JPMorgan To Take Over Apple Credit-Card Business, Report Says

JPMorgan Chase & Co. will replace Goldman Sachs Group Inc. as the partner for Apple Inc.’s credit-card business, bookending Goldman’s costly foray into consumer finance.

The portfolio’s transfer will occur in about two years, the firms said Wednesday. The arrangement will boost Goldman’s earnings per share by 46 cents in the fourth quarter, the bank said.

“We look forward to continuing to support our customers during the transition to a new issuer as we focus on advancing the strategy we laid out for our core franchises,” Goldman Chief Executive Officer David Solomon said in its statement, referring to businesses such as investment banking, markets and asset management.

The deal lets Goldman release $2.48 billion of reserves for loan losses — an amount that’ll be offset by a $2.26 billion hit to net revenue as it marks down the outstanding credit-card loan portfolio and terminates contractual obligations. It also expects $38 million in other related expenses.

The announcement was widely anticipated as the bank, known for its Wall Street prowess, retreated from a foray into consumer banking that had attracted mounting skepticism from shareholders and employees. The firm lost more than $7 billion before taxes since the beginning of 2020 on consumer-lending businesses, analysts at RBC Capital Markets wrote in a note Wednesday.

Apple, however, has stood by its bet on consumer-focused financial services, dominating the digital-wallet space.

Mastercard Inc. will remain the payment-network partner for the credit card, the Cupertino, California-based maker of iPhones and computers said in its statement.

“Apple is an iconic brand recognized globally for its innovation, design excellence and commitment to delivering exceptional customer experiences,” Allison Beer, JPMorgan’s head of cards and connected commerce, said in the Apple statement.

Apple had also spoken to other potential lending partners including Synchrony Financial and Capital One Financial Corp., Bloomberg reported last year.

The transaction with JPMorgan is expected to include about $20 billion of outstanding card balances, with a discount of more than $1 billion, a person familiar with the matter said.

The Wall Street Journal reported the agreement earlier Wednesday.