A new analyst report today from Nomura, seen by CNBC predicts that Goldman Sachs could see notable losses on Apple Card customers if a recession happens within the next few years. This estimate is based on the firm’s belief that it will take several years for Goldman Sachs to break even on the cost acquiring of Apple Card users.
Goldman Sachs has said that it isn’t worried about Apple Card profitability and is more focused on the long-term. However, Citigroup allegedly pulled out of doing an Apple Card deal due to profitability doubts. Today, Nomura analyst Bill Carcache detailed in a note that he believes Apple Card will be more vulnerable to losses as it is expected to create lower revenue than competing products.
Specifically, Carcache estimates that it will take Goldman Sachs four years to break even on its Apple Card customers.
If a recession does hit the US economy in that window, Goldman could see losses on Apple Card.
Compounding those potential issues, Carcache notes that “outsized headwinds” could be a factor in the same timeframe as peak losses normally occur from credit card loans at the two-year mark.
Nomura’s report comes as we heard last week that Apple Card approvals have been seen as overly generous, which has caused some concerns about the risk that Goldman Sachs is taking on.
If you’ve just got your Apple Card or are just curious about it, check out our hands-on and how-to coverage below:
- Hands-on: Apple Card application and approval, Wallet app, iPad support, more
- Apple Card: How to track and manage Daily Cash rewards
- Apple Card: How to manage bank accounts used for payments
- Apple Card: How to manage bank accounts used for payments
