There are reports that Apple Card, an Apple credit card, is arriving one after another to US consumers. However, it is predicted that if an economic recession occurs within the next few years, the affiliate Goldman Sachs may suffer a large loss.
Gold Max Sachs, a large financial institution, is focusing on the long-term perspective without worrying about the profitability of Apple Card. However, Citigroup, one of the places where Apple negotiated as a candidate for an Apple Card partner, said it withdrew in advance because it was suspected of profitability because it was basically free of fees.
According to an analysis by analyst Nomura Securities, it is concluded that Apple Card’s portfolio is less profitable than the industry average and is likely to result in higher losses. It costs $350 to acquire one new Goldman Sachs customer. Assuming this, Goldman Sachs will be able to benefit from customers in four years.
However, if the recession hits and the US economy is hit, Goldman Sachs could lose money from Apple Card. Apple Card may be sensitive to the increase in the portion it treats as a loss on the side that imposes a debt that it believes cannot be recovered, and Goldman Sachs analyzes that when the bad debt reaches 8%, it will begin to lose money. For reference, in 2008, when the Lehman shock occurred, bad debts surged, reaching 10% or more at the peak in 2010.
Goldman Sachs is in charge of issuing the Apple Card to pioneer the market through the iPhone in a consumer market with little experience. This lack of experience means poor credit information data and could be an Achilles tendon for Goldman Sachs. Analysts are also predicting that Apple and Goldman Sachs may offer debit cards. This is because Apple Card customers are more likely to repay through their bank accounts, so they can bypass this route. Debit cards are known to be highly profitable, so it is believed that Apple Card’s losses may be compensated here. Related information can be found here .