Goldman Sachs is a leading force in capital markets and investment banking activities. But it just showed once again that it could not figure out how to successfully break into consumer banking. The financial services institution has decided to sell the $20 billion Apple Card portfolio, a program it has run since its inception in 2019, to Wall Street rival JPMorgan Chase (JPM +1.04%). The transaction is expected to close in 24 months, according to the press release.
Here's what investors need to know.
Image source: JPMorgan Chase.
JPMorgan Chase gains access to high-value consumers
The Apple Card partnership surprisingly wasn't a winning product offering for Goldman Sachs. Unexpectedly high charge-off rates as a result of looser lending standards, with a particularly higher proportion of approvals to consumers with FICO scores below 660 (considered fair to very poor), led to the troubles. This is part of the bigger struggles Goldman Sachs had getting its consumer banking efforts off the ground.
But one person's trash could be another person's treasure. That's what JPMorgan Chase, the biggest domestic bank with $4.4 trillion in assets, is hoping for. It has a leading position in consumer banking, serving 85 million consumers.
JPMorgan Chase will immediately gain access to more than 12 million Apple Card customers (data is from January 2024). Today, this likely means tens of millions of people who own Apple devices and are also more affluent than the general population. Being able to cross-sell the bank's vast array of products and services is the key opportunity here.
On the fourth-quarter 2025 earnings call, JPMorgan Chase management highlighted the challenge of properly integrating Apple Card into their internal systems. But optimism is there. "In terms of the portfolio and the transaction, this is, you know, an economically compelling transaction for us," CFO Jeremy Barnum said.
NYSE: JPM
Key Data Points
Expect minimal financial impact
Goldman Sachs will still handle the Apple Card for the next two years until this deal closes. After it does, assuming regulatory approvals take place, investors shouldn't expect much of a financial impact for JPMorgan Chase.
As of Dec. 31, the bank had $1.5 trillion in total loans in its portfolio. Apple Card's $20 billion in balances would represent a tiny 1.3% of that entire sum. That's not going to move the needle in any meaningful way.
This transaction, in my view, also doesn't have any influence on the investment implications of JPMorgan Chase stock. Given its expensive valuation, with shares trading at a price-to-book ratio of 2.5, this isn't a worthy portfolio addition right now.
