Goldman expects to hold $28bn of online loans on balance sheet by 2020

By Ryan Weeks on 18th September 2017

P2P/Marketplace LendingAlternative Credit

Goldman Sachs sees online lending as its biggest revenue growth opportunity over the next three years.

Goldman expects to hold $28bn of online loans on balance sheet by 2020

Barely a day goes by without Goldman Sachs being mentioned in a fintech-related news piece. But the bank is doing nothing to stem the speculation. Quite the reverse, in fact.

Last week Harvey M. Schwartz, president and co-chief operating officer at Goldman, made no bones about the importance of online lending to the bank. In a presentation delivered at Barclays Financial Services Conference, Schwartz singled out Goldman’s online lending initiatives as the bank’s single biggest revenue driver over the next three years.

By 2020, Goldman expects to make more than $2bn in net revenues from its lending and financing efforts. Of these efforts, its consumer lending and deposit platform, Marcus, is the most significant.

Marcus is an online lending platform which funds loans using deposits from Goldman’s banking operations. Launched in the US in October 2016, the platform has already loaned out over $1bn, and expects to cross the $2bn mark by year end.

Goldman expects the Marcus loan and deposit platform – which looks poised to arrive in the UK soon – to account for over $1bn of revenue by 2020. The bank then sees its plans to lend money to high net worth individuals and to companies accounting for another $500m+ each. The $2bn that Goldman sees it lending efforts generating over the next three years is twice the forecasted net revenues of any other of the bank’s activities. For context, it sees its firmwide net revenue growth opportunity as approximately $5bn.

The Marcus loan and deposit platform targets “prime consumers” with FICO scores of over 660. It has already attracted more than $15bn of retail deposits. The bank’s corporate lending strategy will focus on “key growth areas”, including middle market lending, real estate, alternative energy and structured credit in growth markets.

Page 19 of Schwartz’ presentation shows that Goldman anticipates holding $28bn of online loans on its balance sheet by 2020.

In addition to its own activities, Goldman is also busily investing in upstart online lending platforms. Most recently it committed £100m of debt and equity capital to UK-based employee benefit lender Neyber.

Speaking to CNBC’s Jim Cramer in June, Goldman Sachs CEO Lloyd Blankfein (pictured) said that the plan was to grow the Marcus platform gradually.

“But we're going to grow, you know, we're going to grow this thing,” he added. 

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