Analyst: Goldman Sachs spends $350 for every Apple Card customer; may lose money on credit card in the next recession

A team of analysts estimates that Goldman Sachs spends $350 to acquire each new Apple Card holder and thinks the bank will begin to break even on a customer after four years.

Hugh Son for CNBC:

Goldman Sachs may get stung by rising loan losses on the Apple Card in the next economic downturn, according to Nomura analysts.

The much-hyped credit card, which Goldman began to make available last week, has no fees, the industry’s lowest interest rate range for comparable cards, and a mandate to approve as many iPhone users as possible, according to a report Wednesday from analysts led by Bill Carcache. In his analysis, which assumes that Goldman spends $350 to acquire each new user, the bank will begin to break even on a customer after four years.

Goldman’s product is “highly sensitive” to rising net charge offs, and the bank will begin to lose money if losses reach about 8%, Carcache said. In the last recession, net charge offs surged in 2008 and peaked at above 10% in 2010.

MacDailyNews Take: As Son notes, Nomura believe that an Apple Debit Card is next up which would help Goldman offset costs as debit cards generated some $15 billion in revenues for banks last year.

1 Comment

  1. Let’s hope they take a bath in this recession, after screwing Americans in the last one.

    Some would say that Apple deserves no further financial rewards after spending the last two decades producing every thing in China, literally teaching them how to rip off US tech.

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