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.
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.