January 25, 2025
Goldman Sachs Hints at Early Exit from Apple Card Partnership

Goldman Sachs Hints at Early Exit from Apple Card Partnership

Posted January 15, 2025 at 7:03pm by iClarified
Goldman Sachs CEO David Solomon hinted at an early exit from the company's partnership with Apple for the Apple Card during an earnings call today.

In response to a question from Morgan Stanley's Betsy Graseck, Solomon acknowledged that the Apple Card is a significant part of Goldman's Platform Solutions unit, which has been a financial drag on the firm, bringing down return on equity by 75 to 100 basis points in 2024. Although the performance of the Apple Card is improving, he also said there is a possibility the partnership might not continue until the end of its term in 2030.

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Betsy Graseck (Morgan Stanley)
Hi. I did just want to follow up on one thing here regarding the point you were making on Platform Solutions. It's a drag right now, 75 bps to 100 bps on ROE, but '25 and '26, that will improve. So could you just step us through -- I mean, we know what your plans are for Platform Solutions. But I'm wondering what's happening in '25 and '26 that will drive the reduction of the drag in this year and next, if you could speak through that.


David Solomon
Yeah. At a high level, Betsy, we're obviously -- the primary thing is in Platform Solutions is the Apple partnership. As you know, we have a contract with Apple to run that partnership until 2030, although, there's some possibility that it won't continue until that time frame. The most important thing that's happening is the card continues to improve and its performance and the card is driving towards profitability. And so the improvement in the profitability of the card has an impact on the short-term drag.

Ultimately, whether it's in the medium-term or through the life of the contract, that's not going to be a long-term business for the firm, and that will ultimately allow us to exit and return capital, but I'm really not in a position to comment any more specifically other than the direction of travel that you're aware of.
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There have been recent reports that JPMorgan Chase is in discussions with Apple to take over the tech giant's flagship credit card program. The negotiations reportedly include a proposal to acquire approximately $17 billion in Apple Card loans at a discount, reflecting elevated losses associated with the program. In a September note, JPMorgan highlighted that Goldman's 2.93% loss rate on credit card loans is the highest among major U.S. issuers, surpassing even subprime lenders.

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Goldman Sachs Hints at Early Exit from Apple Card Partnership
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