The Goldman Sachs Group, Inc.

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, 2017

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)

13-4019460

(I.R.S. Employer Identification No.)

200 West Street New York, N.Y.

(Address of principal executive offices)

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 6.20% Non-Cumulative Preferred Stock, Series B

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

Depository Shares, Each Representing 1/1,000th Interest in a Share of 6.30% Non-Cumulative Preferred Stock, Series N

See Exhibit 99.2 for debt and trust securities registered under Section 12(b) of the Act

Name of each exchange on which registered: New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ? Yes ` No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Annual Report on Form 10-K or any amendment to the Annual Report on Form 10-K. ?

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 `

Smaller reporting company `

Non-accelerated filer (Do not check if a 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ` Yes ? No

As of June 30, 2017, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $84.9 billion.

As of February 9, 2018, there were 379,887,039 shares of the registrant's common stock outstanding.

Documents incorporated by reference: Portions of The Goldman Sachs Group, Inc.'s Proxy Statement for its 2018 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, 2017

INDEX

Form 10-K Item Number

Page No.

PART I

1

Item 1

Business

1

Introduction

1

Our Business Segments and Segment Operating Results

1

Investment Banking

2

Institutional Client Services

2

Investing & Lending

4

Investment Management

4

Business Continuity and Information Security

5

Employees

5

Competition

6

Regulation

7

Available Information

21

Cautionary Statement Pursuant to the U.S. Private Securities

Litigation Reform Act of 1995

22

Item 1A

Risk Factors

23

Item 1B

Unresolved Staff Comments

42

Item 2

Properties

42

Item 3

Legal Proceedings

43

Item 4

Mine Safety Disclosures

43

Executive Officers of The Goldman Sachs Group, Inc.

43

PART II

44

Item 5

Market for Registrant's Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

44

Item 6

Selected Financial Data

44

Page No.

Item 7

Management's Discussion and Analysis of Financial Condition

and Results of Operations

45

Introduction

45

Executive Overview

46

Business Environment

47

Critical Accounting Policies

48

Recent Accounting Developments

50

Use of Estimates

50

Results of Operations

51

Balance Sheet and Funding Sources

64

Equity Capital Management and Regulatory Capital

69

Regulatory Matters and Developments

75

Off-Balance-Sheet Arrangements and Contractual Obligations 75

Risk Management

77

Overview and Structure of Risk Management

77

Liquidity Risk Management

82

Market Risk Management

89

Credit Risk Management

94

Operational Risk Management

99

Model Risk Management

101

Item 7A

Quantitative and Qualitative Disclosures About Market Risk 101

Goldman Sachs 2017 Form 10-K

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

INDEX

Page No.

Item 8

Financial Statements and Supplementary Data

102

Management's Report on Internal Control over Financial

Reporting

102

Report of Independent Registered Public Accounting Firm 103

Consolidated Financial Statements

104

Consolidated Statements of Earnings

104

Consolidated Statements of Comprehensive Income

105

Consolidated Statements of Financial Condition

106

Consolidated Statements of Changes in Shareholders' Equity 107

Consolidated Statements of Cash Flows

108

Notes to Consolidated Financial Statements

109

Note 1. Description of Business

109

Note 2. Basis of Presentation

109

Note 3. Significant Accounting Policies

110

Note 4. Financial Instruments Owned and Financial

Instruments Sold, But Not Yet Purchased

117

Note 5. Fair Value Measurements

118

Note 6. Cash Instruments

119

Note 7. Derivatives and Hedging Activities

125

Note 8. Fair Value Option

136

Note 9. Loans Receivable

142

Note 10. Collateralized Agreements and Financings

146

Note 11. Securitization Activities

150

Note 12. Variable Interest Entities

152

Note 13. Other Assets

155

Note 14. Deposits

158

Note 15. Short-Term Borrowings

159

Note 16. Long-Term Borrowings

159

Note 17. Other Liabilities and Accrued Expenses

162

Note 18. Commitments, Contingencies and Guarantees

162

Note 19. Shareholders' Equity

166

Note 20. Regulation and Capital Adequacy

169

Note 21. Earnings Per Common Share

178

Note 22. Transactions with Affiliated Funds

178

Note 23. Interest Income and Interest Expense

179

Page No.

Note 24. Income Taxes

179

Note 25. Business Segments

182

Note 26. Credit Concentrations

184

Note 27. Legal Proceedings

185

Note 28. Employee Benefit Plans

191

Note 29. Employee Incentive Plans

192

Note 30. Parent Company

194

Supplemental Financial Information

196

Quarterly Results

196

Common Stock Price Range

196

Common Stock Performance

196

Selected Financial Data

197

Statistical Disclosures

197

Item 9

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure

203

Item 9A

Controls and Procedures

203

Item 9B

Other Information

203

PART III

203

Item 10

Directors, Executive Officers and Corporate Governance

203

Item 11

Executive Compensation

203

Item 12

Security Ownership of Certain Beneficial Owners and

Management and Related Stockholder Matters

204

Item 13

Certain Relationships and Related Transactions, and Director

Independence

204

Item 14

Principal Accounting Fees and Services

204

PART IV

205

Item 15

Exhibits, Financial Statement Schedules

205

SIGNATURES

210

Goldman Sachs 2017 Form 10-K

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

PART I

Item 1. Business

Introduction

Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals.

When we use the terms "Goldman Sachs," "the firm," "we," "us" and "our," we mean The Goldman Sachs Group, Inc. (Group Inc. or parent company), a Delaware corporation, and its consolidated subsidiaries.

References to "this Form 10-K" are to our Annual Report on Form 10-K for the year ended December 31, 2017. All references to 2017, 2016 and 2015 refer to our years ended, or the dates, as the context requires, December 31, 2017, December 31, 2016 and December 31, 2015, respectively.

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 (Federal Reserve Board or FRB). Our U.S. depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank.

As of December 2017, we had offices in over 30 countries and 48% of our total staff was based outside the Americas. Our clients are located worldwide and we are an active participant in financial markets around the world. In 2017, we generated 39% of our net revenues outside the Americas. For further information about our geographic results, see Note 25 to the consolidated financial statements in Part II, Item 8 of this Form 10-K.

Our Business Segments and Segment Operating Results

We report our activities in four business segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management.

The chart below presents our four business segments.

Firmwide

Investment Banking

Financial Advisory

Underwriting

Equity Underwriting

Debt Underwriting

Institutional Client

Services

Fixed Income, Currency and Commodities Client Execution

Equities

Equities Client

Execution

Commissions and Fees

Investing & Lending

Equity Securities

Debt Securities and

Loans

Investment Management

Management and Other Fees

Incentive Fees

Transaction Revenues

Securities Services

The table below presents our segment operating results.

$ in millions

Investment Banking Net revenues Operating expenses Pre-tax earnings

Year Ended December

% of 2017 Net

2017

2016

2015 Revenues

$ 7,371 $ 6,273 $ 7,027 3,526 3,437 3,713

$ 3,845 $ 2,836 $ 3,314

23%

Institutional Client Services Net revenues Operating expenses

Pre-tax earnings

$11,902 $14,467 $15,151 9,692 9,713 13,938

$ 2,210 $ 4,754 $ 1,213

37%

Investing & Lending Net revenues Operating expenses

Pre-tax earnings

$ 6,581 $ 4,080 $ 5,436 2,796 2,386 2,402

$ 3,785 $ 1,694 $ 3,034

21%

Investment Management Net revenues Operating expenses

Pre-tax earnings

$ 6,219 $ 5,788 $ 6,206 4,800 4,654 4,841

$ 1,419 $ 1,134 $ 1,365

19%

Total net revenues Total operating expenses

Total pre-tax earnings

$32,073 $30,608 $33,820 20,941 20,304 25,042

$11,132 $10,304 $ 8,778

Goldman Sachs 2017 Form 10-K 1

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES

In the table above:

Financial information related to our business segments for 2017, 2016 and 2015 is included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Financial Statements and Supplementary Data," which are in Part II, Items 7 and 8, respectively, of this Form 10-K. See Note 25 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for a summary of our total net revenues, pre-tax earnings and net earnings by geographic region.

Operating expenses included $3.37 billion recorded in Institutional Client Services in 2015 related to the settlement agreement with the Residential MortgageBacked Securities Working Group of the U.S. Financial Fraud Enforcement Task Force. See Note 27 to the consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2015 for further information.

All operating expenses have been allocated to our segments except for charitable contributions of $127 million for 2017, $114 million for 2016 and $148 million for 2015.

Investment Banking Investment Banking serves public and private sector clients around the world. We provide financial advisory services and help companies raise capital to strengthen and grow their businesses. We seek to develop and maintain longterm relationships with a diverse global group of institutional clients, including governments, states and municipalities. Our goal is to deliver to our institutional clients the entire resources of the firm in a seamless fashion, with investment banking serving as the main initial point of contact with Goldman Sachs.

Financial Advisory. Financial Advisory includes strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings, spin-offs and risk management. In particular, we help clients execute large, complex transactions for which we provide multiple services, including cross-border structuring expertise. Financial Advisory also includes revenues from derivative transactions directly related to these client advisory assignments. We also assist our clients in managing their asset and liability exposures and their capital.

Underwriting. The other core activity of Investment Banking is helping 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 services. Our underwriting activities include public offerings and private placements, including local and cross-border transactions and acquisition financing, of a wide range of securities and other financial instruments, including loans. Underwriting also includes revenues from derivative transactions entered into with public and private sector clients in connection with our underwriting activities.

Equity Underwriting. We underwrite common and preferred stock and convertible and exchangeable securities. We regularly receive mandates for large, complex transactions and have held a leading position in worldwide public common stock offerings and worldwide initial public offerings for many years.

Debt Underwriting. We underwrite and originate various types of debt instruments, including investment-grade and high-yield debt, bank loans and bridge loans, including in 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.

Institutional Client Services Institutional Client Services serves our clients who come to us to buy and sell financial products, raise funding and manage risk. We do this by acting as a market maker and offering market expertise on a global basis. Institutional Client Services makes markets and facilitates client transactions in fixed income, equity, currency and commodity products. In addition, we make markets in and clear client transactions on major stock, options and futures exchanges worldwide.

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.

2 Goldman Sachs 2017 Form 10-K

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