Goldman’s Apple Card biz has a shockingly high loss rate on credit card loans — and it could get worse

Charging the iPhone to my Apple Card... seamless. Paying it off on time: not so much. Goldman Sachs’ Apple Card biz has a bad-credit problem, according to competitor JPMorgan. In 2019 the investment-banking giant triumphed over established card companies to become Apple's card issuer. The sleek no-fee card generated hype, with early users posting pics of their names etched in Apple titanium. Some expressed shock they'd been approved. Now we know why:

• Credit karma: Over a quarter of Goldman’s card loans have gone to customers with credit scores under 660 (aka: fair to poor).
• The WOAT: Goldman’s loss rate on credit-card loans is the worst among major US card issuers and “well above subprime lenders," JPM said.
• The GOAT: Thanks to pandemic stimulus and rising wages, rivals like Bank of America have seen repayments rise near record levels.

DJ D-Sol in the hot seat... Goldman CEO David Solomon, who moonlights as an EDM DJ, is under pressure to produce profits at Goldman's consumer-facing biz (which makes up 18% of its total revenue). The Wall Street-centric bank expanded to consumers in 2016 with its high-yield Marcus savings account. Then Apple Card supercharged its retail reach. Now:

• Growing revenue: Goldman's consumer-banking biz grew revenue 25% last quarter, with 14M customers and $16B in loan balances.
• Growing losses: The consumer division is on track to lose $1.2B this year, and Goldman has been forced to set aside more reserves in case of future loan losses.