Goldman Sachs continues to bleed cash from Apple Card operations
Goldman Sachs has reported more losses from its credit card operations, mostly attributable to Apple Card, and it's not clear when or how the bleeding will stop.

Goldman Sachs posts more losses from its credit card business
The investment bank has released its financial results for the second quarter of 2023, revealing ongoing challenges with the Apple Card and other portfolios. The document indicates a decrease in revenues for the bank's consumer business, Platform Solutions.
The division enables clients to integrate financial products and solutions into their offerings, using application programming interfaces (APIs). The Apple Card is a part of the Platform Solutions division, and it has been a significant factor in the financial performance of the segment.
Platform Solutions experienced a net loss of $667 million during the June quarter. Despite a rise in revenue within the division, there was a significant provision of $615 million for credit losses overall.
The $615 million provision includes amounts set aside for potential losses from their credit card business and point-of-sale loans. Goldman reduced the reserve after repaying a term deposit with the First Republic Bank.
The credit losses and operating expenses for Platform Solutions amounted to $544 million and $987 million, respectively, surpassing the quarterly revenue of $659 million.
To date, Goldman Sachs has lost over a billion dollars, mostly because of the Apple Card. Although CEO David Solomon called the partnership with Apple "the most successful credit launch ever," the bank is reportedly trying to end its deal.
The executives overseeing Goldman Sachs' assortment of businesses, referred to as Platform Solutions, revealed that their consumer division might achieve a break-even point in 2025. This target was originally set to be accomplished by the end of 2022.
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Comments
Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."
I am sure GS has overhead on these operations. They have to pay staff to provide customer service; and other infrastructure like IT and the like. But a billion in losses to that? Really?
Their greed for the possible 20+ % financing interest blinded GS into giving too much credit to those who could least afford it. I am sure the GS lenders were licking their chops the last few months as the charges crowded $5,000 on my account, But these balances were paid in full on the 2nd of the month following.
So GS got no penalty interest and instead had negative cash flow for the cash discounts given on the purchases.
GS may have signed a multi year contract for this business and may find it difficult to extricate themselves.
Sympathy is between two other "S..." words in the dictionary.
One-third of operating expenses is due to credit losses? Accounting trickery?
The "swipe fee" consists of three things: a fee paid to the issuing bank (GS), a fee paid to Apple, and a fee paid to the credit card company (Mastercard) for use of its network.
I suspect GS, which has never really been in consumer banking, has a lot of overhead that hasn't been optimized away yet and, as the original comment to you indicated, the users of Apple Card are more affluent than the average Joe and, likely, more financially savvy - especially with the help Apple Wallet gives them to keep on top of their spending - and, less likely to go into debt. Add to this the other card benefits - Apple Cash, interest free repay on Apple products, etc. and I can see where a novice bank like GS ends up in the red.
I pay my balance every month. They only get the swipe fee from me and that's paid by the business.
BTW, this card from GS is the most miserable credit card experience I've ever had, for many reasons, which I've written about before. I've simply made it dormant, seldom—if ever—to be used again.
And Goldman Sachs can't just kick me to the curb. I have something like $0.12 in Apple Cash credit (I do not have a linked bank account). Due to US consumer banking laws, that's MY property. They're not "miles" or "points". If GS wanted to close me out, they are legally obligated to mail me a check for $0.12. Hell, closing an account probably costs them $20-30 in administrative fees, salaries, etc.
Goldman Sachs can suck it.
If Goldman Sachs gets out of the consumer lending business, they will sell off my account to some other financial institution or more likely close me out, mail out a check and write me down as a loss, taking a direct hit off their bottom line. They can't sweep those twelve cents under the rug. And yes, if they filed for bankruptcy, they would still be obligated to contact me about it and include me in all of their administrative procedures as a creditor.
GS has their own processes in approving applicants. Credit reports aren't free. And credit reports don't reflect other financial aspects of an applicant's life. Time at current employer, salary, time at current residence, court records, whatever. GS isn't just pulling a VantageScore from a database and rubber stamping the application.
Even the physical card mailout costs money. A new customer acquisition is more than some ads on social media.