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Good news for credit unions in Goldman Sachs' latest earnings

There could be good news for credit unions in the latest earnings data from Goldman Sachs.

The New York banking giant reported Wednesday that it sharply curtailed its originations of personal loans last year amid the rollout of its credit card partnership with Apple.

Goldman Sachs’ personal loans outstanding at the end of 2019 were in the $5 billion range, unchanged from a year earlier. The company started offering personal loans under its Marcus brand in the fall of 2016 and hit $4 billion in originations in less than two years. The company retains all of its personal loans on its own books.

Many credit union watchers were concerned when Marcus launched in 2016 because of its potential to cut into the industry’s unsecured loan portfolio. Recent data shows those fears may have been overblown.

According to the latest Credit Union Trends Report from CUNA Mutual Group, unsecured lending at credit unions – excluding credit cards – was up by 7.5% year-over-year in November, the most recent data available, for a total of $47 billion. While growth rates have fluctuated, year-over-year growth for that product has not dipped below 5.9% during any month for the last two years and has generally stayed above 7%.

Goldman generally eschewed consumer banking during its first 145 years, but has recently built retail loan and deposit franchises from scratch. The mobile app for Marcus, which has both borrowing and saving features, was rolled out last week.

Goldman’s partnership with Apple for the Apple Card has taken some of the momentum away from Marcus, and the company said Wednesday it already has $2 billion in loans on the product, which only launched in August.

“The slowing pace of growth in our Marcus unsecured loan business reflected the anticipated growth in our credit card lending from the launch of Apple Card,” Chief Financial Officer Stephen Scherr said Wednesday during the company’s quarterly earnings call.

Credit unions haven’t had the same concerns about the Apple Card as they did with Marcus. CUNA Mutual data shows just 5.9% year-over-year credit card growth for CUs as of November, a total of $65.1 billion in loans. One year prior credit card growth was at 7.8% year over year, and in November 2017 that figure stood at 9.1%.

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