Goldman’s Card Balances Up 11% as Management’s ‘Pleased’ With Credit Performance
Goldman Sachs’ GreenSky sale is in the rearview mirror and its pivot from Main Street banking is ongoing.
Its latest earnings results, released Monday (July 15), show that “substantially all” of the Marcus loans were sold a year ago.
As PYMNTS reported earlier this year, independent digital investment advisor Betterment reached an agreement with Goldman Sachs to acquire the digital investment accounts of Marcus Invest. The accounts were slated to be transferred to Betterment by the end of last quarter. Betterment acquired only the accounts and assets under management of Marcus Invest; the transaction did not include any other accounts, technology, employees or operations.
Beyond the Banking
While much of Wall Street remains focused on Goldman’s progress in sharpening its focus on investments, banking and other activities more geared to the markets, there were some details in the data and on the call that the transaction banking and corporate treasury efforts. In that line item, transaction banking and other revenues were $70 million in the most recent quarter, down 15%, and reflecting lower client balances.
Drilling down into the data, the credit card balances, up 11% year on year to $19 billion, remain somewhat even with the first quarter, while management said on the conference call with analysts that they were “pleased” with the card performance. Charge-offs of 8.4% for consumer loans has been consistent with recent quarters.
Within its platform solutions segment, consumer platforms delivered 4% growth to $599 million in revenues, which reflected higher average credit card balances, though results were offset by the GreenSky transaction.
The level of growth in the card business has slowed, management said, given the implementation of what management said were “several rounds of underwriting adjustments to card originations” and the expectation is that the “period over period growth should be more muted.”
The overall provision for credit losses in the quarter stood at $395 million, down 27% year over year, reflecting the card business (the wholesale loan charge-offs, according to the data, stand at 0%).
With a nod toward artificial intelligence (AI), CEO David Solomon said that “the proliferation of AI in the corporate world will bring with it significant demand-related infrastructure and financing needs, which should fuel activity across our broad franchise.”
Private Credit
During the question-and-answer session, Solomon noted that in terms of lending activity, leveraged finance is being combined with Goldman’s “powerful direct lending private credit platform … the size and the scope of the companies that are out there that have to be refinanced, recapitalized, sold, changed hands … bodes well over the course of the next three to five years.”
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