Goldman Sachs sees higher loan deferral opt-ins than competitors - Business Insider

Goldman's deferral rates are higher than its competitors', but its smaller size might afford it some flexibility. Recently announced Q1 2020 bank earnings shed light on shifting consumer behaviors due to the pandemic, as well as on what banks are doing to brace for losses they expect to incur from extending relief to customers.

Compared with Goldman's 10% to 20%, Bank of America said that 3% of its consumer and business card customers had opted to defer payments as of April 8, while JPMorgan Chase has seen 4% of its mortgage customers opt into forbearance. The person familiar with the matter told the FT that the newness and smaller size of Goldman's 4-year-old consumer lending business relative to its more mature competitors allows it to extend forbearance to a higher percentage of customers without taking as big of a financial hit: Goldman's provisions for loan losses in increased annually to $937 million — significantly lower than competitors', all of which are in the billions — and the bank plans to reduce its pace of origination...

Goldman Sachs was one of the first banks to extend coronavirus-response accommodations: By mid-March, Apple Card cardholders had the to skip their March payments without incurring interest — through Apple's Customers Assistance Program — which came weeks before some competing banks extended comparable options. This could have contributed in part to Goldman's higher level of deferrals.

While the risks of losses associated with granting payment deferrals might be high, the reputational damage of not extending the option could ultimately be worse. A prolonged period of

The bigger they R. Watch this bank collapse. No bailout Plz.

Thanks Goldman. Considering you would be out of business if it weren’t for us, we really appreciate it.

Mm

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