Wall Street banking giant Goldman Sachs Group, Inc. reported a 60-year over year drop in second quarter profits on Wednesday, with the weakness blamed primarily on dwindling deal activity.
“Goldman Sachs reported a sharp drop in profit on Wednesday as deal making and trading, a core part of the mega bank’s business, dry up. The Wall Street titan also felt the pain of a nearly $1 billion reduction in the value of its consumer and real estate businesses,” said CNN reports.
Tech giant Apple, Inc. may also have a part to play in Goldman’s disappointing earnings show.
What Happened is that 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 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.
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,” said a Wall Street Journal report 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,” said Benzinga.
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.
© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.
Produced in association with Benzinga
Edited by Judy J. Rotich and Newsdesk Manager
“What’s the latest with Florida Man?”
Get news, handpicked just for you, in your box.