Goldman's $0.46 EPS Win: A Tactical Exit or a Costly Portfolio Transfer?

The immediate financial impact is stark. Goldman Sachs announced that the transition of the Apple Card program to JPMorgan Chase will result in a $0.46 earnings per share increase to its fourth-quarter 2025 results. This boost is a direct tactical win, but it comes with a significant cost. The firm will see a reduction in net revenues of $2.26 billion from the deal, stemming from markdowns on the outstanding credit card loan portfolio and contract termination obligations.

This frames the core trade-off. The $0.46 EPS gain is a clean accounting win, driven by the release of $2.48 billion of loan loss reserves. In other words, Goldman is writing off a high-provision portfolio that was dragging on its consumer business. The revenue loss, however, is a real and permanent exit of a high-quality, high-yield asset. The transition to JPMorgan Chase is the catalyst that forces this decision, allowing Goldman to narrow its consumer focus and redirect capital toward its core banking and wealth management franchises.

The Portfolio's Hidden Cost: A $20B Asset with High Credit Risk

The asset Goldman is exiting is substantial and carries a specific, high-risk profile. The Apple Card program represents a credit card loan portfolio of approximately $20 billion in size, a core part of its consumer business. The program's key attraction for users is its generous up to 3 percent unlimited Daily Cash back reward structure, which has driven its popularity since its 2019 launch.

The critical risk, however, is baked into the numbers. The $0.46 EPS boost Goldman receives is directly tied to the release of $2.48 billion of loan loss reserves. This massive reserve release is the clearest signal that the portfolio carried significant past credit provisions. In other words, Goldman had already set aside billions to cover expected losses from this book of business, indicating it was a high-risk, high-cost asset to manage.

This creates a direct transfer of risk. Chase now inherits this portfolio and its associated credit quality. The $2.48 billion reserve release is a one-time accounting win for Goldman, but it locks in the current credit quality for Chase. The 24-month transition timeline provides Chase with operational runway to manage the portfolio, but it also means the new issuer must absorb the credit performance of this book from day one. Any deterioration in the portfolio's quality during that period will pressure Chase's future earnings, making the asset's true cost to the new owner a key watch item.

Catalysts and Risks: The 24-Month Watch

The immediate catalyst is clear: the successful, low-impact transition of 100% of Apple Card accounts to Chase's systems within the expected transition in approximately 24 months. For Goldman, this is the event that unlocks the $0.46 EPS benefit and allows it to exit a complex, high-reserve asset. The watch item here is execution-ensuring the handoff is seamless for the 20 million+ users, maintaining the card's award-winning experience, and hitting the timeline without operational hiccups that could trigger unexpected costs.

The key risk, however, shifts to Chase. The firm inherits a portfolio with a known history of credit provisions. Any deterioration in the portfolio's quality during the transition period could force Chase to take further provisions, directly impacting its earnings. Goldman's massive reserve release of $2.48 billion is a one-time accounting win that locks in the current credit quality. Chase now bears the future risk of that book, making the portfolio's credit performance a primary watch item for the next two years.

Beyond the core credit risk, two other items will shape the outcome. First is the stability of the Apple Card's core incentive: the up to 3 percent unlimited Daily Cash back reward. If Apple or Chase later reduces this generous offer, it could affect user retention and the portfolio's overall profitability. Second is the integration of Chase's own credit products into the Apple Wallet experience. The partnership announcement highlights a shared commitment to innovation, but the real test will be whether Chase can successfully cross-sell its products within the Apple ecosystem, turning a simple issuer transfer into a strategic growth opportunity.