Goldman Sachs Lost $3 Billion on Consumer Lending Push

Marcus, Goldman’s consumer-banking arm, launched in 2016 to a strong start.

Rivals

JPMorgan Chase

& Co. and

Bank of America Corp.

were posting big profits on the back of strong consumer businesses that carried them through rocky stretches in their Wall Street operations. Goldman, long reliant on its gold-plated investment banking and trading arms, wanted in on the action.

The bank rolled out savings accounts, personal loans and credit cards. Its 2019 credit-card partnership with

Apple Inc.

signaled its ambitions to be a big player in the business.

Goldman invested billions of dollars in Marcus. But it struggled to bulk up the credit-card business following an early win with the Apple Card. A long-awaited checking account never materialized.

The consumer unit was never profitable. In October, Goldman formally scaled back its plan to bank the masses.

The reshuffling parceled out the consumer business to different parts of the bank.

Before the shift, it was under the same umbrella as Goldman’s wealth-management division. 

Much of Marcus will be folded into Goldman’s new asset and wealth management unit. Some pieces, including its credit-card partnerships with Apple and

General Motors Co.

, as well as specialty lender GreenSky, are moving into a new unit called Platform Solutions.

Goldman on Friday disclosed that its Platform Solutions unit lost $1.2 billion on a pretax basis in the nine months that ended in September 2022. It lost slightly more than $1 billion in 2021 and $783 million in 2020, after accounting for operating expenses and money set aside to cover possible losses on loans. The unit also includes transaction banking, with services such as enabling banks to send payments to each other, vendors and elsewhere.

Goldman shares closed up about 1% Friday at $374.

The bank said it set aside $942 million during the first nine months of 2022 for credit losses in Platform Solutions, up 35% from full-year 2021. Operating expenses for the division increased 27% during this period. After hovering around record lows for much of the pandemic, consumer delinquencies are rising across the industry.

Net revenue for Platform Solutions’ consumer platforms segment, which reflects credit cards and GreenSky, totaled $743 million during the first nine months of 2022, up 75% from all of 2021 and up 295% from 2020. Goldman completed its acquisition of GreenSky last year. 

The disclosure didn’t reveal financial details for Goldman’s consumer deposit accounts, personal loans and other parts of Marcus. Those business lines are included in the firm’s asset and wealth management division, which is profitable, and aren’t material to the firm’s overall profits, according to people familiar with the matter. 

Goldman is in the process of winding down personal loans, according to people familiar with the matter. It will be ending its checking account pilot for employees, one of the people said, while it considers other ways to offer the product. One possible option is pitching the checking account to workplace and personal-wealth clients.

As recently as the summer, Goldman executives were saying the checking account would unlock new business opportunities for the bank. 

Marcus has been a divisive topic at Goldman. Some partners, senior executives and investors were against continuing to pour billions of dollars into the effort, in particular for checking accounts and other products that Goldman would be developing on its own.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and Charley Grant at charles.grant@wsj.com