Goldman Sachs Exits Apple Credit Card Business, JPMorgan Takes Over

Significant Shift in Consumer Finance Strategy

Goldman Sachs Group Inc. is ending its partnership with Apple Inc. in the Apple credit card business, with JPMorgan Chase & Co. set to become the new issuing bank. This strategic move marks a significant retreat from Goldman Sachs' ambitious but costly foray into consumer finance.

Key Financial Implications

The transition, expected to take approximately two years to complete, is anticipated to have several key financial impacts on Goldman Sachs:

1. Earnings Per Share (EPS) Boost: The deal is projected to increase Goldman Sachs' EPS by 46 cents in Q4 2026.
2. Credit Loss Reserve Release: Goldman Sachs will be able to release $2.48 billion in credit loss reserves.
3. Revenue Impact: The bank expects a $2.26 billion reduction in net revenue due to portfolio adjustments and contract termination fees.
4. Additional Transition Costs: Approximately $38 million in related expenses are anticipated.

Strategic Rationale

The decision to exit the consumer credit business aligns with Goldman Sachs' broader strategy to refocus on its core competencies in investment banking, financial markets, and asset management. CEO David Solomon emphasized that the firm will continue to support customers during the transition period while redirecting its resources to higher-growth areas.

Market Context and Future Outlook

This move was widely anticipated given Goldman Sachs' significant losses in consumer lending. Since early 2020, the firm has incurred over $7 billion in pre-tax losses from consumer lending activities, according to RBC Capital Markets analysts. The exit from the Apple credit card business is seen as a strategic retreat from a challenging segment.

Impact on Other Parties

• Apple will continue to develop its consumer financial services, maintaining Mastercard as their payment network partner.
• JPMorgan Chase will take over the credit card portfolio valued at approximately $20 billion, with a negotiated discount of over $1 billion.
• The transition reflects the challenges faced by financial institutions in the consumer credit space and the strategic realignment of major players.