Is Goldman Sachs Bleeding From Apple Card Tieup? What A Closer Look At Q2 Results Reveals

Wall Street banking giant Goldman Sachs Group, Inc. GS reported a 60% year-over-year drop in second-quarter profits on Wednesday, with the weakness blamed primarily on dwindling deal activity.

Tech giant Apple, Inc. AAPL may also have a part to play in Goldman's disappointing earnings show.

What Happened: The investment bank said in its quarterly earnings report that second-quarter provisioning for credit losses was $615 million, reflecting net provisions related to credit card and point-of-sale loan portfolios. If not for the reserve reduction related to the repayment of a term deposit with the now-collapsed First Republic Bank FRCB the losses could have been worse.

The Platform Solutions business segment of which Apple Card business is part of reported revenue of $659 million, up 17% quarter-over-quarter and 92% year-over-year. The segment, however, recorded a net loss of $672 million, dragged by $544 million in provision for credit losses and $987 million in operating expenses.

See Also: Best Financial Services Stocks Right Now

Why It's Important: Goldman is trying to wriggle out of its partnership with Apple and is trying to transition the Apple credit card portfolio to American Express, a Wall Street Journal report said in late June.

Goldman first struck a consumer lending partnership with Apple in 2019, offering an Apple credit card paired with the iPhone. Earlier this year, the two companies jointly announced a high-yielding savings account for Apple card users.

They also collaborate on the tech giant's "Pay Later" service in the U.S., which allows users to split purchases into four installments spread over six weeks with no interest and fees.

In 2022 alone, Goldman's Platform Solutions division lost $1.2 billion.

Read Next: Apple Now Offering Savings Account With 4.15% Interest, Allowing Card Users To Get Paid On Their Cash

Photo by Eui Jong Kim on Shutterstock