Despite macro headwinds, investment volatility and Wall Street-related business, Goldman Sachs continues to make progress in its consumer-facing segments, including with online-only banking Marcus.
CEO David Solomon said on a conference call with analysts to discuss the first quarter earnings results that the stage is set for an ongoing challenge to former financial services players.
“In terms of our aspirations to build the world’s first digital consumer bank, many pieces of the puzzle are in place at this point,” he said. “A lot of those investments have been made.”
He added that “we are very pleased with the progress made on the various lending and deposit platforms that we have invested in and built in.”
Active customers in the consumer space of Goldman’s operations numbered more than 13 million last quarter, down from less than 10 million in the fourth quarter.
Total consumer and wealth management revenue was $2.1 billion, up 19% year-on-year. The unit includes Marcus. Management said on the call that so far Goldman/Marcus has not raised its rates paid on savings.
Going down in the compensation supplementsthe company said net retail banking revenue rose 30% to $483 million, driven by its credit card business.
Credit card-related loans were $11 billion, down from $4 billion last year and $8 billion in the fourth quarter of last year. The company said in its filings that the increase in card lending came when Goldman acquired General Motors’ co-branded credit card portfolio.
Installment loans in the latest quarter were $4 billion, virtually unchanged from the fourth quarter of 2021, and up from $3 billion in the first quarter of last year.
Chief Financial Officer Denis Coleman said on the call that company-wide assets under review in consumer and wealth management were $738 billion in the last quarter, compared to $637 million last year.
“As we continue to grow our consumer business and grow our lending business, we recognize that macro headwinds and inflationary pressures could potentially weigh on payout rates and net portfolio performance,” a- he declared.
Target loan growth
Comments on the call indicated that Goldman will look to drive loan growth on the consumer platform, on installment loans, on cards and with the company’s recent acquisition buy now, pay later ( BNPL) GreenSky (the agreement was concluded in September last year).
As GreenSky continues to issue loans, Goldman management has indicated that it will take those loans on its balance sheet, and where origination volumes were $1.5 billion in the first quarter.
Provisions for credit losses last quarter were $561 million from $344 million, related in part to growth in card loans.
During the call with analysts, Solomon said that “we have become accustomed to low inflation, low interest rates and the free movement of people and goods across national borders. I believe we are entering a period where this will not be the case. The consequences for financial markets will be significant.
Goldman, he said, is focused on building a “more resilient and diverse franchise.”
Looking ahead, Solomon said, the company is on track to launch verification services more broadly to its customers later this year.
“We’re already piloting this internally,” he said on the call. “And [checking] will be an important part of the product roadmap for us.
Most of the investments needed to meet a $4 billion revenue target for the retail banking segment have been made, he added.
Solomon said the ongoing partnership with Apple (including on cards) remains “very strong”.
With a nod to other digital endeavors, when asked about blockchain initiatives on the call, Solomon said the company was following a “regulatory track” which, so far, for large banks is “restrictive”. It’s a situation that may not change much in the current year, he told analysts.
“But when it comes to how blockchain supports infrastructure, payment systems, and financial markets, we’re extremely engaged and invested in thinking about how Goldman Sachs can participate,” he said. he declares.