Goldman Sachs lost $1.2 billion in 2022 mostly because of Apple Card
Goldman Sachs' consumer credit division lost $1.2 billion in nine months last year, and the losses were primarily related to the Apple Card.
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.
Read on AppleInsider
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.
Read on AppleInsider
Comments
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.
…really? For who? My SO and I were given a predatory rate of almost 25%, despite excellent credit.
”The rich rules over the poor, and the borrower is the slave of the lender.”
- Proverbs 22:7
the biggest issue with the Apple Card is it still limited to one market and has not expanded its services in any meaningful way since launch. It seems to be getting as much corporate love as one of those google thought bubbles.
https://www.imf.org/en/Publications/IMF-Policy-Discussion-Papers/Issues/2016/12/30/Regulatory-and-Tax-Treatment-of-Loan-Loss-Provisions-2014
https://www.europeanceo.com/finance/goldman-sachs-and-cargill-fined-e89m-in-uk-tax-avoidance-case/
Big companies do this all the time. They record losses on paper in their high tax jurisdictions, even when they aren't realized losses and may never be and their income on some remote island in the middle of nowhere where they pay little to no income tax.
As for me and, I assume, a large percentage of Apple Card holders, I have never paid a dime in interest. So there’s another reason that Goldman Sachs could be losing money.
No one should weep for Goldman Sachs, though. The company's annual revenue for 2021 was $59.339B, a 33.17% increase from 2020. That paltry $1.2 Billion is just another tax write-off for them, and making net loss in that division MUCH smaller.