After much discussion and speculation, JPMorgan Chase has agreed to assume Apple’s $20 billion credit portfolio from Goldman Sachs.
The deal offers benefits for all parties involved. For Goldman Sachs, it represents the end of a rocky foray into consumer lending and a return to its core business. For JPMorgan Chase, the bank will acquire a sizable credit portfolio at a discount while strengthening ties with one of the world’s leading technology companies. For Apple, the arrangement places its credit business in the hands of an established consumer lender.
“The problem here is Apple wanted everybody who had a phone to have a card,” said Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research. “Goldman Sachs accommodated it for a while, and then it started to blow up and you have these billion-dollar credit write-offs, and Goldman Sachs had to get out of it. Being an investment bank and then trying to move into retail—it was a very different culture.”
Weathering the Transition
To prepare for potential risks, JPMorgan will record a $2.2 billion provision for credit losses when it reports its Q4 2025 earnings. However, as the largest lender in the United States—and soon to be even larger—Chase is well positioned to weather this transition, which is expected to take roughly two years.
“It’s a win for Chase in some ways,” Riley said. “It doesn’t bring in a zillion new customers—Chase is already in one out of two households in the U.S—but it does bring in some good technology. It is a springboard to reach millennials and younger adults, but Chase is often already there. But it increases volume by 10%, and being able to do that, in itself, is important.”
In addition to the increased volume, Chase will acquire the Apple Card portfolio at a discount of over $1 billion. This reflects the portfolio’s higher concentration of subprime and less-than-optimal borrowers.
“Chase is a very conservative lender, and that’s want you want out of the biggest bank in the United States,” Riley said. “They’re not going to carry over the Goldman Sachs standards. You can expect that there are going to be bank-grade lending standards in place, and that’s important.”
That said, Chase has demonstrated flexibility in the past. For example, with its Chase Rise card, the bank has softened underwriting criteria when borrowers open a checking account. The rationale is that consumer who deposit their salaries into a checking account are more likely to be stable, long-term relationships.
A Wobbly Portfolio
While Chase could bring a similar model to Apple’s portfolio, it would still face risks that require a response.
“They can mitigate a lot of the risks by shutting down accounts,” Riley said. “When you start looking at the portfolio and you get down and dirty into it, there’s going to be some pockets they want to grow and there’s going to be some pockets they want to diminish. They can do that systemically and not have the emotion of tying into the old business.”
Cleaning up Apple’s portfolio will require significant legwork on Chase’s part, but this has already been factored into the deal.
“The big thing to point out is usually these deals come with a premium,” Riley said. “This comes with a discount, and that tells you how wobbly the portfolio is. It will take years for that to work its way out of the system, but it’s something that Chase is used to. It’s a very large bank with lots of computer horsepower behind it.”
