Goldman Sachs (NYSE: GS), the leading global investment bank, will be segmenting out its business operations in the upcoming Q4 earnings report scheduled for January 15, 2020. This will include breaking out its emerging consumer division, a portion of its business that includes its digital bank venture Marcus.
According to Goldman Sachs:
Consumer & Wealth Management is a new segment that includes management and other fees, incentive fees and results from deposit-taking activities related to the firm’s wealth management business, all previously reported in Investment Management. It also includes the results from providing loans through the firm’s private bank, providing unsecured loans and accepting deposits through the firm’s digital platform, Marcus by Goldman Sachs, and providing credit cards, all previously reported in Investing & Lending.
Beyond the Consumer segment, Goldman’s other segments include Investment Banking, Global Markets, and Asset Management. Investing and Lending results are now included across the four segments of the firm.
Goldman first launched Marcus as a consumer lending platform but it soon leveraged a bank it had purchased along with the affiliated consumer deposits. The move established Marcus as the first digital-only bank offering consumer deposits without piggy-backing on the charter of another financial institution.
Marcus has experienced exceptional growth regarding deposits with consumers being lured by an above industry interest rate on savings – now standing at 1.7%. In October, Marcus reported a solid $55 billion in deposits. A release posted in September told the public that the largest banks are offering .11% APY or less than Marcus’ savings option.
Marcus currently offers digital banking services in both the United States and United Kingdom.
Last November, Marcus announced it would offer stock trading and an ISA vehicle in the UK supported by digital wealth manager Nutmeg.
Marcus/Goldman Sachs has also established a high-profile relationship with Apple and the issuance of the Apple Card – described as completely rethinking everything about a credit card.
While Marcus has grown rapidly, the digital bank is not yet driving revenue to the bottom line.
As reported last November, Marcus has reportedly experienced losses of around $1.3 billion since 2016. These losses were driven by the rapid ramp-up in both tech and skilled employees.
Goldman has indicated in the past it expects big things out of Marcus and its consumer offerings. It will be interesting to see how the numbers add up and any comments on forthcoming services planned by the digital bank when Goldman posts its upcoming earnings report.