the allowance for loan losses for the wholesale loan portfolio. others, /s/ PricewaterhouseCoopers LLP New York, New York February 23, 2023 We have served as the Company’s auditor since 1922. Report of Independent Registered Public Accounting Firm Allowance for Loan Losses - Wholesale Loan Portfolio As described in Note 9 to the consolidated financial statements, the Company’s allowance for loan losses for the wholesale loan portfolio reflects management’s estimate of loan losses over the remaining expected life of the loans and also considers forecasts of future economic conditions. As of December 31, 2022, $2.6 billion of the allowance for loan losses and $150.4 billion of the loans accounted for at amortized cost related to the wholesale loan portfolio. The allowance for loan losses for the wholesale loan portfolio is measured on a collective basis for loans that exhibit similar risk characteristics using a modeled approach and on an asset-specific basis for loans that do not share similar risk characteristics. qualitative components to reflect the uncertain nature of economic forecasting, capture uncertainty regarding model inputs, and account for model imprecision and concentration risk. The wholesale models determine the probability of default and loss given default based on various risk factors, including industry default and loss data, internal credit ratings, the borrower’s expected life, macroeconomic indicators, capacity to meet its financial obligations, the borrower’s country of risk and industry, loan seniority and collateral type. The most significant inputs to the forecast model for wholesale loans include forecasted U.S. unemployment rates, GDP, credit spreads, commercial and industrial delinquency rates, short- and long-term interest rates, and oil prices. addition, includes In it The principal considerations for our determination that performing procedures relating to the allowance for loan losses for the wholesale loan portfolio is a critical audit matter are (i) the significant judgment and estimation by management in the determinations of internal credit ratings and the forecasted U.S. unemployment rates, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determinations, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge. 122 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Earnings in millions, except per share amounts Revenues Investment banking Investment management Commissions and fees Market making Other principal transactions Total non-interest revenues Interest income Interest expense Net interest income Total net revenues Provision for credit losses Operating expenses Compensation and benefits Transaction based Market development Communications and technology Depreciation and amortization Occupancy Professional fees Other expenses Total operating expenses Pre-tax earnings Provision for taxes Net earnings Preferred stock dividends Net earnings applicable to common shareholders Earnings per common share Basic Diluted Average common shares Basic Diluted Consolidated Statements of Comprehensive Income $ in millions Net earnings Other comprehensive income/(loss) adjustments, net of tax: Currency translation Debt valuation adjustment Pension and postretirement liabilities Available-for-sale securities Other comprehensive income/(loss) Comprehensive income The accompanying notes are an integral part of these consolidated financial statements. Year Ended December 2022 2021 2020 $ 7,360 $ 14,136 $ 9,100 6,986 3,539 15,428 4,756 39,809 8,171 3,590 15,357 11,615 52,869 9,005 4,034 18,634 654 39,687 29,024 21,346 7,678 47,365 2,715 15,148 5,312 812 1,808 2,455 1,026 1,887 2,716 31,164 12,120 5,650 6,470 59,339 13,689 8,938 4,751 44,560 357 3,098 17,719 4,710 553 1,573 2,015 981 1,648 2,739 31,938 13,309 4,141 401 1,347 1,902 960 1,306 5,617 28,983 13,486 2,225 11,261 497 12,479 3,020 9,459 544 $ 10,764 $ 21,151 $ 8,915 27,044 5,409 21,635 484 $ 30.42 $ 60.25 $ 24.94 $ 30.06 $ 59.45 $ 24.74 352.1 358.1 350.5 355.8 356.4 360.3 Year Ended December 2022 2020 $ 11,261 $ 21,635 $ 9,459 2021 (47) 1,403 (172) (2,126) (942) (80) (261) (26) 417 50 $ 10,319 $ 21,001 $ 9,509 (42) 322 41 (955) (634) Goldman Sachs 2022 Form 10-K 123 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets $ in millions Assets Cash and cash equivalents Collateralized agreements: Securities purchased under agreements to resell (at fair value) Securities borrowed (includes $38,578 and $39,955 at fair value) Customer and other receivables (includes $25 and $42 at fair value) Trading assets (at fair value and includes $40,143 and $68,208 pledged as collateral) Investments (includes $78,201 and $83,427 at fair value, and $9,818 and $12,840 pledged as collateral) Loans (net of allowance of $5,543 and $3,573, and includes $7,655 and $10,769 at fair value) Other assets (includes $145 and $0 at fair value) Total assets Liabilities and shareholders’ equity Deposits (includes $15,746 and $35,425 at fair value) Collateralized financings: Securities sold under agreements to repurchase (at fair value) Securities loaned (includes $4,372 and $9,170 at fair value) Other secured financings (includes $12,756 and $17,074 at fair value) Customer and other payables Trading liabilities (at fair value) Unsecured short-term borrowings (includes $39,731 and $29,832 at fair value) Unsecured long-term borrowings (includes $73,147 and $52,390 at fair value) Other liabilities (includes $159 and $359 at fair value) Total liabilities Commitments, contingencies and guarantees As of December 2022 2021 $ 241,825 $ 261,036 225,117 189,041 135,448 301,245 130,629 179,286 39,208 205,703 178,771 160,673 375,916 88,719 158,562 34,608 $ 1,441,799 $ 1,463,988 $ 386,665 $ 364,227 110,349 30,727 13,946 262,045 191,324 60,961 247,138 21,455 1,324,610 165,883 46,505 18,544 251,931 181,424 46,955 254,092 24,501 1,354,062 Shareholders’ equity Preferred stock; aggregate liquidation preference of $10,703 and $10,703 Common stock; 917,815,030 and 906,430,314 shares issued, and 334,918,639 and 333,573,254 shares outstanding Share-based awards Nonvoting common stock; no shares issued and outstanding Additional paid-in capital Retained earnings Accumulated other comprehensive loss Stock held in treasury, at cost; 582,896,393 and 572,857,062 shares Total shareholders’ equity Total liabilities and shareholders’ equity 10,703 9 5,696 – 59,050 139,372 (3,010) (94,631) 117,189 10,703 9 4,211 – 56,396 131,811 (2,068) (91,136) 109,926 $ 1,441,799 $ 1,463,988 The accompanying notes are an integral part of these consolidated financial statements. 124 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Shareholders’ Equity $ in millions Preferred stock Beginning balance Issued Redeemed Ending balance Common stock Beginning balance Issued Ending balance Share-based awards Beginning balance Issuance and amortization of share-based awards Delivery of common stock underlying share-based awards Forfeiture of share-based awards Ending balance Additional paid-in capital Beginning balance Delivery of common stock underlying share-based awards Cancellation of share-based awards in satisfaction of withholding tax requirements Issuance costs of redeemed preferred stock Issuance of common stock in connection with acquisition Other Ending balance Retained earnings Beginning balance, as previously reported Cumulative effect of change in accounting principle for current expected credit losses, net of tax Beginning balance, adjusted Net earnings Dividends and dividend equivalents declared on common stock and share-based awards Dividends declared on preferred stock Preferred stock redemption premium Ending balance Accumulated other comprehensive income/(loss) Beginning balance Other comprehensive income/(loss) Ending balance Stock held in treasury, at cost Beginning balance Repurchased Reissued Other Ending balance Total shareholders’ equity Year Ended December 2022 2021 2020 $ 10,703 $ 11,203 $ 11,203 350 (350) 11,203 2,175 (2,675) 10,703 – – 10,703 9 – 9 4,211 4,110 (2,468) (157) 5,696 56,396 2,516 (1,591) – 1,730 (1) 59,050 131,811 – 131,811 11,261 (3,203) (497) – 139,372 9 – 9 3,468 2,527 (1,626) (158) 4,211 55,679 1,678 (984) 24 – (1) 56,396 9 – 9 3,195 1,967 (1,601) (93) 3,468 54,883 1,619 (829) – – 6 55,679 112,947 – 112,947 21,635 (2,287) (443) (41) 131,811 106,465 (638) 105,827 9,459 (1,795) (543) (1) 112,947 (2,068) (942) (3,010) (1,434) (634) (2,068) (1,484) 50 (1,434) (91,136) (3,500) 20 (15) (94,631) (84,006) (1,928) 11 (17) (85,940) $ 117,189 $ 109,926 $ 95,932 (85,940) (5,200) 11 (7) (91,136) The accompanying notes are an integral part of these consolidated financial statements. Goldman Sachs 2022 Form 10-K 125 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows $ in millions Cash flows from operating activities Net earnings Adjustments to reconcile net earnings to net cash provided by/(used for) operating activities Depreciation and amortization Deferred income taxes Share-based compensation Gain related to extinguishment of unsecured borrowings Provision for credit losses Changes in operating assets and liabilities: Customer and other receivables and payables, net Collateralized transactions (excluding other secured financings), net Trading assets Trading liabilities Loans held for sale, net Other, net Net cash provided by/(used for) operating activities Cash flows from investing activities Purchase of property, leasehold improvements and equipment Proceeds from sales of property, leasehold improvements and equipment Net cash used for business acquisitions Purchase of investments Proceeds from sales and paydowns of investments Loans (excluding loans held for sale), net Net cash used for investing activities Cash flows from financing activities Unsecured short-term borrowings, net Other secured financings (short-term), net Proceeds from issuance of other secured financings (long-term) Repayment of other secured financings (long-term), including the current portion Purchase of Trust Preferred securities Proceeds from issuance of unsecured long-term borrowings Repayment of unsecured long-term borrowings, including the current portion Derivative contracts with a financing element, net Deposits, net Preferred stock redemption Common stock repurchased Settlement of share-based awards in satisfaction of withholding tax requirements Dividends and dividend equivalents paid on common stock, preferred stock and share-based awards Proceeds from issuance of preferred stock, net of issuance costs Other financing, net Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents, beginning balance Cash and cash equivalents, ending balance Year Ended December 2022 2021 2020 $ 11,261 $ 21,635 $ 9,459 2,455 (2,412) 4,083 – 2,715 35,014 (100,996) 45,278 8,062 3,161 87 8,708 (3,748) 2,706 (2,115) (60,536) 12,961 (25,228) (75,960) 2,015 5 2,348 – 357 21,971 (70,058) 15,232 26,616 (5,556) (8,267) 6,298 (4,667) 3,933 – (39,912) 45,701 (35,520) (30,465) 1,902 (833) 1,920 (1) 3,098 (30,895) (13,007) (33,405) 44,892 1,820 (3,485) (18,535) (6,309) 2,970 (231) (48,670) 29,057 (11,173) (34,356) 321 (2,283) 1,800 (3,407) – 84,522 (42,806) 1,797 28,074 – (3,500) (1,595) (3,682) – 361 59,602 (11,561) (19,211) 261,036 7,707 2,861 8,073 (4,137) (11) 47,250 (55,040) 1,037 67,343 (350) (1,928) (830) (2,336) 349 392 70,380 4,807 22,296 133,546 $ 241,825 $ 261,036 $ 155,842 2,137 (1,320) 4,795 (6,590) – 92,717 (52,608) 1,121 103,538 (2,675) (5,200) (985) (2,725) 2,172 361 134,738 (5,377) 105,194 155,842 Supplemental disclosures: Cash payments for interest, net of capitalized interest Cash payments for income taxes, net See Notes 12 and 16 for information about non-cash activities. $ $ 19,022 $ 4,555 $ 5,521 $ 6,195 $ 9,091 2,754 The accompanying notes are an integral part of these consolidated financial statements. 126 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1. Description of Business The Goldman Sachs Group, Inc. (Group Inc. or parent together with its company), a Delaware corporation, consolidated subsidiaries (collectively, the firm), is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that institutions, governments includes corporations, and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world. financial Commencing with the fourth quarter of 2022, consistent with the firm's previously announced organizational changes, the firm began managing and reporting its activities in the following three business segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Prior periods are presented on a comparable basis. institutions, Global Banking & Markets The firm provides a broad range of services to a diverse group of corporations, investment financial funds and governments. Services include strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs, and equity and debt underwriting of public offerings and private placements. The firm facilitates client transactions and makes markets in fixed income, equity, currency and commodity products. In addition, the firm makes markets in and clears institutional client transactions on major stock, options and futures exchanges worldwide and provides prime brokerage and other equities financing activities, including securities lending, margin lending and swaps. The firm also provides lending to corporate clients, including through relationship lending and acquisition financing, and secured lending, through structured credit and asset-backed lending. In addition, the firm provides financing through securities purchased under agreements to resell (resale agreements) and provides securities-based loans to individuals. The firm also makes equity and debt investments related to Global Banking & Markets activities. Asset & Wealth Management The firm manages assets and offers investment products across all major asset classes to a diverse set of clients, both institutional and individuals, including through a network of third-party distributors around the world. The firm also provides investing and wealth advisory solutions, including financial planning and counseling, and executing brokerage transactions for wealth management clients. The firm issues to wealth management clients, accepts deposits loans through its consumer banking digital platform, Marcus by Goldman Sachs (Marcus), and through its private bank, and provides investing services through Marcus Invest to U.S. customers. The firm has also issued unsecured loans to consumers through Marcus and has started a process to cease offering new loans. The firm makes equity investments, which include investing activities related to public and private equity investments in corporate, real estate and infrastructure assets, as well as through consolidated investment entities, substantially all of which are engaged in real estate investment activities. The firm also invests in debt instruments and engages in lending activities to middle-market clients, and provides financing for real estate and other assets. investments cards credit firm issues Platform Solutions partnership The arrangements and provides point-of-sale financing through GreenSky, Inc. (GreenSky) to consumers. The firm also provides transaction banking and other services, including such as deposit-taking and cash management payment solutions for corporate and institutional clients. services, through Note 2. Basis of Presentation These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and include the accounts of Group Inc. and all other entities in which the firm has a controlling financial interest. Intercompany transactions and balances have been eliminated. All references to 2022, 2021 and 2020 refer to the firm’s years ended, or the dates, as the context requires, December 31, 2022, December 31, 2021 and December 31, 2020, respectively. Any reference to a future year refers to a year ending on December 31 of that year. Certain reclassifications have been made to previously reported amounts to conform to the current presentation. Goldman Sachs 2022 Form 10-K 127 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 3. Significant Accounting Policies The firm’s significant accounting policies include when and how to measure the fair value of assets and liabilities, measuring the allowance for credit losses on loans and lending commitments accounted for at amortized cost, and when to consolidate an entity. See Note 4 for policies on fair value measurements, Note 9 for policies on the allowance for losses, and below and Note 17 for policies on credit consolidation accounting. All other significant accounting policies are either described below or included in the following footnotes: Fair Value Measurements Fair Value Hierarchy Trading Assets and Liabilities Derivatives and Hedging Activities Investments Loans Fair Value Option Collateralized Agreements and Financings Other Assets Deposits Unsecured Borrowings Other Liabilities Securitization Activities Variable Interest Entities Commitments, Contingencies and Guarantees Shareholders’ Equity Regulation and Capital Adequacy Earnings Per Common Share Transactions with Affiliated Funds Interest Income and Interest Expense Income Taxes Business Segments Credit Concentrations Legal Proceedings Employee Benefit Plans Employee Incentive Plans Parent Company Note 4 Note 5 Note 6 Note 7 Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Note 14 Note 15 Note 16 Note 17 Note 18 Note 19 Note 20 Note 21 Note 22 Note 23 Note 24 Note 25 Note 26 Note 27 Note 28 Note 29 Note 30 128 Goldman Sachs 2022 Form 10-K Consolidation The firm consolidates entities in which the firm has a controlling financial interest. The firm determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE). Voting Interest Entities. Voting interest entities are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the firm has a controlling majority voting interest in a voting interest entity, the entity is consolidated. Variable Interest Entities. A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. The firm has a controlling financial interest in a VIE when the firm has a variable interest or interests that provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. See Note 17 for further information about VIEs. Equity-Method Investments. When the firm does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is generally accounted for at fair value by electing the fair value option available under U.S. GAAP. Significant influence generally exists when the firm owns 20% to 50% of the entity’s common stock or in- substance common stock. In certain cases, the firm applies the equity method of accounting to new investments that are strategic in nature or closely related to the firm’s principal business activities, when the firm has a significant degree of involvement in the cash flows or operations of the investee or when cost-benefit considerations are less significant. See Note 8 for further information about equity-method investments. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements funds are limited partnerships or Investment Funds. The firm has formed investment funds with third-party investors. These typically organized as limited liability companies for which the firm acts as general partner or manager. Generally, the firm does not hold a majority of the economic interests in these funds. These funds are usually voting interest entities and generally are not consolidated because to terminate the funds or to remove the firm as general partner or manager. in these funds are generally measured at net asset value (NAV) and are included in investments. See Notes 8, 18 and 22 for further information about investments in funds. third-party investors typically have Investments rights Use of Estimates statements consolidated financial Preparation of these certain estimates and to make requires management assumptions, the most important of which relate to fair value measurements, the allowance for credit losses on loans and lending commitments accounted for at amortized cost, accounting for goodwill and identifiable intangible assets, provisions for losses that may arise from litigation and regulatory governmental investigations), and accounting for income taxes. These estimates and assumptions are based on the best available information, but actual results could be materially different. proceedings (including Revenue Recognition Financial Assets and Liabilities at Fair Value. Trading assets and liabilities and certain investments are carried at fair value either under the fair value option or in accordance with other U.S. GAAP. In addition, the firm has elected to account for certain of its loans and other financial assets and liabilities at fair value by electing the fair value option. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. Fair value gains or losses are generally included in market making or further other principal information about fair value measurements. transactions. See Note 4 for firm Revenue from Contracts with Clients. The recognizes revenue earned from contracts with clients for services, investment investment management, and execution and clearing (contracts with clients), when the performance obligations related to the underlying transaction are completed. banking, such as total clients non-interest from contracts with Revenues represent approximately 50% of total non-interest revenues for 2022 investment banking (including approximately 85% of revenues, approximately 95% of investment management revenues and all commissions and fees), approximately 45% of (including revenues approximately 90% of both investment banking revenues and investment management revenues, and all commissions and fees), and approximately 45% of total non-interest for 2020 (including approximately 90% of revenues approximately 95% of investment banking investment management revenues and all commissions and fees). See Note 25 for information about net revenues by business segment. revenues, 2021 for Investment Banking Advisory. Fees from financial advisory assignments are recognized in revenues when the services related to the underlying transaction are completed under the terms of the and milestone assignment. Non-refundable payments in connection with financial advisory assignments are the recognized in revenues upon completion of underlying transaction or when the assignment is otherwise concluded. deposits Expenses associated with financial advisory assignments are recognized when incurred and are included in transaction based expenses. Client reimbursements for such expenses are included in investment banking revenues. Underwriting. Fees from underwriting assignments are recognized in revenues upon completion of the underlying transaction based on the terms of the assignment. Expenses associated with underwriting assignments are generally deferred until the related revenue is recognized or the assignment is otherwise concluded. Such expenses are for completed included in transaction based expenses assignments. Goldman Sachs 2022 Form 10-K 129 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Investment Management The firm earns management fees and incentive fees for investment management services, which are included in investment management revenues. The firm makes payments to brokers and advisors related to the placement of the firm’s investment funds (distribution fees), which are included in transaction based expenses. Management Fees. Management fees for mutual funds are calculated as a percentage of daily net asset value and are received monthly. Management fees for hedge funds and separately managed accounts are calculated as a percentage of month-end net asset value and are generally received quarterly. Management fees for private equity funds are calculated as a percentage of monthly invested capital or committed capital and are received quarterly, semi-annually or annually, depending on the fund. Management fees are recognized over time in the period the services are provided. Distribution fees paid by the firm are calculated based on either a percentage of the management fee, the investment fund’s net asset value or the committed capital. Such fees are included in transaction based expenses. Incentive Fees. Incentive fees are calculated as a percentage of a fund’s or separately managed account’s return, or excess return above a specified benchmark or other performance target. Incentive fees are generally based on investment performance over a twelve-month period or over the life of a fund. Fees that are based on performance over a twelve- month period are subject to adjustment prior to the end of the measurement period. For that are based on investment performance over the life of the fund, future investment underperformance may require fees previously distributed to the firm to be returned to the fund. fees Incentive fees earned from a fund or separately managed account are recognized when it is probable that a significant reversal of such fees will not occur, which is generally when such fees are no longer subject to fluctuations in the market value of investments held by the fund or separately managed account. Therefore, incentive fees recognized during the period may relate to performance obligations satisfied in previous periods. 130 Goldman Sachs 2022 Form 10-K Commissions and Fees The firm earns substantially all commissions and fees from executing and clearing client transactions on stock, options and futures markets, as well as over-the-counter (OTC) transactions. Commissions and fees are recognized on the day the trade is executed. The firm also provides third-party research services to clients in connection with certain soft- dollar arrangements. Third-party research costs incurred by the firm in connection with such arrangements are presented net within commissions and fees. Remaining Performance Obligations Remaining performance obligations are services that the firm has committed to perform in the future in connection with its contracts with clients. The firm’s remaining performance obligations are generally related to its financial advisory assignments and certain investment management activities. Revenues associated with remaining performance obligations relating to financial advisory assignments cannot be determined until the outcome of the transaction. For the firm’s investment management activities, where fees are calculated based on the net asset value of the fund or separately managed account, future revenues associated with such be determined as such fees are subject to fluctuations in the market value of investments held by the fund or separately managed account. performance obligations remaining cannot The firm is able to determine the future revenues associated with management fees calculated based on committed capital. As of December 2022, substantially all future net revenues associated with such remaining performance obligations will be recognized through 2030. Annual revenues associated with such performance obligations average less than $300 million through 2030. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when the firm has relinquished control over the assets transferred. For transfers of financial assets accounted for as sales, any gains or losses are recognized in net revenues. Assets or liabilities that arise from the firm’s continuing involvement with transferred financial assets are initially recognized at fair value. For transfers of financial assets that are not accounted for as sales, the assets are generally included in trading assets and the transfer is accounted for as a collateralized financing, with the related interest expense recognized over the life of the transaction. See Note 11 for further financial assets accounted for as collateralized financings and Note 16 for further financial assets accounted for as sales. information about information about transfers of transfers of THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Cash and Cash Equivalents The firm defines cash equivalents as highly liquid overnight deposits held in the ordinary course of business. Cash and cash equivalents included cash and due from banks of $7.87 billion as of December 2022 and $10.14 billion as of December 2021. Cash and cash equivalents also included interest-bearing deposits with banks of $233.96 billion as of December 2022 and $250.90 billion as of December 2021. The firm segregates cash for regulatory and other purposes related to client activity. Cash and cash equivalents segregated for regulatory and other purposes were $16.94 billion as of December 2022 and $24.87 billion as of December 2021. In addition, the firm segregates securities for regulatory and other purposes related to client activity. See Note 11 for further information about segregated securities. Customer and Other Receivables Customer and other receivables included receivables from customers and counterparties of $67.88 billion as of December 2022 and $103.82 billion as of December 2021, and receivables from brokers, dealers and clearing organizations of $67.57 billion as of December 2022 and $56.85 billion as of December 2021. Such receivables primarily consist of collateral posted in connection with certain derivative transactions, customer margin loans and receivables resulting from unsettled transactions. Substantially all of these receivables are accounted for at amortized cost net of any allowance for credit losses, which generally approximates fair value. As these receivables are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these receivables been included in the firm’s fair value hierarchy, substantially all would have been classified in level 2 as of both December 2022 and December 2021. See Note 10 for further information about customer and other receivables accounted for at fair value under the fair value option. Interest on customer and other receivables is recognized over the life of the transaction and included in interest income. Customer and other receivables includes receivables from contracts with clients and contract assets. Contract assets represent the firm’s right to receive consideration for services provided in connection with its contracts with clients for which collection is conditional and not merely subject to the passage of time. The firm’s receivables from contracts with clients were $3.01 billion as of both December 2022 and December 2021. As of both December 2022 and December 2021, contract assets were not material. Customer and Other Payables Customer and other payables included payables to customers and counterparties of $238.12 billion as of December 2022 and $241.93 billion as of December 2021, and payables to brokers, dealers and clearing organizations of $23.93 billion as of December 2022 and $10.00 billion as of December 2021. Such payables primarily consist of customer credit balances related to the firm’s prime brokerage activities. Customer and other payables are accounted for at cost plus accrued interest, which generally approximates fair value. As these payables are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these payables been included in the firm’s fair value hierarchy, substantially all would have been classified in level 2 as of both December 2022 and December 2021. Interest on customer and other payables is recognized over the life of the transaction and included in interest expense. Offsetting Assets and Liabilities To reduce credit exposures on derivatives and securities financing transactions, the firm may enter into master netting agreements or similar arrangements (collectively, netting agreements) with counterparties that permit it to offset receivables and payables with such counterparties. A netting agreement is a contract with a counterparty that permits net settlement of multiple transactions with that counterparty, including upon the exercise of termination rights by a non- defaulting party. Upon exercise of such termination rights, all transactions governed by the netting agreement are terminated and a net settlement amount is calculated. In addition, the firm receives and posts cash and securities collateral with respect to its derivatives and securities financing transactions, subject to the terms of the related arrangements credit (collectively, credit support agreements). An enforceable credit support agreement grants the non-defaulting party exercising termination rights the right to liquidate the collateral and apply the proceeds to any amounts owed. In order to assess enforceability of the firm’s right of setoff under netting and credit support agreements, the firm evaluates various factors, including applicable bankruptcy in the laws, jurisdiction of the parties to the agreement. statutes and regulatory provisions agreements support similar local or Derivatives are reported on a net-by-counterparty basis (i.e., the net payable or receivable for derivative assets and in the consolidated liabilities for a given counterparty) balance sheets when a legal right of setoff exists under an enforceable netting agreement. Resale agreements and securities sold under agreements to repurchase (repurchase agreements) and securities borrowed and loaned transactions with the same settlement date are presented on a net-by- counterparty basis in the consolidated balance sheets when such transactions meet certain settlement criteria and are subject to netting agreements. Goldman Sachs 2022 Form 10-K 131 troubled debt Troubled Debt Restructurings and Vintage Disclosures (ASC 326). In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments — Credit Losses (Topic 326) — Troubled Debt Restructurings and Vintage Disclosures.” This ASU eliminates the recognition and measurement guidance for (TDRs) and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. This ASU also requires enhanced disclosure for loans that have been charged off. The ASU became effective in January 2023 under a prospective approach. Adoption of this ASU did not have a material impact on the firm’s consolidated financial statements. restructurings Accounting for Obligations to Safeguard Crypto- Assets an Entity Holds for Platform Users (SAB 121). In March 2022, the SEC staff issued SAB 121 (SAB 121) — “Accounting for obligations to safeguard crypto-assets an entity holds for platform users.” SAB 121 adds interpretive guidance requiring an entity to recognize a liability on its balance sheet to reflect the obligation to safeguard the crypto-assets held for its platform users, along with a corresponding asset. The firm adopted SAB 121 in June 2022 under a modified retrospective approach and adoption did not have a material impact on the firm’s consolidated financial statements. Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASC 820). In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies contractual restriction on the sale of an equity security should not be considered in measuring its fair value. In addition, the ASU requires specific disclosures related to equity securities that are subject to contractual sale restrictions. The ASU is effective in January 2024 under a prospective approach. Early adoption is permitted. Adoption of this ASU is not expected to have a material impact on the firm’s consolidated financial statements. that a THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In the consolidated balance sheets, derivatives are reported net of cash collateral received and posted under enforceable credit support agreements, when transacted under an enforceable netting agreement. In the consolidated balance sheets, resale and repurchase agreements, and securities borrowed and loaned, are not reported net of the related cash and securities received or posted as collateral. See Note 11 for further information about collateral received and pledged, including rights to deliver or repledge collateral. See Notes 7 and 11 for further information about offsetting assets and liabilities. Foreign Currency Translation Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the date of the consolidated balance sheets and revenues and expenses are translated at average rates of exchange for the period. losses on Foreign currency transactions in nonfunctional currencies are recognized in earnings. Gains or losses on translation of the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included, net of hedges and taxes, consolidated statements of comprehensive income. remeasurement gains or in the Recent Accounting Developments Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform — Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU, as amended in 2022, provides optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. In addition, in January 2021 the FASB issued ASU No. 2021-01, “Reference Rate Reform — Scope,” which clarified the scope of ASC 848 relating to contract modifications. The firm adopted these ASUs upon issuance and elected to apply the relief available to certain modified derivatives. The adoption of these ASUs did not have a material impact on the firm’s consolidated financial statements. 132 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 4. Fair Value Measurements in an orderly transaction The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to include offer prices. Fair value measurements do not transaction costs. The firm measures certain financial assets and liabilities as a portfolio (i.e., based on its net exposure to market and/or credit risks). The best evidence of fair value is a quoted price in an active market. If quoted prices in active markets are not available, fair value is determined by reference to prices for similar instruments, quoted prices or recent transactions in less active markets, or internally developed models that primarily use market-based or independently sourced inputs, including, but not limited to, interest rates, volatilities, equity or debt prices, foreign exchange rates, commodity prices, credit spreads and funding spreads (i.e., the spread or difference between the interest rate at which a borrower could finance a given financial instrument relative to a benchmark interest rate). U.S. GAAP has a three-level hierarchy for disclosure of fair value measurements. This hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to level 1 inputs and the lowest priority to level 3 inputs. A financial instrument’s level in this hierarchy is based on the lowest level of input that is significant to its fair value measurement. In evaluating the significance of a valuation input, the firm considers, among other factors, a portfolio’s net risk exposure to that input. The fair value hierarchy is as follows: Inputs are unadjusted quoted prices in active Level 1. markets to which the firm had access at the measurement date for identical, unrestricted assets or liabilities. Level 2. Inputs to valuation techniques are observable, either directly or indirectly. Level 3. One or more inputs to valuation techniques are significant and unobservable. The fair values for substantially all of the firm’s financial assets and liabilities are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Certain level 2 and level 3 financial assets and liabilities may require valuation adjustments that a market participant would require to arrive at fair value for factors, such as counterparty and the firm’s credit quality, funding risk, transfer restrictions, liquidity and bid/offer spreads. Valuation adjustments are generally based on market evidence. The table below presents financial assets and liabilities carried at fair value. As of December $ in millions Total level 1 financial assets Total level 2 financial assets Total level 3 financial assets Investments in funds at NAV Counterparty and cash collateral netting Total financial assets at fair value 2022 2021 $ 194,698 $ 255,774 498,527 24,083 3,469 (66,041) $ 650,966 $ 715,812 485,134 26,048 2,941 (57,855) Total assets $ 1,441,799 $ 1,463,988 Total level 3 financial assets divided by: Total assets Total financial assets at fair value Total level 1 financial liabilities Total level 2 financial liabilities Total level 3 financial liabilities Counterparty and cash collateral netting Total financial liabilities at fair value 1.8% 4.0% 1.6% 3.4% $ 119,578 $ 110,030 403,627 29,169 (51,269) $ 447,584 $ 491,557 353,060 22,830 (47,884) Total liabilities $ 1,324,610 $ 1,354,062 Total level 3 financial liabilities divided by: Total liabilities Total financial liabilities at fair value 1.7% 5.1% 2.2% 5.9% In the table above: • Counterparty netting among positions classified in the same level is included in that level. • Counterparty and cash collateral netting represents the impact on derivatives of netting across levels. The table below presents a summary of level 3 financial assets. $ in millions Trading assets: Trading cash instruments Derivatives Investments Loans Other assets Total As of December 2022 2021 $ $ 1,734 $ 5,461 16,942 1,837 74 1,889 5,938 13,902 2,354 – 26,048 $ 24,083 Level 3 financial assets as of December 2022 increased compared with December 2021, primarily reflecting an increase in level 3 investments. See Note 5 for further (including information about information about unrealized gains and losses related to level 3 financial assets and transfers in and out of level 3). level 3 financial assets The valuation techniques and nature of significant inputs used to determine the fair value of the firm’s financial instruments are described below. See Note 5 for further information about significant unobservable inputs used to value level 3 financial instruments. Goldman Sachs 2022 Form 10-K 133 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Inputs for Valuation Techniques and Significant Trading Cash Instruments, Investments and Loans Level 1. Level 1 instruments include U.S. government obligations, most non-U.S. government obligations, certain instruments, agency obligations, certain corporate debt certain money market instruments and actively traded listed equities. These instruments are valued using quoted prices for identical unrestricted instruments in active markets. The firm defines active markets for equity instruments based on the average daily trading volume both in absolute terms and relative to the market capitalization for the instrument. The firm defines active markets for debt instruments based on both the average daily trading volume and the number of days with trading activity. Level 2. Level 2 instruments include certain non-U.S. government obligations, most agency obligations, most mortgage-backed loans and securities, most corporate debt instruments, most state and municipal obligations, most money market instruments, most other debt obligations, restricted or less liquid listed equities, certain private equities, commodities and certain lending commitments. recent identical or trading activity for Valuations of level 2 instruments can be verified to quoted prices, similar instruments, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g., indicative or executable) and the relationship of recent market activity to the prices provided from alternative pricing sources. if the instrument typically made is subject to level 2 Valuation adjustments are instruments (i) to transfer restrictions and/or (ii) for other premiums and liquidity discounts that a market participant would require to arrive at fair value. Valuation adjustments are generally based on market evidence. Level 3. Level 3 instruments have one or more significant valuation inputs that are not observable. Absent evidence to the contrary, level 3 instruments are initially valued at transaction price, which is considered to be the best initial estimate of fair value. Subsequently, the firm uses other methodologies to determine fair value, which vary based on the type of instrument. Valuation inputs and assumptions are changed when corroborated by substantive observable evidence, including values realized on sales. 134 Goldman Sachs 2022 Form 10-K level 3 instruments vary by Valuation techniques of instrument, but are generally based on discounted cash flow techniques. The valuation techniques and the nature of significant inputs used to determine the fair values of each type of level 3 instrument are described below: Loans and Securities Backed by Commercial Real Estate Loans and securities backed by commercial real estate are directly or indirectly collateralized by a single property or a portfolio of properties, and may include tranches of varying levels of subordination. Significant inputs are generally determined based on relative value analyses and include: • Market yields implied by transactions of similar or related assets and/or current levels and changes in market indices, such as the CMBX (an index that tracks the performance of commercial mortgage bonds); • Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral; implied by the value of • A measure of expected future cash flows in a default the scenario (recovery rates) underlying collateral, which is mainly driven by current performance of the underlying collateral and capitalization rates. Recovery rates are expressed as a percentage of notional or face value of the instrument and reflect the benefit of credit enhancements on certain instruments; and • Timing of expected future cash flows (duration) which, in certain cases, may incorporate the impact of any loan forbearances (e.g., and prepayment speeds). unobservable inputs other Loans and Securities Backed by Residential Real Estate Loans and securities backed by residential real estate are directly or indirectly collateralized by portfolios of residential real estate and may include tranches of varying levels of subordination. Significant inputs are generally determined based on relative analyses, which incorporate comparisons to instruments with similar collateral and risk profiles. Significant inputs include: value • Market yields implied by transactions of similar or related assets; • Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral; • Cumulative loss expectations, driven by default rates, home price projections, residential property liquidation timelines, related costs and subsequent recoveries; and • Duration, driven by underlying loan prepayment speeds and residential property liquidation timelines. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Corporate Debt Instruments Corporate debt instruments includes corporate loans, debt securities and convertible debentures. Significant inputs for corporate debt instruments are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for which observable prices or broker quotations are available. Significant inputs include: the same or similar issuer for • Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices, such as the CDX (an index that tracks the performance of corporate credit); • Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related instrument, the cost of borrowing the underlying reference obligation; • Duration; and • Market and transaction multiples for corporate debt instruments with convertibility or participation options. Equity Securities Equity securities consists of private equities. Recent third- party completed or pending transactions (e.g., merger proposals, debt restructurings, tender offers) are considered the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate: • Industry multiples (primarily EBITDA and revenue multiples) and public comparables; • Transactions in similar instruments; • Discounted cash flow techniques; and • Third-party appraisals. The firm also considers changes in the outlook for the relevant industry and financial performance of the issuer as compared to projected performance. Significant inputs include: • Market and transaction multiples; • Discount rates and capitalization rates; and • For equity securities with debt-like features, market yields implied by transactions of similar or related assets, current performance and recovery assumptions, and duration. Investments and Other Trading Cash Instruments, Loans The significant inputs to the valuation of other instruments, such as non-U.S. government and agency obligations, state loans and debt and municipal obligations, and other obligations are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for the same issuer for which observable prices or broker quotations are available. Significant inputs include: • Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices; • Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related instrument, the cost of borrowing the underlying reference obligation; and • Duration. Inputs for Valuation Techniques and Significant Derivatives The firm’s level 2 and level 3 derivatives are valued using derivative pricing models (e.g., discounted cash flow models, correlation models and models that incorporate option pricing methodologies, such as Monte Carlo simulations). Price be of characterized by product type, as described below. transparency derivatives generally can • Interest Rate. In general, the key inputs used to value interest rate derivatives are transparent, even for most long-dated contracts. Interest rate swaps and options denominated in the currencies of leading industrialized nations are characterized by high trading volumes and tight bid/offer spreads. Interest rate derivatives that reference indices, such as an inflation index, or the shape of the yield curve (e.g., 10-year swap rate vs. 2-year swap rate) are more complex, but the key inputs are generally observable. swaps indices, reference • Credit. Price transparency for credit default swaps, including both single names and baskets of credits, varies by market and underlying reference entity or obligation. large that Credit default corporates and major sovereigns generally exhibit the most price transparency. For credit default swaps with other underliers, price transparency varies based on credit rating, the cost of borrowing the underlying reference obligations, and the availability of the underlying reference obligations for delivery upon the default of the issuer. Credit default swaps that reference loans, asset-backed securities and emerging market debt instruments tend to have less price transparency than those that reference corporate bonds. In addition, more complex credit derivatives, such as those sensitive correlation between two or more underlying reference obligations, generally have less price transparency. to the Goldman Sachs 2022 Form 10-K 135 inputs, such as Valuation models require a variety of contractual terms, market prices, yield curves, discount rates (including those derived from interest rates on collateral received and posted as specified in credit support agreements for collateralized derivatives), credit curves, measures of volatility, prepayment and correlations of to the such inputs. Significant valuations of level 2 derivatives can be verified to market transactions, broker or dealer quotations or other alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g., indicative or executable) and the relationship of recent market activity to the prices provided from alternative pricing sources. severity inputs rates, rates loss Level 3. Level 3 derivatives are valued using models which utilize observable level 1 and/or level 2 inputs, as well as unobservable level 3 inputs. The significant unobservable inputs used to value the firm’s level 3 derivatives are described below. • For level 3 interest rate and currency derivatives, significant certain unobservable include currencies and interest rates (e.g., the correlation between Euro inflation and Euro interest rates) and specific interest rate and currency volatilities. correlations of inputs • For level 3 credit derivatives, significant unobservable inputs include illiquid credit spreads and upfront credit points, which are unique to specific reference obligations and reference entities, and recovery rates. • For level 3 commodity derivatives, significant unobservable inputs include volatilities for options with strike prices that differ significantly from current market prices and prices or spreads for certain products for which the product quality or physical location of the commodity is not aligned with benchmark indices. • For level 3 equity derivatives, significant unobservable inputs generally include equity volatility inputs for options that are long-dated and/or have strike prices that differ significantly from current market prices. In addition, the valuation of certain structured trades requires the use of level 3 correlation inputs, such as the correlation of the price performance of two or more individual stocks or the correlation of the price performance for a basket of stocks to another asset class, such as commodities. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements • Currency. Prices for currency derivatives based on the exchange rates of leading industrialized nations, including those with longer tenors, are generally transparent. The primary difference between the price transparency of developed and emerging market currency derivatives is that emerging markets tend to be only observable for contracts with shorter tenors. • Commodity. Commodity derivatives include transactions referenced to energy (e.g., oil, natural gas and electricity), metals (e.g., precious and base) and soft commodities (e.g., agricultural). Price transparency varies based on the underlying commodity, delivery location, tenor and product quality (e.g., diesel fuel compared to unleaded gasoline). In general, price transparency for commodity derivatives is greater for contracts with shorter tenors and contracts that are more closely aligned with major and/or benchmark commodity indices. • Equity. Price transparency for equity derivatives varies by market and underlier. Options on indices and the common stock of corporates included in major equity indices exhibit the most price transparency. Equity derivatives generally have observable market prices, except for contracts with long tenors or reference prices that differ significantly from current market prices. More complex equity derivatives, such as those sensitive to the correlation between two or more less price transparency. generally have individual stocks, Liquidity is essential to the observability of all product types. If transaction volumes decline, previously transparent prices and other inputs may become unobservable. Conversely, even highly structured products may at times have trading volumes large enough to provide observability of prices and other inputs. Level 1. Level 1 derivatives include short-term contracts for future delivery of securities when the underlying security is a level 1 instrument, and exchange-traded derivatives if they are actively traded and are valued at their quoted market price. Level 2. Level 2 derivatives include OTC derivatives for which all significant valuation inputs are corroborated by market evidence and exchange-traded derivatives that are not actively traded and/or that are valued using models that calibrate to market-clearing levels of OTC derivatives. The selection of a particular model to value a derivative depends on the contractual terms of and specific risks inherent in the instrument, as well as the availability of pricing information in the market. For derivatives that trade in liquid markets, model selection does not involve significant management judgment because outputs of models can be calibrated to market-clearing levels. 136 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements by such evidence, Subsequent to the initial valuation of a level 3 derivative, the firm updates the level 1 and level 2 inputs to reflect observable market changes and any resulting gains and losses are classified in level 3. Level 3 inputs are changed when similar market corroborated transactions, third-party pricing services and/or broker or dealer quotations or other empirical market data. In circumstances where the firm cannot verify the model value by reference to market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. See Note 5 for further information about significant unobservable inputs used in the valuation of level 3 derivatives. as adjustments incorporate bid/offer Valuation Adjustments. Valuation are integral to determining the fair value of derivative portfolios and are used to adjust the mid-market valuations produced by derivative pricing models to the exit price valuation. These adjustments the cost of liquidity, and credit and funding valuation adjustments, which account for the credit and funding risk inherent in the uncollateralized portion of derivative portfolios. The firm also makes funding valuation adjustments to collateralized derivatives where the terms of the agreement do not permit the firm to deliver or repledge collateral received. Market- based inputs are generally used when calibrating valuation adjustments to market-clearing levels. spreads, for derivatives In addition, significant unobservable inputs, the firm makes model or exit price adjustments to account for the valuation uncertainty present in the transaction. include that Valuation Techniques and Significant Inputs for Other Financial Instruments at Fair Value In addition to trading cash instruments, derivatives, and certain investments and loans, the firm accounts for certain of its other financial assets and liabilities at fair value under the fair value option. Such instruments include resale and repurchase agreements; certain securities borrowed and loaned transactions; certain customer and other receivables, including certain margin loans; certain time deposits, including structured certificates of deposit, which are hybrid instruments; financial secured including transfers of assets accounted for as financings, financings; long-term borrowings, substantially all of which are hybrid financial instruments; and certain other assets and liabilities. These instruments are generally valued based on discounted cash flow techniques, which incorporate inputs with reasonable levels of price transparency, and are generally classified in level 2 because the inputs are observable. Valuation adjustments may be made for liquidity and for counterparty and the firm’s credit quality. The significant inputs used to value the firm’s other financial instruments are described below. substantially all other unsecured certain short- and Resale and Repurchase Agreements and Securities Borrowed and Loaned. The significant inputs to the valuation of resale and repurchase agreements and securities borrowed and loaned are funding spreads, the amount and timing of expected future cash flows and interest rates. Customer and Other Receivables. The significant inputs to the valuation of receivables are interest rates, the amount and timing of expected future cash flows and funding spreads. Deposits. The significant inputs to the valuation of time deposits are interest rates and the amount and timing of future cash flows. The inputs used to value the embedded instruments are derivative component of hybrid financial consistent with the inputs used to value the firm’s other derivative instruments described above. See Note 7 for further information about derivatives and Note 13 for further information about deposits. Other Secured Financings. The significant inputs to the valuation of other secured financings are the amount and timing of expected future cash flows, interest rates, funding spreads and the fair value of the collateral delivered by the firm (determined using the amount and timing of expected future cash flows, market prices, market yields and recovery assumptions). See Note 11 for further information about other secured financings. Unsecured Short- and Long-Term Borrowings. The significant inputs to the valuation of unsecured short- and long-term borrowings are the amount and timing of expected future cash flows, interest rates, the credit spreads of the firm and commodity prices for prepaid commodity transactions. The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firm’s other derivative instruments described above. See Note 7 for further information about derivatives and Note 14 for further information about borrowings. Other Assets and Liabilities. The significant inputs to the valuation of other assets and liabilities are the amount and timing of expected future cash flows, interest rates, market yields, volatility and correlation inputs. The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firm’s other derivative instruments described above. See Note 7 for further information about derivatives. Goldman Sachs 2022 Form 10-K 137 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 5. Fair Value Hierarchy Financial assets and liabilities at fair value includes trading cash instruments, derivatives, and certain investments, loans and other financial assets and liabilities at fair value. Fair Value of Trading Cash Instruments by Level The table below presents trading cash instruments by level within the fair value hierarchy. $ in millions As of December 2022 Assets Government and agency obligations: Level 1 Level 2 Level 3 Total U.S. Non-U.S. $ 75,598 $ 31,783 $ 22,794 15,238 – $ 107,381 38,099 67 Loans and securities backed by: Commercial real estate Residential real estate Corporate debt instruments State and municipal obligations Other debt obligations Equity securities Commodities Total – – 249 – 27 44,909 – 1,201 9,794 29,042 727 2,529 47,150 5,909 $ 143,577 $ 96,521 $ 1,734 $ 241,832 1,135 9,706 27,555 707 2,349 2,141 5,907 66 88 1,238 20 153 100 2 Liabilities Government and agency obligations: U.S. Non-U.S. $ (23,339) $ (28,537) (36) $ (2,172) – $ (23,375) (30,709) – Loans and securities backed by: Commercial real estate Residential real estate Corporate debt instruments Other debt obligations Equity securities Commodities Total – – (64) – (67,591) – (30) (16) (14,217) (35) (488) – $(119,531) $ (16,994) $ – – (61) (2) (1) – (30) (16) (14,342) (37) (68,080) – (64) $(136,589) As of December 2021 Assets Government and agency obligations: U.S. Non-U.S. $ 63,388 $ 27,427 $ 35,284 13,511 – $ 90,815 48,814 19 Loans and securities backed by: Commercial real estate Residential real estate Corporate debt instruments State and municipal obligations Other debt obligations Equity securities Commodities Total – – 590 – 69 105,233 – 1,854 13,235 38,782 604 1,699 108,347 7,806 $ 204,564 $ 105,503 $ 1,889 $ 311,956 1,717 13,083 36,874 568 1,564 2,958 7,801 137 152 1,318 36 66 156 5 Liabilities Government and agency obligations: U.S. Non-U.S. $ (21,002) $ (39,983) (25) $ (2,602) – $ (21,027) (42,585) – Loans and securities backed by: Commercial real estate Residential real estate Corporate debt instruments Equity securities Total – – (23) (48,991) (42) (5) (15,875) (49,937) $(109,999) $ (19,368) $ (104) $ (129,471) (40) (5) (15,781) (915) (2) – (71) (31) 138 Goldman Sachs 2022 Form 10-K Trading cash instruments consists of instruments held in risk connection with management activities. These instruments are carried at fair value and the related fair value gains and losses are recognized in the consolidated statements of earnings. firm’s market-making the or In the table above: • Trading cash instrument assets are shown as positive amounts and trading cash instrument liabilities are shown as negative amounts. • Corporate debt instruments includes corporate loans, debt securities, convertible debentures, prepaid commodity transactions and transfers of assets accounted for as secured loans rather than purchases. • Other debt obligations includes other asset-backed securities and money market instruments. • Equity securities includes public equities and exchange- traded funds. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of trading cash instruments. Significant Unobservable Inputs for Trading Cash Instrument Assets The table below presents the amount of level 3 assets, and ranges and weighted averages of significant unobservable inputs used to value level 3 trading cash instrument assets. As of December 2022 As of December 2021 Amount or Range Weighted Average Amount or Range Weighted Average $ 154 3.0% to 36.0% 35.8% to 76.1% 3.7% to 29.9% 0.9 to 12.3 $ in millions Loans and securities backed by real estate Level 3 assets Yield Recovery rate Cumulative loss rate Duration (years) Corporate debt instruments Level 3 assets Yield Recovery rate Duration (years) Other Level 3 assets Yield Multiples Duration (years) 1,238 1.1% to 34.3% 11.5% to 77.0% 0.3 to 20.3 342 2.8% to 47.8% 3.3x to 4.5x 1.2 to 14.4 $ $ $ 289 14.2% 0.4% to 28.5% 9.7% 54.7% 5.1% to 86.5% 55.0% 10.4% 0.1% to 43.4% 17.7% 4.3 0.1 to 17.2 4.6 $ 1,318 6.9% 0.0% to 18.0% 7.1% 48.0% 9.0% to 69.9% 52.0% 4.5 2.0 to 28.5 4.5 $ 282 10.0% 1.1% to 44.8% N/A 0.9 to 5.2 4.3x 6.1 9.4% N/A 2.4 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In the table above: • Other includes government and agency obligations, state and municipal obligations, other debt obligations, equity securities and commodities. the significant unobservable inputs for multiples as of December 2021 did not have a range (and there was no weighted average) as each pertained to a single position. Therefore, such unobservable inputs are not included in the table above. In other, • Ranges represent the significant unobservable inputs that were used in the valuation of each type of trading cash instrument. • Weighted averages are calculated by weighting each input by the relative fair value of the trading cash instruments. • The ranges and weighted averages of these inputs are not representative of the appropriate inputs to use when calculating the fair value of any one trading cash instrument. For example, the highest recovery rate for corporate debt instruments is appropriate for valuing a instrument, but may not be specific corporate debt corporate debt valuing appropriate instrument. Accordingly, inputs do not represent uncertainty in, or possible ranges of, fair value measurements of level 3 trading cash instruments. any other the ranges of for • Increases in yield, duration or cumulative loss rate used in the valuation of level 3 trading cash instruments would have resulted in a lower fair value measurement, while increases in recovery rate or multiples would have resulted in a higher fair value measurement as of both December 2022 and December 2021. Due to the distinctive nature of each level 3 trading cash instrument, the interrelationship of inputs is not necessarily uniform within each product type. • Trading cash instruments are valued using discounted cash flows. Level 3 Rollforward for Trading Cash Instruments The table below presents a summary of the changes in fair value for level 3 trading cash instruments. $ in millions Assets Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Liabilities Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g In the table above: Year Ended December 2021 2022 $ $ $ $ 1,889 $ 167 (1,889) 1,271 (704) (345) 1,680 (335) 1,734 $ (104) $ 18 65 137 (106) 5 (89) 10 (64) $ 1,237 80 52 1,241 (456) (273) 272 (264) 1,889 (80) 6 (5) 36 (64) 13 (16) 6 (104) • Changes in fair value are presented for all trading cash instruments that are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to trading cash instruments that were still held at period-end. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If a trading cash instrument was transferred to level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. • For level 3 trading cash instrument assets, increases are shown as positive amounts, while decreases are shown as negative amounts. For level 3 trading cash instrument liabilities, increases are shown as negative amounts, while decreases are shown as positive amounts. • Level 3 are cash trading instruments frequently economically hedged with level 1 and level 2 trading cash instruments and/or level 1, level 2 or level 3 derivatives. Accordingly, gains or losses that are classified in level 3 can be partially offset by gains or losses attributable to level 1 or level 2 trading cash instruments and/or level 1, level 2 or level 3 derivatives. As a result, gains or losses included in the level 3 rollforward below do not necessarily represent impact on the firm’s results of operations, the overall liquidity or capital resources. Goldman Sachs 2022 Form 10-K 139 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information, by product type, for assets included in the summary table above. $ in millions Loans and securities backed by real estate Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Corporate debt instruments Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Other Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Year Ended December 2021 2022 $ $ $ $ $ $ 289 $ 11 (11) 51 (127) (26) 19 (52) 154 $ 1,318 $ 29 (111) 607 (372) (247) 278 (264) 1,238 $ 282 $ 127 (1,767) 613 (205) (72) 1,383 (19) 342 $ 334 12 3 135 (75) (53) 42 (109) 289 797 57 28 894 (330) (182) 207 (153) 1,318 106 11 21 212 (51) (38) 23 (2) 282 In the table above, other includes government and agency obligations, state and municipal obligations, other debt obligations, equity securities and commodities. Level 3 Rollforward Commentary for Trading Cash Instruments Year Ended December 2022. The net realized and unrealized losses on level 3 trading cash instrument assets of $1.72 billion (reflecting $167 million of net realized gains and $1.89 billion of net unrealized losses) for 2022 included gains/ (losses) of $(1.77) billion reported in market making and $54 million reported in interest income. The net unrealized losses on level 3 trading cash instrument assets for 2022 primarily reflected losses on certain equity securities (included in other cash instruments), principally driven by broad macroeconomic and geopolitical concerns. Transfers into level 3 trading cash instrument assets during 2022 primarily reflected transfers of certain equity securities (included in other cash instruments) and corporate debt instruments from both level 1 and level 2 (in each case, principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 trading cash instrument assets during 2022 primarily reflected transfers of certain corporate debt instruments to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments). Year Ended December 2021. The net realized and unrealized gains on level 3 trading cash instrument assets of $132 million (reflecting $80 million of net realized gains and $52 million of net unrealized gains) for 2021 included gains of $45 million reported in market making and $87 million reported in interest income. The drivers of the net unrealized gains on level 3 trading cash instrument assets for 2021 were not material. Transfers into level 3 trading cash instrument assets during 2021 primarily reflected transfers of certain corporate debt instruments to certain from level 2 (principally due unobservable yield and duration inputs becoming significant to the valuation of these instruments, and reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 trading cash instrument assets during 2021 primarily reflected transfers of certain corporate debt instruments, and loans and securities backed by real estate to level 2 (in each case, principally due to increased price transparency as a result of market evidence, including market transactions in these instruments, and certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments). 140 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Fair Value of Derivatives by Level The table below presents derivatives on a gross basis by level and product type, as well as the impact of netting. $ in millions As of December 2022 Assets Interest rates Credit Currencies Commodities Equities Gross fair value Counterparty netting in levels Subtotal Cross-level counterparty netting Cash collateral netting Net fair value Liabilities Interest rates Credit Currencies Commodities Equities Gross fair value Counterparty netting in levels Subtotal Cross-level counterparty netting Cash collateral netting Net fair value As of December 2021 Assets Interest rates Credit Currencies Commodities Equities Gross fair value Counterparty netting in levels Subtotal Cross-level counterparty netting Cash collateral netting Net fair value Liabilities Interest rates Credit Currencies Commodities Equities Gross fair value Counterparty netting in levels Subtotal Cross-level counterparty netting Cash collateral netting Net fair value Level 1 Level 2 Level 3 Total $ 69 $ 269,590 $ – – – 113 182 – 2,577 494 1,609 967 6,347 (886) 9,690 103,450 38,331 49,481 470,542 (358,917) 700 $ 270,359 12,267 103,944 39,940 50,561 477,071 (359,803) $ 182 $ 111,625 $ 5,461 $ 117,268 (1,079) (56,776) $ 59,413 $ $ $ $ $ $ – – – (15) (47) – (1,117) (332) (690) (1,528) (4,826) 886 (10,163) (111,840) (32,435) (55,240) (457,549) 358,917 (32) $(247,871) $ (1,159) $ (249,062) (11,280) (112,172) (33,125) (56,783) (462,422) 359,803 (47) $ (98,632) $ (3,940) $ (102,619) 1,079 46,805 $ (54,735) 3,433 237 1,044 963 6,742 (804) 12,823 86,773 34,501 72,570 453,192 (329,164) 2 $ 246,525 $ 1,065 $ 247,592 16,256 – 87,010 – 35,545 – 73,566 33 459,969 35 (329,968) – 35 $ 124,028 $ 5,938 $ 130,001 (1,924) (64,117) $ 63,960 (1,579) (384) (606) (2,851) (6,302) 804 (14,176) (85,925) (31,925) (77,393) (426,857) 329,164 (2) $ (217,438) $ – – – (29) (31) – (882) $ (218,322) (15,755) (86,309) (32,531) (80,273) (433,190) 329,968 (31) $ (97,693) $ (5,498) $ (103,222) 1,924 49,345 $ (51,953) In the table above: • Gross fair values exclude the effects of both counterparty netting and collateral netting, and therefore are not representative of the firm’s exposure. • Counterparty netting is reflected in each level to the extent that receivable and payable balances are netted within the same level and is included in counterparty netting in levels. Where the counterparty netting is across levels, the netting is included in cross-level counterparty netting. • Derivative assets are shown as positive amounts and derivative liabilities are shown as negative amounts. the firm’s fair value See Note 4 for an overview of measurement policies, valuation techniques and significant inputs used to determine the fair value of derivatives. Significant Unobservable Inputs for Derivatives The table below presents the amount of level 3 derivative assets (liabilities), and ranges, averages and medians of significant unobservable inputs used to value level 3 derivatives. As of December 2022 As of December 2021 $ in millions, except inputs Interest rates, net Correlation Volatility (bps) Credit, net Credit spreads (bps) Upfront credit points Recovery rates Currencies, net Correlation Volatility Commodities, net Amount or Range (459) Average/ Median Amount or Range 183 $ (10)% to 81% 61%/60% 25% to 81% 63%/62% 59/54 60/57 $ Average/ Median $ 31 to 100 1,854 1 to 568 2 to 100 $ 31 to 101 1,460 5 to 935 (1) to 100 136/107 34/26 20% to 50% 40%/40% 20% to 50% 37%/40% 149/116 29/18 $ 162 $ (147) 20% to 71% 40%/23% 20% to 71% 40%/41% 20% to 21% 20%/20% 19% to 19% 19%/19% $ 919 $ 438 Volatility 20% to 118% 50%/46% 15% to 93% 32%/29% Natural gas spread Oil spread Electricity price Equities, net Correlation Volatility $(3.21) to $5.85 $12.68 to $48.92 $3.00 to $329.28 $(0.20)/ $(0.27) $20.42/ $20.36 $47.19/ $39.69 $(1.33) to $2.60 $8.64 to $22.68 $1.50 to $289.96 $(0.11)/ $(0.07) $13.36/ $12.69 $37.42/ $32.20 (561) $ (75)% to 100% 66%/75% (70)% to 99% 59%/62% 2% to 74% 13%/7% 3% to 150% 17%/17% (1,888) $ In the table above: • Derivative assets are shown as positive amounts and derivative liabilities are shown as negative amounts. • Ranges represent the significant unobservable inputs that were used in the valuation of each type of derivative. Goldman Sachs 2022 Form 10-K 141 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements • Averages represent the arithmetic average of the inputs and are not weighted by the relative fair value or notional amount of the respective financial instruments. An average greater than the median indicates that the majority of inputs are below the average. For example, the difference between the average and the median for credit spreads indicates that the majority of the inputs fall in the lower end of the range. • The ranges, averages and medians of these inputs are not representative of the appropriate inputs to use when calculating the fair value of any one derivative. For example, the highest correlation for interest rate derivatives is appropriate for valuing a specific interest rate derivative but may not be appropriate for valuing any other interest rate derivative. Accordingly, the ranges of inputs do not represent uncertainty in, or possible ranges of, fair value measurements of level 3 derivatives. • Interest rates, currencies and equities derivatives are valued using option pricing models, credit derivatives are valued using option pricing, correlation and discounted cash flow models, and commodities derivatives are valued using option pricing and discounted cash flow models. • The fair value of any one instrument may be determined using multiple valuation techniques. For example, option pricing models and discounted cash flow models are typically used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques. • Correlation within currencies and equities includes cross- product type correlation. • Natural gas spread represents the spread per million British thermal units of natural gas. • Oil spread represents the spread per barrel of oil and refined products. • Electricity price represents the price per megawatt hour of electricity. of Significant Unobservable Range Derivatives The following provides information about the ranges of significant unobservable inputs used to value the firm’s level 3 derivative instruments: Inputs for • Correlation. Ranges for correlation cover a variety of underliers both within one product type (e.g., equity index and equity single stock names) and across product types (e.g., correlation of an interest rate and a currency), as well as across regions. Generally, cross-product type correlation inputs are used to value more complex instruments and are lower than correlation inputs on assets within the same derivative product type. 142 Goldman Sachs 2022 Form 10-K • Volatility. Ranges for volatility cover numerous underliers across a variety of markets, maturities and strike prices. For example, volatility of equity indices is generally lower than volatility of single stocks. • Credit spreads, upfront credit points and recovery rates. The ranges for credit spreads, upfront credit points and recovery rates cover a variety of underliers (index and single names), sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of significant unobservable inputs. regions, • Commodity prices and spreads. The ranges for cover variability in commodity prices and spreads products, maturities and delivery locations. Sensitivity of Fair Value Measurement to Changes in Significant Unobservable Inputs for Derivatives The following is a description of the directional sensitivity of the firm’s level 3 fair value measurements to changes in significant unobservable inputs, in isolation, as of each period-end: • Correlation. In general, for contracts where the holder benefits from the convergence of the underlying asset or index prices (e.g., interest rates, credit spreads, foreign inflation rates and equity prices), an exchange rates, increase in correlation results in a higher fair value measurement. • Volatility. In general, for purchased options, an increase in volatility results in a higher fair value measurement. In general, • Credit spreads, upfront credit points and recovery the fair value of purchased credit rates. protection increases as credit spreads or upfront credit points increase or recovery rates decrease. Credit spreads, upfront credit points and recovery rates are strongly related to distinctive risk factors of the underlying reference obligations, which include reference entity-specific factors, such as leverage, volatility and industry, market-based risk factors, such as borrowing costs or liquidity of the underlying reference obligation, and macroeconomic conditions. • Commodity prices and spreads. for contracts where the holder is receiving a commodity, an increase in the spread (price difference from a benchmark index due to differences in quality or delivery location) or price results in a higher fair value measurement. In general, Due to the distinctive nature of each of the firm’s level 3 derivatives, the interrelationship of inputs is not necessarily uniform within each product type. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Level 3 Rollforward for Derivatives The table below presents a summary of the changes in fair value for level 3 derivatives. The table below presents information, by product type, for derivatives included in the summary table above. $ in millions Total level 3 derivatives, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g In the table above: Year Ended December 2021 2022 $ $ 440 $ 839 1,817 510 (1,592) 100 (482) (111) 1,521 $ 1,175 265 452 501 (1,541) (59) (131) (222) 440 • Changes in fair value are presented for all derivative assets and liabilities that are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to instruments that were still held at period-end. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If a derivative was transferred into level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. • Positive amounts for transfers into level 3 and negative amounts for transfers out of level 3 represent net transfers of derivative assets. Negative amounts for transfers into level 3 and positive amounts for transfers out of level 3 represent net transfers of derivative liabilities. • A derivative with level 1 and/or level 2 inputs is classified in level 3 in its entirety if it has at least one significant level 3 input. • If there is one significant level 3 input, the entire gain or loss from adjusting only observable inputs (i.e., level 1 and level 2 inputs) is classified in level 3. • Gains or losses that have been classified in level 3 resulting from changes in level 1 or level 2 inputs are frequently offset by gains or losses attributable to level 1 or level 2 derivatives and/or level 1, level 2 and level 3 trading cash instruments. As a result, gains/(losses) included in the level 3 rollforward below do not necessarily represent the overall liquidity or impact on the firm’s results of operations, capital resources. $ in millions Interest rates, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Credit, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Currencies, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Commodities, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Equities, net Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Year Ended December 2021 2022 $ $ $ $ $ $ $ $ 183 $ 88 137 50 (585) (20) (13) (299) (459) $ 1,854 $ 217 (343) 107 (90) (27) (21) (237) 1,460 $ (147) $ 95 270 41 (36) 19 (83) 3 162 $ 438 $ (59) 741 31 (30) (245) 182 (139) 919 $ 267 72 316 124 (341) 18 2 (275) 183 1,778 (21) 409 53 (217) (77) (70) (1) 1,854 (338) 9 155 7 (10) 32 (17) 15 (147) 300 (80) 355 42 (15) (149) (3) (12) 438 $ (1,888) $ (832) 285 498 (783) 1,012 275 281 (958) (851) 117 373 (43) (547) 51 561 (561) $ (1,888) $ Goldman Sachs 2022 Form 10-K 143 The net unrealized gains on level 3 derivatives for 2021 were primarily attributable to gains on certain credit and currency derivatives (in each case, primarily reflecting the impact of changes in foreign exchange rates), gains on certain commodity derivatives (primarily reflecting the impact of an increase in commodity prices) and gains on certain interest rate derivatives (primarily reflecting the impact of an increase in interest rates), partially offset by losses on certain equity derivatives (primarily reflecting the impact of an increase in equity prices). The drivers of transfers into level 3 derivatives during 2021 were not material. Transfers out of level 3 derivatives during 2021 primarily reflected transfers of certain interest rate derivative assets to level 2 (principally due to increased transparency of certain volatility inputs used to value these derivatives). Fair Value of Investments by Level The table below presents investments accounted for at fair value by level within the fair value hierarchy. $ in millions As of December 2022 Government and agency obligations: Level 1 Level 2 Level 3 Total U.S. Non-U.S. Corporate debt securities Securities backed by real estate Money market instruments Other debt obligations Equity securities Subtotal Investments in funds at NAV Total investments – $ 66 2,950 176 957 3 3,227 $ 47,055 $ 2,169 145 – 48 – 1,522 – $ 47,055 2,235 – 10,098 7,003 1,003 827 1,005 – 256 259 13,605 8,856 $ 50,939 $ 7,379 $ 16,942 $ 75,260 2,941 $ 78,201 As of December 2021 Government and agency obligations: U.S. Non-U.S. Corporate debt securities Securities backed by real estate Money market instruments Other debt obligations Equity securities Subtotal Investments in funds at NAV Total investments – $ – 5,201 1,202 1,355 35 7,088 $ 46,322 $ 2,612 65 – 41 – 2,135 – $ 46,322 2,612 – 9,793 4,527 2,280 1,078 1,396 – 417 382 17,138 7,915 $ 51,175 $ 14,881 $ 13,902 $ 79,958 3,469 $ 83,427 See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of investments. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Level 3 Rollforward Commentary for Derivatives Year Ended December 2022. The net realized and unrealized gains on level 3 derivatives of $2.66 billion (reflecting $839 million of net realized gains and $1.82 billion of net unrealized gains) for 2022 included gains of $2.65 billion reported in market making and gains of $3 million reported in other principal transactions. The net unrealized gains on level 3 derivatives for 2022 were attributable to gains on certain equity derivatives (primarily reflecting the impact of a decrease in equity prices), gains on certain commodity derivatives (primarily reflecting the impact of an increase in commodity prices), gains on certain currency derivatives (primarily reflecting the impact of changes in foreign exchange rates and an increase in interest rates), and gains on certain interest rate derivatives (primarily reflecting the impact of an increase in interest rates), partially offset by losses on certain credit derivatives (primarily reflecting the impact of an increase in interest rates). Transfers into level 3 derivatives during 2022 primarily reflected transfers of certain equity derivative liabilities from level 2 (principally due to decreased transparency of certain these unobservable inputs derivatives), partially offset by certain commodity derivative assets from level 2 (principally due to inputs becoming certain unobservable significant to the valuation of these derivatives). to transfers of electricity price volatility value used Transfers out of level 3 derivatives during 2022 primarily reflected transfers of certain interest rate derivative assets to level 2 (principally due to certain unobservable volatility inputs no longer being significant to the valuation of these derivatives), certain credit derivative assets to level 2 (principally due to certain unobservable credit spread inputs to the net risk of certain no longer being significant portfolios), and certain commodity derivative assets to level 2 (principally due to certain unobservable natural gas spread and electricity price inputs no longer being significant to the valuation of these derivatives), partially offset by transfers of certain equity derivative liabilities to level 2 (principally due to certain unobservable volatility inputs no longer being significant to the valuation of these derivatives). Year Ended December 2021. The net realized and unrealized gains on level 3 derivatives of $717 million (reflecting $265 million of net realized gains and $452 million of net unrealized gains) for 2021 included gains of $700 million reported in market making and gains of $17 million reported in other principal transactions. 144 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Significant Unobservable Inputs for Investments The table below presents the amount of level 3 investments, and ranges and weighted averages of significant unobservable inputs used to value such investments. $ in millions As of December 2022 As of December 2021 Amount or Range Weighted Average Amount or Range Weighted Average 827 8.0% to 20.3% 7,003 5.0% to 21.8% 10.0% to 70.0% 1.3 to 5.7 1.8x to 83.4x $ $ Corporate debt securities Level 3 assets Yield Recovery rate Duration (years) Multiples Securities backed by real estate Level 3 assets Yield Recovery rate Duration (years) Other debt obligations Level 3 assets Yield Duration (years) Equity securities Level 3 assets Multiples Discount rate/yield Capitalization rate $ $ 8,856 0.5x to 34.3x 5.4% to 38.5% 4.0% to 10.8% 256 5.2% to 8.4% N/A N/A 0.6 to 4.2 In the table above: $ 4,527 11.6% 2.0% to 29.0% 55.5% 9.1% to 76.0% 1.4 to 6.4 0.5x to 28.2x 3.3 8.3x $ 1,078 14.6% 8.3% to 20.3% N/A 55.1% to 61.0% 0.1 to 2.6 4.1 $ 382 7.4% 2.3% to 10.6% 0.9 to 9.3 N/A $ 8.3x 7,915 0.4x to 30.5x 14.6% 2.0% to 35.0% 5.4% 3.5% to 14.0% 10.8% 59.1% 3.8 6.9x 13.1% 56.4% 1.2 3.2% 4.8 10.1x 14.1% 5.7% • The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparables and discounted cash flows may be used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques. • The significant unobservable inputs for recovery rate (related to securities backed by real estate) and for duration (related to other debt obligations) as of December 2022 did not have a range (and there was no weighted average) as each pertained to a single position. Therefore, such unobservable inputs are not included in the table above. Level 3 Rollforward for Investments The table below presents a summary of the changes in fair value for level 3 investments. $ in millions Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g 2022 Year Ended December 2021 $ 13,902 $ 16,423 449 1,263 1,600 (2,135) (3,265) 3,080 (3,513) $ 16,942 $ 13,902 563 (1,649) 2,362 (1,514) (1,995) 6,345 (1,072) • Ranges represent the significant unobservable inputs that In the table above: were used in the valuation of each type of investment. • Changes in fair value are presented for all investments that • Weighted averages are calculated by weighting each input are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to investments that were still held at period-end. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If an investment was transferred to level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. • For level 3 investments, increases are shown as positive amounts, while decreases are shown as negative amounts. by the relative fair value of the investment. • The ranges and weighted averages of these inputs are not representative of the appropriate inputs to use when calculating the fair value of any one investment. For example, the highest multiple for private equity securities is appropriate for valuing a specific private equity security but may not be appropriate for valuing any other private equity security. Accordingly, the ranges of inputs do not represent uncertainty in, or possible ranges of, fair value measurements of level 3 investments. • Increases in yield, discount rate, capitalization rate or duration used in the valuation of level 3 investments would have resulted in a lower fair value measurement, while increases in recovery rate or multiples would have resulted in a higher fair value measurement as of both December 2022 and December 2021. Due to the distinctive nature of each level 3 investment, the interrelationship of inputs is not necessarily uniform within each product type. • Corporate debt securities, securities backed by real estate and other debt obligations are valued using discounted cash flows, and equity securities are valued using market comparables and discounted cash flows. Goldman Sachs 2022 Form 10-K 145 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information, by product type, for investments included in the summary table above. $ in millions Corporate debt securities Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Securities backed by real estate Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Other debt obligations Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers out of level 3 Ending balance g Equity securities Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Year Ended December 2021 2022 $ $ $ $ $ $ $ $ 4,527 $ 352 (173) 1,007 (125) (1,117) 2,790 (258) 7,003 $ 1,078 $ 42 (338) 199 (169) (320) 344 (9) 827 $ 382 $ 12 (5) 25 (6) (147) (5) 256 $ 5,286 167 311 431 (594) (1,876) 1,871 (1,069) 4,527 998 45 6 182 (44) (234) 142 (17) 1,078 497 12 1 63 – (96) (95) 382 7,915 $ 157 (1,133) 1,131 (1,214) (411) 3,211 (800) 8,856 $ 9,642 225 945 924 (1,497) (1,059) 1,067 (2,332) 7,915 Level 3 Rollforward Commentary for Investments Year Ended December 2022. The net realized and unrealized losses on level 3 investments of $1.09 billion (reflecting $563 million of net realized gains and $1.65 billion of net unrealized losses) for 2022 included gains/(losses) of $(1.52) billion reported in other principal transactions and $433 million reported in interest income. The net unrealized losses on level 3 investments for 2022 primarily reflected losses on certain equity securities and corporate debt securities (in each case, principally driven by broad macroeconomic and geopolitical concerns) and securities backed by real estate (principally driven by an increase in interest rates). 146 Goldman Sachs 2022 Form 10-K Transfers into level 3 investments during 2022 primarily reflected transfers of certain equity securities and corporate debt securities from level 2 (in each case, principally due to reduced price transparency as a result of a lack of market in these evidence, instruments), and transfers of certain corporate debt securities from level 2 (due to certain unobservable yield and duration inputs becoming significant to the valuation of these instruments). including fewer market transactions Transfers out of level 3 investments during 2022 primarily reflected transfers of certain equity securities and corporate debt securities to level 2 (in each case, principally due to increased price transparency as a result of market evidence, including market transactions in these instruments and certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments). realized and Year Ended December 2021. The net unrealized gains on level 3 investments of $1.71 billion (reflecting $449 million of net realized gains and $1.26 billion of net unrealized gains) for 2021 included gains of $1.53 billion reported in other principal transactions and $180 million reported in interest income. The net unrealized gains on level 3 investments for 2021 primarily reflected gains on certain private equity securities and corporate debt securities (in each case, principally driven by corporate performance and company-specific events). Transfers into level 3 investments during 2021 primarily reflected transfers of certain corporate debt securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments, and certain unobservable to the yield and duration inputs becoming significant valuation of these instruments) and transfers of certain private equity securities from level 2 (principally due to reduced price transparency as a result of a lack of market in these evidence, instruments). including fewer market transactions Transfers out of level 3 investments during 2021 primarily reflected transfers of certain private equity securities to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments) and transfers of certain corporate debt securities to level 2 (principally due to certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments, and increased price transparency as a result of market evidence, including market transactions of these instruments). THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Fair Value of Loans by Level The table below presents loans held for investment accounted for at fair value under the fair value option by level within the fair value hierarchy. $ in millions As of December 2022 Loan Type Corporate Real estate: Commercial Residential Other collateralized Other Total As of December 2021 Loan Type Corporate Real estate: Commercial Residential Other collateralized Other Total Level 1 Level 2 Level 3 Total $ – $ 359 $ 637 $ 996 – – – – – $ 435 4,437 576 11 5,818 $ 711 74 140 275 1,837 $ 1,146 4,511 716 286 7,655 – $ 937 $ 672 $ 1,609 – – – – – $ 605 5,980 726 167 8,415 $ 983 205 229 265 1,588 6,185 955 432 2,354 $ 10,769 $ $ $ The gains/(losses) as a result of changes in the fair value of loans held for investment for which the fair value option was elected were $(367) million for 2022 and $216 million for 2021. These gains/(losses) were included in other principal transactions. Significant Unobservable Inputs for Loans The table below presents the amount of level 3 loans, and ranges and weighted averages of significant unobservable inputs used to value such loans. As of December 2022 As of December 2021 Amount or Range Weighted Average Amount or Range Weighted Average $ $ $ in millions Corporate Level 3 assets Yield Recovery rate Duration (years) Real estate Level 3 assets Yield Recovery rate Duration (years) Other collateralized Level 3 assets $ Yield Duration (years) Other Level 3 assets Yield Duration (years) $ 637 4.1% to 26.9% 23.1% to 95.0% 1.6 to 3.3 785 3.0% to 27.0% 3.6% to 66.2% 0.6 to 6.7 140 5.8% to 12.7% 2.5 to 2.9 275 9.4% to 10.0% N/A $ 672 9.6% 1.5% to 55.6% 17.8% 46.6% 2.5 66.0% 20.0% to 92.0% 1.0 to 4.3 2.6 $ 1,188 16.1% 2.1% to 20.0% 13.2% 54.4% 3.8% to 99.5% 43.7% 1.7 0.1 to 4.0 2.5 $ 229 1.8% to 4.3% 0.9 to 6.8 7.7% 2.7 $ 265 9.9% 3.8% to 18.7% 2.9 to 5.5 N/A 3.3% 3.2 7.9% 3.6 In the table above: • Ranges represent the significant unobservable inputs that were used in the valuation of each type of loan. • Weighted averages are calculated by weighting each input by the relative fair value of the loan. • The ranges and weighted averages of these inputs are not representative of the appropriate inputs to use when calculating the fair value of any one loan. For example, the highest yield for real estate loans is appropriate for valuing a specific real estate loan but may not be appropriate for valuing any other real estate loan. Accordingly, the ranges of inputs do not represent uncertainty in, or possible ranges of, fair value measurements of level 3 loans. • Increases in yield or duration used in the valuation of level 3 loans would have resulted in a lower fair value measurement, while increases in recovery rate would have resulted in a higher fair value measurement as of both December 2022 and December 2021. Due to the distinctive nature of each level 3 loan, the interrelationship of inputs is not necessarily uniform within each product type. • Loans are valued using discounted cash flows. • The significant unobservable inputs for duration related to other loans as of December 2022 did not have a range (and there was no weighted average) as it related to a purchased portfolio of revolving loans with a single duration. Level 3 Rollforward for Loans The table below presents a summary of the changes in fair value for level 3 loans. $ in millions Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g In the table above: $ Year Ended December 2021 2,678 99 (33) 272 (54) (668) 369 (309) 2,354 2022 2,354 $ 82 (129) 113 (82) (403) 236 (334) 1,837 $ $ • Changes in fair value are presented for loans that are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to loans that were still held at period-end. • Purchases includes originations and secondary purchases. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If a loan was transferred to level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. Goldman Sachs 2022 Form 10-K 147 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information, by loan type, for loans included in the summary table above. $ in millions Corporate Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Real estate Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Other collateralized Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Settlements Transfers into level 3 Transfers out of level 3 Ending balance g Other Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Purchases Sales Settlements Transfers out of level 3 Ending balance g Year Ended December 2022 2021 $ $ $ $ $ $ $ $ 672 29 (40) 27 (74) (95) 121 (3) 637 1,188 45 (108) 65 (8) (233) 102 (266) 785 229 3 (2) 3 (55) 13 (51) 140 265 5 21 18 – (20) (14) 275 $ $ $ $ $ $ $ $ 896 30 (34) 81 (17) (228) 37 (93) 672 1,364 57 (62) 78 (10) (353) 242 (128) 1,188 97 1 (1) 62 (20) 90 – 229 321 11 64 51 (27) (67) (88) 265 Level 3 Rollforward Commentary for Loans Year Ended December 2022. The net realized and unrealized losses on level 3 loans of $47 million (reflecting $82 million of net realized gains and $129 million of net unrealized losses) for 2022 included gains/(losses) of $(78) million reported in other principal transactions and $31 million reported in interest income. The net unrealized losses on level 3 loans for 2022 primarily reflected losses on certain loans backed by real estate (principally due to the impact of an increase in interest rates). Transfers into level 3 loans during 2022 primarily reflected transfers of certain corporate loans and loans backed by real estate from level 2 (in each case, principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 loans during 2022 primarily reflected transfers of certain loans backed by real estate to level 2 (principally due to increased price transparency as a result of market evidence, transactions in these instruments). including market Year Ended December 2021. The net realized and unrealized gains on level 3 loans of $66 million (reflecting $99 million of net realized gains and $33 million of net unrealized losses) for 2021 included gains of $42 million reported in other principal transactions and $24 million reported in interest income. The drivers of net unrealized losses on level 3 loans for 2021 were not material. Transfers into level 3 loans during 2021 primarily reflected transfers of certain loans backed by real estate from level 2 (principally due to certain unobservable yield and duration inputs becoming significant these instruments) and transfers of certain other collateralized from level 2 (principally due to reduced price loans transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). to the valuation of Transfers out of level 3 loans during 2021 primarily reflected transfers of certain loans backed by real estate, corporate loans and other loans to level 2 (in each case, principally due to increased price transparency as a result of market evidence, including market transactions in these instruments). 148 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Fair Value of Other Financial Assets and Liabilities by Level The table below presents, by level within the fair value hierarchy, other financial assets and liabilities at fair value, substantially all of which are accounted for at fair value under the fair value option. $ in millions As of December 2022 Assets Resale agreements Securities borrowed Customer and other receivables Other assets Total Liabilities Deposits Repurchase agreements Securities loaned Other secured financings Unsecured borrowings: Short-term Long-term Other liabilities Total As of December 2021 Assets Resale agreements Securities borrowed Customer and other receivables Total Liabilities Deposits Repurchase agreements Securities loaned Other secured financings Unsecured borrowings: Short-term Long-term Other liabilities Total Level 1 Level 2 Level 3 Total $ $ $ $ $ $ $ $ – $ 225,117 $ – – – – $ 263,791 $ 38,578 25 71 – $ 225,117 38,578 – 25 – 74 145 74 $ 263,865 – $ (13,003) $ (2,743) $ (15,746) (110,349) – (4,372) – (12,756) – (110,349) (4,372) (10,914) – – (1,842) (35,641) (63,081) (74) (39,731) – (73,147) – – (159) – $ (237,434) $ (18,826) $(256,260) (4,090) (10,066) (85) – $ 205,703 $ – – – $ 245,700 $ 39,955 42 – $ 205,703 39,955 – 42 – – $ 245,700 – $ (31,812) $ (3,613) $ (35,425) (165,883) – (9,170) – (17,074) – (165,883) (9,170) (14,508) – – (2,566) (22,003) (42,977) (213) (29,832) – (52,390) – (359) – – $ (286,566) $ (23,567) $ (310,133) (7,829) (9,413) (146) In the table above, other financial assets are shown as positive amounts and other financial liabilities are shown as negative amounts. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of other financial assets and liabilities. Significant Unobservable Inputs for Other Financial Instruments at Fair Value See below for information about the significant unobservable inputs used to value level 3 other financial liabilities at fair value as of both December 2022 and December 2021. Other Secured Financings. The ranges and weighted averages of significant unobservable inputs used to value level 3 other secured financings are presented below. These ranges and weighted averages exclude unobservable inputs that are only relevant to a single instrument, and therefore are not meaningful. As of December 2022: • Yield: 4.5% to 9.4% (weighted average: 5.9%) • Duration: 0.6 to 5.1 years (weighted average: 2.2 years) As of December 2021: • Yield: 1.3% to 6.4% (weighted average: 2.1%) • Duration: 0.6 to 7.1 years (weighted average: 3.7 years) Generally, increases in yield or duration, in isolation, would have resulted in a lower fair value measurement as of period- end. Due to the distinctive nature of each of level 3 other secured financings, the interrelationship of inputs is not necessarily uniform across such financings. See Note 11 for further information about other secured financings. Deposits, Unsecured Borrowings and Other Assets and Liabilities. Substantially all of the firm’s deposits, unsecured short- and long-term borrowings, and other assets and liabilities that are classified in level 3 are hybrid financial instruments. As the significant unobservable inputs used to value hybrid financial instruments primarily relate to the embedded derivative component of these deposits, unsecured borrowings these assets unobservable inputs are incorporated in the firm’s derivative disclosures. See Note 12 for further information about other assets, Note 13 for further information about deposits, Note 14 for further information about unsecured borrowings and Note 15 for further information about other liabilities. liabilities, other and and Goldman Sachs 2022 Form 10-K 149 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Level 3 Rollforward for Other Financial Instruments at Fair Value The table below presents a summary of the changes in fair value for level 3 other financial instruments accounted for at fair value. $ in millions Assets Beginning balance Net unrealized gains/(losses) Purchases Ending balance Liabilities Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Issuances Settlements Transfers into level 3 Transfers out of level 3 Ending balance g In the table above: Year Ended December 2021 2022 $ $ – $ 65 9 74 $ – – – – $ (23,567) $ (28,058) (401) 825 (12,632) 14,930 (736) 2,505 $ (18,826) $ (23,567) (311) 4,459 (10,090) 10,255 (1,851) 2,279 • Changes in fair value are presented for all other financial instruments that are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to other financial instruments that were still held at period-end. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If a financial instrument was transferred to level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. • For level 3 other financial assets, increases are shown as positive amounts, while decreases are shown as negative amounts. For level 3 other financial liabilities, increases are shown as negative amounts, while decreases are shown as positive amounts. • Level 3 other financial instruments are frequently economically hedged with trading assets and liabilities. Accordingly, gains or losses that are classified in level 3 can be partially offset by gains or losses attributable to level 1, 2 or 3 trading assets and liabilities. As a result, gains or losses included in the level 3 rollforward below do not necessarily represent impact on the firm’s the overall results of operations, liquidity or capital resources. 150 Goldman Sachs 2022 Form 10-K The table below presents information, by the consolidated balance sheet for liabilities included in the summary table above. line items, $ in millions Deposits Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Issuances Settlements Transfers into level 3 Transfers out of level 3 Ending balance Repurchase agreements Beginning balance Net unrealized gains/(losses) Settlements Ending balance Other secured financings Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Issuances Settlements Transfers into level 3 Transfers out of level 3 Ending balance Unsecured short-term borrowings Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Issuances Settlements Transfers into level 3 Transfers out of level 3 Ending balance Unsecured long-term borrowings Beginning balance Net realized gains/(losses) Net unrealized gains/(losses) Issuances Settlements Transfers into level 3 Transfers out of level 3 Ending balance Other liabilities Beginning balance Net unrealized gains/(losses) Ending balance Year Ended December 2021 2022 $ (3,613) $ (4,221) (28) (110) (473) 1,203 (70) 86 $ (2,743) $ (3,613) (5) 391 (937) 1,264 (13) 170 $ $ – $ – – – $ (2) 1 1 – $ (2,566) $ (3,474) (27) 63 (145) 779 (135) 373 $ (1,842) $ (2,566) (12) 31 (621) 850 (110) 586 $ (7,829) $ (7,523) (134) 374 (7,878) 7,188 (163) 307 $ (4,090) $ (7,829) (112) 730 (3,497) 6,201 (265) 682 $ (9,413) $ (12,576) (212) 381 (4,136) 5,759 (368) 1,739 $ (10,066) $ (9,413) (182) 3,246 (5,035) 1,940 (1,463) 841 $ $ (146) $ 61 (85) $ (262) 116 (146) Level 3 Rollforward Commentary for Other Financial Instruments at Fair Value Year Ended December 2022. The net realized and unrealized gains on level 3 other financial liabilities of $4.15 billion (reflecting $311 million of net realized losses and $4.46 billion of net unrealized gains) for 2022 included gains/ (losses) of $3.60 billion reported in market making, $64 million reported in other principal transactions and $(21) million reported in interest expense in the consolidated statements of earnings, and $503 million reported in debt in the consolidated statements of valuation adjustment comprehensive income. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The net unrealized gains on level 3 other financial liabilities for 2022 primarily reflected gains on certain hybrid financial instruments included in unsecured long- and short-term borrowings (principally due to a decrease in global equity prices and an increase in interest rates). Transfers into level 3 other financial liabilities during 2022 primarily reflected transfers of certain hybrid financial instruments included in unsecured long- and short-term from level 2 (principally due to reduced borrowings transparency of certain volatility and correlation inputs used to value these instruments). Transfers out of level 3 other financial liabilities during 2022 primarily reflected transfers of certain hybrid financial instruments included in unsecured long- and short-term borrowings to level 2 (principally due to increased price transparency of certain volatility and correlation inputs used to value these instruments) and transfers of certain other secured financings to level 2 (principally due to certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments). Year Ended December 2021. The net realized and unrealized gains on level 3 other financial liabilities of $424 million (reflecting $401 million of net realized losses and $825 million of net unrealized gains) for 2021 included gains/ (losses) of $355 million reported in market making, $32 million reported in other principal transactions and $(20) million reported in interest expense in the consolidated statements of earnings, and $57 million reported in debt valuation adjustment in the consolidated statements of comprehensive income. The net unrealized gains on level 3 other financial liabilities for 2021 primarily reflected gains on certain hybrid financial instruments included in unsecured long- and short-term borrowings (principally due to an increase in interest rates). Transfers into level 3 other financial liabilities during 2021 primarily reflected transfers of certain hybrid financial instruments included in unsecured long- and short-term borrowings from level 2 (principally due to reduced price transparency of certain volatility and correlation inputs used secured to value these instruments) and certain other financings from level 2 (principally due to reduced price transparency of certain yield and duration inputs used to value these instruments). Transfers out of level 3 other financial liabilities during 2021 primarily reflected transfers of certain hybrid financial instruments included in unsecured long- and short-term borrowings to level 2 (principally due to increased price transparency of certain volatility and correlation inputs used to value instruments, and certain unobservable volatility inputs no longer being significant to the valuation of these instruments) and certain other secured financings to level 2 (principally due to increased price transparency of certain yield and duration inputs used to value these instruments). these Note 6. Trading Assets and Liabilities Trading assets and liabilities include trading cash instruments and derivatives held in connection with the firm’s market- making or risk management activities. These assets and liabilities are carried at fair value either under the fair value option or in accordance with other U.S. GAAP, and the related fair value gains and losses are generally recognized in the consolidated statements of earnings. The table below presents a summary of trading assets and liabilities. $ in millions As of December 2022 Trading cash instruments Derivatives Total As of December 2021 Trading cash instruments Derivatives Total Trading Assets Trading Liabilities $ 241,832 59,413 $ 301,245 $ 136,589 54,735 $ 191,324 $ 311,956 63,960 $ 375,916 $ 129,471 51,953 $ 181,424 See Note 5 for further information about trading cash instruments and Note 7 for further information about derivatives. Goldman Sachs 2022 Form 10-K 151 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Gains and Losses from Market Making The table below presents market making revenues by major product type. $ in millions Interest rates Credit Currencies Equities Commodities Total In the table above: 2021 Year Ended December 2022 2020 $ (4,890) $ (2,664) $ 6,074 3,269 (3,312) 6,792 2,605 $ 18,634 $ 15,357 $ 15,428 1,095 11,662 7,734 3,033 1,739 5,627 8,459 2,196 • Gains/(losses) include both realized and unrealized gains and losses. Gains/(losses) exclude related interest income and interest expense. See Note 23 for further information about interest income and interest expense. • Gains/(losses) included in market making are primarily related to the firm’s trading assets and liabilities, including both derivative and non-derivative financial instruments. • Gains/(losses) are not representative of the manner in which the firm manages its business activities because many of the firm’s market-making and client facilitation strategies utilize financial instruments across various product types. Accordingly, gains or losses in one product type frequently offset gains or losses in other product types. For example, most of the firm’s longer-term derivatives across product types are sensitive to changes in interest rates and may be economically hedged with interest rate swaps. Similarly, a significant portion of the firm’s trading cash instruments and derivatives across product types has exposure to foreign currencies and may be economically hedged with foreign currency contracts. Note 7. Derivatives and Hedging Activities Derivative Activities Derivatives are instruments that derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as OTC derivatives. Certain of the firm’s OTC derivatives are clearing counterparties (OTC-cleared), while others are bilateral contracts between two counterparties (bilateral OTC). through cleared central settled and 152 Goldman Sachs 2022 Form 10-K Market Making. As a market maker, the firm enters into derivative transactions to provide liquidity to clients and to facilitate the transfer and hedging of their risks. In this role, the firm typically acts as principal and is required to commit capital to provide execution, and maintains market-making positions in response to, or in anticipation of, client demand. Risk Management. The firm also enters into derivatives to actively manage risk exposures that arise from its market- making and investing and financing activities. The firm’s holdings and exposures are hedged, in many cases, on either a portfolio or risk-specific basis, as opposed to an instrument- by-instrument basis. The offsetting impact of this economic hedging is reflected in the same business segment as the the firm may enter into related revenues. derivatives designated as hedges under U.S. GAAP. These derivatives are used to manage interest rate exposure of certain fixed-rate unsecured borrowings and deposits and certain U.S. government securities classified as available-for- foreign exchange risk of certain available-for-sale sale, securities and the net in certain non-U.S. operations, and the price risk of certain commodities. In addition, investment The firm enters into various types of derivatives, including: • Futures and Forwards. Contracts commit counterparties to purchase or sell financial instruments, commodities or currencies in the future. that • Swaps. Contracts that require counterparties to exchange cash flows, such as currency or interest payment streams. The amounts exchanged are based on the specific terms of the contract with reference to specified rates, financial instruments, commodities, currencies or indices. • Options. Contracts in which the option purchaser has the right, but not the obligation, to purchase from or sell to the commodities or option writer currencies within a defined time period for a specified price. instruments, financial credit support agreements Derivatives are reported on a net-by-counterparty basis (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) when a legal right of setoff exists under an enforceable netting agreement (counterparty netting). Derivatives are accounted for at fair value, net of cash collateral received or posted under enforceable (cash collateral netting). Derivative assets are included in trading assets and derivative liabilities are included in trading liabilities. Realized and unrealized gains and losses on derivatives not designated as hedges are included in market making (for derivatives included in Fixed Income, Currency and Commodities (FICC) and Equities within Global Banking & Markets), and other principal transactions (for derivatives included in Investment banking fees and Other within Global Banking & Markets, as well as derivatives in Asset & Wealth Management) in the consolidated statements of earnings. For both 2022 and 2021, substantially all of the firm’s derivatives were included in Global Banking & Markets. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The tables below present the gross fair value and the notional amounts of derivative contracts by major product type, the amounts of counterparty and cash collateral netting in the consolidated balance sheets, as well as cash and securities collateral posted and received under enforceable credit support agreements that do not meet the criteria for netting under U.S. GAAP. As of December 2022 As of December 2021 Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities 1,385 72,979 174,687 249,051 1,802 9,478 11,280 22 589 111,276 111,887 9,542 838 22,745 33,125 26,607 19 30,157 56,783 462,126 675 $ 74,297 195,052 270,024 1,516 10,751 12,267 1,041 520 102,301 103,862 9,225 698 30,017 39,940 26,302 685 23,574 50,561 476,654 $ $ in millions Not accounted for as hedges Exchange-traded OTC-cleared Bilateral OTC Total interest rates OTC-cleared Bilateral OTC Total credit Exchange-traded OTC-cleared Bilateral OTC Total currencies Exchange-traded OTC-cleared Bilateral OTC Total commodities Exchange-traded OTC-cleared Bilateral OTC Total equities Subtotal Accounted for as hedges OTC-cleared Bilateral OTC Total interest rates OTC-cleared Bilateral OTC Total currencies Subtotal Total gross fair value g – 335 335 29 53 82 417 – 11 11 29 256 285 296 $ 477,071 $ 462,422 $ 256 $ 13,795 232,595 246,646 3,665 12,591 16,256 417 423 86,076 86,916 6,534 652 28,359 35,545 33,840 8 39,718 73,566 458,929 557 12,692 205,073 218,322 4,053 11,702 15,755 10 338 85,795 86,143 6,189 373 25,969 32,531 35,518 5 44,750 80,273 433,024 1 945 946 34 60 94 1,040 – – – 27 139 166 166 $ 459,969 $ 433,190 Offset in the consolidated balance sheets Exchange-traded OTC-cleared Bilateral OTC Counterparty netting OTC-cleared Bilateral OTC Cash collateral netting Total amounts offset $ (31,229) $ (31,229) $ (35,724) $ (35,724) (16,979) (279,189) (331,892) (361) (48,984) (49,345) $ (417,658) $ (407,687) $ (396,009) $ (381,237) (75,349) (254,304) (360,882) (1,388) (55,388) (56,776) (75,349) (254,304) (360,882) (406) (46,399) (46,805) (16,979) (279,189) (331,892) (1,033) (63,084) (64,117) Included in the consolidated balance sheets Exchange-traded OTC-cleared Bilateral OTC Total 6,014 $ 1,008 52,391 59,413 $ 6,327 501 47,907 54,735 $ $ $ $ 5,323 $ 566 58,071 63,960 $ 6,550 148 45,255 51,953 Not offset in the consolidated balance sheets Cash collateral Securities collateral Total (15,229) 43,886 $ (1,887) $ (4,329) 48,519 (298) $ $ $ $ (1,008) $ (15,751) 47,201 $ (1,939) (7,349) 42,665 $ in millions Not accounted for as hedges Exchange-traded OTC-cleared Bilateral OTC Total interest rates Exchange-traded OTC-cleared Bilateral OTC Total credit Exchange-traded OTC-cleared Bilateral OTC Total currencies Exchange-traded OTC-cleared Bilateral OTC Total commodities Exchange-traded OTC-cleared Bilateral OTC Total equities Subtotal Accounted for as hedges OTC-cleared Bilateral OTC Total interest rates OTC-cleared Bilateral OTC Total currencies Exchange-traded Total commodities Subtotal Total notional amounts In the tables above: Notional Amounts as of December 2022 2021 $ 4,241,937 $ 13,104,682 11,137,127 28,483,746 369 529,543 577,542 1,107,454 9,012 150,561 5,304,069 5,463,642 341,526 3,188 255,208 599,922 1,107,659 1,639 1,026,736 2,136,034 37,790,798 257,739 3,156 260,895 2,048 7,701 9,749 – – 270,644 38,061,442 $ $ 2,630,915 17,874,504 11,122,871 31,628,290 – 463,477 616,095 1,079,572 14,617 194,124 6,606,927 6,815,668 308,917 3,647 234,322 546,886 1,149,777 198 1,173,103 2,323,078 42,393,494 219,083 4,499 223,582 2,758 18,658 21,416 1,050 1,050 246,048 42,639,542 • Gross fair values exclude the effects of both counterparty netting and collateral, and therefore are not representative of the firm’s exposure. • Where the firm has received or posted collateral under credit support agreements, but has not yet determined such agreements are enforceable, the related collateral has not been netted. • Notional amounts, which represent the sum of gross long and short derivative contracts, provide an indication of the volume of the firm’s derivative activity and do not represent anticipated losses. • Total gross fair value of derivatives included derivative assets of $10.08 billion as of December 2022 and $17.48 billion as of December 2021, and derivative liabilities of $12.71 billion as of December 2022 and $17.29 billion as of December 2021, which are not subject to an enforceable netting agreement or are subject to a netting agreement that the firm has not yet determined to be enforceable. Goldman Sachs 2022 Form 10-K 153 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements OTC Derivatives The table below presents OTC derivative assets and liabilities by tenor and major product type. $ in millions As of December 2022 Assets Interest rates Credit Currencies Commodities Equities Counterparty netting in tenors Subtotal Cross-tenor counterparty netting Cash collateral netting Total OTC derivative assets Liabilities Interest rates Credit Currencies Commodities Equities Counterparty netting in tenors Subtotal Cross-tenor counterparty netting Cash collateral netting Total OTC derivative liabilities As of December 2021 Assets Interest rates Credit Currencies Commodities Equities Counterparty netting in tenors Subtotal Cross-tenor counterparty netting Cash collateral netting Total OTC derivative assets Liabilities Interest rates Credit Currencies Commodities Equities Counterparty netting in tenors Subtotal Cross-tenor counterparty netting Cash collateral netting Total OTC derivative liabilities Less than 1 Year 1 - 5 Years Greater than 5 Years Total $ 5,509 $16,963 $ 921 12,284 10,525 5,346 (2,661) 2,622 7,819 7,513 4,007 (3,942) $ 31,924 $34,982 $ $ 9,351 $23,589 $ 993 18,987 6,400 7,629 (2,661) 2,635 8,736 6,135 7,249 (3,942) $ 40,699 $44,402 $ $ 6,076 $11,655 $ 1,800 13,366 10,178 11,075 (3,624) 2,381 6,642 7,348 6,592 (3,357) $ 38,871 $31,261 $ $ 3,929 $10,932 $ 1,695 14,122 7,591 8,268 (3,624) 3,257 6,581 6,274 12,944 (3,357) $ 31,981 $36,631 $ 53,943 $ 76,415 5,685 2,142 27,188 7,085 20,612 2,574 11,135 1,782 (4,830) (11,433) 62,696 $129,602 (19,427) (56,776) $ 53,399 21,467 $ 54,407 4,699 1,071 36,435 8,712 13,480 945 17,052 2,174 (4,830) (11,433) 29,539 $114,640 (19,427) (46,805) $ 48,408 61,380 $ 79,111 7,294 3,113 26,578 6,570 18,296 770 19,767 2,100 (2,673) (9,654) 71,260 $141,392 (18,638) (64,117) $ 58,637 34,676 $ 49,537 6,793 1,841 26,283 5,580 15,628 1,763 24,799 3,587 (2,673) (9,654) 44,774 $113,386 (18,638) (49,345) $ 45,403 In the table above: • Tenor is based on remaining contractual maturity. • Counterparty netting within the same product type and tenor category is included within such product type and tenor category. • Counterparty netting across product types within the same tenor category is included in counterparty netting in tenors. Where the counterparty netting is across tenor categories, the netting is included in cross-tenor counterparty netting. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of derivatives, and Note 5 for information about derivatives within the fair value hierarchy. Credit Derivatives The firm enters into a broad array of credit derivatives to facilitate client transactions and to manage the credit risk associated with market-making and investing and financing activities. Credit derivatives are actively managed based on the firm’s net risk position. Credit derivatives are generally individually negotiated contracts and can have various settlement and payment conventions. Credit events include failure to pay, bankruptcy, acceleration of indebtedness, restructuring, repudiation and dissolution of the reference entity. The firm enters into the following types of credit derivatives: • Credit Default Swaps. Single-name credit default swaps protect the buyer against the loss of principal on one or more bonds, loans or mortgages (reference obligations) in the event the issuer of the reference obligations suffers a credit event. The buyer of protection pays an initial or periodic premium to the seller and receives protection for the period of the contract. If there is no credit event, as defined in the contract, the seller of protection makes no payments to the buyer. If a credit event occurs, the seller of protection is required to make a payment to the buyer, calculated according to the terms of the contract. • Credit Options. In a credit option, the option writer assumes the obligation to purchase or sell a reference obligation at a specified price or credit spread. The option purchaser buys the right, but does not assume the obligation, to sell the reference obligation to, or purchase it from, the option writer. The payments on credit options depend either on a particular credit spread or the price of the reference obligation. 154 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements • Credit Indices, Baskets and Tranches. Credit derivatives may reference a basket of single-name credit default swaps or a broad-based index. If a credit event occurs in one of the underlying reference obligations, the protection seller pays the protection buyer. The payment is typically a pro-rata portion of the transaction’s total notional amount based on the underlying defaulted reference obligation. In certain transactions, the credit risk of a basket or index is separated into various portions (tranches), each having different levels of subordination. The most junior tranches cover initial defaults and once losses exceed the notional amount of these junior tranches, any excess loss is covered by the next most senior tranche. • Total Return Swaps. A total return swap transfers the risks relating to economic performance of a reference obligation from the protection buyer to the protection seller. Typically, the protection buyer receives a floating rate of interest and protection against any reduction in fair value of the reference obligation, and the protection seller receives the cash flows associated with the reference obligation, plus any increase in the fair value of the reference obligation. The firm economically hedges its exposure to written credit derivatives primarily by entering into offsetting purchased credit derivatives with identical underliers. Substantially all of the firm’s purchased credit derivative transactions are with financial institutions and are subject to stringent collateral thresholds. In addition, upon the occurrence of a specified trigger event, the firm may take possession of the reference obligations underlying a particular written credit derivative, and consequently may, upon liquidation of the reference obligations, recover amounts on the underlying reference obligations in the event of default. As of December 2022, written credit derivatives had a total gross notional amount of $528.31 billion and purchased credit derivatives had a total gross notional amount of $579.14 billion, for total net notional purchased protection of $50.83 billion. As of December 2021, written credit derivatives had a amount of $510.24 billion and purchased credit derivatives had a total for total net gross notional amount of $569.34 billion, notional purchased protection of $59.10 billion. The firm’s written and purchased credit derivatives primarily consist of credit default swaps. gross notional total The table below presents information about credit derivatives. Credit Spread on Underlier (basis points) 251 - 500 501 - 1,000 Greater than 1,000 0 - 250 $ in millions As of December 2022 Maximum Payout/Notional Amount of Written Credit Derivatives by Tenor $108,703 $12,166 $ 1,879 $ 4,135 $126,883 Less than 1 year 357,488 13,724 1 - 5 years Greater than 5 years 43,939 1,416 $454,489 $43,270 $ 17,019 $ 13,532 $528,310 Total 306,484 39,302 28,188 2,916 9,092 305 Total Maximum Payout/Notional Amount of Purchased Credit Derivatives Offsetting Other $372,360 $33,149 $ 14,817 $ 11,757 $432,083 $128,828 $13,211 $ 2,615 $ 2,407 $147,061 Fair Value of Written Credit Derivatives Asset Liability Net asset/(liability) $ $ As of December 2021 5,405 $ 681 460 $ 132 $ 1,081 1,027 4,724 $ (621) $ (895) $ (2,589) $ 2,673 84 $ 6,081 5,462 619 Maximum Payout/Notional Amount of Written Credit Derivatives by Tenor $ 120,456 $ 6,173 $ 1,656 $ 4,314 $132,599 Less than 1 year 336,151 12,754 1 - 5 years Greater than 5 years 41,485 2,529 $ 461,269 $23,588 $ 16,939 $ 8,439 $510,235 Total 305,255 35,558 14,328 3,087 3,814 311 Maximum Payout/Notional Amount of Purchased Credit Derivatives Offsetting Other $ 381,715 $17,210 $ 12,806 $ 6,714 $418,445 $ 138,214 $ 7,780 $ 3,576 $ 1,322 $150,892 Fair Value of Written Credit Derivatives Asset Liability Net asset/(liability) $ $ 9,803 $ 941 8,862 $ In the table above: 318 $ 924 $ 123 801 $ (1,348) $ (1,796) $ 137 $ 11,182 4,663 6,519 1,666 1,933 • Fair values exclude the effects of both netting of receivable balances with payable balances under enforceable netting agreements, and netting of cash received or posted under enforceable credit support agreements, and therefore are not representative of the firm’s credit exposure. • Tenor is based on remaining contractual maturity. • The credit spread on the underlier, together with the tenor of the contract, are indicators of payment/performance risk. The firm is less likely to pay or otherwise be required to perform where the credit spread and the tenor are lower. • Offsetting purchased credit derivatives the notional amount of purchased credit derivatives that economically hedge written credit derivatives with identical underliers. represent • Other purchased credit derivatives represent the notional amount of all other purchased credit derivatives not included in offsetting. Goldman Sachs 2022 Form 10-K 155 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Impact of Credit and Funding Spreads on Derivatives The firm realizes gains or losses on its derivative contracts. These gains or losses include credit valuation adjustments (CVA) relating to uncollateralized derivative assets and liabilities, which represent the gains or losses (including hedges) attributable to the impact of changes in credit exposure, counterparty credit liability funding spreads (which include the firm’s own credit), probability of default and assumed recovery. These gains or losses also include funding valuation adjustments (FVA) relating to uncollateralized derivative assets, which represent the gains or losses (including hedges) attributable to the impact of changes in expected funding exposures and funding spreads. spreads, The table below presents information about CVA and FVA. $ in millions CVA, net of hedges FVA, net of hedges Total Year Ended December 2022 320 $ (193) 127 $ 2021 25 $ 60 85 $ $ $ 2020 (143) 173 30 Bifurcated Embedded Derivatives The table below presents the fair value and the notional amount of derivatives that have been bifurcated from their related borrowings. $ in millions Fair value of assets Fair value of liabilities y Net asset/(liability) Notional amount As of December 2022 288 $ (392) (104) $ 2021 845 (124) 721 8,892 $ 10,743 $ $ $ In the table above, derivatives that have been bifurcated from their related borrowings are recorded at fair value and primarily consist of interest rate, equity and commodity products. These derivatives are included in unsecured short- and long-term borrowings, as well as other secured financings, with the related borrowings. Derivatives with Credit-Related Contingent Features Certain of the firm’s derivatives have been transacted under bilateral agreements with counterparties who may require the firm to post collateral or terminate the transactions based on changes in the firm’s credit ratings. The firm assesses the impact of these bilateral agreements by determining the collateral or that would occur assuming a downgrade by all rating agencies. A downgrade by any one rating agency, depending on the agency’s relative ratings of the firm at the time of the downgrade, may have an impact which is comparable to the impact of a downgrade by all rating agencies. termination payments 156 Goldman Sachs 2022 Form 10-K The table below presents information about net derivative liabilities under bilateral agreements (excluding collateral posted), the fair value of collateral posted and additional collateral or termination payments that could have been called by counterparties in the event of a one- or two-notch downgrade in the firm’s credit ratings. $ in millions Net derivative liabilities under bilateral agreements $ $ Collateral posted Additional collateral or termination payments: As of December 2022 2021 33,059 $ 34,315 27,657 $ 29,214 One-notch downgrade Two-notch downgrade $ $ 343 $ 1,115 $ 345 1,536 Hedge Accounting The firm applies hedge accounting for (i) interest rate swaps used to manage the interest rate exposure of certain fixed- rate unsecured long- and short-term borrowings, certain fixed-rate certificates of deposit and certain U.S. government securities classified as available-for-sale, (ii) foreign currency forward contracts used to manage the foreign exchange risk of certain available-for-sale, (iii) foreign currency forward contracts and foreign currency-denominated debt used to manage foreign exchange risk on the firm’s net investment in certain non-U.S. operations and (iv) commodity futures contracts used to manage certain commodities. the price risk of To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Additionally, the firm must formally document the hedging relationship at inception and assess the hedging relationship at least on a quarterly basis to ensure the hedging instrument continues to be highly effective over the life of the hedging relationship. Fair Value Hedges The firm designates interest rate swaps as fair value hedges of certain fixed-rate unsecured long- and short-term debt and fixed-rate certificates of deposit and, beginning in the second quarter of 2022, of certain U.S. government securities classified as available-for-sale. These interest rate swaps hedge changes in fair value attributable to the designated benchmark interest rate (e.g., London Interbank Offered Rate (LIBOR), Secured Overnight Financing Rate (SOFR) or Overnight Index Swap Rate), effectively converting a substantial portion of these fixed-rate financial instruments into floating-rate financial instruments. The firm applies a statistical method that utilizes regression analysis when assessing the effectiveness of these hedging relationships in achieving offsetting changes in the fair values of the hedging instrument and the risk being hedged (i.e., interest rate risk). An interest rate swap is considered highly effective in offsetting changes in fair value attributable to changes in the hedged risk when the regression analysis results in a coefficient of determination of 80% or greater and a slope between 80% and 125%. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements For qualifying interest rate fair value hedges, gains or losses on derivatives are included in interest income/expense. The change in fair value of the hedged items attributable to the risk being hedged is reported as an adjustment to its carrying value (hedging adjustment) and is also included in interest income/expense. When a derivative is no longer designated as a hedge, any remaining difference between the carrying value and par value of the hedged item is amortized in interest income/expense over the remaining life of the hedged item using the effective interest method. See Note 23 for further information about interest income and interest expense. The table below presents the gains/(losses) from interest rate derivatives accounted for as hedges and the related hedged items. $ in millions Investments Interest rate hedges Hedged investments Gains/(losses) Borrowings and deposits Interest rate hedges Hedged borrowings and deposits Gains/(losses) Year Ended December 2022 2021 2020 $ $ 366 $ (350) 16 $ – $ – – $ – – – $(22,183) $ (6,638) $ 3,862 (4,557) (695) (521) $ (553) $ 21,662 6,085 $ The table below presents the carrying value of investments, deposits and unsecured borrowings that are designated in an interest rate hedging relationship and the related cumulative hedging adjustment (increase/(decrease)) from current and prior hedging relationships included in such carrying values. $ in millions As of December 2022 Assets Investments Liabilities Deposits Unsecured short-term borrowings Unsecured long-term borrowings As of December 2021 Liabilities Deposits Unsecured short-term borrowings Unsecured long-term borrowings In the table above: Carrying Value Cumulative Hedging Adjustment $ 10,804 $ (350) 6,311 $ $ $ 7,295 $ $ 151,215 $ (280) (47) (15,134) 14,131 $ $ 2,167 $ $ $ 144,934 $ 246 5 6,169 • Cumulative hedging adjustment included $5.09 billion as of December 2022 and $5.91 billion as of December 2021 of hedging adjustments from prior hedging relationships that were de-designated and substantially all were related to unsecured long-term borrowings. • The amortized cost of investments was $11.49 billion as of December 2022. In addition, cumulative hedging adjustments for items no longer designated in a hedging relationship were $111 million as of December 2022 and $68 million as of December 2021 and were substantially all related to unsecured long-term borrowings. The firm designates foreign currency forward contracts as fair value hedges of the foreign exchange risk of non-U.S. government securities classified as available-for-sale. See Note 8 for information about the amortized cost and fair value of such securities. The effectiveness of such hedges is assessed based on changes in spot rates. The gains/(losses) on the hedges (relating to both spot and forward points) and the foreign exchange gains/(losses) on the related available-for- sale securities are included in market making. The net gains/ (losses) on hedges and related available-for-sale securities were $(30) million (reflecting a gain of $266 million related to hedges and a loss of $296 million on the related hedged available-for-sale securities) for 2022. The gross and net gains/(losses) were not material for both 2021 and 2020. The firm designates commodity futures contracts as fair value hedges of the price risk of certain precious metals included in commodities within trading assets. As of December 2022, there were no such hedges outstanding, and as of December 2021, the carrying value of such commodities was $1.05 billion and the amortized cost was $1.02 billion. Changes in spot rates of such commodities are reflected as an adjustment to their carrying value, and the related gains/ (losses) on both the commodities and the designated futures contracts are included in market making. The contractual forward points on the designated futures contracts are amortized into earnings ratably over the life of the contract and other gains/(losses) as a result of changes in the forward points are included in other comprehensive income/(loss). The cumulative hedging adjustment was not material as of both December 2022 and December 2021, and the related gains/(losses) were not material for both 2022 and 2021. Goldman Sachs 2022 Form 10-K 157 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Net Investment Hedges The firm seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations through the use of foreign currency forward contracts and foreign currency-denominated debt. For foreign currency forward contracts designated as hedges, the effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts (i.e., based foreign currency- on changes denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. in forward rates). For The table below presents investment hedging. the gains/(losses) from net $ in millions Hedges: Year Ended December 2022 2021 2020 Foreign currency forward contract Foreign currency-denominated debt $ 1,713 $ $ (269) $ 755 $ (126) 386 $ (297) are reclassified from accumulated Gains or losses on individual net investments in non-U.S. operations other comprehensive income/(loss) to other principal transactions in the consolidated statements of earnings when such net investments are sold or substantially liquidated. The gross and net gains and losses on hedges and the related net investments in non-U.S. operations reclassified to earnings from accumulated other comprehensive income/(loss) were not material for both 2022 and 2021, and $61 million (reflecting a gain of $214 million related to hedges and a loss of $153 million on the related net investments in non-U.S. operations) for 2020. The firm had designated $21.46 billion as of December 2022 and $3.71 billion as of December 2021 of foreign currency- denominated debt, included in unsecured long- and short- term borrowings, as hedges of net investments in non-U.S. subsidiaries. Note 8. Investments Investments includes debt instruments and equity securities that are accounted for at fair value and are generally held by the firm in connection with its long-term investing activities. In addition, investments includes debt securities classified as available-for-sale and held-to-maturity that are generally held in connection with the firm’s asset-liability management activities. Investments also consists of equity securities that are accounted for under the equity method. The table below presents information about investments. $ in millions Equity securities, at fair value Debt instruments, at fair value Available-for-sale securities, at fair value Investments, at fair value Held-to-maturity securities Equity method investments Total investments As of December $ 2022 14,892 $ 14,075 49,234 78,201 51,662 766 $ 130,629 $ 2021 18,937 15,558 48,932 83,427 4,699 593 88,719 the firm’s fair value See Note 4 for an overview of measurement policies, valuation techniques and significant inputs used to determine the fair value of investments, and Note 5 for information about investments within the fair value hierarchy. Equity Securities and Debt Instruments, at Fair Value Equity securities and debt instruments, at fair value are accounted for at fair value either under the fair value option or in accordance with other U.S. GAAP, and the related fair value gains and losses are recognized in the consolidated statements of earnings. Equity Securities, at Fair Value. Equity securities, at fair value consists of the firm’s public and private equity investments in corporate and real estate entities. The table below presents information about equity securities, at fair value. $ in millions Equity securities, at fair value q y Equity Type Public equity Private equity Total Asset Class Corporate Real estate Total 158 Goldman Sachs 2022 Form 10-K As of December 2022 14,892 $ 2021 18,937 $ 13% 87% 100% 71% 29% 100% 24% 76% 100% 78% 22% 100% THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In the table above: • Equity securities, at fair value included investments accounted for at fair value under the fair value option where the firm would otherwise apply the equity method of accounting of $5.35 billion as of December 2022 and $5.81 billion as of December 2021. Gains/(losses) recognized as a result of changes in the fair value of equity securities for which the fair value option was elected were $(86) million for 2022 and $2.12 billion for 2021. These gains/(losses) are included in other principal transactions. • Equity securities, at fair value included $1.30 billion as of December 2022 and $1.80 billion as of December 2021 of investments in funds that are measured at NAV. Debt Instruments, at Fair Value. Debt instruments, at fair value primarily includes mezzanine, senior and distressed debt. table The instruments, at fair value. below presents $ in millions Corporate debt securities Securities backed by real estate Money market instruments Other Total In the table above: information about debt As of December 2022 10,098 $ 1,003 1,005 1,969 2021 9,793 2,280 1,396 2,089 14,075 $ 15,558 $ $ • Money market instruments primarily includes time deposits and investments in money market funds. • Other included $1.64 billion as of December 2022 and $1.67 billion as of December 2021 of investments in credit funds that are measured at NAV. Investments in Funds at Net Asset Value Per Share. Equity securities and debt instruments, at fair value include investments in funds that are measured at NAV of the investment fund. The firm uses NAV to measure the fair value of fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with company the measurement accounting, including measurement of the investments at fair value. investment principles of Substantially all of the firm’s investments in funds at NAV consist of investments in firm-sponsored private equity, credit, real estate and hedge funds where the firm co-invests with third-party investors. growth including investments transactions, leveraged and Private equity funds primarily invest in a broad range of buyouts, industries worldwide, recapitalizations, distressed investments. Credit funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for leveraged and management financings, buyout refinancings, acquisitions and restructurings for private equity firms, private family companies and corporate issuers. Real estate funds invest globally, primarily in real estate companies, recapitalizations and property. Private equity, credit and real estate funds are closed-end funds investments are in which the firm’s generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed, the timing of which is uncertain. loan portfolios, debt recapitalizations, The firm also invests in hedge funds, primarily multi- disciplinary hedge funds that employ a fundamental bottom- up investment approach across various asset classes and strategies. The firm’s investments in hedge funds primarily include interests where the underlying assets are illiquid in nature, and proceeds from redemptions will not be received until the underlying assets are liquidated or distributed, the timing of which is uncertain. interpretations of The firm's investments in funds at NAV includes investments in “covered funds” as defined in the Volcker Rule of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). To achieve conformance with the covered fund provisions of the Volcker Rule by July 2022, the firm restructured certain legacy “illiquid funds” (as defined by the Volcker Rule) to be non-covered funds as liquidating trusts. However, based on recent the covered fund provisions of the Volcker Rule, the firm was required to seek an additional extension from the Board of Governors of the Federal Reserve System (FRB) to bring these funds into conformance. The FRB granted the firm an additional extension to July 2023. If the firm does not conform such funds by July 2023, the firm will be required to sell such interests. If that occurs, the firm may receive a value for its interests that is less than the then carrying value as these there could be a limited secondary market investments and the firm may be unable to sell them in orderly transactions. As of December 2022, the amount by which the firm’s investment in such funds would need to be reduced in order to achieve conformance was approximately $200 million (net of the firm’s pro rata share of cash in the funds). for Goldman Sachs 2022 Form 10-K 159 • The gross unrealized gains included in accumulated other comprehensive income/(loss) were not material and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $3.52 billion as of December 2022 and primarily related to U.S. government obligations in a continuous unrealized loss position for more than a year. The gross unrealized gains included in accumulated other comprehensive income/(loss) were $118 million and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $779 million as of December 2021 and primarily related to U.S. government obligations in a continuous unrealized loss position for less than a year. Net unrealized losses included in other comprehensive income/(loss) were $2.85 billion ($2.13 billion, net of tax) for 2022 and $1.28 billion ($955 million, net of tax) for 2021. • If the fair value of available-for-sale securities is less than amortized cost, such securities are considered impaired. If the firm has the intent to sell the debt security, or if it is more likely than not that the firm will be required to sell the debt security before recovery of its amortized cost, the difference between the amortized cost (net of allowance, if any) and the fair value of the securities is recognized as an impairment loss in earnings. The firm did not record any such impairment losses during either 2022 or 2021. Impaired available-for-sale debt securities that the firm has the intent and ability to hold are reviewed to determine if an allowance for credit losses should be recorded. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings and severity of the unrealized losses. The firm did not record any provision for credit losses on such securities during either 2022 or 2021. The table below presents gross realized gains/(losses) and the proceeds from the sales of available-for-sale securities. $ in millions Gross realized gains Gross realized losses Gains/(losses) Proceeds from sales $ $ $ Year Ended December 2022 2021 – $ – – $ 206 $ (19) 187 $ 2020 319 – 319 2 $ 24,882 $ 4,489 In the table above, the realized gains/(losses) were reclassified from accumulated other comprehensive income/(loss) to other principal transactions in the consolidated statements of earnings. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents the fair value of investments in funds at NAV and the related unfunded commitments. $ in millions As of December 2022 Private equity funds Credit funds Hedge funds Real estate funds Total As of December 2021 Private equity funds Credit funds Hedge funds Real estate funds Total Fair Value of Investments Unfunded Commitments $ $ $ $ 815 $ 1,645 68 413 2,941 $ 1,411 $ 1,686 84 288 3,469 $ 647 303 – 138 1,088 619 556 – 147 1,322 Available-for-Sale Securities Available-for-sale securities are accounted for at fair value, and the related unrealized fair value gains and losses are included in accumulated other comprehensive income/(loss) unless designated in a fair value hedging relationship. See Note 7 for information about available-for-sale securities that are designated in a hedging relationship. The table below presents information about available-for- sale securities by tenor. Amortized Cost Fair Value Weighted Average Yield $ in millions As of December 2022 Less than 1 year 1 year to 5 years 5 years to 10 years Total U.S. government obligations $ 8,103 $ 7,861 38,706 488 47,055 41,479 538 50,120 1 year to 5 years 5 years to 10 years Total non-U.S. government obligations Total available-for-sale securities 10 2,616 10 2,169 2,626 2,179 $ 52,746 $ 49,234 As of December 2021 Less than 1 year 1 year to 5 years 5 years to 10 years Greater than 10 years Total U.S. government obligations $ 25 $ 41,536 5,337 2 46,900 25 41,066 5,229 2 46,322 5 years to 10 years Total non-U.S. government obligations Total available-for-sale securities 2,693 2,693 2,610 2,610 49,593 $ 48,932 $ 0.37% 0.74% 1.86% 0.69% 0.27% 0.40% 0.40% 0.68% 0.12% 0.47% 0.92% 2.00% 0.53% 0.33% 0.33% 0.52% In the table above: • Available-for-sale securities were classified in level 1 of the fair value hierarchy as of both December 2022 and December 2021. • The weighted average yield for available-for-sale securities is presented on a pre-tax basis and computed using the effective interest rate of each security at the end of the period, weighted based on the fair value of each security. 160 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Held-to-Maturity Securities Held-to-maturity securities are accounted for at amortized cost. The table below presents information about held-to-maturity securities by type and tenor. Amortized Cost Fair Value Weighted Average Yield $ in millions As of December 2022 Less than 1 year 1 year to 5 years 5 years to 10 years Total U.S. government obligations $ 5,319 $ 45,154 1,026 51,499 5,282 43,852 966 50,100 5 years to 10 years Greater than 10 years Total securities backed by real estate Total held-to-maturity securities y 2 161 163 2 158 160 $ 51,662 $ 50,260 As of December 2021 1 year to 5 years Total U.S. government obligations 5 years to 10 years Greater than 10 years Total securities backed by real estate Total held-to-maturity securities y In the table above: $ $ 4,054 $ 4,054 3 642 645 4,699 $ 4,200 4,200 3 670 673 4,873 2.98% 3.00% 2.89% 2.99% 5.63% 3.18% 3.24% 2.99% 2.30% 2.30% 2.78% 1.03% 1.04% 2.13% • Substantially all of the securities backed by real estate consist of securities backed by residential real estate. • As these securities are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these securities been included in the firm’s fair value hierarchy, U.S. government obligations would have been classified in level 1 and securities backed by real estate would have been primarily classified in level 2 of the fair value hierarchy as of both December 2022 and December 2021. • The weighted average yield for held-to-maturity securities is presented on a pre-tax basis and computed using the effective interest rate of each security at the end of the period, weighted based on the amortized cost of each security. • The gross unrealized gains were not material as of December 2022 and were $175 million as of December 2021. The gross unrealized losses were $1.44 billion as of December 2022 and were not material as of December 2021. • Held-to-maturity securities are reviewed to determine if an allowance for credit losses should be recorded in the consolidated statements of earnings. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings, historical credit losses and sovereign guarantees. Provision for credit losses on such securities was not material during either 2022 or 2021. Note 9. Loans (i) includes investment Loans that are loans held for accounted for at amortized cost net of allowance for loan losses or at fair value under the fair value option and (ii) loans held for sale that are accounted for at the lower of cost or fair value. Interest on loans is recognized over the life of the loan and is recorded on an accrual basis. The table below presents information about loans. $ in millions As of December 2022 Loan Type Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total loans, gross Allowance for loan losses Total loans As of December 2021 Loan Type Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total loans, gross Allowance for loan losses Total loans Amortized Cost Fair Value Held For Sale Total $ 36,822 $ 26,222 18,523 16,671 50,473 6,326 15,820 1,723 172,580 (5,543) 996 $ 1,146 4,511 – 716 – – 286 7,655 – $ 167,037 $ 7,655 $ 2,317 $ 40,135 28,879 1,511 23,035 1 16,671 – 51,702 513 – – 252 4,594 – 6,326 15,820 2,261 184,829 (5,543) 4,594 $ 179,286 $ 34,663 $ 1,609 $ 24,267 18,389 16,652 35,916 1,588 6,185 – 955 1,371 $ 37,643 29,000 3,145 24,674 100 16,652 – 38,263 1,392 3,672 8,212 1,736 143,507 (3,573) – – 432 10,769 – $ 139,934 $ 10,769 $ – – 1,851 7,859 – 3,672 8,212 4,019 162,135 (3,573) 7,859 $ 158,562 Goldman Sachs 2022 Form 10-K 161 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements the firm changed the In the fourth quarter of 2022, classification of loans to better reflect the nature of the underlying collateral. This includes the addition of the securities-based and other collateralized loan types, as well as the removal of the wealth management loan type. This also resulted in reclassifications of certain loans in the corporate and other loan types to the other collateralized loan type. Prior periods have been conformed to the current presentation. In the table above: • The increase in credit cards from December 2021 to December 2022 included approximately $2.0 billion relating to the firm’s acquisition of the General Motors co- branded credit card portfolio. • Loans held for investment that are accounted for at amortized cost include net deferred fees and costs, and unamortized premiums and discounts, which are amortized over the life of the loan. These amounts were less than 1% of loans accounted for at amortized cost as of both December 2022 and December 2021. The following is a description of the loan types in the table above: • Corporate. Corporate loans includes term loans, revolving lines of credit, letter of credit facilities and bridge loans, and are principally used for operating and general corporate purposes, or in connection with acquisitions. Corporate loans are secured (typically by a senior lien on the assets of the borrower) or unsecured, depending on the loan purpose, the risk profile of the borrower and other factors. retail • Commercial Real Estate. Commercial real estate loans includes originated loans that are directly or indirectly secured by hotels, stores, multifamily housing complexes and commercial and industrial properties. Commercial real estate loans also includes loans extended to clients who warehouse assets that are directly or indirectly backed by commercial real estate. In addition, commercial real estate includes loans purchased by the firm. • Residential Real Estate. Residential real estate loans primarily includes loans extended to wealth management clients and to clients who warehouse assets that are directly or indirectly secured by residential real estate. In addition, residential real estate includes loans purchased by the firm. • Securities-Based. Securities-based loans includes loans that are secured by stocks, bonds, mutual funds, and exchange-traded funds. These loans are primarily extended to the firm's wealth management clients and used for purposes other than purchasing, carrying or trading margin stocks. Securities-based loans require borrowers to post additional collateral based on changes in the underlying collateral's fair value. 162 Goldman Sachs 2022 Form 10-K • Other Collateralized. Other collateralized loans includes loans that are backed by specific collateral (other than securities and real estate). Such loans are extended to clients who warehouse assets that are directly or indirectly secured by corporate loans, consumer loans and other assets. Other collateralized loans also includes loans to that are investment funds (managed by third parties) collateralized by capital commitments of the funds' investors or assets held by the fund, as well as other secured loans extended to the firm's wealth management clients. • Installment. Installment loans are unsecured loans originated by the firm (including point-of-sale loans that the firm began to originate through the GreenSky platform in the third quarter of 2022). • Credit Cards. Credit card loans are loans made pursuant to revolving lines of credit issued to consumers by the firm. • Other. Other loans includes unsecured loans extended to wealth management clients and unsecured consumer and credit card loans purchased by the firm. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of loans, and Note 5 for information about loans within the fair value hierarchy. Credit Quality Risk Assessment. The firm’s risk assessment process includes evaluating the credit quality of its loans by the firm’s independent function. For risk oversight and control corporate loans and a majority of securities-based, real estate, other collateralized and other loans, the firm performs credit analyses which incorporate initial and ongoing evaluations of the capacity and willingness of a borrower to meet its financial obligations. These credit evaluations are performed on an annual basis or more frequently if deemed necessary as a result of events or changes in circumstances. The firm determines an internal credit rating for the borrower by considering the results of the credit evaluations and assumptions with respect to the nature of and outlook for the borrower’s industry and the economic environment. The internal credit rating does not take into consideration collateral received or other credit support arrangements. For consumer loans and for loans that are not assigned an internal credit rating, the firm reviews certain key metrics, including, but not limited to, the Fair Isaac Corporation (FICO) credit scores, delinquency status, collateral value and other risk factors. In the table above: • Substantially all residential real estate, securities-based, other collateralized and other loans included in the other metrics/unrated category consists of loans where the firm uses other key metrics to assess the borrower’s credit quality, such as loan-to-value ratio, delinquency status, collateral value, expected cash flows, FICO credit score (which measures creditworthiness by considering factors such as payment and credit history) and other risk factors. a borrower’s • For installment and credit card loans included in the other metrics/unrated category, the evaluation of credit quality incorporates the borrower’s FICO credit score. FICO credit scores are periodically refreshed by the firm to assess the updated creditworthiness of the borrower. See “Vintage” below for information about installment and credit card loans by FICO credit scores. The firm also assigns a regulatory risk rating to its loans based on the definitions provided by the U.S. federal bank regulatory agencies. Total loans included 93% of loans as of December 2022 and 92% of loans as of December 2021 that were rated pass/non-criticized. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents gross loans by an internally determined public rating agency equivalent or other credit metrics and the concentration of secured and unsecured loans. $ in millions As of December 2022 Accounting Method Amortized cost Fair value Held for sale Total Loan Type Corporate Real estate: Commercial Residential Securities-based Other collateralized Consumer: Installment Credit cards Other Total Secured Unsecured Total As of December 2021 Accounting Method Amortized cost Fair value Held for sale Total Loan Type Corporate Real estate: Commercial Residential Securities-based Other collateralized Consumer: Installment Credit cards Other Total Secured Unsecured Total Investment- Grade Non-Investment- Grade Other Metrics/ Unrated Total $ 63,971 $ 1,735 466 $ 66,172 $ 79,648 $ 3,349 4,082 87,079 $ 28,961 $ 172,580 7,655 4,594 31,578 $ 184,829 2,571 46 $ 10,200 $ 29,935 $ – $ 40,135 5,208 3,710 12,901 33,093 23,536 13,954 764 18,291 135 5,371 3,006 318 28,879 23,035 16,671 51,702 – – 1,060 $ 66,172 $ – – 599 87,079 $ 6,326 15,820 602 6,326 15,820 2,261 31,578 $ 184,829 85% 15% 100% 93% 7% 100% 27% 73% 100% 79% 21% 100% $ 50,923 $ 2,301 1,650 $ 54,874 $ 75,179 $ 4,634 4,747 84,560 $ 17,405 $ 143,507 10,769 7,859 22,701 $ 162,135 3,834 1,462 $ 8,345 $ 29,183 $ 115 $ 37,643 6,283 3,194 13,801 22,290 – – 961 $ 54,874 $ 85% 15% 100% 22,344 16,071 447 15,601 – – 914 84,560 $ 92% 8% 100% 373 5,409 2,404 372 29,000 24,674 16,652 38,263 3,672 8,212 2,144 3,672 8,212 4,019 22,701 $ 162,135 36% 64% 100% 82% 18% 100% Goldman Sachs 2022 Form 10-K 163 $ in millions 2021 2020 2019 2018 2017 2016 or earlier Revolving Corporate 2021 2020 2019 2018 2017 2016 or earlier Revolving Commercial real estate 2021 2020 2019 2018 2017 2016 or earlier Revolving Residential real estate 2018 2017 2016 or earlier Revolving Securities-based 2021 2020 2019 2018 2017 2016 or earlier Revolving Other collateralized 2021 2020 2019 2017 Revolving Other Total As of December 2021 $ Investment- Grade 2,932 $ 675 314 1,310 431 273 Non- Investment- Grade 6,843 $ 3,051 3,630 2,751 1,737 1,648 Other Metrics/ Unrated – $ 7 – – – – 6,806 26,466 4,139 2,081 1,548 854 625 824 8,507 18,578 2,744 564 – 96 73 1 10,919 14,397 1 22 – 424 447 4,316 1,598 464 180 125 47 8,148 14,878 290 60 20 – 75 82 94 – – – – 7 – 101 1,517 103 173 165 119 56 – 2,133 – – – 2,404 2,404 304 48 19 – – – – 371 10 330 – 8 2,180 8,115 799 532 444 478 760 692 1,883 5,588 864 271 9 – 25 – 690 1,859 – – 264 13,537 13,801 1,876 1,378 243 595 303 15 16,257 20,667 68 – 30 – 795 893 $ 50,923 $ Total 9,775 3,733 3,944 4,061 2,168 1,921 9,061 34,663 5,032 2,613 1,992 1,332 1,385 1,523 10,390 24,267 5,125 938 182 261 217 57 11,609 18,389 1 22 264 16,365 16,652 6,496 3,024 726 775 428 62 24,405 35,916 368 390 50 8 43 413 75,179 $ 82 430 920 1,736 5,521 $ 131,623 Percentage of total 39% 57% 4% 100% In the tables above, revolving loans which converted to term loans were $725 million as of December 2022, and primarily included other collateralized loans. Such loans were not material as of December 2021. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Vintage. The tables below present gross loans accounted for at amortized cost (excluding installment and credit card loans) by an internally determined public rating agency equivalent or other credit metrics and origination year for term loans. As of December 2022 $ in millions 2022 2021 2020 2019 2018 2017 or earlier Revolving Corporate 2022 2021 2020 2019 2018 2017 or earlier Revolving Commercial real estate 2022 2021 2020 2019 2018 2017 or earlier Revolving Residential real estate 2022 2018 2017 or earlier Revolving Securities-based 2022 2021 2020 2019 2018 2017 or earlier Revolving Other collateralized 2022 2021 2020 2019 2017 or earlier Revolving Other Total $ Investment- Grade 2,607 $ 1,669 684 209 759 508 3,709 10,145 734 744 407 335 212 1,238 1,281 4,951 941 932 – 7 10 31 773 2,694 5 1 – 12,895 12,901 4,095 1,860 777 235 504 294 24,504 32,269 44 17 – – – 950 1,011 Non- Investment- Grade 4,042 $ 4,273 2,595 2,779 1,911 2,329 8,746 26,675 3,971 3,487 1,740 1,412 469 797 9,382 21,258 1,385 1,219 14 – 50 10 10,019 12,697 – – 291 473 764 1,212 2,577 1,795 367 149 301 11,488 17,889 105 162 29 10 – 59 365 $ 63,971 $ 79,648 $ Other Metrics/ Unrated 2 $ – – – – – – 2 2 – – – – 11 – 13 1,307 1,357 89 99 138 142 – 3,132 – – – 3,006 3,006 113 146 36 12 6 – 2 315 – – 262 – 5 80 347 Total 6,651 5,942 3,279 2,988 2,670 2,837 12,455 36,822 4,707 4,231 2,147 1,747 681 2,046 10,663 26,222 3,633 3,508 103 106 198 183 10,792 18,523 5 1 291 16,374 16,671 5,420 4,583 2,608 614 659 595 35,994 50,473 149 179 291 10 5 1,089 1,723 6,815 $ 150,434 Percentage of total 42% 53% 5% 100% 164 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents gross installment loans by refreshed FICO credit scores and origination year and gross credit card loans by refreshed FICO credit scores. $ in millions As of December 2022 2022 2021 2020 2019 2018 2017 or earlier Installment Credit cards Total Percentage of total: Installment Credit cards Total As of December 2021 2021 2020 2019 2018 2017 2016 Installment Credit cards Total Percentage of total: Installment Credit cards Total Greater than or equal to 660 Less than 660 Total $ $ $ $ 4,349 $ 1,080 251 160 70 5 5,915 10,762 16,677 $ 94% 68% 75% 2,017 $ 665 508 257 32 1 3,480 6,100 9,580 $ 95% 74% 81% 242 $ 109 23 23 13 1 411 5,058 5,469 $ 6% 32% 25% 42 $ 40 61 42 7 – 192 2,112 2,304 $ 5% 26% 19% 4,591 1,189 274 183 83 6 6,326 15,820 22,146 100% 100% 100% 2,059 705 569 299 39 1 3,672 8,212 11,884 100% 100% 100% In the table above, credit card loans consist of revolving lines of credit. Credit Concentrations. The table below presents the concentration of gross loans by region. $ in millions Value Americas EMEA Asia Total Carrying As of December 2022 Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total As of December 2021 Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total $ 40,135 28,879 23,035 16,671 51,702 6,326 15,820 2,261 $184,829 $ 37,643 29,000 24,674 16,652 38,263 3,672 8,212 4,019 $ 162,135 57% 79% 96% 83% 86% 100% 100% 89% 81% 52% 82% 96% 77% 74% 100% 100% 89% 76% 34% 16% 3% 15% 12% – – 11% 15% 38% 13% 2% 16% 23% – – 11% 19% 9% 5% 1% 2% 2% – – – 4% 100% 100% 100% 100% 100% 100% 100% 100% 100% 10% 100% 5% 100% 2% 100% 7% 100% 3% 100% – – – 100% 100% 100% 5% 100% In the table above: • EMEA represents Europe, Middle East and Africa. • The top five industry concentrations for corporate loans as of December 2022 were 26% for technology, media & telecommunications, 18% for diversified industrials, 11% for real estate, 10% for healthcare and 10% for consumer & retail. • The top five industry concentrations for corporate loans as of December 2021 were 24% for technology, media & telecommunications, 17% for diversified industrials, 13% for natural resources & utilities, 11% for consumer & retail and 10% for healthcare. Nonaccrual and Past Due Loans. Loans accounted for at amortized cost (other than credit card loans) are placed on nonaccrual status when it is probable that the firm will not collect all principal and interest due under the contractual terms, regardless of the delinquency status or if a loan is past due for 90 days or more, unless the loan is both well collateralized and in the process of collection. At that time, all accrued but uncollected interest is reversed against interest income and interest subsequently collected is recognized on a cash basis the loan balance is deemed collectible. Otherwise, all cash received is used to reduce the outstanding loan balance. A loan is considered past due when a principal or interest payment has not been made according to its contractual terms. Credit card loans are not placed on nonaccrual status and accrue interest until the loan is paid in full or is charged off. to the extent In certain circumstances, the firm may modify the original terms of a loan agreement by granting a concession to a borrower experiencing financial difficulty, typically in the form of a modification of loan covenants, but may also include interest or principal, payment extensions or interest rate reductions. These modifications, to considered TDRs. Loan are the modifications that extend payment terms for a period of less than 90 days are generally considered insignificant and therefore not reported as TDRs. forbearance of significant, extent Goldman Sachs 2022 Form 10-K 165 Allowance for Credit Losses The firm’s allowance for credit the allowance for losses on loans and lending commitments accounted for at amortized cost. Loans and lending commitments accounted for at fair value or accounted for at the lower of cost or fair value are not subject to an allowance for credit losses. losses consists of losses, To determine the allowance for credit the firm classifies its loans and lending commitments accounted for at amortized cost into wholesale and consumer portfolios. These portfolios represent the level at which the firm has developed and documented its methodology to determine the allowance for credit losses. The allowance for credit losses is measured on a collective basis for loans that exhibit similar risk characteristics using a modeled approach and on an asset-specific basis for loans that do not share similar risk characteristics. losses takes into account The allowance for credit the weighted average of a range of forecasts of future economic conditions over the expected life of the loan and lending commitments. The expected life of each loan or lending commitment is determined based on the contractual term adjusted for extension options or demand features, or is modeled in the case of revolving credit card loans. The forecasts include baseline, favorable and adverse economic scenarios over a three-year period. For loans with expected lives beyond three years, the model reverts to historical loss information based on a non-linear modeled approach. The forecasted economic scenarios consider a number of risk factors relevant to the wholesale and consumer portfolios described below. The firm applies judgment in weighing individual scenarios each quarter based on a variety of including the firm’s internally derived economic factors, outlook, market recent macroeconomic conditions and industry trends. consensus, The allowance for credit losses also includes qualitative components which allow management to reflect the uncertain nature uncertainty forecasting, regarding model inputs, and account for model imprecision and concentration risk. economic capture of THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information about past due loans. $ in millions As of December 2022 Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total 30-89 days 90 days or more $ – $ 92 $ 47 4 1 10 362 6 – 5 46 291 17 416 $ 17 265 5 752 $ $ Total divided by gross loans at amortized cost As of December 2021 Corporate Commercial real estate Residential real estate Securities-based Consumer: Installment Credit cards Other Total $ $ 5 $ 7 3 – 20 86 15 136 $ 90 $ 158 4 5 7 71 3 338 $ Total divided by gross loans at amortized cost Total 92 409 10 1 15 63 556 22 1,168 0.7% 95 165 7 5 27 157 18 474 0.3% The table below presents information about nonaccrual loans. As of December $ in millions Corporate Commercial real estate Residential real estate Securities-based Other collateralized Installment Total 2022 1,432 $ 1,079 93 – 65 41 2,710 $ $ $ Total divided by gross loans at amortized cost 1.6% In the table above: 2021 1,421 856 5 5 139 43 2,469 1.7% • Nonaccrual loans included $483 million as of December 2022 and $254 million as of December 2021 of loans that were 30 days or more past due. • Loans that were 90 days or more past due and still accruing were not material as of both December 2022 and December 2021. • Nonaccrual loans included $204 million of corporate loans as of December 2022 and $267 million of corporate and commercial real estate loans as of December 2021 that were modified in a TDR. The firm’s lending commitments related to these loans were not material as of both December 2022 and December 2021. Installment loans that were modified in a TDR were not material as of both December 2022 and December 2021. • Allowance for loan losses as a percentage of total nonaccrual loans was 204.5% as of December 2022 and 144.7% as of December 2021. 166 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Management’s estimate of credit losses entails judgment about the expected life of the loan and loan collectability at the reporting dates, and there are uncertainties inherent in those judgments. The allowance for credit losses is subject to a governance process that involves review and approval by senior management within the firm’s risk oversight and control functions. Personnel within the firm’s independent functions are risk oversight and control responsible for forecasting the economic variables that underlie the economic scenarios that are used in the modeling of expected credit losses. While management uses the best information available to determine this estimate, future adjustments to the allowance may be necessary based on, among other things, changes in the economic environment or variances between actual results and the original assumptions used. independent table below presents The commitments accounted for at amortized cost by portfolio. and lending loans gross As of December 2022 2021 Lending Commitments Loans Lending Commitments Loans $ 36,822 $ 26,222 18,523 16,671 50,473 1,723 137,149 3,692 3,089 508 13,209 944 $ 34,663 $ 24,267 18,389 16,652 35,916 1,736 6,326 15,820 $172,580 $ 1,882 62,216 222,689 3,672 8,212 $143,507 $ 135,968 5,229 3,949 454 15,137 442 9 35,932 197,120 $ in millions Wholesale Corporate Commercial real estate Residential real estate Securities-based Other collateralized Other Consumer Installment Credit cards Total In the table above: • Wholesale loans included $2.67 billion as of December 2022 and $2.43 billion as of December 2021 of nonaccrual loans for which the allowance for credit losses was measured on an asset-specific basis. The allowance for credit losses on these loans was $535 million as of December 2022 and $543 million as of December 2021. These loans included $384 million as of December 2022 and $140 million as of December 2021 of loans which did not require a reserve as the loan was deemed to be recoverable. in credit card lending commitments • Credit card lending commitments included $62.22 billion as of December 2022 and $33.97 billion as of December 2021 related to credit card lines issued by the firm to consumers. These credit card lines are cancellable by the firm. The from increase December 2021 to December 2022 reflected approximately the $15.0 billion relating to the firm’s acquisition of General Motors co-branded credit card portfolio. In addition, credit card lending commitments as of December 2021 included a commitment of approximately $2.0 billion to acquire the outstanding credit card loans related to the General Motors co-branded credit card portfolio. See Note 18 for further information about lending commitments. • The increase in installment lending commitments from December 2021 to December 2022 primarily relates to commitments extended in connection with point-of-sale financing through GreenSky. See Note 18 for further information about lending commitments. The following is a description of the methodology used to calculate the allowance for credit losses: Wholesale. The allowance for credit losses for wholesale loans and lending commitments that exhibit similar risk characteristics is measured using a modeled approach. These models determine the probability of default and loss given default based on various risk factors, including internal credit ratings, industry default and loss data, expected life, macroeconomic indicators, the borrower’s capacity to meet its financial obligations, the borrower’s country of risk and loan seniority and collateral type. For lending industry, commitments, the probability of drawdowns or funding. In addition, for loans backed by real estate, risk factors include the loan-to-value ratio, debt service ratio and home price index. The most significant inputs to the forecast model for wholesale loans and lending commitments include unemployment rates, GDP, credit spreads, commercial and industrial delinquency rates, short- and long-term interest rates, and oil prices. the methodology considers also The allowance for loan losses for wholesale loans that do not share similar risk characteristics, such as nonaccrual loans or loans in a TDR, is calculated using the present value of expected future cash flows discounted at the loan’s original effective rate, the observable market price of the loan or the fair value of the collateral. Wholesale loans are charged off against the allowance for loan losses when deemed to be uncollectible. Goldman Sachs 2022 Form 10-K 167 Allowance for Credit Losses Rollforward The table below presents information about the allowance for credit losses. Wholesale Consumer Total $ in millions Year Ended December 2022 Allowance for loan losses Beginning balance Net (charge-offs)/recoveries Provision Other Ending balance g $ $ 2,135 $ (253) 699 (19) 2,562 $ Allowance ratio Net charge-off ratio Allowance for losses on lending commitments Beginning balance Provision Other Ending balance g $ $ 1.7% 0.2% 589 $ 124 (2) 711 $ Year Ended December 2021 Allowance for loan losses Beginning balance Net (charge-offs)/recoveries Provision Other Ending balance g $ $ 2,584 $ (130) (231) (88) 2,135 $ Allowance ratio Net charge-off ratio Allowance for losses on lending commitments Beginning balance Provision Other Ending balance $ $ g 1.6% 0.1% 557 $ 50 (18) 589 $ 1,438 $ (473) 2,016 – 2,981 $ 13.5% 2.8% 187 $ (124) – 63 $ 1,290 $ (203) 351 – 1,438 $ 12.1% 2.3% – $ 187 – 187 $ 3,573 (726) 2,715 (19) 5,543 3.2% 0.5% 776 – (2) 774 3,874 (333) 120 (88) 3,573 2.5% 0.3% 557 237 (18) 776 In the table above: • For the year ended December 2021, other primarily represented the reduction to the allowance related to loans and lending commitments transferred to held for sale. • The allowance ratio is calculated by dividing the allowance for loan losses by gross loans accounted for at amortized cost. • The net charge-off ratio is calculated by dividing net (charge-offs)/recoveries by average gross loans accounted for at amortized cost. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Consumer. The allowance for credit losses for consumer loans that exhibit similar risk characteristics is calculated using a modeled approach which classifies consumer loans into pools based on borrower-related and exposure-related characteristics that differentiate a pool’s risk characteristics from other pools. The factors considered in determining a pool are generally consistent with the risk characteristics used for internal credit risk measurement and management and include key metrics, such as FICO credit scores, delinquency status, loan vintage and macroeconomic indicators. The most significant inputs to the forecast model for consumer loans include unemployment rates and delinquency rates. The expected life of revolving credit card loans is determined by modeling expected future draws and the timing and amount of repayments allocated to the funded balance. The firm also recognizes an allowance for credit losses on commitments to acquire loans and commitments extended in connection with point-of-sale financing. However, no allowance for credit losses is recognized on credit card lending commitments as they are cancellable by the firm. The allowance for credit losses for consumer loans that do not share similar risk characteristics, such as loans in a TDR, is calculated using the present value of expected future cash flows discounted at the loan’s original effective rate. Installment loans are charged off when they are 120 days past due. Credit card loans are charged off when they are 180 days past due. 168 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Forecast Model Inputs as of December 2022 When modeling expected credit losses, the firm employs a weighted, multi-scenario forecast, which includes baseline, adverse and favorable economic scenarios. As of December 2022, this multi-scenario forecast was weighted towards the baseline and adverse economic scenarios. The table below presents the forecasted U.S. unemployment and U.S. GDP growth rates used in the baseline economic scenario of the forecast model. As of December 2022 U.S. unemployment rate Forecast for the quarter ended: June 2023 December 2023 June 2024 Growth in U.S. GDP Forecast for the year: 2023 2024 2025 4.2% 4.6% 4.6% 0.4% 1.3% 1.7% The adverse economic scenario of the forecast model reflects a global recession in 2023 and a more aggressive tightening of monetary policy by central banks, resulting in an economic contraction and rising unemployment rates. In this scenario, the U.S. unemployment rate peaks at approximately 7.4% during the first quarter of 2024 and the maximum decline in the quarterly U.S. GDP relative to the fourth quarter of 2022 is approximately 2.7%, which occurs during the fourth quarter of 2023. In the table above: • U.S. unemployment rate represents the rate forecasted as of the respective quarter-end. • Growth in U.S. GDP represents the year-over-year growth rate forecasted for the respective years. • While the U.S. unemployment and U.S. GDP growth rates are significant inputs to the forecast model, the model contemplates a variety of other inputs across a range of scenarios future economic conditions. Given the complex nature of the forecasting process, no single economic variable can be viewed in isolation and independently of other inputs. to provide a forecast of Allowance for Credit Losses Commentary Year Ended December 2022. The allowance for credit losses increased by $1.97 billion during 2022, reflecting growth in the firm's consumer lending portfolios (principally in credit cards) and higher modeled expected losses due to broad macroeconomic and geopolitical concerns. In addition, the allowance for credit losses for wholesale loans was impacted by asset-specific provisions and ratings downgrades primarily related to borrowers in the technology, media & telecommunications, real estate, and consumer & retail industries. Net (charge-offs)/recoveries for 2022 for wholesale loans were primarily related to corporate loans and net (charge- offs)/recoveries for consumer loans were primarily related to credit cards. by driven Year Ended December 2021. The allowance for credit losses decreased by $82 million during 2021, reflecting reserve reduction economic environment, partially offset by growth in the firm’s lending portfolios, primarily in the consumer portfolio related to credit cards, losses of approximately $185 million related to the acquisition of the General Motors co-branded credit card portfolio. including a provision for credit improved broader Net (charge-offs)/recoveries for 2021 for wholesale loans were primarily related to corporate loans and net (charge- offs)/recoveries for consumer loans were primarily related to credit cards. of on Credit Losses Financial Measurement Instruments (ASC 326) The firm adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments" as of January 1, 2020. As a result of adopting this ASU, the firm's allowance for credit losses on financial assets and commitments that are accounted for at amortized cost reflects management's estimate of credit losses over the remaining life of such assets. The cumulative effect of adopting this ASU as of January 1, 2020, was a decrease to retained earnings of $638 million (net of tax). Estimated Fair Value The table below presents the estimated fair value of loans that are not accounted for at fair value and in what level of the fair value hierarchy they would have been classified if they had been included in the firm’s fair value hierarchy. $ in millions As of December 2022 Amortized cost Held for sale As of December 2021 Amortized cost Held for sale Carrying Value Estimated Fair Value Level 3 Level 2 Total $ 167,037 4,594 $ $ 85,921 $ 83,121 $ 169,042 4,606 $ 2,592 $ 2,014 $ $ 139,934 7,859 $ $ 87,676 $ 54,127 $ 141,803 7,887 $ 5,970 $ 1,917 $ See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of loans, and Note 5 for information about loans within the fair value hierarchy. Goldman Sachs 2022 Form 10-K 169 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 10. Fair Value Option Other Financial Assets and Liabilities at Fair Value In addition to trading assets and liabilities, and certain investments and loans, the firm accounts for certain of its other financial assets and liabilities at fair value, substantially all under the fair value option. The primary reasons for electing the fair value option are to: • Reflect economic events in earnings on a timely basis; • Mitigate volatility in earnings from using different measurement attributes (e.g., transfers of financial assets accounted for as financings are recorded at fair value, whereas the related secured financing would be recorded on an accrual basis absent electing the fair value option); and • Address simplification and cost-benefit considerations (e.g., accounting for hybrid financial instruments at fair value in their entirety versus bifurcation of embedded derivatives and hedge accounting for debt hosts). Hybrid financial instruments are instruments that contain bifurcatable embedded derivatives and do not require settlement by physical delivery of nonfinancial assets (e.g., physical commodities). If the firm elects to bifurcate the embedded derivative from the associated debt, the derivative is accounted for at fair value and the host contract is accounted for at amortized cost, adjusted for the effective portion of any fair value hedges. If the firm does not elect to bifurcate, the entire hybrid financial instrument is accounted for at fair value under the fair value option. Other financial assets and liabilities accounted for at fair value under the fair value option include: • Resale and repurchase agreements; • Certain securities borrowed and loaned transactions; • Certain customer and other receivables and certain other assets and liabilities; • Certain time deposits (deposits with no stated maturity are not eligible for a fair value option election), including structured certificates of deposit, which are hybrid financial instruments; • Substantially all other secured financings, including transfers of assets accounted for as financings; and • Certain unsecured short- and long-term borrowings, substantially all of which are hybrid financial instruments. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of other financial assets and liabilities, and Note 5 for information about other financial assets and liabilities within the fair value hierarchy. 170 Goldman Sachs 2022 Form 10-K Gains and Losses on Other Financial Assets and Liabilities Accounted for at Fair Value Under the Fair Value Option The table below presents the gains and losses recognized in earnings as a result of the election to apply the fair value option to certain financial assets and liabilities. $ in millions Unsecured short-term borrowings Unsecured long-term borrowings Other Total In the table above: $ 2021 Year Ended December 2022 2020 206 (2,804) (563) $ 11,633 $ (3,544) $ (3,161) 4,055 $ (1,016) $ 6,506 1,072 (2,393) (135) • Gains/(losses) were substantially all included in market making. • Gains/(losses) exclude contractual interest, which is included in interest income and interest expense, for all instruments other than hybrid financial instruments. See Note 23 for further information about interest income and interest expense. • Gains/(losses) included in unsecured short- and long-term borrowings were substantially all related to the embedded derivative component of hybrid financial instruments. These gains and losses would have been recognized under other U.S. GAAP even if the firm had not elected to account for the entire hybrid financial instrument at fair value. • Gains/(losses) included in other were substantially all related to resale and repurchase agreements, deposits, other secured financings and other liabilities. • Other financial assets and liabilities at fair value are frequently economically hedged with trading assets and liabilities. Accordingly, gains or losses on such other financial assets and liabilities can be partially offset by gains or losses on trading assets and liabilities. As a result, gains or losses on other financial assets and liabilities do not necessarily represent the overall impact on the firm’s results of operations, liquidity or capital resources. See Note 8 for information about gains/(losses) on equity securities and Note 9 for information about gains/(losses) on loans which are accounted for at fair value under the fair value option. Gains/(losses) on trading assets and liabilities accounted for at fair value under the fair value option are further included in market making. See Note 6 for information about gains/(losses) from market making. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Long-Term Debt Instruments The difference between the aggregate contractual principal amount and the related fair value of long-term other secured financings, for which the fair value option was elected, was not material as of both December 2022 and December 2021. The aggregate contractual principal amount of unsecured long-term borrowings, for which the fair value option was elected, exceeded the related fair value by $5.03 billion as of December 2022. The related amount was not material as of December 2021. These debt instruments include both principal-protected and non-principal-protected long-term borrowings. Debt Valuation Adjustment The firm calculates the fair value of financial liabilities for which the fair value option is elected by discounting future cash flows at a rate which incorporates the firm’s credit spreads. The table below presents information about the net debt valuation adjustment (DVA) gains/(losses) on financial liabilities for which the fair value option was elected. $ in millions Pre-tax DVA After-tax DVA In the table above: Year Ended December 2022 $ 1,882 $ $ 1,403 $ 2021 433 $ 322 $ 2020 (347) (261) • After-tax DVA is included in debt valuation adjustment in the consolidated statements of comprehensive income. • The gains/(losses) reclassified to market making in the consolidated statements of earnings from accumulated other comprehensive income/(loss) upon extinguishment of such financial liabilities were not material for 2022, 2021 and 2020. Loans and Lending Commitments The table below presents the difference between the aggregate fair value and the aggregate contractual principal amount for loans (included in trading assets and loans in the consolidated balance sheets) for which the fair value option was elected. $ in millions Performing loans Aggregate contractual principal in excess of fair value $ As of December 2022 2021 2,645 $ 1,373 Loans on nonaccrual status and/or more than 90 days past due 3,331 $ Aggregate contractual principal in excess of fair value $ 2,633 $ $ Aggregate fair value 8,600 3,559 In the table above, the aggregate contractual principal amount of loans on nonaccrual status and/or more than 90 days past due (which excludes loans carried at zero fair value and considered uncollectible) exceeds the related fair value primarily because the firm regularly purchases loans, such as distressed loans, at values significantly below the contractual principal amounts. The fair value of unfunded lending commitments for which the fair value option was elected was a liability of $22 million as of December 2022 and $20 million as of December 2021, and the related total contractual amount of these lending commitments was $307 million as of December 2022 and $611 million as of December 2021. See Note 18 for further information about lending commitments. Impact of Credit Spreads on Loans and Lending Commitments The estimated net gain/(loss) attributable to changes in instrument-specific credit spreads on loans and lending commitments for which the fair value option was elected was $(281) million for 2022, $277 million for 2021 and $(106) million for 2020. The firm generally calculates the fair value of loans and lending commitments for which the fair value option is elected by discounting future cash flows at a rate which incorporates the instrument-specific credit spreads. For commitments, substantially all changes in fair value are attributable to changes in instrument-specific credit spreads, whereas for fixed-rate loans and lending commitments, changes in fair value are also attributable to changes in interest rates. floating-rate lending loans and Goldman Sachs 2022 Form 10-K 171 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 11. Collateralized Agreements and Financings resale agreements Collateralized agreements and are securities borrowed. Collateralized financings are repurchase agreements, securities loaned and other secured financings. The firm enters into these transactions in order to, among other things, facilitate client activities, invest excess cash, acquire securities to cover short positions and finance certain firm activities. Collateralized agreements and financings with the same settlement date are presented on a net-by-counterparty basis when such transactions meet certain settlement criteria and are subject to netting agreements. Interest on collateralized agreements, which is included in interest income, and collateralized financings, which is included in interest expense, is recognized over the life of the transaction. See Note 23 for further information about interest income and interest expense. Resale and Repurchase Agreements is a transaction in which the firm A resale agreement purchases financial instruments from a seller, typically in exchange for cash, and simultaneously enters into an agreement the same or substantially the same instruments to the seller at a stated price plus financial accrued interest at a future date. to resell A repurchase agreement is a transaction in which the firm sells financial instruments to a buyer, typically in exchange for cash, and simultaneously enters into an agreement to repurchase the same or substantially the same financial instruments from the buyer at a stated price plus accrued interest at a future date. Even though repurchase and resale agreements (including “repos- and reverses-to-maturity”) involve the legal transfer of ownership of financial instruments, they are accounted for as financing arrangements because they require the financial instruments to be repurchased or resold before or at the maturity of instruments the agreement. The financial purchased or sold in resale and repurchase agreements and government typically investment-grade sovereign obligations. include U.S. and agency, the firm monitors the market value of The firm receives financial instruments purchased under resale agreements and makes delivery of financial instruments repurchase agreements. To mitigate credit sold under exposure, these financial instruments on a daily basis, and delivers or obtains additional collateral due to changes in the market value of the financial instruments, as appropriate. For resale agreements, the firm typically requires collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated balance sheets. 172 Goldman Sachs 2022 Form 10-K Securities Borrowed and Loaned Transactions the firm borrows In a securities borrowed transaction, securities from a counterparty in exchange for cash or the securities. When the counterparty returns is Interest generally paid periodically over the life of the transaction. the securities. firm returns the cash or securities, In a securities loaned transaction, the firm lends securities to a counterparty in exchange for cash or securities. When the counterparty returns the securities, the firm returns the cash or securities posted as collateral. Interest is generally paid periodically over the life of the transaction. The firm receives securities borrowed and makes delivery of the firm securities loaned. To mitigate credit exposure, monitors the market value of these securities on a daily basis, and delivers or obtains additional collateral due to changes in the market value of the securities, as appropriate. For securities borrowed transactions, the firm typically requires collateral with a fair value approximately equal to the carrying value of the securities borrowed transaction. Securities borrowed and loaned within FICC financing are recorded at fair value under the fair value option. See Note 5 for further information about securities borrowed and loaned accounted for at fair value. Substantially all of the securities borrowed and loaned within Equities financing are recorded based on the amount of cash collateral advanced or received plus accrued interest. The firm also reviews such securities borrowed to determine if an allowance for credit losses should be recorded by taking into consideration the fair value of collateral received. As these agreements generally can be terminated on demand, they exhibit little, if any, sensitivity to changes in interest rates. agreements Therefore, approximates these agreements are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these agreements been included in the firm’s fair value hierarchy, they would have been classified in level 2 as of both December 2022 and December 2021. carrying fair value. As value such the of THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Offsetting Arrangements The table below presents resale and repurchase agreements and securities borrowed and loaned transactions included in the consolidated balance sheets, as well as the amounts not offset in the consolidated balance sheets. Gross Carrying Value of Repurchase Agreements and Securities Loaned The table below presents the gross carrying value of repurchase agreements and securities loaned by class of collateral pledged. Assets Liabilities Resale agreements Securities borrowed $ in millions As of December 2022 Included in the consolidated balance sheets Gross carrying value $ Counterparty netting Total 334,042 $ 199,623 (10,582) (108,925) 189,041 225,117 Amounts not offset Counterparty netting Collateral Total As of December 2021 (15,350) (204,843) (4,576) (171,997) 4,924 $ 12,468 $ Included in the consolidated balance sheets Gross carrying value $ Counterparty netting Total 334,725 $ 190,197 (11,426) (129,022) 178,771 205,703 Repurchase agreements Securities loaned $ $ $ 219,274 $ (108,925) 110,349 41,309 (10,582) 30,727 (15,350) (92,997) 2,002 $ (4,576) (25,578) 573 294,905 $ (129,022) 165,883 57,931 (11,426) 46,505 Amounts not offset Counterparty netting Collateral Total In the table above: (27,376) (173,915) $ 4,412 $ (12,822) (157,752) 8,197 (27,376) (134,465) $ 4,042 $ (12,822) (33,143) 540 • Substantially all of the gross carrying values of these netting enforceable subject are to arrangements agreements. • Where the firm has received or posted collateral under credit support agreements, but has not yet determined such agreements are enforceable, the related collateral has not been netted. • Amounts not offset includes counterparty netting that does not meet the criteria for netting under U.S. GAAP and the to fair value of collateral received or posted subject enforceable credit support agreements. • Resale agreements and repurchase agreements are carried at fair value under the fair value option. See Note 4 for further information about the valuation techniques and significant inputs used to determine fair value. • Securities borrowed included in the consolidated balance sheets of $38.58 billion as of December 2022 and $39.96 billion as of December 2021, and securities loaned of $4.37 billion as of December 2022 and $9.17 billion as of December 2021 were at fair value under the fair value option. See Note 5 for further information about securities borrowed and securities loaned accounted for at fair value. $ in millions As of December 2022 Money market instruments U.S. government and agency obligations Non-U.S. government and agency obligations Securities backed by commercial real estate Securities backed by residential real estate Corporate debt securities State and municipal obligations Other debt obligations Equity securities Total As of December 2021 Money market instruments U.S. government and agency obligations Non-U.S. government and agency obligations Securities backed by commercial real estate Securities backed by residential real estate Corporate debt securities State and municipal obligations Other debt obligations Equity securities Total Repurchase agreements Securities loaned $ 10 $ 112,825 87,828 172 466 11,398 143 108 6,324 219,274 $ 328 $ 132,049 126,397 362 919 11,034 248 374 23,194 294,905 $ $ $ $ – 55 594 – – 295 – – 40,365 41,309 14 503 1,254 – – 510 – – 55,650 57,931 The table below presents the gross carrying value of repurchase agreements and securities loaned by maturity. $ in millions No stated maturity and overnight 2 - 30 days 31 - 90 days 91 days - 1 year Greater than 1 year Total In the table above: As of December 2022 Repurchase agreements Securities loaned $ $ 86,835 70,351 17,776 35,096 9,216 219,274 , $ $ 27,791 956 936 7,596 4,030 41,309 , • Repurchase agreements and securities loaned that are repayable prior to maturity at the option of the firm are reflected at their contractual maturity dates. • Repurchase agreements and securities loaned that are redeemable prior to maturity at the option of the holder are reflected at such options become exercisable. the earliest dates Goldman Sachs 2022 Form 10-K 173 The table below presents information about other secured financings. $ in millions As of December 2022 Other secured financings (short-term): At fair value At amortized cost Other secured financings (long-term): At fair value At amortized cost Total other secured financings g $ Other secured financings collateralized by: $ $ Financial instruments Other assets U.S. Dollar Non-U.S. Dollar Total $ 3,478 $ 2,963 $ 398 – 6,441 398 3,793 395 6,315 2,522 792 397 8,064 $ 5,882 $ 13,946 3,817 $ 4,895 $ 987 $ 4,247 $ 8,712 5,234 As of December 2021 Other secured financings (short-term): At fair value At amortized cost Other secured financings (long-term): At fair value At amortized cost g Total other secured financings Other secured financings collateralized by: Financial instruments Other assets In the table above: $ 5,315 $ 3,664 $ – 191 8,979 191 4,170 827 8,095 1,279 $ 10,312 $ 8,232 $ 18,544 3,925 452 $ $ 5,990 $ 6,834 $ 12,824 5,720 4,322 $ 1,398 $ • Short-term other secured financings includes financings maturing within one year of the financial statement date and financings that are redeemable within one year of the financial statement date at the option of the holder. • U.S. dollar-denominated secured financings at amortized cost had a weighted average interest rate of 5.56% as of December 2022. These rates include the effect of hedging activities. short-term other • Non-U.S. dollar-denominated short-term other secured financings at amortized cost had a weighted average interest rate of 0.22% as of December 2021. This rate includes the effect of hedging activities. • U.S. long-term other dollar-denominated secured financings at amortized cost had a weighted average interest rate of 3.54% as of December 2022 and 1.06% as of December 2021. These rates include the effect of hedging activities. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Other Secured Financings In addition to repurchase agreements and securities loaned transactions, the firm funds certain assets through the use of other secured financings and pledges financial instruments and other assets as collateral in these transactions. These other secured financings include: • Liabilities of consolidated VIEs; • Transfers of assets accounted for as financings rather than sales (e.g., pledged commodities, bank loans and mortgage whole loans); and • Other structured financing arrangements. secured financings nonrecourse Other arrangements. Nonrecourse other secured financings were $7.94 billion as of December 2022 and $8.64 billion as of December 2021. included The firm has elected to apply the fair value option to substantially all other secured financings because the use of fair value eliminates non-economic volatility in earnings that would arise from using different measurement attributes. See Note 10 for secured financings that are accounted for at fair value. information about other further Other secured financings that are not recorded at fair value are recorded based on the amount of cash received plus accrued interest, which generally approximates fair value. As these financings are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these financings been included in the firm’s fair value hierarchy, substantially all would have been classified in level 3 as of both December 2022 and December 2021. 174 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements • Non-U.S. dollar-denominated long-term other secured financings at amortized cost had a weighted average interest rate of 0.45% as of December 2022 and 0.46% as of December 2021. These rates include the effect of hedging activities. • Total other secured financings included $1.69 billion as of December 2022 and $1.97 billion as of December 2021 related to transfers of financial assets accounted for as than sales. Such financings were financings collateralized by financial assets, primarily included in trading assets, of $1.64 billion as of December 2022 and $2.02 billion as of December 2021. rather • Other secured financings collateralized by financial instruments included $7.49 billion as of December 2022 and $10.37 billion as of December 2021 of other secured financings collateralized by trading assets, investments and loans, and included $1.22 billion as of December 2022 and $2.45 billion as of December 2021 of other secured financings collateralized by financial instruments received as collateral and repledged. The table below presents other maturity. secured financings by $ in millions Other secured financings (short-term) Other secured financings (long-term): 2024 2025 2026 2027 2028 - thereafter Total other secured financings (long-term) g Total other secured financings In the table above: As of December 2022 6,839 $ 2,956 1,053 978 152 1,968 7,107 13,946 $ • Long-term other secured financings that are repayable prior to maturity at the option of the firm are reflected at their contractual maturity dates. • Long-term other secured financings that are redeemable prior to maturity at the option of the holder are reflected at the earliest dates such options become exercisable. Collateral Received and Pledged The firm receives cash and securities (e.g., U.S. government and agency obligations, other sovereign and corporate obligations, as well as equity securities) as collateral, primarily in connection with resale agreements, securities borrowed, derivative transactions and customer margin loans. The firm obtains cash and securities as collateral on an upfront or contingent basis for derivative instruments and collateralized agreements to reduce its credit exposure to individual counterparties. repurchase agreements In many cases, the firm is permitted to deliver or repledge financial instruments received as collateral when entering loaned into transactions, primarily in connection with secured client financing activities. The firm is also permitted to deliver or repledge these financial instruments in connection with other secured financings, collateralized derivative transactions and firm or customer settlement requirements. securities and Goldman Sachs 2022 Form 10-K 175 Note 12. Other Assets The table below presents other assets by type. As of December $ in millions Property, leasehold improvements and equipment Goodwill Identifiable intangible assets Operating lease right-of-use assets Income tax-related assets Miscellaneous receivables and other Total 2022 2021 $ 17,074 $ 18,094 4,285 418 2,292 3,860 5,659 $ 39,208 $ 34,608 6,374 2,009 2,172 7,012 4,567 During 2022, the firm completed the acquisitions of (i) GreenSky, a leading technology company facilitating point- of-sale financing for merchants and consumers, in an all- stock transaction, (ii) NN Investment Partners (NNIP), a leading European asset manager, in an all-cash transaction, and (iii) NextCapital Group, Inc. (NextCapital), a digital retirement advice provider, in an all-cash transaction. These acquisitions were accounted for under the acquisition method of accounting for business combinations and had an aggregate purchase price of $3.83 billion, substantially all of which related to GreenSky and NNIP. The purchase price of GreenSky has been preliminarily allocated to goodwill of approximately $1.05 billion, identifiable intangible assets of approximately of approximately $960 million (primarily cash and other assets), and to liabilities assumed of approximately $990 million (primarily unsecured short-term borrowings and customer and other payables). The purchase price of NNIP has been preliminarily allocated to goodwill of approximately $880 million, identifiable intangible assets of approximately $900 million, tangible assets of approximately $540 million (primarily cash and customer and other receivables), and to liabilities assumed of approximately $500 million (primarily deferred tax liabilities and customer and other payables). See below for and identifiable intangible assets related to these acquisitions. information about $710 million goodwill tangible further assets and THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The firm also pledges certain trading assets in connection with repurchase agreements, securities loaned transactions and other secured financings, and other assets (substantially all real estate and cash) in connection with other secured financings to counterparties who may or may not have the right to deliver or repledge them. The table below presents financial instruments at fair value received as collateral that were available to be delivered or repledged and were delivered or repledged. $ in millions Collateral available to be delivered or repledged Collateral that was delivered or repledged 2022 2021 $ 971,699 $ 1,057,195 $ 797,919 $ 875,213 As of December The table below presents information about assets pledged. As of December $ in millions Pledged to counterparties that had the right to deliver or repledge Trading assets Investments 40,143 $ 9,818 $ 2022 $ $ 2021 68,208 12,840 Pledged to counterparties that did not have the right to deliver or repledge 102,259 Trading assets 8,683 Investments 6,808 Loans 8,878 Other assets 70,912 $ 1,726 $ 6,600 $ 7,525 $ $ $ $ $ The firm also segregates securities for regulatory and other purposes related to client activity. Such securities are segregated from trading assets and investments, as well as from securities received as collateral under resale agreements and securities borrowed transactions. Securities segregated by the firm were $49.60 billion as of December 2022 and $41.49 billion as of December 2021. 176 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Property, Leasehold Improvements and Equipment Property, leasehold improvements and equipment is net of accumulated depreciation and amortization of $12.19 billion as of December 2022 and $10.81 billion as of December 2021. Property, leasehold improvements and equipment included $7.17 billion as of December 2022 and $6.71 billion as of December 2021 that the firm uses in connection with its operations, and $89 million as of December 2022 and $194 million as of December 2021 of foreclosed real estate primarily related to distressed loans that were purchased by the firm. The remainder is held by investment entities, including VIEs, consolidated by the firm. Substantially all property and equipment is depreciated on a straight-line basis over the useful life of the asset. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. Capitalized costs of software developed or obtained for internal use are amortized on a straight-line basis over three years. leasehold improvements and The firm tests property, for impairment when events or changes in equipment circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value. The firm had impairments of $314 million during 2022, $143 million during 2021, and $171 million during 2020, primarily related to properties held by the firm’s investment entities within Asset & Wealth Management. Goodwill Goodwill is the cost of acquired companies in excess of the fair value of net assets, including identifiable intangible assets, at the acquisition date. During the fourth quarter of 2022, in connection with the changes to the firm’s business segments, the firm reassigned the goodwill to its new reporting units using a relative fair value approach in accordance with ASC 350. The table below presents the carrying value of goodwill by reporting unit. $ in millions Global Banking & Markets: Investment banking FICC Equities Asset & Wealth Management: Asset management Wealth management Platform Solutions: Consumer platforms Transaction banking and other Total In the table above: As of December 2022 2021 $ 267 $ 269 2,647 267 269 2,647 1,385 1,310 349 718 482 14 21 14 $ 6,374 $ 4,285 • Goodwill of $14 million previously in Investment Banking was reassigned to the Transaction banking and other reporting unit related to the transfer of the transaction banking business. The amount of goodwill reassigned was based on the relative fair values of the transferred business and the remaining business within Investment Banking. • Goodwill of $9 million previously in Wealth management was reassigned to the Equities reporting unit related to the transfer of a securities-based loans business of the firm. The amount of goodwill reassigned was based on the relative fair values of the transferred business and the remaining business within Wealth management. • All goodwill previously in Consumer banking was and Consumer reassigned platforms based on the relative fair values of the businesses transferred to each reporting unit. to Wealth management • Goodwill previously and Asset Management was not reassigned as no businesses were transferred out of these reporting units. in FICC, Equities • Substantially all of the increase in goodwill from December 2021 to December 2022 was driven by the acquisitions of GreenSky and NNIP. for impairment, Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events occur or circumstances indicate an impairment may exist. When change that assessing goodwill first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its carrying value. If the results of the qualitative assessment are not conclusive, a quantitative test goodwill is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment. Goldman Sachs 2022 Form 10-K 177 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The quantitative goodwill test compares the estimated fair value of each reporting unit with its carrying value (including goodwill and identifiable intangible assets). If the reporting unit’s estimated fair value exceeds its carrying value, goodwill is not impaired. An impairment is recognized if the estimated fair value of a reporting unit is less than its carrying value. During the fourth quarter of 2022, goodwill was tested for impairment using a quantitative test (both prior to and following the firm’s changes to its business segments). For each test, the estimated fair value of each of the reporting units exceeded its respective carrying value, and therefore, goodwill was not impaired. The firm acquired approximately $1.79 billion of identifiable intangible assets (with a weighted average amortization period of 13 years) during 2022, in connection with the acquisitions of GreenSky and NNIP. these identifiable intangible assets Substantially all of consisted of customer lists and merchant relationships. During 2021, the amount of identifiable intangible assets acquired by the firm was not material. substantially all Substantially all of the firm’s identifiable intangible assets have finite useful lives and are amortized over their estimated useful lives generally using the straight-line method. The tables below present information about the amortization of identifiable intangible assets. $ in millions Amortization $ $ in millions Estimated future amortization 2023 2024 2025 2026 2027 Year Ended December 2022 174 $ 120 $ 2021 2020 147 As of December 2022 $200 $188 $171 $164 $163 The firm tests identifiable intangible assets for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value. There were no material impairments during 2022, 2021 and 2020. or applies observable price-to-book multiples The estimated fair value of each reporting unit was based on valuation techniques the firm believes market participants would use to value these reporting units. Estimated fair values are generally derived from utilizing a relative value price-to-earnings technique, which multiples comparable of competitors to the reporting units’ net earnings or net book value, or a discounted cash flow valuation approach, for reporting units with businesses stages of development. The carrying value of each reporting unit reflects an allocation of total shareholders’ equity and represents the estimated amount of total shareholders’ equity required to support the activities of the reporting unit under currently applicable regulatory capital requirements. in early Identifiable Intangible Assets The table below presents identifiable intangible assets by type. $ in millions Customer lists and merchant relationships Gross carrying value Accumulated amortization Net carrying value Acquired leases and other Gross carrying value Accumulated amortization Net carrying value Total gross carrying value Total accumulated amortization y g Total net carrying value As of December 2022 2021 3,225 $ (1,275) 1,950 1,460 (1,130) 330 486 (427) 59 500 (412) 88 3,711 (1,702) 2,009 $ 1,960 (1,542) 418 $ $ 178 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Operating Lease Right-of-Use Assets The firm enters into operating leases for real estate, office equipment and other assets, substantially all of which are used in connection with its operations. For leases longer than one year, the firm recognizes a right-of-use asset representing the right to use the underlying asset for the lease term, and a lease liability representing the liability to make payments. The lease term is generally determined based on the contractual maturity of the lease. For leases where the firm has the option to terminate or extend the lease, an assessment of the likelihood of exercising the option is incorporated into the determination of the lease term. Such assessment is initially performed at the inception of the lease and is updated if events occur that impact the original assessment. An operating lease right-of-use asset is initially determined based on the operating lease liability, adjusted for initial direct costs, lease incentives and amounts paid at or prior to lease commencement. This amount is then amortized over the lease term. Right-of-use assets and operating lease liabilities recognized (in non-cash transactions for leases entered into or assumed) by the firm were $256 million for 2022, $305 million for 2021 and $182 million for 2020. See Note 15 for information about operating lease liabilities. For leases where the firm will derive no economic benefit from leased space that it has vacated or where the firm has shortened the term of a lease when space is no longer needed, the accelerated amortization of right-of-use assets. There were no material impairments or accelerated amortizations during 2022 and 2021. record an impairment or firm will Miscellaneous Receivables and Other Miscellaneous receivables and other included: • Investments in qualified affordable housing projects of $793 million as of December 2022 and $714 million as of December 2021. • Assets classified as held for sale of $285 million as of December 2022 and $1.02 billion as of December 2021 related to certain of the firm’s consolidated investments within Asset & Wealth Management, primarily consisted of property and equipment. Note 13. Deposits The table below presents the types and sources of deposits. $ in millions As of December 2022 Private bank and consumer Brokered certificates of deposit Deposit sweep programs Transaction banking Other Total As of December 2021 Private bank and consumer Brokered certificates of deposit Deposit sweep programs Transaction banking Other Total In the table above: Savings and Demand $ 192,713 $ – 44,819 65,155 808 $ 303,495 $ Time Total 33,046 $ 225,759 32,624 32,624 44,819 – 70,224 5,069 12,431 13,239 83,170 $ 386,665 $ 174,577 $ 30,198 $ 204,775 30,816 30,816 37,965 – 54,307 5,689 36,364 36,089 $ 261,435 $ 102,792 $ 364,227 – 37,965 48,618 275 • Substantially all deposits are interest-bearing. • Savings and demand accounts consist of money market deposit accounts, negotiable order of withdrawal accounts and demand deposit accounts that have no stated maturity or expiration date. • Time deposits included $15.75 billion as of December 2022 and $35.43 billion as of December 2021 of deposits accounted for at fair value under the fair value option. See Note 10 for further information about deposits accounted for at fair value. • Time deposits had a weighted average maturity of approximately 0.9 years as of both December 2022 and December 2021. • Deposit sweep programs include long-term contractual agreements with U.S. broker-dealers who sweep client cash to FDIC-insured deposits. • Transaction banking deposits consists of deposits that the firm raised through its cash management services business for corporate and other institutional clients. • Other deposits represent deposits from institutional clients. • Deposits insured by the FDIC were $184.88 billion as of December 2022 and $156.66 billion as of December 2021. • Deposits insured by non-U.S. insurance programs were $31.74 billion as of December 2022 and $31.44 billion as of December 2021. Goldman Sachs 2022 Form 10-K 179 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents the location of deposits. As of December Note 14. Unsecured Borrowings $ in millions U.S. offices Non-U.S. offices Total 2022 2021 $ 313,598 $ 283,705 80,522 $ 386,665 $ 364,227 73,067 The table below presents information about unsecured borrowings. As of December In the table above, U.S. deposits were held at Goldman Sachs Bank USA (GS Bank USA) and substantially all non-U.S. deposits were held at Goldman Sachs International Bank (GSIB) and Goldman Sachs Bank Europe SE (GSBE). The table below presents maturities of time deposits held in U.S. and non-U.S. offices. $ in millions 2023 2024 2025 2026 2027 2028 - thereafter Total As of December 2022 Non-U.S. U.S. $ 42,113 $ 11,457 3,828 2,522 1,179 1,382 $ 62,481 $ Total 19,364 $ 61,477 11,767 4,045 2,779 1,364 1,738 20,689 $ 83,170 310 217 257 185 356 As of December 2022, deposits in U.S. offices included $14.81 billion and deposits in non-U.S. offices included $18.96 billion of time deposits in denominations that met or exceeded the applicable insurance limits, or were otherwise not covered by insurance. The firm’s savings and demand deposits are recorded based on the amount of cash received plus accrued interest, which approximates fair value. In addition, the firm designates certain derivatives as fair value hedges to convert a portion of its time deposits not accounted for at fair value from fixed- rate obligations into floating-rate obligations. The carrying fair value time deposits not accounted for at value of approximated fair value as of both December 2022 and December 2021. As these savings and demand deposits and time deposits are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these deposits been included in the firm’s fair value hierarchy, they would have been classified in level 2 as of both December 2022 and December 2021. 180 Goldman Sachs 2022 Form 10-K $ in millions Unsecured short-term borrowings Unsecured long-term borrowings Total $ 2022 2021 60,961 $ 46,955 254,092 $ 308,099 $ 301,047 247,138 Unsecured Short-Term Borrowings Unsecured short-term borrowings includes the portion of unsecured long-term borrowings maturing within one year of the financial statement date and unsecured long-term borrowings that are redeemable within one year of the financial statement date at the option of the holder. from fixed-rate The firm accounts for certain hybrid financial instruments at fair value under the fair value option. See Note 10 for further information about unsecured short-term borrowings that are accounted for at fair value. In addition, the firm designates certain derivatives as fair value hedges to convert a portion of its unsecured short-term borrowings not accounted for at fair value floating-rate obligations. The carrying value of unsecured short-term borrowings that are not recorded at fair value generally approximates fair value due to the short-term nature of the obligations. As these unsecured short-term borrowings are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these borrowings been included in the firm’s fair value hierarchy, substantially all would have been classified in level 2 as of both December 2022 and December 2021. obligations into The table below presents information about unsecured short- term borrowings. $ in millions Current portion of unsecured long-term borrowings $ Hybrid financial instruments Commercial paper Other unsecured short-term borrowings Total unsecured short-term borrowings g $ Weighted average interest rate In the table above: As of December 2022 2021 38,635 $ 18,118 20,073 18,383 6,730 1,718 2,034 2,225 60,961 $ 46,955 3.71% 2.34% • The current portion of unsecured long-term borrowings included $21.75 billion as of December 2022 and $9.16 billion as of December 2021 issued by Group Inc. • The weighted average interest rates for these borrowings include the effect of hedging activities and exclude unsecured short-term borrowings accounted for at fair value under the fair value option. See Note 7 for further information about hedging activities. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Unsecured Long-Term Borrowings The table below presents information about unsecured long- term borrowings. $ in millions As of December 2022 Fixed-rate obligations: Group Inc. Subsidiaries Floating-rate obligations: Group Inc. Subsidiaries Total As of December 2021 Fixed-rate obligations: Group Inc. Subsidiaries Floating-rate obligations: Group Inc. Subsidiaries Total In the table above: U.S. Dollar Non-U.S. Dollar Total $ 117,092 $ 35,541 $ 152,633 4,891 1,894 2,997 19,308 36,381 33,340 56,274 $ 174,675 $ 72,463 $ 247,138 14,032 19,893 $ 124,731 $ 43,219 $ 167,950 4,992 1,803 3,189 23,452 27,543 40,846 40,304 $ 177,529 $ 76,563 $ 254,092 17,394 12,761 • Unsecured long-term borrowings consists principally of extending senior borrowings, which have maturities through 2065. • Floating-rate obligations includes equity-linked, credit- linked and indexed instruments. Floating interest rates are generally based on Euro Interbank Offered Rate, SOFR or USD LIBOR. • U.S. dollar-denominated debt had interest rates ranging from 0.66% to 6.75% (with a weighted average rate of 3.51%) as of December 2022 and 0.48% to 7.68% (with a weighted average rate of 3.34%) as of December 2021. These rates exclude unsecured long-term borrowings accounted for at fair value under the fair value option. • Non-U.S. dollar-denominated debt had interest rates ranging from 0.13% to 7.25% (with a weighted average rate of 1.85%) as of December 2022 and 0.13% to 13.00% (with a weighted average rate of 1.86%) as of December 2021. These rates exclude unsecured long-term borrowings accounted for at fair value under the fair value option. The table below presents unsecured long-term borrowings by maturity. $ in millions 2024 2025 2026 2027 2028 - thereafter Total As of December 2022 Group Inc. Subsidiaries $ $ 34,130 $ 26,690 17,662 21,835 85,655 185,972 $ 16,881 $ 10,452 4,540 8,525 20,768 61,166 $ Total 51,011 37,142 22,202 30,360 106,423 247,138 In the table above: • Unsecured long-term borrowings maturing within one year of the financial statement date and unsecured long-term borrowings that are redeemable within one year of the financial statement date at the option of the holder are excluded as they are included in unsecured short-term borrowings. • Unsecured long-term borrowings that are repayable prior to maturity at the option of the firm are reflected at their contractual maturity dates. • Unsecured long-term borrowings that are redeemable prior to maturity at the option of the holder are reflected at the earliest dates such options become exercisable. • Unsecured long-term borrowings included $(15.01) billion of adjustments to the carrying value of certain unsecured long-term borrowings resulting from the application of hedge accounting by year of maturity as follows: $(539) million in 2024, $(1.25) billion in 2025, $(800) million in 2026, $(1.55) billion in 2027 and $(10.87) billion in 2028 and thereafter. The firm designates certain derivatives as fair value hedges to fixed-rate unsecured long-term convert a portion of borrowings not accounted for at fair value into floating-rate obligations. See Note 7 for further information about hedging activities. The table below presents unsecured long-term borrowings, after giving effect to such hedging activities. $ in millions Group Inc. Subsidiaries Total As of December 2022 Fixed-rate obligations: At fair value At amortized cost Floating-rate obligations: At fair value At amortized cost Total As of December 2021 Fixed-rate obligations: At fair value At amortized cost Floating-rate obligations: At fair value At amortized cost Total $ 6,094 $ 2,667 53 $ 3,398 6,147 6,065 16,328 160,884 $ 185,973 $ 50,672 7,042 67,000 167,926 61,165 $ 247,138 $ 4,798 $ 65 $ 27,133 3,237 4,863 30,370 12,864 164,001 $ 208,796 $ 34,663 7,331 47,527 171,332 45,296 $ 254,092 In the table above, the aggregate amounts of unsecured long- term borrowings had weighted average interest rates of 4.97% (4.08% related to fixed-rate obligations and 5.00% related to floating-rate obligations) as of December 2022 and 1.60% (2.25% related to fixed-rate obligations and 1.48% related to floating-rate obligations) as of December 2021. exclude unsecured long-term borrowings These accounted for at fair value under the fair value option. rates Goldman Sachs 2022 Form 10-K 181 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The carrying value of unsecured long-term borrowings for which the firm did not elect the fair value option was $173.99 billion as of December 2022 and $201.70 billion as of December 2021. The estimated fair value of such unsecured long-term borrowings was $173.70 billion as of December 2022 and $209.37 billion as of December 2021. As these borrowings are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these borrowings been included in the firm’s fair value hierarchy, substantially all would have been classified in level 2 as of both December 2022 and December 2021. subordinated debt. Subordinated debt Subordinated Borrowings Unsecured long-term borrowings includes subordinated debt and junior that matures within one year is included in unsecured short-term borrowings. Junior subordinated debt is junior in right of payment to other subordinated borrowings, which are junior to senior borrowings. Long-term subordinated debt had maturities ranging from 2025 to 2045 as of both December 2022 and December 2021. The table below presents information about subordinated borrowings. $ in millions As of December 2022 Subordinated debt Junior subordinated debt Total As of December 2021 Subordinated debt Junior subordinated debt Total In the table above: Par Amount Carrying Value 12,261 $ 968 13,229 $ 11,882 1,054 12,936 12,437 $ 968 13,405 $ 15,571 1,321 16,892 $ $ $ $ Rate 6.40% 4.86% 6.29% 1.74% 1.31% 1.71% • The par amount of subordinated debt issued by Group Inc. was $12.26 billion as of December 2022 and $12.44 billion carrying value of as of December 2021, and the subordinated debt issued by Group Inc. was $11.88 billion as of December 2022 and $15.57 billion as of December 2021. • The rate is the weighted average interest rate for these borrowings (excluding borrowings accounted for at fair value under the fair value option), including the effect of fair value hedges used to convert fixed-rate obligations into further floating-rate information about hedging activities. obligations. See Note for 7 issued $2.84 billion of Junior Subordinated Debt In 2004, Group Inc. junior subordinated debt to Goldman Sachs Capital I, a Delaware statutory trust. Goldman Sachs Capital I issued $2.75 billion of guaranteed preferred beneficial interests (Trust Preferred securities) to third parties and $85 million of common beneficial interests to Group Inc. As of both December 2022 and December 2021, the outstanding par amount of junior subordinated debt held by Goldman Sachs Capital I was $968 million and the outstanding par amount of Trust Preferred securities and common beneficial issued by Goldman Sachs Capital I was $939 million and $29 million, respectively. Goldman Sachs Capital I is a wholly-owned finance subsidiary of the firm for regulatory and legal purposes but is not consolidated for accounting purposes. interests interest firm pays semi-annually on the The junior subordinated debt at an annual rate of 6.345% and the debt matures on February 15, 2034. The coupon rate and the payment dates applicable to the beneficial interests are the same as the interest rate and payment dates for the junior subordinated debt. The firm has the right, from time to time, to defer payment of interest on the junior subordinated debt, and therefore cause payment on Goldman Sachs Capital I’s preferred beneficial interests to be deferred, in each case up to ten consecutive semi-annual periods. During any such deferral period, the firm will not be permitted to, among other things, pay dividends on or make certain repurchases of its common stock. Goldman Sachs Capital I is not permitted to pay any distributions on the common beneficial interests held by Group Inc. unless all dividends payable on the preferred beneficial interests have been paid in full. Note 15. Other Liabilities The table below presents other liabilities by type. $ in millions Compensation and benefits Income tax-related liabilities Operating lease liabilities Noncontrolling interests Employee interests in consolidated funds Accrued expenses and other Total As of December 2022 7,225 $ 2,669 2,154 649 25 8,733 21,455 $ 2021 10,838 2,360 2,288 840 29 8,146 24,501 $ $ 182 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Operating Lease Liabilities For leases longer than one year, the firm recognizes a right- of-use asset representing the right to use the underlying asset for the lease term, and a lease liability representing the liability to make payments. See Note 12 for information about operating lease right-of-use assets. Operating lease costs were $462 million for 2022, $463 million for 2021 and $458 million for 2020. Variable lease costs, which are included in operating lease costs, were not material for 2022, 2021 and 2020. Total occupancy expenses for space held in excess of the firm’s current requirements were not material for 2022, 2021 and 2020. The table below presents information about operating lease liabilities. Lease payments relating to operating lease arrangements that were signed but had not yet commenced were $1.48 billion as of December 2022. $ in millions As of December 2022 2023 2024 2025 2026 2027 2028 - thereafter Total undiscounted lease payments Imputed interest Total operating lease liabilities g p Weighted average remaining lease term Weighted average discount rate As of December 2021 2022 2023 2024 2025 2026 2027 - thereafter Total undiscounted lease payments Imputed interest g p Total operating lease liabilities Weighted average remaining lease term Weighted average discount rate Operating lease liabilities $ $ $ $ 325 334 283 236 203 1,424 2,805 (651) 2,154 13 years 3.66% 305 307 284 258 216 1,655 3,025 (737) 2,288 14 years 3.61% In the table above, the weighted average discount rate represents the firm’s incremental borrowing rate as of January 2019 for operating leases existing on the date of adoption of ASU No. 2016-02, “Leases (Topic 842),” and at the lease inception date for leases entered into subsequent to the adoption of this ASU. Accrued Expenses and Other Accrued expenses and other included: • Liabilities classified as held for sale were not material as of December 2022 and $310 million as of December 2021 related to certain of the firm’s consolidated investments within Asset & Wealth Management, substantially all of which consisted of other secured financings primarily carried at fair value under the fair value option, and were related to assets classified as held for sale. See Note 12 for further information about assets held for sale. • Contract liabilities, which represent consideration received by the firm in connection with its contracts with clients prior to providing the service, were $113 million as of December 2022 and were not material as of December 2021. Note 16. Securitization Activities The firm securitizes residential and commercial mortgages, corporate bonds, loans and other types of financial assets by selling these assets to securitization vehicles (e.g., trusts, corporate entities and limited liability companies) or through a resecuritization. The firm acts as underwriter of the interests that are sold to investors. The firm’s beneficial in residential mortgage connection with government agency securitizations. are primarily securitizations Goldman Sachs 2022 Form 10-K 183 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The firm accounts for a securitization as a sale when it has relinquished control over the transferred financial assets. Prior to securitization, the firm generally accounts for assets pending transfer at fair value and therefore does not typically recognize significant gains or losses upon the transfer of assets. Net from underwriting activities are recognized in connection with the sales of the underlying beneficial interests to investors. revenues the The firm generally receives cash in exchange for transferred assets but may also have continuing involvement with the transferred financial assets, including ownership of beneficial interests in securitized financial assets, primarily in the form of debt instruments. The firm may also purchase senior or subordinated securities issued by securitization vehicles (which are typically VIEs) in connection with secondary market-making activities. The primary risks included in beneficial interests and other interests from the firm’s continuing involvement with securitization vehicles are the performance of the underlying collateral, the position of the firm’s investment in the capital structure of the securitization vehicle and the market yield for the security. fair value are Interests accounted for at primarily classified in level 2 of the fair value hierarchy. Interests not accounted for at fair value are carried at amounts that approximate fair value. See Note 4 for further information about fair value measurements. The table below presents the amount of financial assets securitized and the cash flows received on retained interests in securitization entities in which the firm had continuing involvement as of the end of the period. Year Ended December $ in millions Residential mortgages Commercial mortgages Other financial assets Total financial assets securitized 2021 2022 2020 $ 26,717 $ 29,048 $ 20,167 14,904 18,396 1,775 4,377 $ 44,269 $ 51,821 $ 36,846 13,935 3,617 Retained interests cash flows $ 551 $ 513 $ 331 The firm securitized assets of $792 million during 2022, $886 million during 2021 and $551 million during 2020, in a non- cash exchange for loans and investments. 184 Goldman Sachs 2022 Form 10-K The table below presents information about nonconsolidated securitization entities to which the firm sold assets and had continuing involvement as of the end of the period. Outstanding Principal Amount Retained Interests Purchased Interests $ in millions As of December 2022 U.S. government agency-issued CMOs $ Other residential mortgage-backed Other commercial mortgage-backed Corporate debt and other asset-backed Total $ 38,617 $ 27,075 59,688 8,750 134,130 $ 1,835 $ 1,461 1,349 398 5,043 $ As of December 2021 U.S. government agency-issued CMOs $ Other residential mortgage-backed Other commercial mortgage-backed Corporate debt and other asset-backed Total $ 33,984 $ 23,262 50,350 7,755 115,351 $ 955 $ 1,114 1,123 360 3,552 $ – 117 82 46 245 3 96 130 37 266 In the table above: • CMOs represents collateralized mortgage obligations. • The outstanding principal amount is presented for the purpose of providing information about the size of the securitization entities and is not representative of the firm’s risk of loss. • The firm’s risk of loss from retained or purchased interests is limited to the carrying value of these interests. • Purchased interests represent senior and subordinated interests, purchased in connection with secondary market- making activities, in securitization entities in which the firm also holds retained interests. • Substantially all of the total outstanding principal amount and total retained interests relate to securitizations during 2018 and thereafter. • The fair value of retained interests was $5.03 billion as of December 2022 and $3.57 billion as of December 2021. carrying In addition to the interests in the table above, the firm had other continuing involvement in the form of derivative transactions and commitments with certain nonconsolidated VIEs. The and value of commitments was a net asset of $72 million as of December 2022 and $81 million as of December 2021, and the notional amount of these derivatives and commitments was $1.90 billion as of December 2022 and $1.81 billion as of December these derivatives and 2021. The notional amounts of commitments are included in maximum exposure to loss in the nonconsolidated VIE table in Note 17. these derivatives THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information about the weighted average key economic assumptions used in measuring the fair value of mortgage-backed retained interests. Note 17. Variable Interest Entities $ in millions Fair value of retained interests Weighted average life (years) Constant prepayment rate Impact of 10% adverse change Impact of 20% adverse change Discount rate Impact of 10% adverse change Impact of 20% adverse change In the table above: As of December 2022 4,644 $ 6.6 7.7% (27) $ (48) $ 9.5% (138) $ (266) $ 2021 3,209 5.1 14.1% (38) (69) 5.6% (49) (96) $ $ $ $ $ • Amounts do not reflect the benefit of other financial instruments that are held to mitigate risks inherent in these retained interests. • Changes in fair value based on an adverse variation in assumptions generally cannot be extrapolated because the relationship of the change in assumptions to the change in fair value is not usually linear. • The impact of a change in a particular assumption is in any other calculated independently of assumption. in changes In assumptions might magnify or counteract the sensitivities disclosed above. changes simultaneous practice, • The constant prepayment positions determination of fair value. for which it rate is included only for is a key assumption in the • The discount rate for retained interests that relate to U.S. government agency-issued CMOs does not include any credit loss. Expected credit loss assumptions are reflected in the discount rate for the remainder of retained interests. The firm has other retained interests not reflected in the table above with a fair value of $384 million and a weighted average life of 6.4 years as of December 2022, and a fair value of $360 million and a weighted average life of 3.6 years as of December 2021. Due to the nature and fair value of certain of these retained interests, the weighted average assumptions for constant prepayment and discount rates and the related sensitivity to adverse changes are not meaningful as of both December 2022 and December 2021. The firm’s maximum exposure to adverse changes in the value of these interests is the carrying value of $398 million as of December 2022 and $360 million as of December 2021. A variable interest in a VIE is an investment (e.g., debt or equity) or other interest (e.g., derivatives or loans and lending commitments) that will absorb portions of the VIE’s expected losses and/or receive portions of the VIE’s expected residual returns. The firm’s variable interests in VIEs include senior and subordinated debt; loans and lending commitments; limited and general partnership interests; preferred and common equity; derivatives that may include foreign currency, equity and/or credit risk; guarantees; and certain of the fees the firm receives from investment funds. Certain interest rate, foreign currency and credit derivatives the firm enters into with VIEs are not variable interests because they create, rather than absorb, risk. VIEs generally finance the purchase of assets by issuing debt and equity securities that are either collateralized by or indexed to the assets held by the VIE. The debt and equity securities issued by a VIE may include tranches of varying levels of subordination. The firm’s involvement with VIEs includes securitization of financial assets, as described in Note 16, and investments in and loans to other types of VIEs, as described below. See Note 3 for the firm’s consolidation policies, including the definition of a VIE. VIE Consolidation Analysis The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. The firm determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers: • Which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; • Which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE; • The VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders; • The VIE’s capital structure; • The terms between the VIE and its variable interest holders and other parties involved with the VIE; and • Related-party relationships. Goldman Sachs 2022 Form 10-K 185 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The firm reassesses its evaluation of whether an entity is a VIE when certain reconsideration events occur. The firm reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. VIE Activities The firm is principally involved with VIEs through the following business activities: Mortgage-Backed VIEs. The firm sells residential and commercial mortgage loans and securities to mortgage- backed VIEs and may retain beneficial interests in the assets sold to these VIEs. The firm purchases and sells beneficial interests issued by mortgage-backed VIEs in connection with market-making activities. In addition, the firm may enter into derivatives with certain of these VIEs, primarily interest rate swaps, which are typically not variable interests. The firm generally enters into derivatives with other counterparties to mitigate its risk. Real Estate, Credit- and Power-Related and Other Investing VIEs. The firm purchases equity and debt securities issued by and makes loans to VIEs that hold real estate, performing and nonperforming debt, distressed loans, power-related assets and equity securities. The firm generally does not sell assets to, or enter into derivatives with, these VIEs. rather Corporate Debt and Other Asset-Backed VIEs. The firm structures VIEs that issue notes to clients, purchases and sells beneficial interests issued by corporate debt and other asset- backed VIEs in connection with market-making activities, and makes loans to VIEs that warehouse corporate debt. Certain of these VIEs synthetically create the exposure for the they issue by entering into credit interests beneficial than purchasing the derivatives with the firm, underlying assets. the firm may enter into derivatives, such as total return swaps, with certain corporate debt and other asset-backed VIEs, under which the firm pays the VIE a return due to the beneficial interest holders and receives the return on the collateral owned by the VIE. The collateral owned by these VIEs is primarily other asset- backed loans and securities. The firm may be removed as the total return swap counterparty and may enter into derivatives with other counterparties to mitigate its risk related to these swaps. The firm may sell assets to the corporate debt and other asset-backed VIEs it structures. In addition, Principal-Protected Note VIEs. The firm structures VIEs that issue principal-protected notes to clients. These VIEs own portfolios of assets, principally with exposure to hedge funds. Substantially all of the principal protection on the notes issued by these VIEs is provided by the asset portfolio rebalancing that is required under the terms of the notes. The firm enters into total return swaps with these VIEs under which the firm pays the VIE the return due to the principal- protected note holders and receives the return on the assets owned by the VIE. The firm may enter into derivatives with other counterparties to mitigate its risk. The firm also obtains funding through these VIEs. Investments in Funds. The firm makes equity investments in certain investment fund VIEs it manages and is entitled to receive fees from these VIEs. The firm has generally not sold assets to, or entered into derivatives with, these VIEs. Nonconsolidated VIEs The table below presents a summary of the nonconsolidated VIEs in which the firm holds variable interests. $ in millions Total nonconsolidated VIEs Assets in VIEs Carrying value of variable interests — assets Carrying value of variable interests — liabilities Maximum exposure to loss: Retained interests Purchased interests Commitments and guarantees Derivatives Debt and equity Total In the table above: As of December 2022 2021 $ 181,697 $ 176,809 9,582 $ 928 $ 12,325 $ 659 $ $ $ 5,043 $ 861 3,087 8,802 6,026 23,819 $ 3,552 1,071 2,440 8,682 4,639 20,384 • The nature of the firm’s variable interests is described in the rows under maximum exposure to loss. • The firm’s exposure to the obligations of VIEs is generally limited to its interests in these entities. In certain instances, the derivative guarantees, guarantees, to VIEs or holders of variable interests in VIEs. firm provides including • The maximum exposure to loss excludes the benefit of offsetting financial instruments that are held to mitigate the risks associated with these variable interests. • The maximum exposure to loss from retained interests, purchased interests, and debt and equity is the carrying value of these interests. • The maximum exposure to loss from commitments and guarantees, and derivatives is the notional amount, which does not represent anticipated losses and has not been reduced by unrealized losses. As a result, the maximum exposure for commitments and guarantees, and derivatives. liabilities recorded exceeds loss to 186 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information, by principal business activity, for nonconsolidated VIEs included in the summary table above. $ in millions Mortgage-backed Assets in VIEs Carrying value of variable interests — assets Maximum exposure to loss: Retained interests Purchased interests Commitments and guarantees Derivatives Total As of December 2022 2021 $ 127,290 $ 120,343 4,147 $ 4,977 $ $ $ 4,645 $ 332 64 2 5,043 $ 3,192 955 34 18 4,199 Real estate, credit- and power-related and other investing Assets in VIEs Carrying value of variable interests — assets Carrying value of variable interests — liabilities Maximum exposure to loss: $ $ $ 29,193 $ 26,867 3,923 8 4,415 $ 2 $ Commitments and guarantees Derivatives Debt and equity Total Corporate debt and other asset-backed Assets in VIEs Carrying value of variable interests — assets Carrying value of variable interests — liabilities Maximum exposure to loss: Retained interests Purchased interests Commitments and guarantees Derivatives Debt and equity Total Investments in funds Assets in VIEs Carrying value of variable interests — assets Maximum exposure to loss: Commitments and guarantees Derivatives Debt and equity Total $ $ $ $ $ $ $ $ $ $ $ 2,679 $ – 4,414 7,093 $ 2,030 64 3,923 6,017 19,428 $ 18,391 1,156 920 2,817 $ 657 $ 398 $ 529 190 8,800 1,496 11,413 $ 360 116 250 8,597 360 9,683 5,786 $ 11,208 356 116 $ 154 $ – 116 270 $ 126 3 356 485 As of both December 2022 and December 2021, the carrying values of the firm’s variable interests in nonconsolidated VIEs are included in the consolidated balance sheets as follows: • Mortgage-backed: Assets primarily included in trading assets and loans. • Real estate, credit- and power-related and other investing: Assets primarily included in investments and loans, and liabilities included in trading liabilities and other liabilities. • Corporate debt and other asset-backed: Assets included in loans and trading assets, and liabilities included in trading liabilities. • Investments in funds: Assets included in investments. Consolidated VIEs The table below presents a summary of the carrying value and balance sheet classification of assets and liabilities in consolidated VIEs. $ in millions Total consolidated VIEs Assets Cash and cash equivalents Customer and other receivables Trading assets Investments Loans Other assets Total Liabilities Other secured financings Customer and other payables Trading liabilities Unsecured short-term borrowings Unsecured long-term borrowings Other liabilities Total In the table above: As of December 2022 2021 $ $ $ $ 348 $ 7 103 101 1,177 336 2,072 $ 952 $ 51 9 58 16 112 1,198 $ 501 – 122 153 1,988 314 3,078 1,143 34 7 146 81 163 1,574 • Assets and liabilities are presented net of intercompany eliminations and exclude the benefit of offsetting financial instruments that are held to mitigate the risks associated with the firm’s variable interests. • VIEs in which the firm holds a majority voting interest are excluded if (i) the VIE meets the definition of a business and (ii) the VIE’s assets can be used for purposes other than the settlement of its obligations. • Substantially all assets can only be used to settle obligations of the VIE. Goldman Sachs 2022 Form 10-K 187 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information, by principal business activity, for consolidated VIEs included in the summary table above. Note 18. Commitments, Contingencies and Guarantees As of December 2022 2021 Commitments The table below presents commitments by type. $ in millions Real estate, credit-related and other investing Assets Cash and cash equivalents Customer and other receivables Trading assets Investments Loans Other assets Total Liabilities Other secured financings Customer and other payables Trading liabilities Other liabilities Total Corporate debt and other asset-backed Assets Cash and cash equivalents Trading assets Total Liabilities Other secured financings Total Principal-protected notes Assets Trading assets Total Liabilities Other secured financings Unsecured short-term borrowings Unsecured long-term borrowings Total In the table above: $ $ $ $ $ $ $ $ $ $ $ $ 339 $ 7 42 101 1,177 336 2,002 $ 274 – 16 153 1,988 314 2,745 170 $ 51 9 112 342 $ 9 $ 20 29 $ 482 $ 482 $ 41 $ 41 $ 300 $ 58 16 374 $ 150 34 7 163 354 227 17 244 602 602 89 89 391 146 81 618 • The majority of the assets in principal-protected notes VIEs are intercompany and are eliminated in consolidation. • Creditors and beneficial credit-related and other recourse to the general credit of the firm. interest holders of real estate, investing VIEs do not have $ in millions Commitment Type Commercial lending: Investment-grade Non-investment-grade Warehouse financing Consumer Total lending Risk participations Collateralized agreement Collateralized financing Investment Other Total commitments As of December 2022 2021 $ 97,659 $ 56,265 9,116 64,098 227,138 9,173 105,301 22,532 7,705 9,690 95,585 69,635 10,391 35,941 211,552 10,016 101,031 29,561 11,381 9,143 $ 381,539 $ 372,684 The table below presents commitments by expiration. $ in millions Commitment Type Commercial lending: Investment-grade Non-investment-grade Warehouse financing Consumer Total lending Risk participations Collateralized agreement Collateralized financing Investment Other Total commitments $ $ As of December 2022 2023 2024 - 2025 2026 - 2028 - 2027 Thereafter 14,764 $ 26,601 $ 54,258 $ 2,036 5,939 38 – 8,013 87 – – 2,716 237 224,918 $ 57,408 $ 88,160 $ 11,053 4,850 1,633 64,097 85,344 2,932 104,392 21,816 1,266 9,168 17,875 6,248 1 50,725 3,394 909 716 1,379 285 27,601 1,197 – 83,056 2,760 – – 2,344 – Lending Commitments The firm’s commercial and warehouse financing lending commitments are agreements to lend with fixed termination dates and depend on the satisfaction of all contractual conditions to borrowing. These commitments are presented net of amounts syndicated to third parties. The total commitment amount does not necessarily reflect actual future cash flows because the firm may syndicate portions of these commitments. In addition, commitments can expire unused or be reduced or cancelled at the counterparty’s request. The firm also provides credit to consumers by issuing credit card lines and through commitments to provide unsecured installment loans. table below presents The commitments. information about lending As of December $ in millions Held for investment Held for sale At fair value Total 188 Goldman Sachs 2022 Form 10-K 2022 2021 $ 222,689 $ 197,120 13,175 1,257 $ 227,138 $ 211,552 3,355 1,094 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In the table above: • Held for investment lending commitments are accounted for at amortized cost. The carrying value of lending commitments was a liability of $1.01 billion (including allowance for credit losses of $774 million) as of December 2022 and $1.05 billion (including allowance for credit losses of $776 million) as of December 2021. The estimated fair value of such lending commitments was a liability of $5.95 billion as of December 2022 and $4.17 billion as of December 2021. Had these lending commitments been carried at fair value and included in the fair value hierarchy, $3.11 billion as of December 2022 and $1.91 billion as of December 2021 would have been classified in level 2, and $2.84 billion as of December 2022 and $2.26 billion as of December 2021 would have been classified in level 3. • Held for sale lending commitments are accounted for at the lower of cost or fair value. The carrying value of lending commitments held for sale was a liability of $88 million as of December 2022 and $91 million as of December 2021. The estimated fair value of such lending commitments approximates the carrying value. Had these lending commitments been included in the fair value hierarchy, they would have been primarily classified in level 3 as of both December 2022 and December 2021. • Gains or losses related to lending commitments at fair value, if any, are generally recorded net of any fees in other principal transactions. Commercial Lending. The firm’s commercial lending commitments were primarily extended to investment-grade corporate borrowers. Such commitments primarily included $127.60 billion as of December 2022 and $120.99 billion as of December 2021, related to relationship lending activities (principally used for operating and general corporate purposes), and $7.71 billion as of December 2022 and $21.07 billion as of December 2021, related to other investment banking contingent acquisition financing and are often intended to be short-term in nature, as borrowers often seek to replace them with other funding sources). The firm also extends lending commitments in connection with other types of corporate lending, commercial real estate financing and other collateralized lending. See Note 9 for further information about funded loans. extended for (generally activities Warehouse Financing. The firm provides financing to clients who warehouse financial assets. These arrangements are collateralized by the warehoused assets, primarily consisting of residential real estate, consumer and corporate loans. Consumer. The firm’s consumer lending commitments includes: 2021 • Credit card lines issued by the firm to consumers were $62.22 billion as of December 2022 and $33.97 billion as of December 2021. These credit card lines are cancellable by the firm. The increase in credit card lending commitments from December included to December firm’s $15.0 billion relating approximately acquisition of the General Motors co-branded credit card portfolio in February 2022. In addition, consumer lending commitments as of December 2021 included a commitment of approximately $2.0 billion to acquire the outstanding credit card loans related to the General Motors co-branded credit card portfolio. 2022 to the • Commitments to provide unsecured installment loans to consumers were $1.88 billion as of December 2022 and $9 million as of December 2021. The increase in these lending commitments from December 2021 to December 2022 primarily related to commitments extended in connection with point-of-sale financing. Risk Participations The firm also risk participates certain of its commercial lending commitments to other financial institutions. In the event of a risk participant’s default, the firm will be responsible to fund the borrower. includes includes Agreement Commitments/ Collateralized Collateralized Financing Commitments Collateralized agreement commitments forward starting resale and securities borrowing agreements, and forward collateralized financing commitments starting repurchase and secured lending agreements that settle at a future date, generally within three business days. Collateralized includes transactions where the firm has entered into commitments to provide contingent financing to its clients and counterparties through resale agreements. The firm’s funding of these commitments depends on the satisfaction of all contractual conditions to the resale agreement and these commitments can expire unused. commitments agreement also lending activities, To mitigate the credit risk associated with the firm’s commercial credit protection on certain loans and lending commitments through credit default swaps, both single-name and index- based contracts, and through the issuance of credit-linked notes. firm obtains the Goldman Sachs 2022 Form 10-K 189 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Investment Commitments Investment commitments includes commitments to invest in private equity, real estate and other assets directly and through funds that the firm raises and manages. Investment commitments included $1.29 billion as of December 2022 and $1.60 billion as of December 2021, related to commitments to invest in funds managed by the firm. If these commitments are called, they would be funded at market value on the date of investment. firm’s commitment Investment commitments as of December 2021 included approximately $1.90 billion related to the firm’s commitment to acquire NNIP and approximately $2.0 billion related to to acquire GreenSky. These the acquisitions were completed in 2022. See Note 12 for information about these acquisitions. In addition, as of December 2021, the firm had an undrawn commitment of approximately other commitments) to GreenSky to acquire loans originated by GreenSky’s bank partners, which was terminated upon completion of the acquisition. (included within $600 million Contingencies Legal Proceedings. See Note 27 for information about legal proceedings. Guarantees The table below presents derivatives that meet the definition of a guarantee, securities lending and clearing guarantees and certain other financial guarantees. Securities lending and clearing Other financial guarantees y g Derivatives $ in millions As of December 2022 y Carrying Value of Net Liability Maximum Payout/Notional Amount by Period of Expiration 2023 2024 - 2025 2026 - 2027 2028 - thereafter Total $ 110,599 $ 133,090 20,252 27,518 , $ 291,459 $ 7,485 $ $ , – – – – $ 20,970 $ 20,970 $ $ y g As of December 2021 y Carrying Value of Net Liability Maximum Payout/Notional Amount by Period of Expiration 2022 2023 - 2024 2025 - 2026 2027 - thereafter Total 68,212 $ 48,273 19,706 30,006 $ 166,197 $ , 3,406 $ $ , – – – 11,046 $ 11,046 $ – $ 395 1,634 3,308 1,837 93 6,872 , 234 871 3,608 2,015 97 6,591 , In the table above: • The maximum payout is based on the notional amount of the contract and does not represent anticipated losses. • Amounts exclude certain commitments to issue standby letters of credit that are included in lending commitments. See the tables in “Commitments” above for a summary of the firm’s commitments. 190 Goldman Sachs 2022 Form 10-K • The carrying value for derivatives included derivative assets of $578 million as of December 2022 and $1.10 billion as of December 2021, and derivative liabilities of $8.06 billion as of December 2022 and $4.51 billion as of December 2021. Derivative Guarantees. The firm enters into various derivatives that meet the definition of a guarantee under U.S. GAAP, including written equity and commodity put options, written currency contracts and interest rate caps, floors and swaptions. These derivatives are risk managed together with derivatives that do not meet the definition of a guarantee, and therefore the amounts in the table above do not reflect the firm’s overall risk related to derivative activities. Disclosures about derivatives are not required if they may be cash settled and the firm has no basis to conclude it is probable that the counterparties held the underlying instruments at the inception of the contract. The firm has concluded that these conditions have been met for certain large, internationally active commercial and investment bank counterparties, central clearing counterparties, hedge funds and certain other counterparties. Accordingly, the firm has not included such contracts in the table above. See Note 7 for information about credit derivatives that meet the definition of a guarantee, which are not included in the table above. Derivatives are accounted for at fair value and therefore the carrying value is considered the best indication of payment/ performance risk for individual contracts. However, the carrying values in the table above exclude the effect of counterparty and cash collateral netting. Securities Lending and Clearing Guarantees. Securities lending and clearing guarantees include the indemnifications and guarantees that the firm provides in its capacity as an agency lender and in its capacity as a sponsoring member of the Fixed Income Clearing Corporation. the firm indemnifies most of As an agency lender, its securities lending customers against losses incurred in the event that borrowers do not return securities and the collateral held is insufficient to cover the market value of the securities borrowed. The maximum payout of such indemnifications was $12.23 billion as of December 2022 and $11.05 billion as of December 2021. Collateral held by the lenders in connection with securities lending indemnifications was $12.62 billion as of December 2022 and $11.36 billion as of December 2021. Because the contractual nature of these arrangements requires the firm to obtain collateral with a market value that exceeds the value of the securities lent to the borrower, there is minimal performance risk associated with these indemnifications. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements the Government Securities As a sponsoring member of Division of the Fixed Income Clearing Corporation, the firm guarantees the performance of its sponsored member clients to the Fixed Income Clearing Corporation in connection with certain resale and repurchase agreements. To minimize potential losses on such guarantees, the firm obtains a security interest in the collateral that the sponsored client placed with the Fixed Income Clearing Corporation. Therefore, the risk of loss on such guarantees is minimal. As of December 2022, the maximum payout on this guarantee was $8.74 billion and the related collateral held was $8.70 billion. There were no amounts outstanding under the guarantee as of December 2021. if Other Financial Guarantees. In the ordinary course of business, the firm provides other financial guarantees of the obligations of third parties (e.g., standby letters of credit and other guarantees to enable clients to complete transactions and fund-related guarantees). These guarantees represent to beneficiaries obligations the to make payments guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Other financial guarantees also include a guarantee that the firm has provided to the Government of Malaysia that it will receive, by August 2025, at least $1.4 billion in assets and proceeds from assets seized by governmental authorities around the world related to 1Malaysia Development Berhad, a sovereign wealth fund in Malaysia (1MDB). In connection with this guarantee, the firm is also required to make a one- time interim payment of $250 million towards the $1.4 billion if the Government of Malaysia has not received at least $500 million in assets and proceeds by August 2022. The firm considers the reports that it receives on a semi-annual basis, expected in February and August, in evaluating the progress of Malaysia’s recovery efforts. The firm and the Government of Malaysia disagree about and, following an extension of the contractual dispute resolution period, continue to discuss whether the Government of Malaysia did, in fact, recover at least $500 million as of August 2022 and whether any interim payment was due. If the parties are unable to resolve this dispute, it would be settled by arbitration. Any amounts paid by the firm would, in any event, be subject to reimbursement in the event the assets and proceeds received by the Government of Malaysia through August 18, 2028 exceed $1.4 billion. See Note 27 for further information about matters related to 1MDB. including Goldman Sachs Capital Guarantees of Securities Issued by Trusts. The firm has established trusts, I, Goldman Sachs Capital II and Goldman Sachs Capital III (the Trusts), and other entities, for the limited purpose of issuing securities to third parties, lending the proceeds to the firm and entering into contractual arrangements with the firm and third parties related to this purpose. The firm does not consolidate these entities. See Notes 14 and 19 for further information about the transactions involving the Trusts. The firm effectively provides for the full and unconditional guarantee of the securities issued by these entities. Timely payment by the firm of amounts due to these entities under the guarantee, borrowing, preferred stock and related contractual arrangements will be sufficient to cover payments due on the securities issued by these entities. No subsidiary of Group Inc. guarantees the securities of the Trusts. it that that is unlikely any Management believes circumstances will occur, such as nonperformance on the part of paying agents or other service providers, that would make it necessary for the firm to make payments related to these entities other than those required under the terms of the guarantee, related contractual arrangements and in connection with certain expenses incurred by these entities. borrowing, preferred stock and Indemnities and Guarantees of Service Providers. In the ordinary course of business, the firm indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the firm or its affiliates. The firm may also be liable to some clients or other parties for losses arising from its custodial role or caused by acts or omissions of third-party service providers, including sub- custodians and third-party brokers. In certain cases, the firm has the right to seek indemnification from these third-party service providers for certain relevant losses incurred by the firm. In addition, the firm is a member of payment, clearing and settlement networks, as well as securities exchanges around the world that may require the firm to meet the obligations of such networks and exchanges in the event of member defaults and other loss scenarios. In connection with the firm’s prime brokerage and clearing businesses, the firm agrees to clear and settle transactions entered into by clients with other brokerage firms. The firm’s obligations in respect of such transactions are secured by the assets in the client’s account and proceeds received from the transactions cleared and settled by the firm on behalf of the client. In connection with joint venture investments, the firm may issue loan guarantees under which it may be liable in the event of fraud, misappropriation, environmental liabilities and other matters involving the borrower. Goldman Sachs 2022 Form 10-K 191 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements these The firm is unable to develop an estimate of the maximum payout under and indemnifications. guarantees However, management believes that it is unlikely the firm will have to make any material payments under these liabilities related to these arrangements, and no material guarantees and indemnifications have been recognized in the consolidated balance sheets as of both December 2022 and December 2021. Warranties Representations, and Other Indemnifications. The firm provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them those against potential representations and warranties. The firm may also provide indemnifications protecting against changes in or adverse application of certain U.S. tax laws in connection with ordinary-course transactions, such as securities issuances, borrowings or derivatives. losses caused by the breach of In addition, the firm may provide indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or an adverse application of certain non-U.S. tax laws. These indemnifications generally are standard contractual terms and are entered into in the ordinary course of business. Generally, there are no stated or notional amounts included in these indemnifications, and the contingencies triggering the obligation to indemnify are not expected to occur. The firm is unable to develop an estimate of the maximum payout under these guarantees and indemnifications. However, management believes that it is unlikely the firm will have to make any material payments under these arrangements, and no material liabilities related to these arrangements have been recognized in the consolidated balance sheets as of both December 2022 and December 2021. subject Inc. et Cie, Guarantees of Subsidiaries. Group Inc. is the entity that fully and unconditionally guarantees the securities issued by GS Finance Corp., a wholly-owned finance subsidiary of the firm. Group Inc. has guaranteed the payment obligations of Goldman Sachs & Co. LLC (GS&Co.), GS Bank USA and to certain Goldman Sachs Paris exceptions. In addition, Group Inc. has provided guarantees to Goldman Sachs International (GSI) and GSBE related to agreements that each entity has entered into with certain of the its counterparties. Group Inc. guarantees many of its other consolidated subsidiaries on a obligations of transaction-by-transaction negotiated with as counterparties. Group Inc. is unable to develop an estimate of subsidiary guarantees. the maximum payout under However, because these obligations are also obligations of consolidated subsidiaries, Group Inc.’s liabilities as guarantor are not separately disclosed. basis, its 192 Goldman Sachs 2022 Form 10-K Note 19. Shareholders’ Equity Common Equity As of both December 2022 and December 2021, the firm had 4.00 billion authorized shares of common stock and 200 million authorized shares of nonvoting common stock, each with a par value of $0.01 per share. During 2022, in connection with the acquisition of GreenSky, the firm issued approximately 5.5 million shares of common stock, including approximately 325,000 shares subject to future service. The firm’s share repurchase program is intended to help maintain the appropriate level of common equity. The share repurchase program is effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 and accelerated share the amounts and timing of which are repurchases), determined primarily by the firm’s current and projected capital position, and capital deployment opportunities, but which may also be influenced by general market conditions and the prevailing price and trading volumes of the firm’s common stock. The table below presents information about common stock repurchases. Year Ended December in millions, except per share amounts Common share repurchases Average cost per share Total cost of common share repurchases 2021 15.3 2022 10.1 2020 8.2 $ 346.07 $ 339.81 $ 236.35 $ 3,500 $ 5,200 $ 1,928 Pursuant to the terms of certain share-based compensation plans, employees may remit shares to the firm or the firm may cancel share-based awards to satisfy statutory employee tax withholding requirements. Under these plans, 11,644 shares in 2022, 1,830 shares in 2021 and 3,476 shares in 2020 were remitted with a total value of $4 million in 2022, $0.5 million in 2021 and $0.9 million in 2020, and the firm cancelled 4.6 million share-based awards in 2022, and 3.4 million in both 2021 and 2020, with a total value of $1.59 billion in 2022, $984 million in 2021 and $829 million in 2020. The table below presents common stock dividends declared. Year Ended December Dividends declared per common share 2022 2020 $ 9.00 $ 6.50 $ 5.00 2021 On January 13, 2023, the Board of Directors of Group Inc. (Board) declared a dividend of $2.50 per common share to be paid on March 30, 2023 to common shareholders of record on March 2, 2023. A C D E F J K O P Q R S T U V Total Series A C D E F J K O P Q R S T U V Total THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Preferred Equity The tables below present information about the perpetual preferred stock issued and outstanding as of December 2022. Series Shares Authorized Shares Issued 30,000 8,000 54,000 7,667 1,615 40,000 28,000 26,000 60,000 20,000 24,000 14,000 27,000 30,000 30,000 400,282 Shares Outstanding Depositary Shares Per Share 29,999 8,000 53,999 7,667 1,615 40,000 28,000 26,000 60,000 20,000 24,000 14,000 27,000 30,000 30,000 400,280 1,000 1,000 1,000 N.A. N.A. 1,000 1,000 25 25 25 25 25 25 25 25 50,000 25,000 60,000 17,500 5,000 46,000 32,200 26,000 66,000 20,000 24,000 14,000 27,000 30,000 30,000 472,700 Earliest Redemption Date Liquidation Preference Currently redeemable $ Currently redeemable $ Currently redeemable $ Currently redeemable $ Currently redeemable $ May 10, 2023 $ May 10, 2024 $ November 10, 2026 $ Currently redeemable $ August 10, 2024 $ February 10, 2025 $ February 10, 2025 $ May 10, 2026 $ August 10, 2026 $ November 10, 2026 $ 25,000 $ 25,000 25,000 100,000 100,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 $ Redemption Value ($ in millions) 750 200 1,350 767 161 1,000 700 650 1,500 500 600 350 675 750 750 10,703 In the tables above: • All shares have a par value of $0.01 per share and, where applicable, each share is represented by the specified number of depositary shares. • The earliest redemption date represents the date on which each share of non-cumulative preferred stock is redeemable at the firm’s option. • Prior to redeeming preferred stock, the firm must receive approval from the FRB. • The redemption price per share for Series A through F and Series Q through V Preferred Stock is the liquidation preference plus declared and unpaid dividends. The redemption price per share for Series J through P Preferred Stock is the liquidation preference plus accrued and unpaid dividends. • All series of preferred stock are pari passu and have a preference over the firm’s common stock on liquidation. • The firm’s ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, its common stock is subject to certain restrictions in the event that the firm fails to pay or set aside full dividends on the preferred stock for the latest completed dividend period. II and Goldman Sachs Capital • Series E and Series F Preferred Stock are held by Goldman III, Sachs Capital respectively. These trusts are Delaware statutory trusts sponsored by firm and wholly-owned finance subsidiaries of the firm for regulatory and legal purposes but are not consolidated for accounting purposes. the In 2021, the firm redeemed all outstanding shares of its (i) Series N 6.30% Non-Cumulative Preferred Stock with a redemption value of $675 million ($25,000 per share), plus accrued and unpaid dividends and (ii) Series M 5.375% Fixed-to-Floating Rate Non-Cumulative Preferred Stock with a redemption value of $2 billion ($25,000 per share), plus accrued and unpaid dividends. The difference between the redemption value and net carrying value at the time of these redemptions was $41 million, which was recorded as an addition to preferred stock dividends in 2021. In 2020, the firm redeemed the remaining 14,000 outstanding shares of its Series L 5.70% Non-Cumulative Preferred Stock with a redemption value of $350 million ($25,000 per share), plus accrued and unpaid dividends. The difference between the redemption value and net carrying value was $1 million, which was recorded as an addition to preferred stock dividends in 2020. Goldman Sachs 2022 Form 10-K 193 On January 5, 2023, Group Inc. declared dividends of $341.29 per share of Series A Preferred Stock, $341.29 per share of Series C Preferred Stock, $336.18 per share of Series D Preferred Stock, $343.75 per share of Series J Preferred Stock, $398.44 per share of Series K Preferred Stock, $476.99 per share of Series P Preferred Stock, $687.50 per share of Series Q Preferred Stock, $618.75 per share of Series R Preferred Stock, $550.00 per share of Series S Preferred Stock and $456.25 per share of Series U Preferred Stock to be paid on February 10, 2023 to preferred shareholders of record on January 26, 2023. In addition, the firm declared dividends of $1,382.02 per share of Series E Preferred Stock and $1,382.64 per share of Series F Preferred Stock to be paid on March 1, 2023 to preferred shareholders of record on February 14, 2023. Accumulated Other Comprehensive Income/(Loss) The table below presents changes in accumulated other comprehensive income/(loss), net of tax, by type. $ in millions Year Ended December 2022 Currency translation Debt valuation adjustment Pension and postretirement liabilities Available-for-sale securities Total Year Ended December 2021 Currency translation Debt valuation adjustment Pension and postretirement liabilities Available-for-sale securities Total Year Ended December 2020 Currency translation Debt valuation adjustment Pension and postretirement liabilities Available-for-sale securities Total Other comprehensive income/(loss) adjustments, net of tax Beginning balance Ending balance $ (738) $ (511) (327) (492) $ (2,068) $ $ (696) $ (833) (368) 463 $ (1,434) $ $ (616) $ (572) (342) 46 $ (1,484) $ (47) $ 1,403 (172) (2,126) (785) 892 (499) (2,618) (942) $ (3,010) (738) (42) $ (511) 322 (327) 41 (955) (492) (634) $ (2,068) (80) $ (261) (26) 417 (696) (833) (368) 463 50 $ (1,434) THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents the dividend rates of perpetual preferred stock as of December 2022. Series Per Annum Dividend Rate A C D E F J K O P Q R S T U V 3 month LIBOR + 0.75%, with floor of 3.75%, payable quarterly 3 month LIBOR + 0.75%, with floor of 4.00%, payable quarterly 3 month LIBOR + 0.67%, with floor of 4.00%, payable quarterly 3 month LIBOR + 0.7675%, with floor of 4.00%, payable quarterly 3 month LIBOR + 0.77%, with floor of 4.00%, payable quarterly 5.50% to, but excluding, May 10, 2023; 3 month LIBOR + 3.64% thereafter, payable quarterly 6.375% to, but excluding, May 10, 2024; 3 month LIBOR + 3.55% thereafter, payable quarterly 5.30%, payable semi-annually, from issuance date to, but excluding, November 10, 2026; 3 month LIBOR + 3.834%, payable quarterly, thereafter 3 month LIBOR + 2.874%, payable quarterly 5.50%, payable semi-annually, from issuance date to, but excluding, August 10, 2024; 5 year treasury rate + 3.623%, payable semi-annually, thereafter 4.95%, payable semi-annually, from issuance date to, but excluding, February 10, 2025; 5 year treasury rate + 3.224%, payable semi-annually, thereafter 4.40%, payable semi-annually, from issuance date to, but excluding, February 10, 2025; 5 year treasury rate + 2.85%, payable semi-annually thereafter 3.80%, payable semi-annually, from issuance date to, but excluding, May 10, 2026; 5 year treasury rate + 2.969%, payable semi-annually, thereafter 3.65%, payable semi-annually, from issuance date to, but excluding, August 10, 2026; 5 year treasury rate + 2.915%, payable semi-annually, thereafter 4.125%, payable semi-annually, from issuance date to, but excluding, November 10, 2026; 5 year treasury rate + 2.949%, payable semi-annually, thereafter In the table above, dividends on each series of preferred stock are payable in arrears for the periods specified. The table below presents preferred stock dividends declared. Year Ended December 2022 2021 2020 Series A C D E F J K L M N O P Q R S T U V Total per share 950.51 $ $ $ 1,013.90 $ 1,013.90 $ 4,055.55 $ 4,055.55 $ 1,375.00 $ 1,593.76 – $ – $ $ – $ 1,325.00 $ 1,250.00 $ 1,375.00 $ 1,237.50 $ 1,100.00 950.00 $ $ 942.92 $ 1,062.76 $ in millions 28 8 55 31 6 55 45 – – – 34 75 28 30 16 26 28 32 $ 497 950.51 $ 947.92 $ per share $ $ 1,013.90 $ 1,013.90 $ 4,055.55 $ 4,055.55 $ 1,375.00 $ 1,593.76 – $ – $ $ 787.50 $ 1,325.00 $ 1,250.00 $ 1,375.00 $ 1,237.50 $ 1,100.00 511.94 $ – $ – $ $ in millions 28 8 55 31 7 55 44 – – 19 34 75 28 30 15 14 – – $ 443 per share $ $ 1,011.12 $ 1,011.12 $ 4,055.55 $ 4,055.55 $ 1,375.00 $ 1,593.76 361.54 $ $ 1,217.16 $ 1,575.00 $ 1,325.00 $ 1,250.00 $ 1,577.43 910.94 $ 586.67 $ – $ – $ – $ $ in millions 28 8 55 31 6 55 45 4 97 43 34 75 32 22 8 – – – $ 543 194 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 20. Regulation and Capital Adequacy The FRB is the primary regulator of Group Inc., a bank holding company under the U.S. Bank Holding Company Act of 1956 and a financial holding company under amendments to this Act. The firm is subject to consolidated regulatory capital requirements which are calculated in accordance with the regulations of the FRB (Capital Framework). requirements would result The capital requirements are expressed as risk-based capital and leverage ratios that compare measures of regulatory capital to risk-weighted assets (RWAs), average assets and off-balance sheet exposures. Failure to comply with these capital in restrictions being imposed by the firm’s regulators and could limit the firm’s ability to repurchase shares, pay dividends and make certain discretionary compensation payments. The firm’s capital levels are also subject to qualitative judgments by the regulators about components of capital, risk weightings and other factors. Furthermore, certain of the firm’s subsidiaries are subject to separate regulations and capital requirements. Capital Framework The regulations under the Capital Framework are largely based on the Basel Committee on Banking Supervision’s strengthening (Basel Committee) capital international capital standards (Basel III) and also implement certain provisions of the Dodd-Frank Act. Under the Capital Framework, the firm is an “Advanced approaches” banking organization and has been designated as a global systemically important bank (G-SIB). framework for The Capital Framework includes the minimum risk-based capital and the capital conservation buffer requirements. The that qualifies as buffer must consist entirely of capital Common Equity Tier 1 (CET1) capital. The firm calculates its CET1 capital, Tier 1 capital and Total capital ratios in accordance with both the Standardized and Advanced Capital Rules. Each of the ratios calculated under the Standardized and Advanced Capital Rules must meet its respective capital requirements. Under the Capital Framework, the firm is also subject to leverage requirements which consist of a minimum Tier 1 leverage ratio and a minimum supplementary leverage ratio (SLR), as well as the SLR buffer. Consolidated Regulatory Capital Requirements Risk-Based Capital Ratios. The table below presents the risk-based capital requirements. As of December 2022 CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2021 CET1 capital ratio Tier 1 capital ratio Total capital ratio In the table above: Standardized Advanced 13.3% 14.8% 16.8% 13.4% 14.9% 16.9% 9.5% 11.0% 13.0% 9.5% 11.0% 13.0% • As of both December 2022 and December 2021, under both the Standardized and Advanced Capital Rules, the CET1 capital ratio requirement includes a minimum of 4.5%, the Tier 1 capital ratio requirement includes a minimum of 6.0% and the Total capital ratio requirement includes a minimum of 8.0%. These requirements also include the capital conservation buffer requirements, consisting of the G-SIB surcharge the countercyclical capital buffer, which the FRB has set to zero percent. In addition, the capital conservation buffer requirements include the stress capital buffer of 6.3% as of December 2022 and 6.4% as of December 2021 under the Standardized Capital Rules and a buffer of 2.5% under the Advanced Capital Rules. 2.5% (Method and of 2) • The G-SIB surcharge is updated annually based on financial data from the prior year and is generally applicable for the following year. The G-SIB surcharge is calculated using two methodologies, the higher of which is reflected in the firm’s risk-based capital requirements. The first calculation (Method 1) is based on the Basel Committee’s methodology which, among other factors, relies upon measures of the size, activity and complexity of each G-SIB. The second calculation (Method 2) uses similar inputs but includes a measure of reliance on short-term wholesale funding. Goldman Sachs 2022 Form 10-K 195 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents information about risk-based capital ratios. Leverage Ratios. The table below presents the leverage requirements. Tier 1 leverage ratio SLR Requirements 4.0% 5.0% In the table above, the SLR requirement of 5% includes a minimum of 3% and a 2% buffer applicable to G-SIBs. The table below presents information about leverage ratios. $ in millions Tier 1 capital Average total assets Deductions from Tier 1 capital Average adjusted total assets Off-balance sheet and other exposures Total leverage exposure p g Tier 1 leverage ratio SLR In the table above: For the Three Months Ended or as of December 2021 106,766 2022 108,552 $ $ $ 1,500,225 $ 1,466,770 (4,583) 1,462,187 448,334 $ 1,867,358 $ 1,910,521 (8,259) 1,491,966 375,392 7.3% 5.8% 7.3% 5.6% • Average total assets represents the average daily assets for the quarter adjusted for the impact of Current Expected Credit Losses (CECL) transition. • Off-balance sheet and other exposures primarily includes the monthly average of off-balance sheet exposures, consisting of derivatives, securities financing transactions, commitments and guarantees. • Tier 1 leverage ratio is calculated as Tier 1 capital divided by average adjusted total assets. • SLR is calculated as Tier 1 capital divided by total leverage exposure. $ in millions As of December 2022 CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2021 CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs CET1 capital ratio Tier 1 capital ratio Total capital ratio Standardized Advanced $ $ $ $ $ $ $ $ $ $ 98,050 $ 98,050 108,552 $ 108,552 12,115 124,510 $ 120,667 653,419 $ 679,450 15,958 $ 15.0% 16.6% 19.1% 14.4% 16.0% 17.8% 96,254 $ 96,254 106,766 $ 106,766 12,051 121,402 $ 118,817 676,863 $ 647,921 14,636 $ 14.2% 15.8% 17.9% 14.9% 16.5% 18.3% In the table above, beginning in the fourth quarter of 2022, the firm updated the probability of default models used in the calculation of Advanced RWAs. The impact of this change was a decrease in the firm's Advanced CET1 capital ratio of approximately 0.7 percentage points. In the second half of 2022, based on regulatory feedback, the firm revised certain interpretations of the Capital Rules underlying the calculation of Standardized and Advanced RWAs. As of December 2021, this change would have increased the firm's Standardized RWAs of $677 billion by approximately $12 billion, which would have reduced the firm's Standardized CET1 capital ratio of 14.2% by 0.2 percentage points, Standardized Tier 1 capital ratio of 15.8% by 0.3 percentage points and Standardized Total capital ratio of 17.9% by 0.3 percentage points. As of December 2021, this change would have increased the firm's Advanced RWAs of $648 billion by approximately $6 billion, which would have reduced the firm's Advanced CET1 capital ratio of 14.9% by 0.2 percentage points, Advanced Tier 1 capital ratio of 16.5% by 0.2 percentage points and Advanced Total capital ratio of 18.3% by 0.1 percentage points. 196 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Risk-Based Capital. The table below presents information about risk-based capital. As of December $ in millions Common shareholders’ equity Impact of CECL transition Deduction for goodwill Deduction for identifiable intangible assets Other adjustments CET1 capital Preferred stock Deduction for investments in covered funds Other adjustments Tier 1 capital p Standardized Tier 2 and Total capital Tier 1 capital Qualifying subordinated debt Junior subordinated debt Allowance for credit losses Other adjustments Standardized Tier 2 capital Standardized Total capital p Advanced Tier 2 and Total capital Tier 1 capital Standardized Tier 2 capital Allowance for credit losses Other adjustments Advanced Tier 2 capital Advanced Total capital p 2022 $ 106,486 $ 2021 99,223 1,105 (3,610) (401) (63) 96,254 10,703 (189) (2) $ 108,552 $ 106,766 829 (5,674) (1,770) (1,821) 98,050 10,703 (199) (2) $ 108,552 $ 106,766 11,554 94 3,034 (46) 14,636 $ 124,510 $ 121,402 10,637 – 5,331 (10) 15,958 $ 108,552 $ 106,766 14,636 (3,034) 449 12,051 $ 120,667 $ 118,817 15,958 (5,331) 1,488 12,115 In the table above: • Beginning in January 2022, the firm started to phase in the estimated reduction to regulatory capital as a result of adopting the CECL model. Impact of CECL transition in the table above reflects the total amount of reduction of $1.11 billion as of December 2021 to be phased in through January 2025 (at 25% per year), of which $276 million was phased in on January 1, 2022. The total amount to be phased in includes the impact of adopting CECL as of January 1, 2020, as well as 25% of the increase in the allowance for credit losses from January 1, 2020 through December 31, 2021. • Deduction for goodwill was net of deferred tax liabilities of $700 million as of December 2022 and $675 million as of December 2021. • Deduction for identifiable intangible assets was net of deferred tax liabilities of $239 million as of December 2022 and $17 million as of December 2021. • Deduction for investments in covered funds represents the firm’s aggregate investments in applicable covered funds. As of December 2021, this deduction excluded investments that were subject to an extended conformance period. See Note 8 for further information about the Volcker Rule. credit include valuation • Other adjustments within CET1 capital and Tier 1 capital primarily on derivative liabilities, the overfunded portion of the firm’s defined benefit pension plan obligation net of associated deferred tax liabilities, disallowed deferred tax assets, debt valuation adjustments and other required credit risk-based deductions. Other adjustments within Advanced Tier 2 capital include eligible credit reserves. adjustments • Qualifying subordinated debt is subordinated debt issued by Group Inc. with an original maturity of five years or greater. The outstanding amount of subordinated debt qualifying for Tier 2 capital is reduced upon reaching a remaining maturity of five years. See Note 14 for further information about the firm’s subordinated debt. • Junior subordinated debt is debt issued to a Trust and was fully phased out of regulatory capital on January 1, 2022. As of December 2021, 10% of this debt was included in Tier 2 capital and 90% was phased out of regulatory capital. Junior subordinated debt is reduced by the amount of Trust Preferred securities purchased by the firm. See Note 14 for further information about the firm’s junior subordinated debt and Trust Preferred securities. Goldman Sachs 2022 Form 10-K 197 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents changes in CET1 capital, Tier 1 capital and Tier 2 capital. RWAs. RWAs are calculated in accordance with both the Standardized and Advanced Capital Rules. $ in millions Year Ended December 2022 CET1 capital Beginning balance Change in: Common shareholders’ equity Impact of CECL transition Deduction for goodwill Deduction for identifiable intangible assets Other adjustments Ending balance g Tier 1 capital Beginning balance Change in: CET1 capital Deduction for investments in covered funds Ending balance Tier 2 capital Beginning balance Change in: Qualifying subordinated debt Junior subordinated debt Allowance for credit losses Other adjustments Ending balance Total capital p Standardized Advanced $ 96,254 $ 96,254 7,263 (276) (2,064) (1,369) (1,758) 98,050 $ 7,263 (276) (2,064) (1,369) (1,758) 98,050 106,766 $ 106,766 1,796 (10) 1,796 (10) 108,552 108,552 14,636 12,051 (917) (94) 2,297 36 15,958 124,510 $ (917) (94) – 1,075 12,115 120,667 $ $ $ Credit Risk Credit RWAs are calculated based on measures of exposure, which are then risk weighted under the Standardized and Advanced Capital Rules: • The Standardized Capital Rules apply prescribed risk- weights, which depend largely on the type of counterparty. The exposure measures for derivatives and securities financing transactions are based on specific formulas which take certain factors into consideration. • Under the Advanced Capital Rules, the firm computes risk- weights for wholesale and retail credit exposures in accordance with the Advanced Internal Ratings-Based approach. The exposure measures for derivatives and securities financing transactions are computed utilizing internal models. • For both Standardized and Advanced credit RWAs, the risk-weights for securitizations and equities are based on specific required formulaic approaches. Market Risk RWAs for market risk in accordance with the Standardized and Advanced Capital Rules are generally consistent. Market RWAs are calculated based on measures of exposure which include the following: • Value-at-Risk (VaR) is the potential loss in value of trading assets and liabilities, as well as certain investments, loans, and other financial assets and liabilities accounted for at fair value, due to adverse market movements over a defined time horizon with a specified confidence level. 198 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements calculated. For For both risk management purposes and regulatory capital calculations, the firm uses a single VaR model which captures risks, including those related to interest rates, equity prices, currency rates and commodity prices. However, VaR used for risk management purposes differs from VaR used for regulatory capital requirements (regulatory VaR) due to differences in time horizons, confidence levels and the scope of positions on which VaR is risk management purposes, a 95% one-day VaR is used, whereas for regulatory capital requirements, a 99% 10-day VaR is used to determine Market RWAs and a 99% one-day VaR is used to determine regulatory VaR exceptions. In addition, the daily net revenues used to determine risk management VaR exceptions (i.e., comparing the daily net revenues to the VaR measure calculated as of the end of the prior business day) the Capital Framework requires that intraday activity be excluded from revenues when calculating regulatory VaR daily net exceptions. Intraday activity includes bid/offer net revenues, which are more likely than not to be positive by their nature. As a result, there may be differences in the number of VaR exceptions and the amount of daily net revenues calculated for regulatory VaR compared to the amounts calculated for risk management VaR. activity, whereas intraday include losses observed on a single day The firm’s positional exceeded its 99% one-day regulatory VaR on one occasion during each of the years ended 2022 and 2021. There was no change in the firm’s VaR multiplier used to calculate Market RWAs; • Stressed VaR is the potential loss in value of trading assets and liabilities, as well as certain investments, loans, and other financial assets and liabilities accounted for at fair value, during a period of significant market stress; • Incremental risk is the potential loss in value of non- securitized positions due to the default or credit migration of issuers of financial instruments over a one-year time horizon; • Comprehensive risk is the potential loss in value, due to price risk and defaults, within the firm’s credit correlation positions; and • Specific risk is the risk of loss on a position that could result from factors other than broad market movements, including event risk, default risk and idiosyncratic risk. The standardized measurement method is used to determine specific risk RWAs, by applying supervisory defined risk- weighting factors after applicable netting is performed. Operational Risk Operational RWAs are only required to be included under the Advanced Capital Rules. The firm utilizes an internal risk-based model to quantify Operational RWAs. The table below presents information about RWAs. $ in millions As of December 2022 Credit RWAs Derivatives Commitments, guarantees and loans Securities financing transactions Equity investments Other Total Credit RWAs Market RWAs Regulatory VaR Stressed VaR Incremental risk Comprehensive risk Specific risk Total Market RWAs Total Operational RWAs Total RWAs As of December 2021 Credit RWAs Derivatives Commitments, guarantees and loans Securities financing transactions Equity investments Other Total Credit RWAs Market RWAs Regulatory VaR Stressed VaR Incremental risk Comprehensive risk Specific risk Total Market RWAs Total Operational RWAs Total RWAs In the table above: Standardized Advanced $ $ $ $ 142,696 $ 111,344 198,508 247,026 21,659 73,189 33,451 30,899 96,351 76,335 461,313 570,145 18,981 37,833 6,470 3,641 16,349 83,274 – 18,981 37,833 6,470 3,641 16,349 83,274 134,863 653,419 $ 679,450 175,628 $ 109,532 182,210 233,639 14,407 76,346 45,582 43,256 86,768 71,485 438,499 600,354 13,510 38,922 6,867 2,521 14,689 76,509 – 13,510 38,922 6,867 2,521 14,689 76,509 132,913 676,863 $ 647,921 • Securities financing transactions represents resale and repurchase agreements and securities borrowed and loaned transactions. • Other includes receivables, certain debt securities, cash and cash equivalents, and other assets. Goldman Sachs 2022 Form 10-K 199 RWAs Rollforward Commentary Year Ended December 2022. Standardized Credit RWAs as of December 2022 decreased by $30.21 billion compared with December 2021, primarily reflecting a decrease in derivatives (principally due to reduced exposures) and a decrease in equity investments (principally due to reduced exposures as a result of sales and unrealized losses). These decreases were in commitments, guarantees and loans (principally due to increased lending activity). Standardized Market RWAs as of December 2022 increased by $6.77 billion compared with December 2021, primarily reflecting an increase in regulatory VaR (principally due to higher levels of market volatility). partially increase offset by an Advanced Credit RWAs as of December 2022 increased by $22.81 billion compared with December 2021, primarily reflecting an increase in commitments, guarantees and loans, other credit RWAs and securities financing transactions (principally due to updates to the probability of default models in the fourth quarter of 2022). These increases were in equity investments partially offset by a decrease (principally due to reduced exposures as a result of sales and unrealized losses). Advanced Market RWAs as of December 2022 increased by $6.77 billion compared with December 2021, primarily reflecting an increase in regulatory VaR (principally due to higher levels of market volatility). Advanced Operational RWAs as of December 2022 increased by $1.95 billion compared with December 2021, primarily associated with litigation and regulatory proceedings. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents changes in RWAs. $ in millions Year Ended December 2022 RWAs Beginning balance Credit RWAs Change in: Derivatives Commitments, guarantees and loans Securities financing transactions Equity investments Other Change in Credit RWAs Market RWAs Change in: Regulatory VaR Stressed VaR Incremental risk Comprehensive risk Specific risk Change in Market RWAs Change in Operational RWAs Ending balance g Standardized Advanced $ 676,863 $ 647,921 (32,932) 13,387 (3,157) (12,357) 4,850 (30,209) 5,471 (1,089) (397) 1,120 1,660 6,765 – $ 653,419 $ 1,812 16,298 7,252 (12,131) 9,583 22,814 5,471 (1,089) (397) 1,120 1,660 6,765 1,950 679,450 200 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Bank Subsidiaries GS Bank USA. GS Bank USA is the firm’s primary U.S. bank subsidiary. GS Bank USA is a New York State- chartered bank and a member of the Federal Reserve System, is supervised and regulated by the FRB, the FDIC, the New York State Department of Financial Services (NYDFS) and the Consumer Financial Protection Bureau, and is subject to regulatory capital requirements that are calculated under the Capital Framework. GS Bank USA is an Advanced approaches the Capital organization Framework. The deposits of GS Bank USA are insured by the FDIC to the extent provided by law. banking under The Capital Framework includes the minimum risk-based capital and the capital conservation buffer requirements (consisting of a 2.5% buffer and the countercyclical capital buffer). The buffer must consist entirely of capital that the Capital qualifies as CET1 capital. Framework includes the leverage ratio requirement. In addition, requirements risk-based capital GS Bank USA is required to calculate the CET1 capital, Tier 1 capital and Total capital ratios in accordance with both the Standardized and Advanced Capital Rules. The lower of each risk-based capital ratio under the Standardized and Advanced Capital Rules is the ratio against which GS Bank USA’s compliance with its is assessed. In addition, under the regulatory framework for prompt corrective action applicable to GS Bank USA, in order to meet the quantitative requirements for a “well- capitalized” depository institution, GS Bank USA must also meet the “well-capitalized” requirements in the table below. GS Bank USA’s capital levels and prompt corrective action classification are also subject to qualitative judgments by the regulators about components of capital, risk weightings and capital other requirements, including a breach of the buffers described below, would result in restrictions being imposed by the regulators. to comply with the factors. Failure The table below presents GS Bank USA’s risk-based capital, leverage and “well-capitalized” requirements. Requirements “Well-capitalized” Requirements Risk-based capital requirements CET1 capital ratio Tier 1 capital ratio Total capital ratio Leverage requirements Tier 1 leverage ratio SLR 7.0% 8.5% 10.5% 4.0% 3.0% 6.5% 8.0% 10.0% 5.0% 6.0% In the table above: • The CET1 capital ratio requirement includes a minimum of 4.5%, the Tier 1 capital ratio requirement includes a minimum of 6.0% and the Total capital ratio requirement includes a minimum of 8.0%. These requirements also include requirements consisting of a 2.5% buffer and the countercyclical capital buffer, which the FRB has set to zero percent. conservation buffer capital the • The “well-capitalized” requirements are the binding requirements for leverage ratios. The table below presents information about GS Bank USA’s risk-based capital ratios. $ in millions As of December 2022 CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2021 CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs CET1 capital ratio Tier 1 capital ratio Total capital ratio In the table above: Standardized Advanced $ $ $ $ $ $ $ $ $ $ 46,845 $ 46,845 $ 8,042 $ 54,887 $ 357,112 $ 13.1% 13.1% 15.4% 42,535 $ 42,535 $ 6,430 $ 48,965 $ 312,601 $ 13.6% 13.6% 15.7% 46,845 46,845 5,382 52,227 275,451 17.0% 17.0% 19.0% 42,535 42,535 4,646 47,181 222,607 19.1% 19.1% 21.2% • The lower of the Standardized or Advanced ratio is the ratio against which GS Bank USA’s compliance with the capital requirements is assessed under the risk-based the Standardized ratios Capital Rules, and therefore, applied to GS Bank USA as of both December 2022 and December 2021. • Beginning in January 2022, GS Bank USA started to phase in the estimated reduction to regulatory capital as a result of adopting the CECL model. The total amount to be phased in includes the impact of adopting CECL as of January 1, 2020, as well as 25% of the increase in the allowance for credit losses from January 1, 2020 through December 31, 2021. • Beginning in the fourth quarter of 2022, the firm updated the probability of default models used in the calculation of Advanced RWAs. The impact of this change was a decrease in GS Bank USA's Advanced CET1 capital ratio of approximately 1 percentage point. Goldman Sachs 2022 Form 10-K 201 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements • The Standardized and Advanced risk-based capital ratios decreased from December 2021 to December 2022, reflecting an increase in both Credit and Market RWAs, partially offset by an increase in capital, principally due to net earnings and capital contributions. The table below presents information about GS Bank USA’s leverage ratios. $ in millions Tier 1 capital Average adjusted total assets Total leverage exposure Tier 1 leverage ratio SLR In the table above: For the Three Months Ended or as of December 2021 $ 42,535 $ 499,108 $ 409,739 $ 671,215 $ 627,799 2022 46,845 $ 9.4% 7.0% 10.4% 6.8% • Average adjusted total assets represents the average daily assets for the quarter adjusted for deductions from Tier 1 capital and the impact of CECL transition. • Tier 1 leverage ratio is calculated as Tier 1 capital divided by average adjusted total assets. • SLR is calculated as Tier 1 capital divided by total leverage exposure. The FRB requires that GS Bank USA maintain cash reserves with the Federal Reserve. As of both December 2022 and December 2021, the reserve requirement ratio was zero percent. See Note 26 for further information about cash deposits held by the firm at the Federal Reserve. GS Bank USA is a registered swap dealer with the CFTC and a registered security-based swap dealer with the SEC. As of both December 2022 and December 2021, GS Bank USA was subject to and in compliance with applicable capital requirements for swap dealers and security-based swap dealers. GSIB. GSIB is the firm’s U.K. bank subsidiary regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). GSIB is subject to the U.K. capital framework, which is largely based on Basel III. The eligible retail deposits of GSIB are covered by the U.K. Financial Services Compensation Scheme to the extent provided by law. table below presents GSIB’s The requirements. risk-based capital Risk-based capital requirements CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2022 2021 9.7% 11.9% 14.9% 8.5% 10.5% 13.2% 202 Goldman Sachs 2022 Form 10-K The table below presents information about GSIB’s risk- based capital ratios. $ in millions Risk-based capital and risk-weighted assets CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs Risk-based capital ratios CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2022 2021 $ $ $ $ $ 3,395 $ 3,395 $ 828 $ 4,223 $ 3,408 3,408 826 4,234 15,766 $ 17,196 21.5% 21.5% 26.8% 19.8% 19.8% 24.6% In the table above, the risk-based capital ratios as of December 2022 reflected profits after foreseeable charges that are still subject to audit by GSIB’s external auditors and approval by GSIB’s Board of Directors for inclusion in risk- based capital. These profits contributed approximately 161 basis points to the CET1 capital ratio as of December 2022. GSIB is also subject to the minimum leverage ratio requirement of 3.25% established by the PRA, which became effective January 1, 2023. GSIB had a leverage ratio of 6.9% as of December 2022. The leverage ratio as of December 2022 reflected profits after foreseeable charges that are still subject to audit by GSIB’s external auditors and approval by GSIB’s Board of Directors for inclusion in risk-based capital. These profits contributed approximately 56 basis points to the leverage ratio as of December 2022. GSIB is subject to minimum reserve requirements at central banks in certain of the jurisdictions in which it operates. As of both December 2022 and December 2021, GSIB was in compliance with these requirements. the GSBE. GSBE is firm’s German bank subsidiary supervised by the European Central Bank, BaFin and Deutsche Bundesbank. GSBE is a non-U.S. banking subsidiary of GS Bank USA and is also subject to standalone regulatory capital requirements noted below. GSBE is subject to the capital requirements prescribed in the amended E.U. Capital Requirements Directive (CRD) and E.U. Capital Requirements Regulation (CRR), which are largely based on Basel III. The deposits of GSBE are covered by the German statutory deposit protection program to the extent provided by law. In addition, GSBE has elected to participate in the German voluntary deposit protection program which provides insurance for certain eligible deposits not covered by the German statutory deposit program. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements table below presents GSBE’s The requirements. risk-based capital As of December 2022 2021 Risk-based capital requirements CET1 capital ratio 8.7% Tier 1 capital ratio 10.8% Total capital ratio 13.5% The table below presents information about GSBE’s risk- based capital ratios. 9.2% 11.3% 14.0% $ in millions Risk-based capital and risk-weighted assets CET1 capital Tier 1 capital Tier 2 capital Total capital RWAs Risk-based capital ratios CET1 capital ratio Tier 1 capital ratio Total capital ratio As of December 2022 2021 $ $ $ $ $ 9,536 $ 9,536 $ 21 $ 9,557 $ 6,527 6,527 23 6,550 30,154 $ 28,924 31.6% 31.6% 31.7% 22.6% 22.6% 22.6% the risk-based capital ratios as of In the table above, December 2022 reflected profits after foreseeable charges that are still subject to audit by GSBE’s external auditors and approval by GSBE’s shareholder (GS Bank USA) for inclusion contributed in approximately 76 basis points to the CET1 capital ratio as of December 2022. risk-based capital. profits These The table below presents GSBE’s leverage ratio requirement and leverage ratios. Leverage ratio requirement Leverage ratio As of December 2022 3.0% 10.6% 2021 3.0% 7.6% In the table above, the leverage ratio as of December 2022 reflected profits after foreseeable charges that are still subject to audit by GSBE’s external auditors and approval by GSBE’s shareholder (GS Bank USA) for inclusion in risk-based capital. These profits contributed approximately 57 basis points to the leverage ratio as of December 2022. GSBE is subject to minimum reserve requirements at central banks in certain of the jurisdictions in which it operates. As of both December 2022 and December 2021, GSBE was in compliance with these requirements. GSBE is a registered swap dealer with the CFTC and a registered security-based swap dealer with the SEC. As of both December 2022 and December 2021, GSBE was subject to and in compliance with applicable capital requirements for swap dealers and security-based swap dealers. include provisions limitations Restrictions on Payments Group Inc. may be limited in its ability to access capital held at certain subsidiaries as a result of regulatory, tax or other constraints. These of regulatory law and regulations and other applicable restrictions that limit the ability of those subsidiaries to declare and pay dividends without prior regulatory approval. For example, the amount of dividends that may be paid by GS Bank USA are limited to the lesser of the amounts calculated under a recent earnings test and an undivided profits test. As a result of dividends paid in connection with the acquisition of GSBE in July 2021, GS Bank USA cannot currently declare any additional dividends without prior regulatory approval. In addition, subsidiaries not subject to separate regulatory capital requirements may hold capital to satisfy local tax and legal guidelines, rating agency requirements (for entities with assigned credit ratings) or internal policies, including policies concerning the minimum amount of capital a subsidiary should hold based on its underlying level of risk. Group Inc.’s equity investment in subsidiaries was $134.59 billion as of December 2022 and $118.90 billion as of December 2021, of which Group Inc. was required to maintain $82.52 billion as of December 2022 and $77.22 billion as of December 2021, of minimum equity capital in its regulated subsidiaries in order to satisfy the regulatory requirements of such subsidiaries. invested in certain non-U.S. dollar Group Inc.’s capital functional currency subsidiaries is exposed to foreign exchange risk, substantially all of which is managed through a combination of non-U.S. dollar-denominated debt and derivatives. See Note 7 for information about the firm’s net investment hedges used to hedge this risk. Goldman Sachs 2022 Form 10-K 203 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 21. Note 22. Earnings Per Common Share Transactions with Affiliated Funds The firm has formed nonconsolidated investment funds with third-party investors. As the firm generally acts as the investment manager for these funds, it is entitled to receive management fees and, in certain cases, advisory fees or incentive fees from these funds. Additionally, the firm invests alongside the third-party investors in certain funds. The tables below present information about affiliated funds. $ in millions Fees earned from funds Year Ended December 2022 $ 4,553 2020 $ 3,707 $ 3,393 2021 $ in millions Fees receivable from funds Aggregate carrying value of interests in funds As of December 2022 $ 1,175 $ $ 3,801 $ 2021 873 4,321 The firm has waived, and may waive in the future, certain management fees on selected money market funds to enhance the yield for investors in such funds. Management fees waived were $123 million for 2022, $595 million for 2021 and $109 million for 2020. In accordance with the Volcker Rule, the firm does not provide financial support to covered funds. However, in the ordinary course of business, the firm may choose to provide voluntary financial support to funds that are not subject to the Volcker Rule, although any such support is not expected to be material to the results of operations of the firm. Except for the fee waivers noted above, the firm did not provide any additional financial support to its affiliated funds during either 2022 or 2021. In addition, in the ordinary course of business, the firm may also engage in other activities with its affiliated funds, including, among others, securities lending, trade execution, market-making, and acquisition and bridge financing. See Note 18 for information about the firm’s investment commitments related to these funds. custody, Basic earnings per common share (EPS) is calculated by dividing net earnings to common by the weighted average number of common shares outstanding and restricted stock units (RSUs) the underlying for which the delivery of common stock is not subject to satisfaction of future service, performance or market conditions (collectively, basic shares). Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of the common stock deliverable for RSUs for which the delivery of the underlying common stock is subject to satisfaction of future service, performance or market conditions. The table below presents information about basic and diluted EPS. in millions, except per share amounts Net earnings to common Weighted average basic shares Effect of dilutive RSUs Weighted average diluted shares g g Basic EPS Diluted EPS In the table above: 2021 Year Ended December 2022 2020 $ 10,764 $ 21,151 $ 8,915 356.4 3.9 360.3 352.1 6.0 358.1 350.5 5.3 355.8 $ 30.42 $ 60.25 $ 24.94 $ 30.06 $ 59.45 $ 24.74 • Net earnings to common represents net earnings applicable to common shareholders, which is calculated as net earnings less preferred stock dividends. • Unvested share-based awards that have non-forfeitable rights to dividends or dividend equivalents are treated as a separate class of securities under the two-class method. Distributed earnings allocated to these securities reduce net earnings to common to calculate EPS under this method. The impact of applying this methodology was a reduction in basic EPS of $0.15 for 2022, $0.10 for 2021 and $0.07 for 2020. • Diluted EPS does not include antidilutive RSUs, including those that are subject to market conditions, of 0.5 million for 2022, 0.3 million for 2021 and 0.1 million for 2020. 204 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 23. Note 24. Interest Income and Interest Expense Income Taxes Interest is recorded over the life of the instrument on an accrual basis based on contractual interest rates. The table below presents sources of interest income and interest expense. $ in millions Deposits with banks Collateralized agreements Trading assets Investments Loans Other interest Total interest income Deposits Collateralized financings Trading liabilities Short-term borrowings Long-term borrowings Other interest Total interest expense Net interest income In the table above: 2021 (24) $ Year Ended December 2022 $ 3,233 $ 4,468 5,087 2,199 9,059 4,978 29,024 5,823 2,808 1,923 541 5,716 4,535 21,346 2020 245 282 5,210 1,627 4,883 1,442 13,689 2,386 599 1,238 542 4,153 20 8,938 $ 7,678 $ 6,470 $ 4,751 (980) 4,716 1,589 5,319 1,500 12,120 1,303 – 1,662 527 3,231 (1,073) 5,650 • Collateralized agreements includes rebates paid and interest income on securities borrowed. • Loans excludes interest on loans held for sale that are accounted for at the lower of cost or fair value. Such interest is included within other interest. • Other interest income includes interest income on customer debit balances, other interest-earning assets and loans held for sale that are accounted for at the lower of cost or fair value. • Collateralized financings consists of repurchase agreements and securities loaned. • Short- and long-term borrowings include both secured and unsecured borrowings. • Other interest expense includes rebates received on other interest-bearing liabilities and interest expense on customer credit balances. Provision for Income Taxes Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities. The firm reports interest expense related to income tax matters in provision for taxes and income tax penalties in other expenses. The table below presents information about the provision for taxes. $ in millions Current taxes U.S. federal State and local Non-U.S. Total current tax expense Deferred taxes U.S. federal State and local Non-U.S. Total deferred tax (benefit)/expense Provision for taxes Year Ended December 2022 2021 2020 $2,356 $ 2,904 $1,759 555 1,539 3,853 623 1,658 4,637 574 1,926 5,404 (798) (2,079) (42) (436) 7 103 (2,412) (833) $2,225 $ 5,409 $ 3,020 192 72 (259) 5 The table below presents a reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate. Year Ended December U.S. federal statutory income tax rate State and local taxes, net of U.S. federal benefit Settlement of employee share-based awards Non-U.S. operations Tax credits Tax-exempt income, including dividends Non-deductible legal expenses Other Effective income tax rate 2022 2020 2021 21.0% 21.0% 21.0% 3.1 (1.0) (2.4) (1.2) (0.6) 5.6 (0.3) 16.5% 20.0% 24.2% 1.3 (2.4) (1.6) (0.9) (2.2) 0.8 0.5 1.9 (0.7) (1.5) (0.6) (0.5) – 0.4 In the table above, Non-U.S. operations include the impact of the Base Erosion and Anti-Abuse Tax and Global Intangible Low Taxed Income. Goldman Sachs 2022 Form 10-K 205 The firm has recorded deferred tax assets of $787 million as of December 2022 and $681 million as of December 2021, in connection with U.S. federal, state and local and foreign net operating loss carryforwards. The firm also recorded a valuation allowance of $301 million as of December 2022 and $285 million as of December 2021, related to these net operating loss carryforwards. As of December 2022, the U.S. federal net operating loss carryforward was $1.51 billion, the state and local net operating loss carryforward was $2.10 billion, and the foreign net operating loss carryforward was $1.38 billion. If not utilized, the U.S. federal, the state and local, and foreign net operating loss carryforwards will begin to expire in 2023. If these carryforwards expire, they will not have a material impact on the firm’s results of operations. As of December 2022, the firm has recorded deferred tax assets of $37 million in connection with foreign tax credit carryforwards and a related valuation allowance of $20 million. As of December 2022, the firm has recorded deferred tax assets of $41 million in connection with general business credit carryforwards and $9 million in connection with state and local tax credit foreign tax credit carryforwards. the general carryforward will begin to expire in 2033, business credit carryforward will begin to expire in 2023 and the state and local tax credit carryforward will begin to expire in 2024. If not utilized, the As of both December 2022 and December 2021, the firm had no U.S. capital loss carryforwards and no related net deferred income tax assets. As of December 2022, the firm had deferred tax assets of $277 million in connection with foreign loss carryforwards and a valuation allowance of capital $277 million related to these capital loss carryforwards. The valuation allowance increased by $674 million during 2022 and increased by $344 million during 2021. The increases in both 2022 and 2021 were primarily due to an increase in deferred tax assets from which the firm does not expect to realize any benefit. The firm permanently reinvested eligible earnings of certain foreign subsidiaries. As of both December 2022 and December 2021, all U.S. taxes were accrued on these subsidiaries’ distributable earnings. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized and primarily relate to the ability to utilize losses in various tax jurisdictions. Tax assets are included in other assets and tax liabilities are included in other liabilities. The table below presents information about deferred tax assets and liabilities, excluding the impact of netting within tax jurisdictions. $ in millions Deferred tax assets Compensation and benefits ASC 740 asset related to unrecognized tax benefits Non-U.S. operations Unrealized losses Net operating losses Occupancy-related Other comprehensive income/(loss)-related Tax credits carryforward Operating lease liabilities Allowance for credit losses Other, net Subtotal Valuation allowance Total deferred tax assets Deferred tax liabilities Depreciation and amortization Unrealized gains Operating lease right-of-use assets Total deferred tax liabilities As of December 2022 2021 $ 1,889 $ 1,978 287 606 – 681 151 593 43 624 1,081 271 6,315 (895) $ 7,356 $ 5,420 315 1,224 887 787 123 1,225 87 587 1,580 221 8,925 (1,569) $ 1,240 $ 1,225 1,114 585 $ 1,796 $ 2,924 – 556 206 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Unrecognized Tax Benefits The firm recognizes in the consolidated tax positions financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements. The accrued liability for interest expense related to income tax matters and income tax penalties was $205 million as of December 2022 and $131 million as of December 2021. The firm recognized interest expense and income tax penalties of $59 million for 2022, $13 million for 2021 and $41 million for 2020. It is reasonably possible that unrecognized tax benefits could change twelve months significantly during the subsequent to December 2022 due to potential audit settlements. However, at this time it is not possible to estimate any potential change. The table below presents the changes in the liability for unrecognized tax benefits, which is included in other liabilities. $ in millions Beginning balance Increases based on current year tax positions Increases based on prior years' tax positions Decreases based on prior years' tax positions Decreases related to settlements Exchange rate fluctuations Ending balance Related deferred income tax asset Net unrecognized tax benefit 2021 2022 Year Ended or as of December 2020 $ 1,446 $ 1,251 $ 1,445 164 209 (205) (367) 5 $ 1,533 $ 1,446 $ 1,251 297 95 (111) (80) (6) 190 10 (32) (76) (5) 315 200 $ 1,218 $ 1,159 $ 1,051 287 the firm has taxing authorities Regulatory Tax Examinations The firm is subject to examination by the U.S. Internal Revenue Service (IRS) and other in jurisdictions where significant business operations, such as the United Kingdom, Japan, Hong Kong and various states, such as New York. The tax years under examination vary by jurisdiction. The firm does not expect completion of these audits to have a material impact on the firm’s financial condition, but it may be material to operating results for a particular period, depending, in part, on the operating results for that period. The table below presents the earliest tax years that remain subject to examination by major jurisdiction. Jurisdiction U.S. Federal New York State and City United Kingdom Japan Hong Kong As of December 2022 2011 2015 2017 2016 2016 The firm has been accepted into the Compliance Assurance Process program by the IRS for each of the tax years from 2013 through 2023. This program allows the firm to work with the IRS to identify and resolve potential U.S. federal tax issues before the filing of tax returns. All issues for the 2011 and 2012 tax years have been resolved and completion is pending final review by the Joint Committee on Taxation (JCT). During 2022, the firm reached an agreement with IRS Appeals on the remaining issues for tax years 2012 through 2019. Subject to final review by JCT, this agreement will not have a material impact on the effective tax rate. During 2022, the fieldwork for the 2020 tax year was completed and the final resolution is not expected to have a material impact on the effective tax rate. The 2021 tax year remains subject to post-filing review. New York State and City examinations of 2015 through 2018 commenced during 2021. All years, including and subsequent to the years in the table above, remain open to examination by the taxing authorities. The firm believes that the liability for unrecognized tax benefits it has established is adequate in relation to the potential for additional assessments. Goldman Sachs 2022 Form 10-K 207 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 25. Business Segments The firm manages and reports its activities in three business segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. See Note 1 for information about the firm’s business segments, including the changes made during 2022. Compensation and benefits expenses in the firm’s segments reflect, among other factors, the overall performance of the firm, as well as the performance of individual businesses. Consequently, pre-tax margins in one segment of the firm’s business may be significantly affected by the performance of the firm’s other business segments. The firm allocates assets (including allocations of global core liquid assets and cash, secured client financing and other assets), revenues and expenses among the three business segments. Due to the integrated nature of these segments, estimates and judgments are made in allocating certain assets, revenues and expenses. The allocation process is based on the the manner performance of the segments. in which management currently views The allocation of common shareholders’ equity and preferred stock dividends to each segment is based on the estimated amount of equity required to support the activities of the segment under relevant regulatory capital requirements. Net earnings for each segment is calculated by applying the firmwide tax rate to each segment’s pre-tax earnings. that Management believes this allocation provides a reasonable representation of each segment’s contribution to consolidated net earnings to common, return on average common equity and total assets. Transactions between segments are based on specific criteria or approximate third- party rates. 208 Goldman Sachs 2022 Form 10-K Segment Results The table below presents a summary of the firm’s segment results. $ in millions Global Banking & Markets Non-interest revenues Net interest income Total net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings Net earnings to common Average common equity Return on average common equity q y g Asset & Wealth Management Non-interest revenues Net interest income Total net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings Net earnings to common Average common equity Return on average common equity q y g Platform Solutions Non-interest revenues Net interest income Total net revenues Provision for credit losses Operating expenses Pre-tax earnings/(loss) Net earnings/(loss) Net earnings/(loss) to common Average common equity q y g Return on average common equity Total Non-interest revenues Net interest income Total net revenues Provision for credit losses Operating expenses Pre-tax earnings Net earnings Net earnings to common Average common equity Return on average common equity q y g Year Ended December 2022 2021 2020 2,445 32,487 468 17,851 $ 30,042 $ 34,079 $ 28,285 2,184 2,655 30,469 36,734 1,216 (171) 18,884 19,542 $ 14,168 $ 17,363 $ 10,369 7,860 $ 11,830 $ 13,890 $ $ 11,458 $ 13,535 $ 7,428 $ 69,951 $ 60,064 $ 54,749 13.6% 22.5% 16.4% $ 9,843 $ 18,922 $ 11,541 2,216 3,043 3,533 13,757 21,965 13,376 1,395 (169) 519 9,469 11,406 11,550 2,893 $ 2,193 $ $ 2,083 $ 31,762 $ 29,988 $ 24,963 8.3% 1,307 $ 10,728 $ 1,092 $ 8,582 $ 979 $ 8,459 $ 28.2% 3.1% $ (198) $ 1,700 1,502 1,728 1,763 (132) $ 772 640 697 990 (17) 351 334 487 630 (783) (594) (596) 864 (46.8)% (47.4)% (69.0)% $ (1,989) $ (1,047) $ (837) $ $ (1,661) $ $ (1,673) $ (843) $ 3,574 $ 1,777 $ $ 7,678 47,365 2,715 31,164 $ 39,687 $ 52,869 $ 39,809 4,751 6,470 44,560 59,339 3,098 357 28,983 31,938 $ 13,486 $ 27,044 $ 12,479 9,459 $ 11,261 $ 21,635 $ $ 10,764 $ 21,151 $ 8,915 $ 105,287 $ 91,829 $ 80,576 11.1% 23.0% 10.2% THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In the table above: • Revenues and expenses directly associated with each segment are included in determining pre-tax earnings. • Net revenues in the firm’s segments include allocations of interest income and expense to specific positions in relation to the cash generated by, or funding requirements of, such positions. Net interest is included in segment net revenues as it is consistent with how management assesses segment performance. • Total operating expenses included net provisions for litigation and regulatory proceedings of $576 million for 2022, $534 million for 2021 and $3.42 billion for 2020, primarily reflected in Global Banking & Markets. • Expenses not directly associated with specific segments are allocated based on an estimate of support provided to each segment. The table below presents depreciation and amortization expense by segment. $ in millions Global Banking & Markets Asset & Wealth Management Platform Solutions Total Year Ended December 2022 $ 1,033 $ 1,212 210 2021 2020 934 $ 760 1,087 55 $ 2,455 $ 2,015 $ 1,902 1,003 78 Segment Assets The table below presents assets by segment. As of December $ in millions Global Banking & Markets Asset & Wealth Management Platform Solutions Total 2022 2021 $ 1,169,539 $ 1,201,996 221,150 40,842 $ 1,441,799 $ 1,463,988 214,970 57,290 Geographic Information Due to the highly integrated nature of international financial markets, the firm manages its businesses based on the profitability of the enterprise as a whole. The methodology for allocating profitability to geographic regions is dependent on estimates and management judgment because a significant portion of cross-border coordination in order to facilitate the needs of the firm’s clients. Geographic results are generally allocated as follows: activities require firm’s the • Global Banking & Markets: Investment banking fees and Other: location of the client and investment banking team; FICC intermediation and Equities intermediation: location of the market-making desk; FICC financing and Equities financing: location of the desk. business, Equity • Asset & Wealth Management (excluding direct-to- consumer and Debt investments): location of the sales team and/or investments; Direct-to-consumer business: location of the client; Equity investments and Debt the investments: investment or investment professional. location of investments • Platform Solutions: location of the client. The table below presents total net revenues, pre-tax earnings and net earnings by geographic region. $ in millions Year Ended December Americas EMEA Asia Total net revenues 2022 2021 2020 $28,669 12,860 5,836 61% 25% 14 % $47,365 100% $59,339 100% $44,560 100% 63% $27,293 24% 10,946 13% 6,321 61% $37,217 27% 14,474 7,648 12% 71% Americas 25% EMEA Asia 4 % Total pre-tax earnings $13,486 100% $27,044 100% $12,479 100% 64% $ 8,804 27% 3,119 556 52% $17,314 7,164 39% 2,566 9% $ 7,016 5,260 1,210 9% p g Americas EMEA Asia Total net earnings g In the table above: $ 6,067 4,164 1,030 77% 23% – $11,261 100% $21,635 100% $ 9,459 100% 64% $ 7,300 27% 2,150 9 54% $13,796 5,778 37% 2,061 9% 9% for segment reorganization, allocating • During the fourth quarter of 2022, in connection with the firm’s the firm changed its funding-related methodology certain revenues not directly allocable to specific regions. As a result, reclassifications were made to the geographic allocation of net revenues. Prior period amounts have been conformed to the current presentation. • Asia pre-tax earnings and net earnings for 2020 were impacted by net provisions for litigation and regulatory proceedings. • Substantially all of the amounts in Americas were attributable to the U.S. • Asia includes Australia and New Zealand. Goldman Sachs 2022 Form 10-K 209 The table below presents U.S. government and agency obligations and non-U.S. government and agency obligations that collateralize resale agreements and securities borrowed transactions. $ in millions U.S. government and agency obligations Non-U.S. government and agency obligations As of December 2022 2021 $ 164,897 $ 86,274 76,456 $ 141,588 $ In the table above: • Non-U.S. government and agency obligations primarily consists of securities issued by the governments of the U.K., Japan, Germany and France. • Given that the firm’s primary credit exposure on such transactions is to the counterparty to the transaction, the firm would be exposed to the collateral issuer only in the event of counterparty default. Note 27. Legal Proceedings The firm is involved in a number of judicial, regulatory and arbitration proceedings (including those described below) concerning matters arising in connection with the conduct of the firm’s businesses. Many of these proceedings are in early stages, and many of these cases seek an indeterminate amount of damages. Under ASC 450, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” Thus, references to the upper end of the range of reasonably possible loss for cases in which the firm is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the firm believes the risk of loss is more than slight. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 26. Credit Concentrations The firm’s concentrations of credit risk arise from its market- making, client facilitation, investing, underwriting, lending and collateralized transactions, and cash management activities, and may be impacted by changes in economic, industry or political factors. These activities expose the firm to many different industries and counterparties, and may also subject the firm to a concentration of credit risk to a particular central bank, counterparty, borrower or issuer, including sovereign issuers, or to a particular clearinghouse or exchange. The firm seeks to mitigate credit risk by actively monitoring from exposures counterparties as deemed appropriate. and obtaining collateral The firm measures and monitors its credit exposure based on amounts owed to the firm after taking into account risk mitigants that the firm considers when determining credit risk. Such risk mitigants include netting and collateral arrangements credit futures and forward contracts. Netting and derivatives, collateral agreements permit the firm to offset receivables and payables with such counterparties and/or enable the firm to obtain collateral on an upfront or contingent basis. and economic hedges, such as The table below presents the credit concentrations included in trading cash instruments and investments. As of December $ in millions U.S. government and agency obligations Percentage of total assets Non-U.S. government and agency obligations Percentage of total assets 2022 2021 $ 205,935 $ 141,191 14.3% 9.6% 40,334 $ 51,426 3.5% 2.8% $ In addition, the firm had $208.53 billion as of December 2022 and $222.20 billion as of December 2021 of cash deposits held at central banks (included in cash and cash equivalents), of which $165.77 billion as of December 2022 and $122.01 billion as of December 2021 was held at the Federal Reserve. As of both December 2022 and December 2021, the firm did not have credit exposure to any other counterparty that exceeded 2% of total assets. Collateral obtained by the firm related to derivative assets is principally cash and is held by the firm or a third-party custodian. Collateral obtained by the firm related to resale agreements and securities borrowed transactions is primarily U.S. government and agency obligations and non-U.S. government and agency obligations. See Note 11 for further information about collateralized agreements and financings. 210 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements to matters described below for which With respect management has been able to estimate a range of reasonably possible loss where (i) actual or potential plaintiffs have claimed an amount of money damages, (ii) the firm is being, or threatened to be, sued by purchasers in a securities offering and is not being indemnified by a party that the firm believes will pay the full amount of any judgment, or (iii) the purchasers are demanding that the firm repurchase securities, management has estimated the upper end of the range of reasonably possible loss based on (a) in the case of (i), the amount of money damages claimed, (b) in the case of (ii), the difference between the initial sales price of the securities that the firm sold in such offering and the estimated lowest subsequent price of such securities prior to the action being commenced and (c) the price that in the case of purchasers paid for the securities less the estimated value, if any, as of December 2022 of the relevant securities, in each of cases (i), (ii) and (iii), taking into account any other factors believed to be relevant to the particular matter or matters of that type. As of the date hereof, the firm has estimated the upper end of the range of reasonably possible aggregate loss for such matters and for any other matters described below where management has been able to estimate a range of reasonably possible aggregate loss to be approximately $2.3 billion in excess of the aggregate reserves for such matters. (iii), Management is generally unable to estimate a range of reasonably possible loss for matters other than those included in the estimate above, including where (i) actual or potential plaintiffs have not claimed an amount of money damages, except in those instances where management can otherwise determine an appropriate amount, (ii) matters are in early stages, (iii) matters relate to regulatory investigations or reviews, except in those instances where management can otherwise determine an appropriate amount, (iv) there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (v) there is uncertainty as to the outcome of pending appeals or motions, there are significant factual issues to be resolved, and/or (vii) there are novel legal issues presented. For example, the firm’s potential liabilities with respect to the investigations and reviews described below in “Regulatory Investigations and Reviews and Related Litigation” generally are not included in management’s estimate of reasonably possible loss. However, management does not believe, based on currently available information, that the outcomes of such other matters will have a material adverse effect on the firm’s financial condition, though the outcomes could be material to the firm’s operating results for any particular period, depending, in part, upon the operating results for such period. (vi) 1MDB-Related Matters Between 2012 and 2013, subsidiaries of the firm acted as arrangers or purchasers of approximately $6.5 billion of debt securities of 1MDB. On November 1, 2018, the U.S. Department of Justice (DOJ) unsealed a criminal information and guilty plea by Tim Leissner, a former participating managing director of the firm, and an indictment against Ng Chong Hwa, a former managing director of the firm. On August 28, 2018, Leissner was adjudicated guilty by the U.S. District Court for the Eastern District of New York of conspiring to launder money and to violate the U.S. Foreign Corrupt Practices Act’s (FCPA) anti-bribery and internal accounting controls provisions. Ng was charged with conspiring to launder money and to violate the FCPA’s anti-bribery and internal accounting controls provisions. On April 8, 2022, Ng was found guilty on all counts following a trial. On August 18, 2020, the firm announced that it entered into a settlement agreement with the Government of Malaysia to resolve the criminal and regulatory proceedings in Malaysia involving the firm, which includes a guarantee that the Government of Malaysia receives at least $1.4 billion in assets and proceeds from assets seized by governmental authorities around the world related to 1MDB. See Note 18 for further information about this guarantee. On October 22, 2020, the firm announced that it reached settlements of governmental and regulatory investigations relating to 1MDB with the DOJ, the SEC, the FRB, the NYDFS, the FCA, the PRA, the Singapore Attorney General’s Chambers, the Singapore Commercial Affairs Department, the Monetary Authority of Singapore and the Hong Kong Securities and Futures Commission. Group Inc. entered into a three-year deferred prosecution agreement with the DOJ, in which a charge against the firm, one count of conspiracy to violate the FCPA, was filed and will later be dismissed if the firm abides by the terms of the agreement. In addition, GS Malaysia pleaded guilty to one count of conspiracy to violate the FCPA, and was sentenced on June 9, 2021. In May 2021, the U.S. Department of Labor granted the firm a five-year exemption to maintain its status as a qualified professional asset manager (QPAM). Goldman Sachs 2022 Form 10-K 211 Mortgage-Related Matters Beginning in April 2010, a number of purported securities law class actions were filed in the U.S. District Court for the Southern District of New York challenging the adequacy of Group Inc.’s public disclosure of, among other things, the firm’s activities in the collateralized debt obligation market, and the firm’s conflict of interest management. The consolidated amended complaint filed on July 25, 2011, which named as defendants Group Inc. and certain current and former officers and employees of Group Inc. and its affiliates, generally alleges violations of Sections 10(b) and 20(a) of the Exchange Act and seeks monetary damages. The defendants have moved for summary judgment. On April 7, 2020, the U.S. Court of Appeals for the Second Circuit affirmed the district court’s August 14, 2018 grant of class certification. On June 21, 2021, the United States Supreme Court vacated the judgment of the Second Circuit and remanded the case for further proceedings, and on August 26, 2021, the Second Circuit vacated the district court’s grant of class certification and remanded the case for further proceedings. On December 8, 2021, the district court granted the plaintiffs’ motion for class certification. On March 9, 2022, the Second Circuit granted defendants’ petition seeking interlocutory review of the district court’s grant of class certification. Securities Corp. Complaints were filed in the U.S. District Court for the Southern District of New York on July 25, 2019 and May 29, 2020 against Goldman Sachs Mortgage Company and GS by U.S. Bank National Mortgage Association, as trustee for two residential mortgage-backed securitization trusts that issued $1.7 billion of securities. The complaints generally allege that mortgage loans in the trusts and failed to conform to applicable warranties and seek specific performance or, alternatively, compensatory damages and other relief. On November 23, 2020, the court granted in part and denied in part defendants’ motion to dismiss the complaint in the first action and denied defendants’ motion to dismiss the complaint in the second action. On January 14, 2021, amended complaints were filed in both actions. representations THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The firm has received multiple demands, beginning in November 2018, from alleged shareholders under Section 220 of the Delaware General Corporation Law for books and the records firm’s relating to, among other compliance involvement with 1MDB and the procedures. things, firm’s On February 19, 2019, a purported shareholder derivative action relating to 1MDB was filed in the U.S. District Court for the Southern District of New York against Group Inc. and the directors at the time and a former chairman and chief executive officer of the firm. The second amended complaint filed on November 13, 2020, alleges breaches of fiduciary duties, including in connection with alleged insider trading by certain current and former directors, unjust enrichment and violations of the anti-fraud provisions of the Exchange Act, including in connection with Group Inc.’s common stock repurchases and solicitation of proxies, and seeks unspecified damages, disgorgement and injunctive relief. On January 13, 2023, the court approved a settlement among the parties pursuant to which the firm agreed to a payment of $79.5 million to be made to the firm by its insurers, which the firm has agreed to use for compliance purposes after payment of any attorneys’ fees and reimbursement of expenses awarded to plaintiffs. On December 20, 2018, a putative securities class action lawsuit was filed in the U.S. District Court for the Southern District of New York against Group Inc. and certain former officers of the firm alleging violations of the anti-fraud provisions of the Exchange Act with respect to Group Inc.’s disclosures and public statements concerning 1MDB and seeking unspecified damages. The plaintiff filed the second amended complaint on October 28, 2019. On June 28, 2021, the court dismissed the claims against one of the individual defendants but denied the defendants’ motion to dismiss with respect to the firm and the remaining individual defendants. On November 12, 2021, the plaintiff moved for class certification. On January 13, 2023, the plaintiff moved for leave to file a third amended complaint. 212 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Currencies-Related Litigation GS&Co. and Group Inc. are among the defendants named in an action filed in the U.S. District Court for the Southern District of New York on November 7, 2018, and GSI, GSIB, Goldman Sachs Group UK Limited and GS Bank USA are among the defendants in an action filed in the High Court of England and Wales on November 11, 2020 and subsequently transferred to the U.K. Competition Appeal Tribunal, in each foreign exchange case by certain direct purchasers of instruments that opted out of a class settlement reached with, among others, GS&Co. and Group Inc. The third amended complaint in the U.S. district court action, filed on August 3, 2020, generally alleges that the defendants violated federal antitrust law and state common law in connection with an alleged conspiracy to manipulate the foreign currency exchange markets and seeks declaratory and injunctive relief, as well as unspecified amounts of compensatory, punitive, treble and other damages. The claim in the English action is for breaches of English and E.U. competition rules from 2003 to 2013 and alleges manipulation of foreign exchange rates and bid/offer spreads, the exchange of commercially sensitive information among defendants and collusive trading. On December 13, 2022, the parties reached settlements in principle, subject to final documentation, to resolve these actions. GS&Co. is among the defendants named in a putative class action filed in the U.S. District Court for the Southern District of New York on August 4, 2021. The amended complaint, filed on January 6, 2022, generally asserts claims under federal antitrust law and state common law in connection with an alleged conspiracy among the defendants to manipulate auctions for foreign exchange transactions on an electronic trading platform, as well as claims under the Racketeer Influenced and Corrupt Organizations Act. The complaint seeks declaratory and injunctive relief, as well as unspecified amounts of treble and other damages. On March 18, 2022, the defendants moved to dismiss the amended complaint. Banco Espirito Santo S.A. and Oak Finance Beginning in February 2015, GSI commenced actions against Novo Banco S.A. (Novo Banco) in the English Commercial Court and the Bank of Portugal in Portuguese (BoP) in response to BoP’s decisions in Administrative Court December 2014, September 2015 and December 2015 to reverse an earlier transfer to Novo Banco of an $835 million facility agreement (the Facility), structured by GSI, between Oak Finance Luxembourg S.A. (Oak Finance), a special purpose vehicle formed in connection with the Facility, and Banco Espirito Santo S.A. (BES) prior to the failure of BES. In July 2018, the English Supreme Court found that the English courts will not have jurisdiction over GSI’s action unless and until the Portuguese Administrative Court finds against BoP in GSI’s parallel action. the Liquidation Committee for BES issued a decision seeking to claw back from GSI $54 million paid to GSI and $50 million allegedly paid to Oak Finance in connection with the Facility, alleging that GSI acted in bad faith in extending the Facility, including because GSI allegedly knew that BES was at risk of imminent failure. In October 2018, GSI commenced an action in Lisbon Commercial Court challenging the Liquidation Committee’s decision and has since also issued a claim against the Portuguese State losses of approximately $222 million related to the failure of BES, together with a contingent claim for the $104 million sought by the Liquidation Committee. seeking compensation for In July 2018, Financial Advisory Services Group Inc. and certain of its affiliates are from time to time parties to various civil litigation and arbitration proceedings and other disputes with clients and third parties relating to the firm’s financial advisory activities. These claims generally seek, among other things, compensatory damages and, in some cases, punitive damages, and in certain cases allege that the firm did not appropriately disclose or deal with conflicts of interest. Goldman Sachs 2022 Form 10-K 213 Underwriting Litigation Firm affiliates are among the defendants in a number of proceedings in connection with securities offerings. In these proceedings, including those described below, the plaintiffs assert class action or individual claims under federal and state securities laws and in some cases other applicable laws, allege that the offering documents for the securities that they purchased contained material misstatements and omissions, and generally seek compensatory and rescissory damages in unspecified amounts, as well as rescission. Certain of these proceedings involve additional allegations. is an price among offering aggregate representing Inc. GS&Co. the Uber Technologies, in several putative underwriters named as defendants securities class actions filed beginning in September 2019 in California Superior Court, County of San Francisco and the U.S. District Court for the Northern District of California, relating to Uber Technologies, Inc.’s (Uber) $8.1 billion May 2019 initial public offering. In addition to the underwriters, the defendants include Uber and certain of its officers and directors. GS&Co. underwrote 35,864,408 shares of common of stock approximately $1.6 billion. On November 16, 2020, the court in the state court action granted defendants’ motion to dismiss filed on the consolidated amended complaint February 11, 2020, and on December 16, 2020, plaintiffs appealed. On August 7, 2020, defendants’ motion to dismiss the district court action was denied. On September 25, 2020, the plaintiffs in the district court action moved for class certification. On December 5, 2020, the plaintiffs in the state court action filed a complaint in the district court, which was consolidated with the existing district court action on January 25, 2021. On May 14, 2021, the plaintiffs filed a second amended complaint in the district court, purporting to add the plaintiffs from the state court action as additional class representatives. On October 1, 2021, defendants’ motion to dismiss the additional class representatives from the second amended complaint was denied, and on July 26, 2022, the district court granted the plaintiffs’ motion for class certification. On August 9, 2022, defendants filed a petition with the U.S. Court of Appeals for the Ninth Circuit seeking interlocutory review of the district court’s grant of class certification. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements the offering Archegos-Related Matters GS&Co. is among the underwriters named as defendants in a putative securities class action filed on August 13, 2021 in New York Supreme Court, County of New York, relating to ViacomCBS Inc.’s (ViacomCBS) March 2021 public offerings of $1.7 billion of common stock and $1.0 billion of preferred stock. In addition to the underwriters, the defendants include ViacomCBS and certain of its officers and directors. GS&Co. underwrote 646,154 shares of common stock representing an aggregate offering price of approximately $55 million and 323,077 shares of preferred stock representing an aggregate offering price of approximately $32 million. The complaint asserts claims under the federal securities laws and alleges that contained material documents misstatements and omissions, including, among other things, that the offering documents failed to disclose that Archegos Capital Management (Archegos) had substantial exposure to ViacomCBS, including through total return swaps to which certain of including GS&Co., were allegedly counterparties, and that such underwriters failed to disclose their exposure to Archegos. The complaint seeks in unspecified rescission and compensatory damages amounts. On November 5, 2021, the plaintiffs filed an amended complaint. On January 4, 2022, the plaintiffs moved for class certification. On February 6, 2023, the court dismissed the claims against ViacomCBS and the individual defendants, but denied the defendants’ motion to dismiss with respect to GS&Co. and the other underwriter defendants. the underwriters, Group Inc. is also a defendant in putative securities class actions filed beginning in October 2021 and consolidated in the U.S. District Court for the Southern District of New York. The complaints allege that Group Inc., along with institution, sold shares in Baidu Inc. another financial (Baidu), Discovery Inc. (Discovery), GSX Techedu Inc. (Gaotu), iQIYI Inc. (iQIYI), Tencent Music Entertainment Group (Tencent), ViacomCBS, and Vipshop Holdings Ltd. (Vipshop) information regarding the liquidation of Archegos’ position in Baidu, Discovery, Gaotu, iQIYI, Tencent, ViacomCBS and Vipshop, respectively. The complaints generally assert violations of Sections 10(b), 20A and 20(a) of the Exchange Act and seek unspecified damages. On June 13, 2022, the plaintiffs in the class actions filed amended complaints. On August 12, 2022, the defendants the amended complaints. filed motions on material to dismiss nonpublic based On January 24, 2022, the firm received a demand from an alleged shareholder under Section 220 of the Delaware General Corporation Law for books and records relating to, among other things, the firm’s involvement with Archegos and the firm’s controls with respect to insider trading. 214 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In addition to the underwriters, in putative securities class actions GoHealth, Inc. GS&Co. is among the underwriters named as defendants filed beginning on September 21, 2020 and consolidated in the U.S. District Court for the Northern District of Illinois relating to GoHealth, Inc.’s (GoHealth) $914 million July 2020 initial public offering. the defendants include GoHealth, certain of its officers and directors shareholders. GS&Co. underwrote 11,540,550 shares of common stock representing an aggregate offering price of approximately $242 million. On February 25, 2021, the plaintiffs filed a consolidated complaint. On April 5, 2022, the defendants’ motion to consolidated complaint was denied. On dismiss class September certification. the plaintiffs moved for certain 2022, and the 23, its of is among Inc. GS&Co. the Array Technologies, underwriters named as defendants in a putative securities class action filed on May 14, 2021 in the U.S. District Court for the Southern District of New York relating to Array Technologies, Inc.’s (Array) $1.2 billion October 2020 initial public offering of common stock, $1.3 billion December 2020 offering of common stock and $993 million March 2021 offering of common stock. In addition to the underwriters, the defendants include Array and certain of its officers and directors. GS&Co. underwrote an aggregate of 31,912,213 shares of common stock in the three offerings representing an aggregate offering price of approximately $877 million. On December filed an amended the plaintiffs consolidated complaint. On October 17, 2022, the defendants moved to dismiss the amended consolidated complaint. 2021, 7, ContextLogic Inc. GS&Co. is among the underwriters named as defendants in putative securities class actions filed beginning on May 17, 2021 and consolidated in the U.S. District Court for the Northern District of California, relating to ContextLogic Inc.’s (ContextLogic) $1.1 billion December 2020 initial public offering of common stock. In include addition to the underwriters, ContextLogic and certain of its officers and directors. GS&Co. underwrote 16,169,000 shares of common stock representing an aggregate offering price of approximately the plaintiffs filed a $388 million. On July 15, 2022, consolidated amended complaint. On September 16, 2022, the defendants moved to dismiss the consolidated amended complaint. the defendants DiDi Global Inc. Goldman Sachs (Asia) L.L.C. (GS Asia) is among the underwriters named as defendants in putative securities class actions filed beginning on July 6, 2021 in the U.S. District Courts for the Southern District of New York and the Central District of California and New York Supreme Court, County of New York, relating to DiDi Global Inc.’s (DiDi) $4.4 billion June 2021 initial public offering of American Depositary Shares (ADS). In addition to the underwriters, the defendants include DiDi and certain of its officers and directors. GS Asia underwrote 104,554,000 ADS of approximately $1.5 billion. On September 22, 2021, plaintiffs in the California action voluntarily dismissed their claims in the without prejudice. On May 5, 2022, plaintiffs consolidated federal action filed a second consolidated amended complaint, which includes allegations of violations of Sections 10(b) and 20A of the Exchange Act against the underwriter defendants. On June 3, 2022, the defendants moved to dismiss second consolidated amended complaint. representing aggregate offering price the an Vroom Inc. GS&Co. is among the underwriters named as defendants in an amended complaint for a putative securities class action filed on October 4, 2021 in the U.S. District Court for the Southern District of New York relating to Vroom Inc.’s (Vroom) approximately $589 million September 2020 public offering of common stock. In addition to the underwriters, the defendants include Vroom and certain of its officers and directors. GS&Co. underwrote 3,886,819 shares of common stock representing an aggregate offering price of approximately $212 million. On December 20, 2021, the defendants served a motion to dismiss the consolidated complaint. Zymergen Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on August 4, 2021 in the U.S. District Court for the Northern District of California relating to Zymergen Inc.’s (Zymergen) $575 million April 2021 initial public offering of common stock. In addition to the underwriters, the defendants include Zymergen and certain of its officers and directors. GS&Co. underwrote 5,750,345 shares of common stock representing an aggregate offering price of approximately $178 million. On February 24, 2022, the plaintiffs filed an amended complaint, and on November 29, 2022, the court granted in part and denied in part the defendants' motion to dismiss the amended complaint, denying dismissal of the claims for violations of Section 11 of the Securities Act. Goldman Sachs 2022 Form 10-K 215 Natera Inc. GS&Co. is among the underwriters named as defendants in putative securities class actions in New York Supreme Court, County of New York and the U.S. District Court for the Western District of Texas filed on March 10, 2022 and October 7, 2022, respectively, relating to Natera Inc.’s (Natera) approximately $585 million July 2021 public offering of common stock. In addition to the underwriters, the defendants include Natera and certain of its officers and directors. GS&Co. underwrote 1,449,000 shares of common stock of approximately $164 million. On July 15, 2022, the parties in the state court action filed a stipulation and proposed order approving the discontinuance of the action without prejudice. On December 16, 2022, the defendants moved to dismiss the amended complaint in the federal action. representing aggregate offering price an is among Inc. GS&Co. the Robinhood Markets, underwriters named as defendants in a putative securities class action filed on December 17, 2021 in the U.S. District Court for the Northern District of California relating to Robinhood Markets, Inc.’s (Robinhood) approximately $2.2 billion July 2021 initial public offering. In addition to the underwriters, the defendants include Robinhood and certain of its officers and directors. GS&Co. underwrote 18,039,706 shares of common stock representing an aggregate offering price of approximately $686 million. On June 20, 2022, the plaintiffs filed an amended complaint. On August 18, 2022, the defendants moved to dismiss the amended complaint. ON24, Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on November 3, 2021 in the U.S. District Court for the Northern District of California relating to ON24, Inc.’s (ON24) approximately $492 million February 2021 initial public offering of common stock. In addition to the underwriters, the defendants include ON24 and certain of its officers and directors, including a director who was a Managing Director of GS&Co. at the time of the initial public offering. GS&Co. underwrote 3,616,785 shares of common stock representing an aggregate offering price of approximately $181 million. On March 18, 2022, the plaintiffs filed a consolidated complaint. On May 2, 2022, the defendants moved to dismiss the consolidated complaint. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Waterdrop Inc. GS Asia is among the underwriters named as defendants in a putative securities class action filed on September 14, 2021 in the U.S. District Court for the Southern District of New York relating to Waterdrop Inc.’s (Waterdrop) $360 million May 2021 initial public offering of ADS. In addition to the underwriters, the defendants include Waterdrop and certain of its officers and directors. GS Asia underwrote 15,300,000 ADS representing an aggregate offering price of approximately $184 million. On February 21, 2022, the plaintiffs filed an amended complaint, and on February 3, 2023, the court granted the defendants' motion to dismiss the amended complaint. Sea Limited. GS Asia is among the underwriters named as defendants in putative securities class actions filed on February 11, 2022 and June 17, 2022, respectively, in New York Supreme Court, County of New York, relating to Sea Limited’s approximately $4.0 billion September 2021 public offering of ADS and approximately $2.9 billion September 2021 public offering of convertible senior notes, respectively. In addition to the underwriters, the defendants include Sea Limited, certain of its officers and directors and certain of its shareholders. GS Asia 8,222,500 ADS representing an aggregate offering price of approximately $2.6 billion and convertible senior notes representing an aggregate offering price of approximately $1.9 billion. On August 3, 2022, the actions were consolidated, and on August 9, 2022, filed a consolidated amended complaint. The defendants had previously moved to dismiss the action on July 15, 2022, with the parties stipulating that the motion would apply to the consolidated amended complaint. the plaintiffs underwrote is among Inc. GS&Co. the Rivian Automotive underwriters named as defendants in a putative securities class action filed on March 7, 2022 in the U.S. District Court for the Central District of California relating to Rivian Automotive Inc.’s (Rivian) approximately $13.7 billion November 2021 initial public offering. In addition to the underwriters, the defendants include Rivian and certain of its officers and directors. GS&Co. underwrote 44,733,050 shares of common stock representing an aggregate offering price of approximately $3.5 billion. On July 22, 2022, the plaintiffs filed a consolidated complaint, and on August 29, 2022, the defendants moved to dismiss the consolidated complaint. 216 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements relating to Riskified Ltd.’s Riskified Ltd. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on May 2, 2022 in the U.S. District Court for the Southern District of New York (Riskified) approximately $423 million July 2021 initial public offering. In addition to the underwriters, the defendants include Riskified and certain of its officers and directors. GS&Co. underwrote 6,981,128 shares of common stock representing an aggregate offering price of approximately $147 million. On November 28, 2022, the plaintiffs filed a second amended complaint, and on January 20, 2023, the defendants moved to dismiss the second amended complaint. Inc. GS&Co. is among the underwriters Oscar Health, named as defendants in a putative securities class action filed on May 12, 2022 in the U.S. District Court for the Southern District of New York relating to Oscar Health, Inc.’s (Oscar Health) approximately $1.4 billion March 2021 initial public offering. In addition to the underwriters, the defendants include Oscar Health and certain of its officers and directors. GS&Co. underwrote 12,760,633 shares of common stock representing an aggregate offering price of approximately $498 million. On December 5, 2022, the plaintiffs filed an amended complaint. of its and certain Oak Street Health, Inc. GS&Co. is among the underwriters named as defendants in an amended complaint for a putative securities class action filed on May 25, 2022 in the U.S. District Court for the Northern District of Illinois relating to Oak Street Health, Inc.’s (Oak Street) $377 million August 2020 initial public offering, $298 million December 2020 secondary equity offering, $691 million February 2021 secondary equity offering and $747 million May 2021 secondary equity offering. In addition to the underwriters, the defendants include Oak Street, certain of its officers and shareholders. GS&Co. directors underwrote 4,157,103 shares of common stock in the August 2020 initial public offering representing an aggregate offering price of approximately $87 million, 1,503,944 shares of common stock in the December 2020 secondary equity offering an aggregate offering price of approximately $69 million, 3,083,098 shares of common stock in the February 2021 secondary equity offering representing an aggregate offering price of approximately $173 million and 3,013,065 shares of common stock in the May 2021 secondary equity offering representing an aggregate offering price of approximately $187 million. On February 10, 2023, the court granted in part and denied in part the defendants’ motion to dismiss, dismissing the claim alleging a violation of Section 12(a)(2) of the Securities Act and, with respect to the May 2021 secondary equity offering only, the claim alleging a violation of Section 11 of the Securities Act, but declining to dismiss the remaining claims. representing Inc. GS&Co. is among the Reata Pharmaceuticals, underwriters named as defendants in a consolidated amended complaint for a putative securities class action filed on June 21, 2022 in the U.S. District Court for the Eastern District of Inc.’s (Reata) Texas relating to Reata Pharmaceuticals, approximately $282 million December 2020 public offering of common stock. the defendants include Reata and certain of its officers and directors. GS&Co. underwrote 1,000,000 shares of common stock of approximately $141 million. On September 7, 2022, the defendants moved to dismiss the consolidated amended complaint. In addition to the underwriters, representing aggregate offering price an Inc. GS&Co. is among the Bright Health Group, underwriters named as defendants in an amended complaint for a putative securities class action filed on June 24, 2022 in the U.S. District Court for the Eastern District of New York relating to Bright Health Group, Inc.’s (Bright Health) approximately $924 million June 2021 initial public offering of common stock. In addition to the underwriters, the defendants include Bright Health and certain of its officers and directors. GS&Co. underwrote 11,297,000 shares of common stock representing an aggregate offering price of approximately $203 million. On October 12, 2022, the defendants moved to dismiss the amended complaint. 17 Education & Technology Group Inc. GS Asia is among the underwriters named as defendants in a putative securities class action filed on July 19, 2022 in the U.S. District Court for the Central District of California and transferred to the U.S. District Court for the Southern District of New York in November 2022 relating to 17 Education & Technology Group Inc.’s (17EdTech) approximately $331 million December 2020 initial public offering of ADS. In addition to the underwriters, the defendants include 17EdTech and certain of its officers and directors. GS Asia underwrote 12,604,000 ADS representing an aggregate offering price of the approximately $132 million. On January 31, 2023, plaintiffs filed an amended complaint. Goldman Sachs 2022 Form 10-K 217 is among the Yatsen Holding Limited. GS Asia underwriters named as defendants in a putative securities class action filed on September 23, 2022 in the U.S. District Court for the Southern District of New York relating to approximately Yatsen Holding $617 million November 2020 initial public offering of ADS. In addition to the underwriters, the defendants include Yatsen, certain of its officers and directors and one of its 22,912,500 ADS shareholders. GS Asia representing an aggregate offering price of approximately $241 million. underwrote Limited’s (Yatsen) Rent the Runway, Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on November 14, 2022 in the U.S. District Court for the Eastern District of New York relating to Rent the Runway, Inc.’s (Rent the Runway) $357 million October 2021 initial In addition to the public offering of common stock. underwriters, the defendants include Rent the Runway and certain of its officers and directors. GS&Co. underwrote 5,254,304 shares of common stock representing an aggregate offering price of approximately $110 million. Opendoor Technologies Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on November 22, 2022 in the U.S. District Court for the District of Arizona relating to, among other things, Opendoor (Opendoor) Technologies approximately $886 million February 2021 public offering of common stock. the defendants include Opendoor and certain of its officers and directors. GS&Co. underwrote 10,173,401 shares of common stock of representing approximately $275 million. In addition to the underwriters, aggregate offering Inc.’s price an THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Inc. GS&Co. is among the LifeStance Health Group, underwriters named as defendants in a putative securities class action filed on August 10, 2022 in the U.S. District Court for the Southern District of New York relating to LifeStance Health Group, Inc.’s (LifeStance) approximately $828 million June 2021 initial public offering of common stock. In addition to the underwriters, the defendants include LifeStance and certain of its officers and directors. GS&Co. underwrote 10,580,000 shares of common stock representing an aggregate offering price of approximately $190 million. On December 19, 2022, the plaintiffs filed an amended complaint, and on January 18, 2023, the defendants moved to dismiss the amended complaint. MINISO Group Holding Limited. GS Asia is among the underwriters named as defendants in a putative securities class action filed on August 17, 2022 in the U.S. District Court for the Central District of California and transferred to the U.S. District Court for the Southern District of New York on November 18, 2022 relating to MINISO Group Holding Limited’s (MINISO) approximately $656 million October 2020 initial public offering of ADS. In addition to the underwriters, the defendants include MINISO and certain of its officers and directors. GS Asia underwrote 16,408,093 ADS of representing approximately $328 million. aggregate offering price an relating to Coupang, Coupang, Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on August 26, 2022 in the U.S. District Court for the Southern District of (Coupang) New York approximately $4.6 billion March 2021 initial public offering of common stock. In addition to the underwriters, the defendants include Coupang and certain of its officers and directors. GS&Co. underwrote 42,900,000 shares of common stock of representing approximately $1.5 billion. aggregate offering Inc.’s price an 218 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Inc.’s FIGS, Inc. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on December 8, 2022 in the U.S. District Court for the Central District of California relating to FIGS, (FIGS) approximately $668 million May 2021 initial public offering and approximately $413 million September 2021 secondary equity offering. the defendants include FIGS, certain of its officers and directors shareholders. GS&Co. underwrote and certain of 9,545,073 shares of common stock in the May 2021 initial public offering representing an aggregate offering price of approximately $210 million and 3,179,047 shares of common stock in the September 2021 secondary equity offering representing an aggregate offering price of approximately $128 million. In addition to the underwriters, its Silvergate Capital Corporation. GS&Co. is among the underwriters named as defendants in a putative securities class action filed on January 19, 2023 in the U.S. District Court for the Southern District of California relating to Silvergate Capital Corporation’s (Silvergate) approximately $288 million January 2021 public offering of common stock and approximately $552 million December 2021 public offering of common stock. In addition to the underwriters, the defendants include Silvergate and certain of its officers and directors. GS&Co. underwrote 1,711,313 shares of common stock in the January 2021 public offering of common stock representing an aggregate offering price of approximately $108 million and 1,375,397 shares of common stock in the December 2021 public offering of common stock representing an aggregate offering price of approximately $199 million. Centessa Pharmaceuticals plc. GS&Co. is among the underwriters named as defendants in an amended complaint for a putative securities class action filed on February 10, 2023 in the U.S. District Court for the Southern District of New York relating to Centessa Pharmaceuticals plc’s (Centessa) approximately $380 million May 2021 initial public offering of ADS. In addition to the underwriters, the defendants include Centessa and certain of its officers and directors. GS&Co. underwrote 6,072,000 ADS representing an aggregate offering price of approximately $121 million. Investment Management Services Group Inc. and certain of its affiliates are parties to various civil litigation and arbitration proceedings and other disputes with clients relating to losses allegedly sustained as a result of the firm’s investment management services. These claims generally seek, among other things, restitution or other compensatory damages and, in some cases, punitive damages. Securities Lending Antitrust Litigation Group Inc. and GS&Co. were among the defendants named in a putative antitrust class action and three individual actions relating to securities lending practices filed in the U.S. District Court for the Southern District of New York beginning in August 2017. The complaints generally assert claims under federal and state antitrust law and state common law in connection with an alleged conspiracy among the defendants to preclude the development of electronic platforms for securities lending transactions. The individual complaints also assert claims for tortious interference with business relations and under state trade practices law and, in the second and third individual actions, unjust enrichment under state common law. The complaints seek declaratory and injunctive relief, as well as unspecified amounts of compensatory, treble, punitive and other damages. Group Inc. was voluntarily dismissed from the putative class action on January 26, 2018. Defendants’ motion to dismiss the class action complaint was denied on September 27, 2018. Defendants’ motion to dismiss the first individual action was granted on August 7, 2019. On September 30, 2021, the defendants’ motion to dismiss the second and third individual actions, which were consolidated in June 2019, was granted. On October 25, 2021, the plaintiff in the second individual action appealed to the U.S. Court of Appeals for the Second Judge 2022, Circuit. On June class plaintiffs’ motion that recommended certification in the putative class action be granted in part and denied in part. On August 15, 2022, the plaintiffs and defendants filed objections to the Magistrate Judge’s report and recommendation with the district court. the Magistrate for 30, the Goldman Sachs 2022 Form 10-K 219 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements for Variable Rate Demand Obligations Antitrust Litigation Group Inc. and GS&Co. were among the defendants named in a putative class action relating to variable rate demand obligations (VRDOs), filed beginning in February 2019 under separate complaints and consolidated in the U.S. District Court the Southern District of New York. The consolidated amended complaint, filed on May 31, 2019, generally asserts claims under federal antitrust law and state common law in connection with an alleged conspiracy among the defendants to manipulate the market for VRDOs. The complaint seeks declaratory and injunctive relief, as well as unspecified amounts of compensatory, treble and other damages. Group Inc. was voluntarily dismissed from the putative class action on June 3, 2019. On November 2, 2020, the court granted in part and denied in part the defendants’ motion to dismiss, dismissing the state common law claims against GS&Co., but denying dismissal of the federal antitrust law claims. GS&Co. is also among the defendants named in a related putative class action filed on June 2, 2021 in the U.S. District Court for the Southern District of New York. The complaint alleges the same conspiracy in the market for VRDOs as that alleged in the consolidated amended complaint filed on May 31, 2019, and asserts federal antitrust law, state law and state common law claims against the defendants. The complaint seeks declaratory and injunctive relief, as well as unspecified amounts of compensatory, treble and other damages. On August 6, 2021, plaintiffs in the May 31, 2019 action filed an amended complaint consolidating the June 2, 2021 action with the May 31, 2019 action. On September 14, 2021, defendants filed a joint partial motion to dismiss the August 6, 2021 amended consolidated complaint. On June 28, 2022, the court granted in part and denied in part the defendants’ motion to dismiss, dismissing the state breach of fiduciary duty claim against GS&Co., but declining to dismiss any portion of the federal antitrust law claims. On October 27, 2022, the plaintiffs moved for class certification. Interest Rate Swap Antitrust Litigation Group Inc., GS&Co., GSI, GS Bank USA and Goldman Sachs Financial Markets, L.P. are among the defendants named in a putative antitrust class action relating to the trading of interest rate swaps, filed in November 2015 and consolidated in the U.S. District Court for the Southern District of New York. The same Goldman Sachs entities are also among the defendants named in two antitrust actions relating to the trading of interest rate swaps, commenced in April 2016 and June 2018, respectively, in the U.S. District Court for the Southern District of New York by three operators of swap execution facilities and certain of their affiliates. These actions have been consolidated for pretrial proceedings. The complaints generally assert claims under federal antitrust law and state common law in connection with an alleged conspiracy among the defendants to preclude exchange trading of interest rate swaps. The complaints in the individual actions also assert claims under state antitrust law. The complaints seek declaratory and injunctive relief, as well as treble damages in an unspecified amount. Defendants moved to dismiss the class and the first individual action and the district court dismissed the state common law claims asserted by the plaintiffs in the first individual action and otherwise limited the state common law claim in the putative class action and the antitrust claims in both actions to the period from 2013 to 2016. On November 20, 2018, the court granted in part and denied in part the defendants’ motion to dismiss the second individual action, dismissing the state common law claims for unjust enrichment and tortious interference, but denying dismissal of the federal and state antitrust claims. On March 13, 2019, the court denied the plaintiffs’ motion in the putative class action to amend their complaint to add allegations related to conduct from 2008 to 2012, but granted the motion to add limited allegations from 2013 to 2016, which the plaintiffs added in a fourth consolidated amended complaint filed on March 22, 2019. The plaintiffs in the putative class action moved for class certification on March 7, 2019. 220 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Commodities-Related Litigation GSI is among the defendants named in putative class actions relating to trading in platinum and palladium, filed beginning on November 25, 2014 and most recently amended on May 15, 2017, in the U.S. District Court for the Southern District of New York. The amended complaint generally alleges that the defendants violated federal antitrust laws and the Commodity Exchange Act in connection with an alleged conspiracy to manipulate a benchmark for physical platinum and palladium prices and seek declaratory and injunctive relief, as well as treble damages in an unspecified amount. On March 29, 2020, the court granted the defendants’ motions to dismiss and for reconsideration, resulting in the dismissal of all claims. On April 27, 2020, plaintiffs appealed to the U.S. Court of Appeals for the Second Circuit. federal antitrust laws and state laws GS&Co., GSI, J. Aron & Company and Metro International Trade Services (Metro), a previously consolidated subsidiary of Group Inc. that was sold in the fourth quarter of 2014, are among the defendants in a number of putative class and individual actions filed beginning on August 1, 2013 and consolidated in the U.S. District Court for the Southern District of New York. The complaints generally allege violations of in connection with the storage of aluminum and aluminum injunctive and trading. The complaints seek declaratory, other equitable relief, as well as unspecified monetary damages, including treble damages. In December 2016, the district court granted defendants’ motions to dismiss and on August 27, 2019, the Second Circuit vacated the district court’s dismissals and remanded the case to district court for further proceedings. On July 23, 2020, the district court denied the class plaintiffs’ motion for class certification, and on December 16, 2020 the Second Circuit denied leave to appeal the denial. On February 17, 2021, the district court granted defendants’ motion for summary judgment with respect to the claims of most of the individual plaintiffs. On April 14, 2021, the plaintiffs appealed to the U.S. Court of Appeals for the Second Circuit. On May 31, 2022, the two remaining individual plaintiffs entered into a settlement with the defendants. The firm has paid the full amount of its contribution to the settlement. In connection with the sale of Metro, the firm agreed to provide indemnities to the buyer, including for any potential liabilities for legal or regulatory proceedings arising out of the conduct of Metro’s business while the firm owned it. U.S. Treasury Securities Litigation GS&Co. is among the primary dealers named as defendants in several putative class actions relating to the market for U.S. Treasury securities, filed beginning in July 2015 and consolidated in the U.S. District Court for the Southern District of New York. GS&Co. is also among the primary dealers named as defendants in a similar individual action filed in the U.S. District Court for the Southern District of New York on August 25, 2017. The consolidated class action complaint, filed on December 29, 2017, generally alleges that the defendants violated antitrust laws in connection with an alleged conspiracy to manipulate the when-issued market and for U.S. Treasury securities and that certain auctions defendants, including GS&Co., colluded to preclude trading of U.S. Treasury securities on electronic trading platforms in order to impede competition in the bidding process. The individual action alleges a similar conspiracy regarding manipulation of the when-issued market and auctions, as well as related futures and options in violation of the Commodity Exchange Act. The complaints seek declaratory and injunctive relief, treble damages in an unspecified amount and restitution. Defendants’ motion to dismiss was granted on March 31, 2021. On May 14, 2021, plaintiffs filed an amended complaint. Defendants’ motion to dismiss the amended complaint was granted on March 31, 2022. On April 28, 2022, plaintiffs appealed to the U.S. Court of Appeals for the Second Circuit. Corporate Bonds Antitrust Litigation Group Inc. and GS&Co. are among the dealers named as defendants in a putative class action relating to the secondary market for odd-lot corporate bonds, filed on April 21, 2020 in the U.S. District Court for the Southern District of New filed on York. The amended consolidated complaint, October 29, 2020, asserts claims under federal antitrust law in connection with alleged anti-competitive conduct by the defendants in the secondary market for odd-lots of corporate bonds, and seeks declaratory and injunctive relief, as well as unspecified monetary damages, including treble and punitive damages and restitution. On October 25, 2021, the court granted defendants’ motion to dismiss with prejudice. On November 23, 2021, plaintiffs appealed to the U.S. Court of Appeals for the Second Circuit. On November 10, 2022, the district court denied the plaintiffs’ motion for an indicative ruling that the judgment should be vacated because the wife of the district judge owned stock in one of the defendants and the district judge did not recuse himself. Goldman Sachs 2022 Form 10-K 221 denied petition defendants’ Second Circuit On March 30, 2018, the district court certified a damages class as to the plaintiffs’ disparate impact and treatment claims. On September 4, 2018, the U.S. Court of Appeals for the for interlocutory review of the district court’s class certification decision and subsequently denied defendants’ petition for rehearing. On September 27, 2018, plaintiffs advised the district court that they would not seek to certify a class for injunctive and declaratory relief. On March 26, 2020, the Magistrate Judge in the district court granted in part a motion to compel arbitration as to class members who are to certain agreements with Group Inc. and/or parties GS&Co. in which they agreed to arbitrate employment- related disputes. On April 16, 2020, plaintiffs submitted objections to the Magistrate Judge’s order and defendants submitted conditional objections in the event that the district judge overturned any portion of the Magistrate Judge’s order. On July 22, 2021, defendants filed a motion to decertify the class. On September 15, 2021, the district court affirmed the decision of the Magistrate Judge to compel arbitration. On March 17, 2022, the district court denied the plaintiffs’ motion for partial summary judgment as to a portion of the disparate impact claim, granted in part and denied in part the defendants’ motion for summary judgment as to plaintiffs’ disparate impact and treatment claims, denied the defendants’ motion to decertify the class, and granted in part and denied in part the parties’ respective motions to preclude certain expert testimony. On August 22, 2022, the district court granted in part and denied in part the defendants’ motion for reconsideration of the portion of its March 17, 2022 decision that denied the defendants’ motion to decertify the class, denying the defendants’ motion to decertify the class but narrowing the class definition. Trial is scheduled to commence on June 7, 2023. Consumer Investigation and Review The firm is cooperating with the Consumer Financial Protection Bureau and other governmental bodies relating to investigations and/or inquiries concerning GS Bank USA’s credit card account management practices and is providing information regarding the application of refunds, crediting of resolution, nonconforming advertisements, reporting to credit bureaus, and any other consumer-related information requested by them. payments, billing error THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Credit Default Swap Antitrust Litigation Group Inc., GS&Co. and GSI were among the defendants named in a putative antitrust class action relating to the settlement of credit default swaps, filed on June 30, 2021 in the U.S. District Court for the District of New Mexico. The complaint generally asserts claims under federal antitrust law and the Commodity Exchange Act in connection with an alleged conspiracy among the defendants to manipulate the benchmark price used to value credit default swaps for settlement. The complaint also asserts a claim for unjust enrichment under state common law. The complaint seeks declaratory and injunctive relief, as well as unspecified amounts of treble and other damages. On November 15, 2021, the defendants filed a motion to dismiss the complaint. On February 4, 2022, the plaintiffs filed an amended complaint and voluntarily dismissed Group Inc. from the action. On April 5, 2022, the defendants filed a motion to dismiss the amended complaint. Employment-Related Matters On September 15, 2010, a putative class action was filed in the U.S. District Court for the Southern District of New York by three female former employees. The complaint, as subsequently amended, alleges that Group Inc. and GS&Co. have systematically discriminated against female employees in respect of compensation, promotion and performance evaluations. The complaint alleges a class consisting of all female employees employed at specified levels in specified areas by Group Inc. and GS&Co. since July 2002, and asserts claims under federal and New York City discrimination laws. The complaint seeks class action status, injunctive relief and unspecified amounts of compensatory, punitive and other damages. 222 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Regulatory Investigations and Reviews and Related Litigation Group Inc. and certain of its affiliates are subject to a number of other investigations and reviews by, and in some cases have received subpoenas and requests for documents and information from, various governmental and regulatory bodies and self-regulatory organizations and litigation and shareholder requests relating to various matters relating to the firm’s businesses and operations, including: • The securities offering process and underwriting practices; • The firm’s investment management and financial advisory services; • Conflicts of interest; • Research practices, including research independence and interactions between research analysts and other firm personnel, including investment banking personnel, as well as third parties; • Transactions involving government-related financings and including wall-cross other matters, municipal securities, procedures and conflict of interest disclosure with respect to state and municipal clients, the trading and structuring of municipal derivative instruments in connection with municipal offerings, political contribution rules, municipal advisory services and the possible impact of credit default swap transactions on municipal issuers; • Consumer lending, as well as residential mortgage lending, servicing and securitization, and compliance with related consumer laws; securities, government • The offering, auction, sales, and trading and clearance of currencies, corporate commodities and other financial products and related sales and other communications and activities, as well as the firm’s supervision and controls relating to such activities, including compliance with applicable short sale rules, algorithmic, high-frequency and quantitative trading, the firm’s U.S. alternative trading system (dark pool), futures trading, options trading, when-issued trading, transaction reporting, controls, communications recordkeeping and recording, securities lending practices, prime brokerage activities, trading and clearance of credit derivative instruments and interest rate swaps, commodities activities and metals storage, private placement practices, allocations of and trading in securities, and trading activities and communications in connection with the establishment of benchmark rates, such as currency rates; technology systems and • Compliance with the FCPA; • The firm’s hiring and compensation practices; • The firm’s system of risk management and controls; and • Insider trading, the potential misuse and dissemination of material nonpublic information regarding corporate and governmental developments and the effectiveness of the firm’s insider trading controls and information barriers. The firm is cooperating with all such governmental and regulatory investigations and reviews. Note 28. Employee Benefit Plans The firm sponsors various pension plans and certain other postretirement benefit plans, primarily healthcare and life insurance. The firm also provides certain benefits to former or inactive employees prior to retirement. Defined Benefit Pension Plans and Postretirement Plans Employees of certain non-U.S. subsidiaries participate in various defined benefit pension plans. These plans generally provide benefits based on years of credited service and a percentage of eligible compensation. The firm maintains a defined benefit pension plan for certain U.K. employees. As of April 2008, the U.K. defined benefit plan was closed to new participants and frozen for existing participants as of March 31, 2016. The non-U.S. plans do not have a material impact on the firm’s consolidated results of operations. The firm also maintains a defined benefit pension plan for substantially all U.S. employees hired prior to November 1, 2003. As of November 2004, this plan was closed to new participants and frozen for existing participants. In addition, the firm maintains unfunded postretirement benefit plans that provide medical and life insurance for eligible retirees and their dependents covered under these programs. These plans do not have a material impact on the firm’s consolidated results of operations. The firm recognizes the funded status of its defined benefit pension and postretirement plans, measured as the difference between the fair value of the plan assets and the benefit obligation, in the consolidated balance sheets. As of December 2022, other assets included $111 million (related to overfunded pension plans) and other liabilities included $337 million related to these plans. As of December 2021, other assets included $411 million (related to overfunded pension plans) and other liabilities included $426 million related to these plans. Defined Contribution Plans The firm contributes to employer-sponsored U.S. and non- U.S. defined contribution plans. The firm's contribution to these plans was $378 million for 2022, $274 million for 2021 and $261 million for 2020. Goldman Sachs 2022 Form 10-K 223 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 29. Employee Incentive Plans The cost of employee services received in exchange for a share-based award is generally measured based on the grant- date fair value of the award. Share-based awards that do not require future service (i.e., vested awards, including awards granted to retirement-eligible employees) are expensed immediately. Share-based awards that require future service are amortized over the relevant service period. Forfeitures are recorded when they occur. Cash dividend equivalents paid on RSUs are generally charged to retained earnings. If RSUs that require future service are related dividend equivalents originally charged to retained earnings are reclassified to compensation expense in the period in which forfeiture occurs. forfeited, the The firm generally issues new shares of common stock upon delivery of share-based awards. In limited cases, as outlined in the applicable award agreements, the firm may cash settle share-based compensation awards accounted for as equity instruments. For these awards, additional paid-in capital is adjusted to the extent of the difference between the value of the award at the time of cash settlement and the grant-date value of the award. The tax effect related to the settlement of share-based awards and payments of dividend equivalents is recorded in income tax benefit or expense. Stock Incentive Plan The firm sponsors a stock incentive plan, The Goldman Sachs Amended and Restated Stock Incentive Plan (2021) (2021 SIP), which provides for grants of RSUs, restricted stock, dividend equivalent rights, incentive stock options, nonqualified stock options, stock appreciation rights, and other share-based awards, each of which may be subject to terms and conditions, including performance or market conditions. On April 29, 2021, shareholders approved the 2021 SIP. The 2021 SIP is a successor to several predecessor stock incentive plans, the first of which was adopted on April 30, 1999, and each of which was approved by the firm’s shareholders. 224 Goldman Sachs 2022 Form 10-K As of December 2022, 60.8 million shares were available to be delivered pursuant to awards granted under the 2021 SIP. If any shares of common stock underlying awards granted under the 2021 SIP or awards granted under predecessor stock incentive plans are not delivered because such awards are forfeited, terminated or canceled, or if shares of common stock underlying such awards are surrendered or withheld to satisfy any obligation of the grantee (including taxes), those shares will become available to be delivered pursuant to awards granted under the 2021 SIP. Shares available to be delivered under the 2021 SIP also are subject to adjustment for certain events or changes in corporate structure as provided under the 2021 SIP. The 2021 SIP is scheduled to terminate on the date of the annual meeting of shareholders that occurs in 2025. subject (including RSUs firm grants RSUs Restricted Stock Units The to performance or market conditions) to employees, which are generally valued based on the closing price of the underlying shares on the date of grant, after taking into account a liquidity discount for any applicable post-vesting and delivery restrictions. The value of equity awards also transfer considers the impact of material non-public information, if any, that the firm expects to make available shortly following grant. RSUs generally vest and underlying shares of common stock deliver (net of required withholding tax) as outlined in the award agreements. Award agreements generally provide that vesting is accelerated in certain circumstances, such as on retirement, death, disability and, in the certain cases, underlying shares of common stock is conditioned on the grantees satisfying certain vesting and other requirements outlined in the award agreements. RSUs not subject to performance or market conditions generally vest and deliver over a three-year period. conflicted employment. Delivery of applicable RSUs that are subject to performance or market conditions generally deliver after the end of a three- to five-year period. to performance or market For awards that are subject conditions, generally the final award is adjusted from zero up to 150% of the original grant based on the extent to which those conditions are satisfied. Dividend equivalents that accrue on these awards are paid when the awards settle. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The table below presents the 2022 activity related to stock settled RSUs. Restricted Stock Units Outstanding Weighted Average Grant-Date Fair Value of Restricted Stock Units Outstanding Future Service Required No Future Service Required 4,043,074 15,933,696 8,660,927 5,478,475 (606,404) $ $ (260,799) $ – (10,633,955) $ $ (3,626,923) 3,626,923 $ 5,288,222 17,326,792 Future No Future Service Service Required Required 255.08 $ 228.14 315.33 $ 318.03 292.38 $ 261.99 – $ 229.81 277.07 $ 277.07 298.14 $ 281.78 Beginning balance Granted Forfeited Delivered Vested Ending balance In the table above: • The weighted average grant-date fair value of RSUs granted was $316.98 during 2022, $264.57 during 2021 and $220.45 during 2020. The grant-date fair value of these RSUs included an average liquidity discount of 6.0% during 2022, 10.2% during 2021 and 10.1% during 2020, to reflect post-vesting and delivery transfer restrictions, generally of 1 year for 2022, and up to 4 years for both 2021 and 2020. • The aggregate fair value of awards that vested was $3.91 billion during 2022, $2.64 billion during 2021 and $2.01 billion during 2020. • The ending balance included restricted stock subject to future service requirements of 357,367 shares as of December 2022 and 47,719 shares as of December 2021. • The ending balance included RSUs subject to future service requirements and performance or market conditions of 618,248 RSUs as of December 2022 and 322,935 RSUs as of December 2021, and the maximum amount of such RSUs that may be earned was 914,441 RSUs as of December 2022 and 387,508 RSUs as of December 2021. • The ending balance also included RSUs not subject to future service requirements but subject to performance conditions of 1,457,702 RSUs as of December 2022 and 590,453 RSUs as of December 2021, and the maximum amount of such RSUs that may be earned was 2,186,553 RSUs as of December 2022 and 885,680 RSUs as of December 2021. In relation to 2022 year-end, during the first quarter of 2023, the firm granted to its employees 6.2 million RSUs (of which 2.4 million RSUs require future service as a condition for delivery of the related shares of common stock). These RSUs are subject to additional conditions as outlined in the award agreements. Shares underlying these RSUs, net of required withholding tax, generally deliver over a three-year period. These awards are generally subject to a one-year post-vesting and delivery transfer restriction. These awards are not included in the table above. As of December 2022, there was $860 million of total unrecognized compensation cost related to non-vested share- based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.86 years. In addition, there is unrecognized compensation cost related to share-based compensation arrangements to performance conditions. The maximum payout related to these awards is $124 million. This cost is expected to be recognized over a weighted average period of 1.92 years. subject The table below presents the share-based compensation and the related excess tax benefit. $ in millions Share-based compensation Excess net tax benefit for share-based awards Year Ended December 2022 2020 $ 4,107 $ 2,553 $ 1,985 120 $ 324 $ 196 $ 2021 In the table above, excess net tax benefit for share-based awards includes the net tax benefit on dividend equivalents paid on RSUs and the delivery of common stock underlying share-based awards. Overrides The firm shares a portion of its overrides related to investment management services with approximately 800 employees. The fair value of these overrides is recognized as compensation expense over the vesting period. Such expense was $493 million for 2022, $547 million for 2021 and $141 million for 2020. Goldman Sachs 2022 Form 10-K 225 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 30. Parent Company Group Inc. – Condensed Statements of Earnings Group Inc. – Condensed Balance Sheets $ in millions Revenues Dividends from subsidiaries and other affiliates: Bank Nonbank Other revenues Total non-interest revenues Interest income Interest expense Net interest loss Total net revenues $ Year Ended December 2022 2021 2020 101 $16,990 $ 6,243 (3,590) 2,754 8,367 9,428 (1,061) 1,693 529 40 15,562 11,860 774 33,081 12,674 4,020 5,861 (1,841) 32,206 10,833 3,695 4,570 (875) Operating expenses Compensation and benefits Other expenses Total operating expenses Pre-tax earnings Benefit for taxes Undistributed earnings/(loss) of subsidiaries 328 685 1,013 680 (1,398) 750 1,005 1,755 30,451 (551) 367 3,339 3,706 7,127 (696) and other affiliates 1,636 9,459 Net earnings Preferred stock dividends 544 Net earnings applicable to common shareholders $10,764 $21,151 $ 8,915 (9,367) 21,635 484 9,183 11,261 497 Supplemental Disclosures: In the condensed statements of earnings above, revenues and expenses included the following with subsidiaries and other affiliates: • Dividends from bank subsidiaries included cash dividends of $97 million for 2022, $16.99 billion for 2021 and $38 million for 2020. • Dividends from nonbank subsidiaries and other affiliates included cash dividends of $6.14 billion for 2022, $15.14 billion for 2021 and $11.32 billion for 2020. • Other revenues included $(3.34) billion for 2022, $(1.01) billion for 2021 and $2.62 billion for 2020. • Interest income included $7.47 billion for 2022, $3.39 billion for 2021 and $3.68 billion for 2020. • Interest expense included $3.80 billion for 2022, $1.24 billion for 2021 and $1.73 billion for 2020. • Other expenses included $116 million for 2022, $113 million for 2021 and $100 million for 2020. Group Inc.’s other comprehensive income/(loss) was $(942) million for 2022, $(634) million for 2021 and $50 million for 2020. 226 Goldman Sachs 2022 Form 10-K $ in millions Assets Cash and cash equivalents: With third-party banks With subsidiary bank Loans to and receivables from subsidiaries: Bank Nonbank ($4,825 and $7,638 at fair value) Investments in subsidiaries and other affiliates: Bank Nonbank Trading assets (at fair value) Investments ($23,894 and $22,525 at fair value) Other assets Total assets As of December 2022 2021 $ 35 $ 46 47 2 3,545 259,402 1,024 273,416 49,533 85,058 5,431 69,483 6,576 43,021 75,883 4,663 26,078 6,098 $479,109 $ 430,232 Liabilities and shareholders’ equity Repurchase agreements with subsidiaries (at fair value) $ 66,839 $ Secured borrowings with subsidiaries Payables to subsidiaries Trading liabilities (at fair value) Unsecured short-term borrowings: 16,749 510 2,544 – 50,805 1,357 1,116 With third parties ($5,002 and $1,215 at fair value) With subsidiaries 23,823 4,328 11,127 3,687 Unsecured long-term borrowings: With third parties ($22,422 and $17,690 at fair value) With subsidiaries Other liabilities Total liabilities Commitments, contingencies and guarantees Shareholders' equity Preferred stock Common stock Share-based awards Additional paid-in capital Retained earnings Accumulated other comprehensive loss Stock held in treasury, at cost Total shareholders’ equity Total liabilities and shareholders’ equity 185,972 57,565 3,590 361,920 208,796 40,405 3,013 320,306 10,703 9 5,696 59,050 139,372 (3,010) (94,631) 117,189 10,703 9 4,211 56,396 131,811 (2,068) (91,136) 109,926 $479,109 $ 430,232 Supplemental Disclosures: Goldman Sachs Funding LLC (Funding IHC), a wholly- owned, direct subsidiary of Group Inc., has provided Group Inc. with a committed line of credit that allows Group Inc. to draw sufficient funds to meet its cash needs in the ordinary course of business. Trading assets included derivative contracts with subsidiaries of $2.17 billion as of December 2022 and $1.38 billion as of December 2021. liabilities contracts with Trading subsidiaries of $2.54 billion as of December 2022 and $1.12 billion as of December 2021. included derivative Supplemental Disclosures: Cash payments for interest, net of capitalized interest, were $8.54 billion for 2022, $4.72 billion for 2021 and $5.92 billion for 2020, and included $3.55 billion for 2022, $1.33 billion for 2021 and $1.90 billion for 2020 of payments to subsidiaries. Cash payments/(refunds) for income taxes, net, were $2.59 billion for 2022, $3.74 billion for 2021 and $1.37 billion for 2020. Non-cash activities during the year ended December 2022: • Group Inc. issued $1.75 billion of equity in connection with the acquisition of GreenSky. Upon closing of the transaction, GreenSky became a wholly-owned subsidiary of GS Bank USA. Non-cash activities during the year ended December 2021: • Group Inc. exchanged $948 million of loans for additional equity investment in its wholly-owned subsidiaries. Non-cash activities during the year ended December 2020: • Group Inc. exchanged $11.2 million of Trust Preferred securities and common beneficial interests for $12.5 million of certain of Group Inc.’s junior subordinated debt. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements As of December 2022, unsecured long-term borrowings with subsidiaries by maturity date are $56.10 billion in 2024, $534 million in 2025, $62 million in 2026, $103 million in 2027 and $770 million in 2028-thereafter. Group Inc. – Condensed Statements of Cash Flows $ in millions Cash flows from operating activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Undistributed (earnings)/loss of subsidiaries and other affiliates Depreciation and amortization Deferred income taxes Share-based compensation Gain on extinguishment of unsecured borrowings Changes in operating assets and liabilities: Collateralized transactions (excluding secured borrowings, net) Trading assets Trading liabilities Other, net Net cash provided by operating activities Cash flows from investing activities Purchase of property, leasehold improvements and equipment Repayments/(issuances) of short-term loans to subsidiaries, net Issuance of term loans to subsidiaries Repayments of term loans by subsidiaries Purchase of investments Sales/paydowns of investments Capital contributions to subsidiaries, net Net cash used for investing activities Cash flows from financing activities Secured borrowings with subsidiary, net Unsecured short-term borrowings, net: With third parties With subsidiaries Issuance of unsecured long-term borrowings Repayment of unsecured long-term borrowings Purchase of Trust Preferred securities Preferred stock redemption Common stock repurchased Settlement of share-based awards in Year Ended December 2022 2021 2020 $ 11,261 $ 21,635 $ 9,459 (9,183) 9 (1,523) 378 9,367 9 (241) 335 (1,636) 6 (160) 127 – – (1) 66,839 (23,451) 1,428 5,933 51,691 – (10,273) 796 (5,213) 16,415 332 3,484 (97) (1,492) 10,022 (64) (13) (26) 2,210 (1,859) 2,311 (47,247) 3,162 (5,665) (47,152) (9,951) (37,260) 10,059 (16,964) 10,896 (23,978) (67,211) 7,021 (32,472) 29,568 (3,767) 4,135 (5,617) (1,158) (36,389) 12,346 (6,360) 13 27,803 78,803 (65,960) – – (3,500) (683) 7,007 73,164 (31,588) – (2,675) (5,200) (1,372) 12,603 24,789 (33,432) (11) (350) (1,928) satisfaction of withholding tax requirements (1,595) (985) (830) Dividends and dividend equivalents paid on stock and share-based awards Issuance of preferred stock, net of costs Other financing, net Net cash provided by/(used for) financing (3,682) – – (2,725) 2,172 (14) (2,336) 349 – activities (4,507) 50,819 (8,878) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents, beginning balance Cash and cash equivalents, ending balance g q 32 49 81 $ 23 26 49 $ (14) 40 26 $ Goldman Sachs 2022 Form 10-K 227 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Supplemental Financial Information Common Stock Performance Statistical Disclosures The graph and table below compare the performance of an investment in the firm’s common stock from December 31, 2017 (the last trading day before the firm’s 2018 fiscal year) through December 31, 2022, with the S&P 500 Index (S&P 500) and the S&P 500 Financials Index (S&P 500 Financials). 2017 2022 $100.00 $ 66.48 $ 93.38 $109.70 $161.91 $149.18 Group Inc. S&P 500 $100.00 $ 95.61 $125.70 $148.81 $191.49 $156.78 S&P 500 Financials $100.00 $ 86.96 $114.87 $112.84 $152.19 $136.11 2018 2019 2021 As of December 2020 The graph and table above assume $100 was invested on December 31, 2017 in each of the firm’s common stock, the S&P 500 and the S&P 500 Financials, and the dividends were reinvested without payment of any commissions. The performance shown represents past performance and should not be considered an indication of future performance. Distribution of Assets, Liabilities and Shareholders’ Equity The balances, interest and average interest rates. information about average tables below present $ in millions Assets U.S. Non-U.S. Deposits with banks U.S. Non-U.S. Collateralized agreements U.S. Non-U.S. Trading assets U.S. Non-U.S. Investments U.S. Non-U.S. Loans U.S. Non-U.S. Other interest-earning assets Interest-earning assets Cash and due from banks Other non-interest-earning assets Assets Liabilities U.S. Non-U.S. Interest-bearing deposits U.S. Non-U.S. Collateralized financings U.S. Non-U.S. Trading liabilities U.S. Non-U.S. Short-term borrowings U.S. Non-U.S. Long-term borrowings U.S. Non-U.S. Other interest-bearing liabilities Interest-bearing liabilities Non-interest-bearing deposits Other non-interest-bearing liabilities Liabilities Shareholders’ equity Preferred stock Common stock Shareholders’ equity Liabilities and shareholders’ equity Average Balance for the Year Ended December 2022 2021 2020 $ 151,152 107,843 258,995 241,968 169,621 411,589 165,331 123,332 288,663 97,221 14,696 111,917 144,781 22,067 166,848 95,513 64,301 159,814 1,397,826 7,715 137,418 55,662 71,312 126,974 138,447 114,974 253,421 204,118 118,642 322,760 56,167 17,156 73,323 94,115 18,867 112,982 57,149 45,672 102,821 992,281 10,303 116,750 $ 1,542,959 $ 1,370,829 $ 1,119,334 $ 103,182 $ 95,735 198,917 202,841 148,604 351,445 173,498 136,075 309,573 69,893 18,573 88,466 108,032 21,455 129,487 98,086 55,530 153,616 1,231,504 10,804 128,521 $ 302,678 $ 74,662 377,340 107,008 83,783 190,791 80,950 83,657 164,607 34,322 28,675 62,997 221,598 37,656 259,254 166,200 98,130 264,330 1,319,319 4,811 102,839 1,426,969 231,967 $ 72,899 304,866 110,099 72,691 182,790 67,734 75,763 143,497 31,866 34,326 66,192 216,864 29,764 246,628 139,278 85,913 225,191 1,169,164 5,920 94,040 1,269,124 188,767 51,997 240,764 77,727 35,284 113,011 42,213 55,119 97,332 34,449 22,113 56,562 199,196 30,941 230,137 127,489 66,403 193,892 931,698 6,672 89,185 1,027,555 10,703 105,287 115,990 11,203 80,576 91,779 $ 1,542,959 $ 1,370,829 $ 1,119,334 9,876 91,829 101,705 Percentage attributable to non-U.S. operations Interest-earning assets Interest-bearing liabilities 35.90% 30.82% 38.65% 31.76% 38.96% 28.11% 228 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Supplemental Financial Information $ in millions Assets U.S. Non-U.S. Deposits with banks U.S. Non-U.S. Collateralized agreements U.S. Non-U.S. Trading assets U.S. Non-U.S. Investments U.S. Non-U.S. Loans U.S. Non-U.S. Other interest-earning assets Interest-earning assets Liabilities U.S. Non-U.S. Interest-bearing deposits U.S. Non-U.S. Collateralized financings U.S. Non-U.S. Trading liabilities U.S. Non-U.S. Short-term borrowings U.S. Non-U.S. Long-term borrowings U.S. Non-U.S. Other interest-bearing liabilities Interest-bearing liabilities Net interest income U.S. Non-U.S. Net interest income Interest for the Year Ended December 2022 2021 2020 Average Rate for the Year Ended December 2022 2021 2020 $ 2,793 $ 440 3,233 3,463 1,005 4,468 3,362 1,725 5,087 1,656 543 2,199 7,967 1,092 9,059 3,236 1,742 4,978 219 26 245 371 (89) 282 3,649 1,561 5,210 1,081 546 1,627 4,061 822 4,883 1,099 343 1,442 $ 29,024 $ 12,120 $ 13,689 143 $ (167) (24) (383) (597) (980) 2,943 1,773 4,716 991 598 1,589 4,423 896 5,319 1,201 299 1,500 $ 4,959 $ 864 5,823 2,027 781 2,808 872 1,051 1,923 408 133 541 5,570 146 5,716 2,356 2,179 4,535 $ 21,346 $ 1,098 $ 1,967 419 205 2,386 1,303 554 146 45 (146) 599 – 477 661 761 1,001 1,238 1,662 492 476 50 51 542 527 4,034 3,139 119 92 4,153 3,231 (148) (897) 168 (176) (1,073) 20 5,650 $ 8,938 $ $ 6,285 $ 1,393 7,678 $ 4,695 $ 3,104 1,647 1,775 6,470 $ 4,751 Assets U.S. Non-U.S. Deposits with banks U.S. Non-U.S. Collateralized agreements U.S. Non-U.S. Trading assets U.S. Non-U.S. Investments U.S. Non-U.S. Loans U.S. Non-U.S. Other interest-earning assets Interest-earning assets Liabilities U.S. Non-U.S. Interest-bearing deposits U.S. Non-U.S. Collateralized financings U.S. Non-U.S. Trading liabilities U.S. Non-U.S. Short-term borrowings U.S. Non-U.S. Long-term borrowings U.S. Non-U.S. Other interest-bearing liabilities Interest-bearing liabilities Interest rate spread U.S. Non-U.S. Net yield on interest-earning assets 1.85 % 0.41 % 1.25 % 1.43 % 0.59 % 1.09 % 2.03 % 1.40 % 1.76 % 1.70 % 3.69 % 1.96 % 5.50 % 4.95 % 5.43 % 3.39 % 2.71 % 3.11 % 2.08 % 1.64 % 1.16 % 1.54 % 1.89 % 0.93 % 1.47 % 1.08 % 1.26 % 1.17 % 1.19 % 0.46 % 0.86 % 2.51 % 0.39 % 2.20 % 1.42 % 2.22 % 1.72 % 1.62 % 0.46 % 0.70 % 0.28 % 0.55 % 0.39 % 0.14 % 0.04 % (0.17)% 0.19 % (0.01)% (0.19)% 0.27 % (0.40)% (0.08)% 0.11 % (0.28)% 1.79 % 1.70 % 1.32 % 1.30 % 1.61 % 1.52 % 1.92 % 1.42 % 3.18 % 3.22 % 2.22 % 1.80 % 4.31 % 4.09 % 4.36 % 4.18 % 4.32 % 4.11 % 1.92 % 1.22 % 0.75 % 0.54 % 1.40 % 0.98 % 1.38 % 0.98 % 1.04 % 0.47 % 0.81 % 0.28 % 0.99 % 0.43 % 0.71 % 0.13 % 0.13 % (0.20)% 0.53 % 0.00 % 1.13 % 0.98 % 1.38 % 1.32 % 1.27 % 1.16 % 1.43 % 1.49 % 0.23 % 0.15 % 0.96 % 0.80 % 2.03 % 1.45 % 0.38 % 0.31 % 1.80 % 1.31 % (0.64)% (0.12)% 0.25 % (0.20)% 0.01 % (0.48)% 0.96 % 0.48 % 0.50 % 0.62 % 0.37 % 0.53 % 0.42 % 0.51 % 0.43 % 0.48 % In the tables above: • Assets, liabilities and interest are classified as U.S. and non- U.S. based on the location of the legal entity in which the assets and liabilities are held. • Derivative instruments and commodities are included in other non-interest-earning assets and other non-interest- bearing liabilities. • Average collateralized agreements included $216.73 billion of resale agreements and $194.86 billion of securities borrowed for 2022, $167.95 billion of resale agreements and $183.50 billion of securities borrowed for 2021 and $119.16 billion of resale agreements and $134.26 billion of securities borrowed for 2020. • Other interest-earning assets primarily consists of certain receivables from customers and counterparties. Goldman Sachs 2022 Form 10-K 229 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Supplemental Financial Information • Collateralized financings included $150.23 billion of repurchase agreements and $40.56 billion of securities loaned for 2022, $145.68 billion of repurchase agreements and $37.11 billion of securities loaned for 2021, and $96.60 billion of repurchase agreements and $16.41 billion of securities loaned for 2020. • Substantially all of the other interest-bearing liabilities and customers payables certain to consists counterparties. of • Interest rates for borrowings include the effects of interest rate swaps accounted for as hedges. • Loans exclude loans held for sale that are accounted for at the lower of cost or fair value. Such loans are included within other interest-earning assets. • Short- and long-term borrowings include both secured and unsecured borrowings. Changes in Net Interest Income, Volume and Rate Analysis The tables below present the effect on net interest income of volume and rate changes. In this analysis, changes due to volume/rate variance have been allocated to volume. g g g $ in millions Interest-earning assets U.S. Non-U.S. p Deposits with banks U.S. Non-U.S. Collateralized agreements U.S. Non-U.S. g Trading assets U.S. Non-U.S. Investments U.S. Non-U.S. Loans U.S. Non-U.S. Other interest-earning assets Change in interest income Interest-bearing liabilities U.S. Non-U.S. Interest-bearing deposits U.S. Non-U.S. Collateralized financings U.S. Non-U.S. Trading liabilities g U.S. Non-U.S. Short-term borrowings U.S. Non-U.S. Long-term borrowings g U.S. Non-U.S. Other interest-bearing liabilities Change in interest expense Change in net interest income g p g g g g p g g Year Ended December 2022 versus December 2021 Increase (decrease) due to change in: Volume Rate Net Change $ $ 886 $ 49 935 560 125 685 (166) (178) (344) 465 (143) 322 2,022 30 2,052 (87) 238 151 3,801 1,159 20 1,179 (59) 103 44 142 99 241 29 (26) 3 119 31 150 382 271 653 2,270 1,531 $ 1,764 $ 558 2,322 3,286 1,477 4,763 585 130 715 200 88 288 1,522 166 1,688 2,122 1,205 3,327 13,103 2,702 639 3,341 1,940 824 2,764 69 (49) 20 (97) 108 11 2,312 23 2,335 2,871 2,084 4,955 13,426 (323) $ 2,650 607 3,257 3,846 1,602 5,448 419 (48) 371 665 (55) 610 3,544 196 3,740 2,035 1,443 3,478 16,904 3,861 659 4,520 1,881 927 2,808 211 50 261 (68) 82 14 2,431 54 2,485 3,253 2,355 5,608 15,696 1,208 230 Goldman Sachs 2022 Form 10-K g g g $ in millions Interest-earning assets U.S. Non-U.S. p Deposits with banks U.S. Non-U.S. Collateralized agreements U.S. Non-U.S. g Trading assets U.S. Non-U.S. Investments U.S. Non-U.S. Loans U.S. Non-U.S. Other interest-earning assets Change in interest income Interest-bearing liabilities U.S. Non-U.S. Interest-bearing deposits U.S. Non-U.S. g Collateralized financings U.S. Non-U.S. Trading liabilities U.S. Non-U.S. g Short-term borrowings U.S. Non-U.S. g Long-term borrowings g U.S. Non-U.S. Other interest-bearing liabilities Change in interest expense Change in net interest income g p g g g g p Year Ended December 2021 versus December 2020 Increase (decrease) due to change in: Volume Rate Net Change $ 66 $ (43) 23 (122) (135) (257) (519) 227 (292) 195 46 241 570 108 678 501 53 554 947 204 59 263 43 (75) (32) 249 273 522 (39) 18 (21) 256 (4) 252 (76) (40) (116) 868 $ 79 $ (142) $ (150) (292) (632) (373) (1,005) (187) (15) (202) (285) 6 (279) (208) (34) (242) (399) (97) (496) (2,516) (1,073) (273) (1,346) (451) (116) (567) (65) (33) (98) 23 (17) 6 (1,151) (23) (1,174) (673) (304) (977) (4,156) 1,640 $ (76) (193) (269) (754) (508) (1,262) (706) 212 (494) (90) 52 (38) 362 74 436 102 (44) 58 (1,569) (869) (214) (1,083) (408) (191) (599) 184 240 424 (16) 1 (15) (895) (27) (922) (749) (344) (1,093) (3,288) 1,719 Deposits The table below presents information about interest-bearing deposits. $ in millions Average balances U.S. Savings and demand Time Total U.S. Non-U.S. Demand Time Total non-U.S. Total Average interest rates U.S. Savings and demand Time Total U.S. Non-U.S. Demand Time Total non-U.S. Total Year Ended December 2022 2021 $ 231,693 $ 174,745 57,222 231,967 70,985 302,678 45,066 29,596 74,662 43,709 29,190 72,899 $ 377,340 $ 304,866 1.69% 1.48% 1.64% 1.20% 1.09% 1.16% 1.54% 0.34% 0.89% 0.47% 0.33% 0.21% 0.28% 0.43% THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Supplemental Financial Information In the table above, deposits are classified as U.S. and non- U.S. based on the location of the entity in which such deposits are held. The table below presents the gross loans by tenor and for loans with tenors greater than one year, the distributions of such loans between fixed and floating interest rates. The amount of deposits in U.S. offices held by non-U.S. depositors was $6.39 billion as of December 2022 and $7.56 billion as of December 2021. The amount of uninsured deposits in U.S. offices was $128.72 billion as of December 2022 and $127.05 billion as of December 2021. The amount of uninsured deposits in non- U.S. offices was $41.33 billion as of December 2022 and $49.08 billion as of December 2021. The table below presents uninsured time deposits by maturity. $ in millions Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total As of December 2022 More than one year Fixed-rate Floating-rate $ 1 year or less 3,078 $ 4,736 3,934 16,666 20,522 533 $ 607 11,290 – 880 Total 36,524 $ 40,135 28,879 23,536 23,035 7,811 16,671 5 51,702 30,300 129 15,820 1,038 6,197 – 455 $ 65,923 $ 19,962 $ – – 768 6,326 15,820 2,261 98,944 $184,829 $ in millions 3 months or less 3 to 6 months 6 to 12 months Greater than 12 months Total In the table above: As of December 2022 U.S. 5,064 $ 2,376 3,122 584 11,146 $ Non-U.S. 11,093 5,158 1,191 1,335 18,777 $ $ • All U.S. time deposits were in accounts eligible for FDIC insurance and non-U.S. time deposits include deposits in accounts eligible for insurance in their local jurisdictions, as well as deposits in uninsured accounts. • The insurance limit is allocated between time and other deposits on a pro-rata basis for account holders who have both time and other deposits that, in aggregate, exceed the insurance limit. Loan Portfolio The table below presents information about loans. $ in millions Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total As of December 2022 2021 $ 40,135 28,879 23,035 16,671 51,702 6,326 15,820 2,261 $ 184,829 22 % $ 37,643 29,000 16 % 24,674 12 % 16,652 9 % 38,263 28 % 3 % 9 % 1 % 3,672 8,212 4,019 100 % $ 162,135 23 % 18 % 15 % 10 % 24 % 2 % 5 % 3 % 100 % Maturities and Interest Rates. The table below presents gross loans by tenor. As of December 2022 More than More than $ in millions Corporate Commercial real estate Residential real estate Securities-based Other collateralized Consumer: Installment Credit cards Other Total 1 year or less 1 year to 5 years to More than 15 years 15 years 5 years $ 3,078 $ 30,605 $ 4,736 3,934 16,666 20,522 22,578 8,588 5 29,692 6,451 $ 1,561 80 – 1,251 Total 1 $ 40,135 28,879 4 23,035 10,433 16,671 – 51,702 237 129 15,820 1,038 6,326 15,820 2,261 $65,923 $ 96,517 $ 11,491 $ 10,898 $184,829 1,793 – 355 4,269 – 780 135 – 88 Allowance for Loan Losses The table below presents information about the allowance for loan losses. $ in millions Corporate Commercial real estate Residential real estate Securities-based Other collateralized Other Wholesale Installment Credit cards Consumer Total As of December 2022 1,535 $ 572 122 – 264 69 2,562 831 2,150 2,981 5,543 $ $ $ 2021 1,288 482 141 – 153 71 2,135 490 948 1,438 3,573 The table below presents information about the net charge- off ratio for loans accounted for at amortized cost. $ in millions Charge-offs balance off ratio Net Average Net charge- Year Ended December 2022 Wholesale Installment Credit cards Consumer Total Year Ended December 2021 Wholesale Installment Credit cards Consumer Total $ $ $ $ 253 $ 144,129 46 4,711 427 11,984 473 16,695 726 $ 160,824 130 $ 111,088 3,497 68 5,495 135 8,992 203 333 $ 120,080 0.2% 1.0% 3.6% 2.8% 0.5% 0.1% 1.9% 2.5% 2.3% 0.3% In the table above, the net charge-off ratio is calculated by dividing the net charge-offs by average gross loans accounted for at amortized cost. Net charge-offs for wholesale loans were primarily related to corporate loans for both 2022 and 2021. Goldman Sachs 2022 Form 10-K 231 PART III Item 10. Directors, Executive Officers and Corporate Governance Information about our executive officers is included on page 24 of this Form 10-K. Information about our directors, including our audit committee and audit committee financial experts and the procedures by which shareholders can recommend director nominees, and our executive officers will be in our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders, which will be filed within 120 days of the end of 2022 (2023 Proxy Statement) and is incorporated in this Form 10-K by reference. Information about our Code of Business Conduct and Ethics, which applies to our senior financial officers, is included in “Business — Available Information” in Part I, Item 1 of this Form 10-K. Item 11. Executive Compensation Information relating to our executive officer and director compensation and the compensation committee of the Board will be in the 2023 Proxy Statement and is incorporated in this Form 10-K by reference. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with accountants on accounting and financial disclosure during the last two years. Item 9A. Controls and Procedures As of the end of the period covered by this report, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the fourth quarter of our year ended December 31, 2022 that has materially affected, or is reasonably likely to financial internal materially affect, our reporting. control over Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm are set forth in Part II, Item 8 of this Form 10-K. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 232 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Information relating to security ownership of certain beneficial owners of our common stock and information relating to the security ownership of our management will be in the 2023 Proxy Statement and is incorporated in this Form 10-K by reference. The table below presents information as of December 31, 2022 regarding securities to be issued pursuant to outstanding remaining restricted stock units available for issuance under our equity compensation plans that were in effect during 2022. (RSUs) and securities Securities to be Issued Upon Exercise of Outstanding Options and Rights (a) 23,282,691 – 23,282,691 Weighted Average Exercise Price of Outstanding Options (b) Securities Available For Future Issuance Under Equity Compensation Plans (c) N/A – 60,775,322 – 60,775,322 Plan Category Equity compensation plans: Approved by security holders Not approved by security holders Total In the table above: • Securities to be Issued Upon Exercise of Outstanding Options and Rights includes 20,288,851 shares that may be issued pursuant to outstanding RSUs. These awards are subject to vesting and other conditions to the extent set forth in the respective award agreements, and the underlying shares will be delivered net of any required tax withholding. As of December 31, 2022, there were no outstanding options. • Shares underlying RSUs are deliverable without the payment of any consideration, and therefore these awards in calculating the have not been taken into account weighted average exercise price. • Securities Available For Future Issuance Under Equity Compensation Plans represents shares remaining to be issued under our current stock incentive plan (SIP), excluding shares reflected in column (a). If any shares of common stock underlying awards granted under our current SIP, our SIP adopted in 2018, our SIP adopted in 2015 or our SIP adopted in 2013 are not delivered due to forfeiture, termination or cancellation or are surrendered or withheld, those shares will again become available to be delivered under our current SIP. Shares available for grant are also subject for certain changes in to adjustment corporate structure as permitted under our current SIP. Information regarding certain relationships and related transactions and director independence will be in the 2023 Proxy Statement and is incorporated in this Form 10-K by reference. Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services will be in the 2023 Proxy Statement and is incorporated in this Form 10-K by reference. PART IV Item 15. Exhibit and Financial Statement Schedules (a) Documents filed as part of this Report: 1. Consolidated Financial Statements The consolidated financial statements required to be filed in this Form 10-K are included in Part II, Item 8 hereof. 2. Exhibits 2.1 3.1 3.2 4.1 4.2 Plan of Incorporation (incorporated by reference to Exhibit 2.1 to the Registrant’s Registration Statement on Form S-1 (No. 333-74449)). Incorporation of The Restated Certificate of Goldman Sachs Group, Inc., amended as of November 10, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on November 10, 2021). Amended and Restated By-Laws of The Goldman Sachs Group, Inc., amended as of October 28, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021). Description of The Goldman Sachs Group, Inc.’s Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. Indenture, dated as of May 19, 1999, between The Goldman Sachs Group, Inc. and The Bank of New York, as trustee (incorporated by reference to Exhibit the Registrant’s Registration Statement on Form 8-A, filed on June 29, 1999). to 6 Goldman Sachs 2022 Form 10-K 233 4.10 4.11 4.12 4.13 4.14 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES 4.3 Subordinated Debt Indenture, dated as of February 20, 2004, between The Goldman Sachs Group, Inc. and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 28, 2003). 4.4 Warrant Indenture, dated as of February 14, 2006, between The Goldman Sachs Group, Inc. and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.34 to the Registrant’s Post- Effective Amendment No. 3 to Form S-3, filed on March 1, 2006). 4.5 4.6 4.7 4.8 4.9 Senior Debt Indenture, dated as of December 4, 2007, among GS Finance Corp., as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of New York, as trustee (incorporated by reference to Exhibit to the Registrant’s Post-Effective Amendment No. 10 to Form S-3, filed on December 4, 2007). 4.69 Senior Debt Indenture, dated as of July 16, 2008, between The Goldman Sachs Group, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.82 to the Registrant’s Post- Effective Amendment No. 11 to Form S-3 (No. 333-130074), filed on July 17, 2008). Fourth Supplemental Indenture, dated as of December 31, 2016, between The Goldman Sachs Group, Inc. and The Bank of New York Mellon, as trustee, with respect to the Senior Debt Indenture, dated as of July 16, 2008 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on January 6, 2017). Senior Debt Indenture, dated as of October 10, 2008, among GS Finance Corp., as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of trustee (incorporated by New York Mellon, as reference to the Registrant’s 4.70 Registration Statement on Form S-3 (No. 333-154173), filed on October 10, 2008). to Exhibit First Supplemental Indenture, dated as of February 20, 2015, among GS Finance Corp., as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of New York Mellon, as trustee, with respect to the Senior Debt Indenture, dated as of October 10, 2008 (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). 234 Goldman Sachs 2022 Form 10-K Fourth Supplemental Indenture, dated as of August 21, 2018, among GS Finance Corp., as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of New York Mellon, as trustee, with respect to the Senior Debt Indenture, dated as of October 10, 2008 (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2018). Ninth Supplemental Subordinated Debt Indenture, dated as of May 20, 2015, between The Goldman Sachs Group, Inc. and The Bank of New York the Mellon, Subordinated Debt Indenture, dated as of February 20, 2004 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on May 22, 2015). trustee, with respect to as Tenth Supplemental Subordinated Debt Indenture, dated as of July 7, 2017, between The Goldman Sachs Group, Inc. and The Bank of New York the Mellon, Subordinated Debt Indenture, dated as of February 20, 2004 (incorporated by reference to Exhibit 4.89 to the Registrant’s Registration Statement on Form S-3 (No. 333-219206), filed on July 10, 2017). trustee, with respect to as Seventh Supplemental Indenture, dated as of July 1, 2020, among GS Finance Corp., as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of New York Mellon, as trustee, with respect to the Senior Debt Indenture, dated as of October 10, 2008 (incorporated by reference to Exhibit 4.69 to the Registrant's Registration Statement on Form S-3 (No. 333-239610), filed on July 1, 2020). Eighth Supplemental Indenture, dated as of October 14, 2020, among GS Finance Corp., as Inc., as issuer, The Goldman Sachs Group, guarantor, and The Bank of New York Mellon, as trustee, with respect to the Senior Debt Indenture, dated as of October 10, 2008 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on October 14, 2020). Certain instruments defining the rights of holders of long-term debt securities of the Registrant and to Item its subsidiaries are omitted pursuant 601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES 10.1 The Goldman Sachs Amended and Restated Stock Incentive Plan (2021) (incorporated by reference to Annex C to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on March 19, 2021). † 10.12 Form of Non-Employee Director RSU Award Agreement (pre-2015) (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). † 10.2 The Goldman Sachs Partner Compensation Plan (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 (No. 333-74449)). † 10.3 The Goldman and Restated Sachs Amended Restricted Partner Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended February 24, 2006). † 10.4 10.5 Form of Employment Agreement for Participating Managing Directors (incorporated by reference to Exhibit to the Registrant’s Registration Statement on Form S-1 (No. 333-75213)). † 10.19 Form of Agreement Relating to Noncompetition and (incorporated by reference Other Covenants to Exhibit to the Registrant’s Registration Statement on Form S-1 (No. 333-75213)). † 10.20 10.6 Amended and Restated Shareholders’ Agreement, effective as of December 31, 2019, among The Goldman Sachs Group, Inc. and various parties (incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019). 10.7 10.8 10.9 Indemnification (incorporated by Instrument of to Exhibit 10.27 to the Registrant’s reference Registration Statement on Form S-1 (No. 333-75213)). Form of Indemnification Agreement (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 26, 1999). Form of Indemnification Agreement (incorporated by reference to Exhibit 10.44 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 26, 1999). 10.10 Form of Indemnification Agreement, dated as of July 5, 2000 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended August 25, 2000). 10.11 Form of Amendment, dated November 27, 2004, to Agreement Relating to Noncompetition and Other Covenants, dated May 7, 1999 (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 26, 2004). † 10.13 Ground Lease, dated August 23, 2005, between Battery Park City Authority d/b/a/ Hugh L. Carey Battery Park City Authority, as Landlord, and Goldman Sachs Headquarters LLC, as Tenant (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 26, 2005). 10.14 General Guarantee Agreement, dated January 30, 2006, made by The Goldman Sachs Group, Inc. relating to certain obligations of Goldman Sachs & Co. LLC (incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 25, 2005). Insurance Company 10.15 Goldman Sachs & Co. LLC Executive Life Insurance Policy and Certificate with Metropolitan Life Participating Managing Directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended August 25, 2006). † for 10.16 10.17 Form of Goldman Sachs & Co. LLC Executive Life Insurance Policy with Pacific Life & Annuity Company for Participating Managing Directors, including policy specifications and form of restriction on Policy Owner’s Rights (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the period ended August 25, 2006). † Form of Second Amendment, dated November 25, 2006, to Agreement Relating to Noncompetition and Other Covenants, dated May 7, 1999, as amended 2004 (incorporated by reference to Exhibit 10.51 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006). † November effective 27, 10.18 Description of PMD Retiree Medical Program (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021). † 10.19 Inc. Letter, dated June 28, 2008, from The Goldman to Mr. Lakshmi N. Mittal Sachs Group, (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed on June 30, 2008). † Goldman Sachs 2022 Form 10-K 235 THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES 10.20 General Guarantee Agreement, dated December 1, 2008, made by The Goldman Sachs Group, Inc. relating to certain obligations of Goldman Sachs Bank USA (incorporated by reference to Exhibit 4.80 to the Registrant’s Post-Effective Amendment No. 2 to Form S-3, filed on March 19, 2009). 10.21 Form of One-Time RSU Award Agreement (incorporated by reference to Exhibit (pre-2015) 10.32 to the Registrant’s Annual Report on Form 10- K for the fiscal year ended December 31, 2014). † 10.22 Amendments to Certain Non-Employee Director by Equity Award Agreements reference to Exhibit 10.69 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008). † (incorporated (pre-2015) Form of Year-End RSU Award Agreement (not fully vested) (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). † (pre-2015) Form of Year-End RSU Award Agreement (fully vested) (incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). † Supplemental) Form of Year-End RSU Award Agreement (Base and/ by (pre-2015) or reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). † (incorporated 10.30 The Goldman Sachs Long-Term Performance Incentive 2010 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on December 23, 2010). † dated December Plan, 17, 10.31 10.32 10.33 Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by (pre-2015) reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on December 23, 2010). † Form of Performance-Based Option Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8- K, filed on December 23, 2010). † Form of Performance-Based Cash Compensation Award Agreement (incorporated by (pre-2015) reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed on December 23, 2010). † 10.34 Amended and Restated General Guarantee Agreement, dated November 21, 2011, made by The Goldman Sachs Group, Inc. relating to certain Sachs Bank USA obligations (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on November 21, 2011). of Goldman 10.35 Sharing Agreement Form of Aircraft Time (incorporated by reference to Exhibit 10.61 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011). † Form of Year-End Restricted Stock Award Agreement (fully vested) (pre-2015) (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013). † 10.36 The Goldman Sachs Group, Inc. Clawback Policy, effective as of January 1, 2015 (incorporated by reference to Exhibit 10.53 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). Form of Year-End Restricted Stock Award Agreement (Base and/or Supplemental) (pre-2015) (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014). † Form of Fixed Allowance RSU Award Agreement (pre-2015) (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10- K for the fiscal year ended December 31, 2014). † Form of Deed of Gift (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010). † 10.37 10.38 10.39 10.40 10.41 10.42 Form of Non-Employee Director RSU Award Agreement. † Form of One-Time/Year-End RSU Award Agreement. † Form of Year-End RSU Award Agreement (not fully vested). † Form of Year-End RSU Award Agreement (fully vested). † Form of Year-End RSU Award Agreement (Base (not fully vested) and/or Supplemental). † Form of Year-End Short-Term RSU Award Agreement. † 10.23 10.24 10.25 10.26 10.27 10.28 10.29 236 Goldman Sachs 2022 Form 10-K THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES 10.43 10.44 10.45 Stock Award Form of Year-End Restricted Agreement (incorporated by reference to Exhibit 10.46 to the Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 2020). † Form of Year-End Restricted Stock Award Agreement (fully vested) (incorporated by reference to Exhibit 10.53 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2017). † Form of Year-End Short-Term Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.57 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015). † 10.46 Form of Fixed Allowance RSU Award Agreement. † 10.47 10.48 10.49 10.50 10.51 Form of Fixed Allowance Restricted Stock Award Agreement. † Form of Fixed Allowance Deferred Cash Award Agreement (incorporated by reference to Exhibit 10.59 to the Registrant’s Annual Report on Form 10- K for the fiscal year ended December 31, 2015). † Form of Performance-Based Restricted Stock Unit Award Agreement (fully vested). † Form of Performance-Based Restricted Stock Unit Award Agreement (not fully vested). † Form of Performance-Based Cash Compensation Award Agreement (incorporated by reference to Exhibit 10.61 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015). † 10.52 Form of Signature Card for Equity Awards. † 10.53 Amended and Restated General Guarantee Agreement, dated September 28, 2018, made by The Inc. relating to certain Goldman Sachs Group, obligations Bank USA (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on September 28, 2018). of Goldman Sachs 10.54 Amended and Restated General Guarantee Agreement, dated September 28, 2018, made by The Goldman Sachs Group, Inc. relating to certain obligations of Goldman Sachs & Co. LLC (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed on September 28, 2018). 10.55 21.1 22.1 23.1 31.1 32.1 101 Lease, dated August 17, 2018, between Farringdon Street Partners Limited and Farringdon Street (Nominee) Limited, as Landlord, and Goldman Sachs International, as Tenant (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2018). List of significant subsidiaries of The Goldman Sachs Group, Inc. Issuers of guaranteed securities (incorporated by reference to Exhibit 22.1 to the Registrant's Post- Effective Amendment No. 1 to Form S-3, filed on February 18, 2021). Consent Accounting Firm. of Independent Registered Public Rule 13a-14(a) Certifications. Section 1350 Certifications (This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934). Pursuant to Rules 405 and 406 of Regulation S-T, the following information is formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Earnings for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, (ii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, (iii) the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022, December 31, 2021 and December the Consolidated Statements of Cash Flows for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, to the Consolidated Financial Statements and (vii) the cover page. the notes 2020, (vi) 31, (v) 104 Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101). † This exhibit is a management contract or a compensatory plan or arrangement. Goldman Sachs 2022 Form 10-K 237 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. /s/ By: Name: Title: Date: Lakshmi N. Mittal Lakshmi N. Mittal Director February 23, 2023 By: Name: Title: Date: /s/ Adebayo O. Ogunlesi Adebayo O. Ogunlesi Director February 23, 2023 /s/ /s/ /s/ By: Name: Title: Date: By: Name: Title: Date: By: Name: Title: Date: Peter Oppenheimer Peter Oppenheimer Director February 23, 2023 Jan E. Tighe Jan E. Tighe Director February 23, 2023 Jessica R. Uhl Jessica R. Uhl Director February 23, 2023 By: Name: Title: Date: /s/ David A. Viniar David A. Viniar Director February 23, 2023 By: Name: Title: Date: /s/ Mark O. Winkelman Mark O. Winkelman Director February 23, 2023 By: Name: Title: Date: By: Name: Title: Date: /s/ Denis P. Coleman III Denis P. Coleman III Chief Financial Officer (Principal Financial Officer) February 23, 2023 /s/ Sheara J. Fredman Sheara J. Fredman Chief Accounting Officer (Principal Accounting Officer) February 23, 2023 THE GOLDMAN SACHS GROUP, INC. By: Name: Title: Date: /s/ Denis P. Coleman III Denis P. Coleman III Chief Financial Officer February 23, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: Name: Title: Date: /s/ David Solomon David Solomon Director, Chairman and Chief Executive Officer (Principal Executive Officer) February 23, 2023 By: Name: Title: Date: /s/ M. Michele Burns M. Michele Burns Director February 23, 2023 By: Name: Title: Date: /s/ Drew G. Faust Drew G. Faust Director February 23, 2023 By: Name: Title: Date: /s/ Mark A. Flaherty Mark A. Flaherty Director February 23, 2023 By: Name: Title: Date: /s/ Kimberley D. Harris Kimberley D. Harris Director February 23, 2023 By: Name: Title: Date: /s/ Kevin R. Johnson Kevin R. Johnson Director February 23, 2023 /s/ By: Name: Title: Date: Ellen J. Kullman Ellen J. Kullman Director February 23, 2023 238 Goldman Sachs 2022 Form 10-K Shareholder Information EXECUTIVE OFFICES The Goldman Sachs Group, Inc. 200 West Street New York, New York 10282 1-212-902-1000 www.goldmansachs.com COMMON STOCK The common stock of The Goldman Sachs Group, Inc. is listed on the New York Stock Exchange and trades under the ticker symbol “GS.” SHAREHOLDER INQUIRIES Information about the fi rm, including all quarterly earnings releases and fi nancial fi lings with the U.S. Securities and Exchange Commission, can be accessed via our Web site at www.goldmansachs.com. Shareholder inquiries can also be directed to Investor Relations via email at gs-investor-relations@gs.com or by calling 1-212-902-0300. 2022 ANNUAL REPORT ON FORM 10-K Copies of the fi rm’s 2022 Annual Report on Form 10-K as fi led with the U.S. Securities and Exchange Commission can be accessed via our Web site at www.goldmansachs.com/investor-relations. Copies can also be obtained by contacting Investor Relations via email at gs-investor-relations@gs.com or by calling 1-212-902-0300. TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK Questions from registered shareholders of The Goldman Sachs Group, Inc. regarding lost or stolen stock certifi cates, dividends, changes of address, and other issues related to registered share ownership should be addressed (by regular mail or phone) to: Computershare P.O. Box 43078 Providence, RI 02940-3078 U.S. and Canada: 1-800-419-2595 International: 1-201-680-6541 www.computershare.com INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 300 Madison Avenue New York, New York 10017 The papers used in the printing of this Annual Report are certifi ed by the Forest Stewardship Council,® which promotes environmentally appropriate, socially benefi cial and economically viable management of the world’s forests. These papers contain a mix of pulp that is derived from FSC® certifi ed well-managed forests; post-consumer recycled paper fi bers and other controlled sources. Sandy Alexander Inc FSC® “Chain of Custody” certifi cation is BV-COC-080903. © 2023 Goldman Sachs 4350-22-102 G O L D M A N S A C H S 2 0 2 2 A N N U A L R E P O R T goldmansachs.com 

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