Just a year after acquiring a point-of-sale loan provider, Goldman Sachs is considering a sale of the unit — a move that would further shrink the New York investment bank's consumer finance business.
While Atlanta-based GreenSky is "a good business" that is "performing well with first-quarter originations," it may no longer make sense for Goldman to own, CEO David Solomon said Tuesday.
"Given our current strategic priorities … we may not be the best long-term holder of this business," Solomon told analysts during the company's first-quarter earnings call.
The disclosure of a potential sale of GreenSky — which makes loans to homeowners through a network of home improvement contractors — is among the latest developments in Goldman's ongoing dismantling of its consumer banking operations.
The Wall Street giant also said Tuesday that it sold about $1 billion of loans from its digital consumer bank Marcus and put the remaining balance into held-for-sale status, which resulted in a one-time loss of about $470 million.
That loss was largely offset by a reserve release of about $440 million, the company noted. The release reflects both the decrease in the volume of Marcus loans and the good performance of GreenSky loans, the bank said.
Goldman did not name the buyer of the Marcus loans that it sold. The company will look at "moving down" the remaining balance in its Marcus portfolio "over time," Chief Financial Officer Denis Coleman said on the call.
Even after those moves, Goldman may not be done with scaling back its footprint in the consumer banking business.
Betsy Graseck, an analyst at Morgan Stanley, wanted to know Tuesday if the Marcus loan sales and any potential changes related to GreenSky would be the bank's final moves related to consumer banking.
In Solomon's response, he hinted that there could be more announcements to come. Goldman still has credit card partnerships with
"I do think there are opportunities for us to do other interesting things strategically," Solomon said. "But we're going to continue to examine all the things that we can do to make that as successful as possible … We'll continue to move forward to bring the consumer platform [and] card platforms for profitability."
Goldman's journey in consumer banking has been hampered by higher than expected costs. The $1.5 trillion-asset company started building its consumer offerings seven years ago by rolling out Marcus, a digital-only platform, and it entered the credit card business in 2019.
It
But six months later, Goldman changed its tune, saying that it had decided to scale back its consumer banking ambitions.
Last October, Solomon laid out a reorganization plan that included shifting Goldman's direct-to-consumer banking operations into its wealth and asset management division. The realignment was designed to lower Goldman's customer acquisition costs.
By January, Goldman had
Some analysts reacted positively Tuesday to Goldman's latest announcements. Analyst Gerard Cassidy of RBC Capital Markets noted that changing directions carries a high cost, but he indicated that the firm's strategy makes sense overall.
"The company's decision to exit the consumer loan business, while costly, over the long run removes a distraction for the company and investors," Cassidy wrote in a research note.
In a separate note, Kenneth Leon of CFRA Research responded favorably to the transfer of the remaining Marcus loan portfolio to held-for-sale status.
Goldman isn't ready to give up entirely on consumer banking. On Monday, it launched a new savings account for Apple Card users. The account offers a 4.15% annual percentage yield.
"This is a way for us to try to open up another deposit channel, and it's always good for us to broaden our deposit base," Solomon said. "This is small at the moment and we'll watch it carefully, but I think it's an interesting opportunity for the firm."
Shares in Goldman, which
