Andrew Orr
Goldman Sachs' consumer credit division lost $1.2 billion in nine months last year, and the losses were primarily related to the Apple Card.
Goldman's collection of businesses, known as Platform Solutions, lost over $1.2 billion in pre-tax losses in the first nine months of 2022 and was driven mainly by loan-loss provisions. It was mostly tied to the Apple Card, according to Business Insider.
Previously, the only financials Goldman had disclosed in its consumer business showed $1.3 billion in losses from the start through mid-2019. However, executives of Platform Solutions believe the consumer division may break even in 2025, although that target was initially by the end of 2022.
Goldman spent a lot of money to help launch Apple Card and its other consumer services. A report from 2019 revealed the bank spent around $1.3 billion on its consumer services, and reportedly spent roughly $350 to acquire every new Apple Card customer.
Due to Apple Card benefits such as no fees and a competitive interest rate, analysts believed "The Apple Card portfolio may generate lower revenues and face higher loss content relative to the industry average."
But Goldman CEO David Solomon called its partnership with Apple "the most successful credit launch ever" and noted that although its investment draws on the bank's returns in the short term, it's critical to expanding its capabilities and competitive position.
AppleInsider Staff
Chip Loder
Christine McKee
Malcolm Owen
William Gallagher
26 Comments
Wonder if this will jeopardize the launch of a savings account that was introduced in iOS 16. The feature would allow you to open a savings account and transfer money from your Apple Cash card to-and-from one from a Goldman savings account.
The Apple Card falls under Platform Solutions within GS which includes credit card partnerships and point of sale financing. It also includes Transaction Banking. All of this is not just Apple. While provisions for credit losses did move higher it is not accurate to say the $1.2 billion loss (9 months) is attributable to Apple. The GS earnings call is next week so more info at that time. Also Business Insider has not been a credible source for years unless you like cat videos and memes. I suggest you read WSJ.com which is more accurate.
IANA Businessman/MBA/Entropnenur so I have no idea how losing over a billion dollars could be “The most successful credit launch ever”.
Sounds like BS to me. How can you lose that much money on a credit card business unless a vast number of customers default on payments or there is massive fraud. The fraud aspect is unlikely as the Apple Card is an order of magnitude safer than most other credit cards. The "defaulting" on payments also seems unlikely since iPhone owners and Apple Card users in particular seem to be from a demographic that generally pays off their CC balances or would be very negatively affected by not paying off their CC.