Goldman Sachs is years into transitioning from the bank of choice for millionaires to a more inclusive, consumer friendly brand. But the turnaround isn’t cheap.
The New York firm has spent $1.3 billion on its consumer arm Marcus, the Apple Card, and other new initiatives to date, Goldman Sachs chief financial officer Stephen Scherr told analysts after second-quarter earnings Tuesday. This year alone, the firm spent $275 million on the new businesses, resulting in a .6% drag on Goldman’s return on equity.
The CFO, who joined Goldman in 1993, said the “depth” of these investments will happen this year and continue into 2020. There will also be a “meaningful impact” of Goldman’s reserve build to support initial growth in the Apple Card portfolio following the expected launch later this summer, he said. The bank plans to give a “strategic update” to investors in January and provide new targets, with return profiles on Marcus and the Apple credit card.
MacDailyNews Take: The Apple Card adoption rate will surprise even Apple and Goldman Sachs.