“Goldman Sachs has sealed a deal to offload its Apple Card program to JPMorgan Chase, transferring over $20 billion in card balances at a discount exceeding $1 billion amid high delinquency rates. The transition, expected to span two years, allows Goldman to exit its loss-making consumer lending business while bolstering JPMorgan’s dominance in credit cards.”
Goldman Sachs has finalized an agreement to transfer its Apple Card partnership to JPMorgan Chase, effectively concluding a challenging chapter in its foray into consumer finance. The move comes after substantial losses in Goldman’s retail banking efforts, paving the way for a strategic retreat from mass-market lending.
Deal Structure and Timeline The transaction positions JPMorgan as the new issuer for the Apple Card, with Mastercard continuing as the payment network. Existing cardholders will maintain access to features like unlimited Daily Cash back rewards, spending tracking tools, family sharing options, and high-yield savings accounts. During the handover period, new and current users will receive cards from JPMorgan, and savings account holders can opt to remain with Goldman or migrate. The full shift of the program, including more than $20 billion in outstanding balances, is anticipated to complete over the next two years, subject to regulatory approvals.
Financial Implications Goldman Sachs is divesting the portfolio at a steep discount of over $1 billion, reflecting elevated delinquency levels among cardholders, which surpass industry norms due to a higher proportion of subprime borrowers. This markdown contrasts with typical co-branded card sales that often fetch premiums. For Goldman, the deal triggers a one-time earnings lift of about 46 cents per share, offsets revenue by $2.26 billion, and frees up $2.48 billion in previously reserved loan losses. JPMorgan, in turn, anticipates allocating roughly $2.2 billion for credit loss provisions to absorb the risks.
| Financial Impact | Goldman Sachs | JPMorgan Chase |
|---|---|---|
| Portfolio Value | $20+ billion sold at >$1B discount | Acquires $20+ billion in balances |
| Earnings Effect | +46 cents/share boost | $2.2B credit loss provisions |
| Revenue/Reserves | -$2.26B revenue; +$2.48B reserve release | Enhances card issuance revenue potential |
| Overall Losses | Part of >$7B pretax consumer losses since launch | Strengthens market position without prior losses |
Reasons Behind the Sale Goldman’s push into consumer banking, initiated with the Apple Card launch, resulted in over $7 billion in pretax losses across related ventures, including partnerships with other brands and specialty lending operations. Regulatory scrutiny and mounting delinquencies amplified the strain, prompting a pivot back to core institutional services. The Apple Card, despite its popularity and innovative features, became emblematic of these struggles, with high-risk exposure complicating retention and negotiations with potential buyers.
Impacts on Stakeholders For Goldman Sachs, this divestiture signifies the closure of an experimental consumer segment, allowing refocus on high-margin areas like investment banking and wealth management. JPMorgan benefits by integrating a flagship co-branded product into its expansive card ecosystem, enabling cross-selling opportunities to Apple’s loyal user base and reinforcing its status as a top issuer. Cardholders face minimal disruption, with commitments to preserve the card’s user-centric design, security, and rewards structure.
Strategic Shifts in Banking The agreement underscores broader industry trends, where traditional banks like JPMorgan leverage scale and risk expertise to expand consumer products, while firms like Goldman recalibrate amid profitability pressures. This handover also highlights the growing intersection of tech and finance, with mobile-first cards driving payment innovation and customer engagement.
Disclaimer: This news report is for informational purposes only and does not constitute financial advice or tips. Sources are not mentioned.
