Goldman Sachs may be new to Main Street lending, but the Wall Street bank insists that it is well prepared for a downturn in consumer payment rates.

Some analysts have questioned the timing of Goldman’s foray into consumer lending — its loan platform, Marcus, launched in October 2016 — since many observers believe that the U.S. credit cycle is in its late stages.

Martin Chavez, Goldman’s chief financial officer, addressed those concerns during an earnings call Tuesday. He said that Goldman Sachs is focused on borrowers with prime credit scores, and that realized losses so far have been less than what the firm projected.

Goldman Sachs signage is displayed at the company's booth on the floor of the New York Stock Exchange.
Goldman Sachs signage is displayed at the company's booth on the floor of the New York Stock Exchange. Bloomberg News

“This is an organically growing business,” he said. “We’re doing it slowly and deliberately.”

The fixed-rate loans range in size from $3,500 to $30,000. Goldman Sachs has made $1.7 billion in consumer installment loans in the 12 months since the launch of Marcus, a digital platform that competes with the likes of Lending Club. The company expects to make an additional $300 million in loans by the end of 2017.

Chavez also touted the talent that Goldman has hired to run Marcus. The business is run by Harit Talwar, a former executive at Discover Financial Services, which specializes in unsecured consumer lending.

“We are well aware of where we are in the credit cycle,” Chavez said. “Even though Marcus is a new business for us, the people who are building and leading that business for us are industry veterans in consumer finance.”

Goldman reported net earnings of $2.13 billion in the third quarter, up 2% from the same period a year earlier. The increase was driven largely by gains on investments, which helped to offset a steep decline in income from trading activities.

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Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.