Goldman’s Apple Card business has a surprising subprime problem

[gdale6]

• Goldman’s loss rate on credit card loans is the worst among big U.S. card issuers and “well above subprime lenders” at 2.93%, according to a Sept. 6 note from JPMorgan.
• More than a quarter of Goldman’s card loans have gone to customers with FICO scores below 660, according to company filings. That could expose the bank to higher losses if the economy experiences a downturn, as is expected by many forecasters.
• CEO David Solomon will likely face questions from directors about the consumer business at a board meeting later this week, according to people with knowledge of the matter.

https://www.cnbc.com/2022/09/12/goldmans-gs-apple-card-business-has-a-surprising-subprime-problem.ht...

[GZG]

funny, they have both this

and they have this: 

Do they just not know how to be a subprime issuer or something? 

[coldfusion]

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@GZG wrote:

Do they just not know how to be a subprime issuer or something? 

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They're new to the CC game and until they took over the GM card Apple was their only offering. so they may not have had a critical mass of their own data and/or model development ability to allow for effective predictive risk analysis. 

"Good judgement comes from experience, and experience comes from bad judgement".   

Even Chase got burned hard by churners exploiting procedural loopoles when the CSR was first released.  Goldman won't be the last issuer to make costly missteps. 

[SouthJamaica]

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@gdale6 wrote:

• Goldman’s loss rate on credit card loans is the worst among big U.S. card issuers and “well above subprime lenders” at 2.93%, according to a Sept. 6 note from JPMorgan.
• More than a quarter of Goldman’s card loans have gone to customers with FICO scores below 660, according to company filings. That could expose the bank to higher losses if the economy experiences a downturn, as is expected by many forecasters.
• CEO David Solomon will likely face questions from directors about the consumer business at a board meeting later this week, according to people with knowledge of the matter.

https://www.cnbc.com/2022/09/12/goldmans-gs-apple-card-business-has-a-surprising-subprime-problem.ht...

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Why surprising? Goldman Sachs is a veteran player in how to make money on sub-prime loans.  https://fortune.com/2016/04/11/goldman-sachs-doj-settlement/

[SPChaser]

Yup, was reading this today and wanted to see if it had already been posted. 

[SPChaser]

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@SouthJamaica wrote:

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@gdale6 wrote:

• Goldman’s loss rate on credit card loans is the worst among big U.S. card issuers and “well above subprime lenders” at 2.93%, according to a Sept. 6 note from JPMorgan.
• More than a quarter of Goldman’s card loans have gone to customers with FICO scores below 660, according to company filings. That could expose the bank to higher losses if the economy experiences a downturn, as is expected by many forecasters.
• CEO David Solomon will likely face questions from directors about the consumer business at a board meeting later this week, according to people with knowledge of the matter.

https://www.cnbc.com/2022/09/12/goldmans-gs-apple-card-business-has-a-surprising-subprime-problem.ht...

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Why surprising? Goldman Sachs is a veteran player in how to make money on sub-prime loans.  https://fortune.com/2016/04/11/goldman-sachs-doj-settlement/

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Excellent point @SouthJamaica . Goldman has a sordid history with sub-prime loans.