As is always the case when Wall Street heavy hitters weigh in with earnings, the markets and financial trade publications parse the data and management commentary for insight on investment banking. For Goldman Sachs, the latest earnings report on Tuesday (Oct. 15) offered variations on a recurring theme: as the shift away from Main Street progresses, the goal of massing an even greater Wall Street — and corporate lending — presence continues.
CEO David Solomon noted on the earnings call with analysts that growth in its core, traditional market-facing businesses comes as the U.S. economy continues to be resilient (though he added that there’s some “softness” in consumer behavior).
As for the Apple Card, in response to an analyst question about the future of that offering, Solomon noted that “there’s a lot of focus on that. I think I think we’ve been pretty clear on our messaging that we are continuing to narrow our consumer footprint … I don’t have a lot more to say about where we are with Apple Card other than we’re running it, improving it … But I think the direction of travel at this point is pretty clear.”
JPMorgan Chase is reportedly in talks with Apple to become the new issuer of the Apple credit card. The current issuer of the credit card is of course Goldman Sachs, and that firm and Apple agreed to end their partnership last year. But the companies have not yet reached an agreement with a new issuer to take over the program as detailed last month, as last November Goldman and Apple had reportedly struck a pact to end their joint efforts through the ensuing 12 to 15 months. Apple has subprime exposure, per last month’s reporting.
And in Goldman’s latest financial supplementals, the company noted that its provision for losses in its credit card portfolio (where it is also exiting its GM card relationships) the third-quarter provision for credit losses came in at $397 million, driven in part by net charges-offs in that portfolio (and that provision was up 121% year over year and 41% from the previous quarter). Total card related loans on Goldman’s books as of the third quarter were $20 billion, up from $19 billion in the second quarter and $18 billion a year ago. Solomon said the GM card exit agreement is signed but not yet closed — “the expectations we’re targeting [are for] Q3 of 2025,” he said.
As for the macro backdrop, said Solomon — with a nod toward demand for lending and other core markets activity — “the beginning of the rate cut cycle has renewed optimism for a soft landing, which should spur increased economic activity.”
Chief Financial Officer Denis Coleman noted on the call that equity writing revenues were up 25% though “volumes are still well below longer term averages.” Debt underwriting revenues rose 46% year over year to $605 million, amid higher leverage finance and investment grade activity.
“We are seeing increased client demand for committed acquisition financing, which we expect to continue on the back of increasing M and A activity,” said Coleman.
Separately, during the call, an analyst asked about the impact of non-bank competitors — particularly firms moving into fixed income markets and possibly causing disruption for incumbents such as Goldman.
In response, Solomon said “there’s lots of competition in all these businesses. There’s always been competition, but there are very few platforms that offer the leading capital allocators and asset managers in the world, the scale and the breadth across all the services that they need on an integrated basis. And that’s very important to those clients.”
Goldman shares were flat in intraday trading on Tuesday.
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