Goldman Sachs posts more losses from its credit card business
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.
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.
