After clinching Apple Card sale to JPMorgan, Goldman Sachs nears the end of its years-long consumer headache

Core Viewpoint - Goldman Sachs has agreed to transfer its Apple Card business to Chase, marking a significant step in the firm's strategy to refocus its consumer banking efforts, which have been problematic for the company [1]. Group 1: Transaction Details - The deal is pending regulatory approval and is not expected to be finalized for two years, but both Goldman Sachs and Chase will account for the transaction in their fourth quarter earnings reports [2]. - Goldman Sachs anticipates a one-time earnings per share boost of $0.46 from the hand-off, while expecting a net revenue decline of $2.26 billion due to markdowns on the credit card loan portfolio and contract terminations, which will be offset by the release of $2.48 billion in loan loss reserves [3]. Group 2: Financial Impact and Analyst Insights - Analyst Mike Mayo from Wells Fargo noted that the one-time gain appears favorable, considering the consumer banking efforts have been value-destructive, with losses amounting to $7 billion on a pre-tax basis since 2020 [4]. - Prior to the announcement, analysts had projected Goldman Sachs to report fourth quarter earnings of $11.50 per share [4]. Group 3: Strategic Shift - Discussions to retreat from the consumer banking sector began internally in early 2022, with CEO David Solomon indicating that the bank's rapid expansion efforts were overwhelming [6]. - Solomon mentioned that regulatory pressures and the realization that the consumer banking initiative was not yielding the desired results led to the decision to exit the partnership with Apple [7].