Goldman Sachs has today filed a regulatory statement in its “Platform Solutions” business group that includes a report on the Apple Card. Goldman’s consumer offerings is on track for a total loss of $4 billion from 2020, of which, the Apple Card represents more than 1,000 million dollars. That is, the Apple Card is responsible for losses of 1 trillion dollars.
As Bloomberg reports, new financial details from Goldman’s Platform Solutions division paint a bleak picture. Only in the first nine months of 2022, businesses that include Apple Card posted a pretax loss of more than $1.2 billion.
If we go back to 2020 through the end of September 2022, those losses amounted to $3 billion. But when fourth-quarter 2022 results are included soon, the number is expected to be closer to $4 billion.
Apple launched the Apple Card in the United States in August 2019 and it’s unclear exactly how much of the $4 billion in losses has stemmed from it. Nevertheless, sources close to believe that most of the 1,000 million dollars of losses in 2021 come from Apple Card itself. Also, there is another $2 billion in losses in 2022 that is believed to come mostly from Apple Card and another Goldman lending platform called GreenSky.
With all this in mind, plus the question of how much was lost on the Apple Card in 2019 and 2020, it looks like Goldman has lost between $1 billion and $3 billion on the credit card. Losses are said to be the main cause of loan loss provisions (when a bank reserves money as an expense for future loans that it expects will not be repaid).
Previous Goldman Sahs estimates suggested that the Platform Solutions division would break even in 2022, but now they expect it to be able to do so in 2025. Sources believe the transaction banking business line is probably the only profitable part of the Platform Solutions division.
It seems clear that launching a new credit card is not an easy business and that it is going to bring benefits. Is this one of the main reasons why Apple has not expanded the number of markets in which you have launched this product and, seen what has been seen, It doesn’t look like it’s going to expand in the short term.