NEW YORK (Reuters) - Goldman Sachs Group Inc’s credit card deal with Apple Inc is the latest move by the Wall Street investment bank to court mass-market consumers, potentially connecting Goldman with hundreds of millions of iPhone users.

FILE PHOTO: The logo of Apple is seen at a store in Zurich, Switzerland January 3, 2019. REUTERS/Arnd Wiegmann -/File Photo

But Goldman is entering a crowded market for co-branded cards where retailers often have the upper hand, and analysts question how much tolerance its shareholders will have for growing the bank’s fledgling consumer business through credit card lending.

Goldman has been courting consumers since the 2016 launch of its online bank Marcus, and with its first credit card it is targeting fee-conscious ones. There will be no annual or late fees, and customers will pay variable annual interest rates of between 13.24 percent and 24.24 percent, according to Apple’s website.

Apple and Goldman did not disclose the economic terms of their partnership when it was announced on Monday.

But banks have been increasingly willing to take less favorable deals because post-financial crisis regulations make the credit card business attractive for lenders, which are required to hold less capital against such debt than against other assets.

“As this kind of benign credit environment continues retailers have a greater leverage than they had a few years ago,” said a person involved in similar credit card deals.

Issuing banks retain control of approving customers for cards, often using data the retailer has on shoppers as part of the process, the person said.

Goldman Chief Executive David Solomon said in an email to employees on Monday that the card is a “major step” in the bank’s plan to grow its consumer business.

Solomon has said the consumer business is a critical part of the bank’s strategy to grow revenues and cut costs, as revenue shrinks in traditional areas of strength for Goldman like bond trading.

But many investors have been uneasy with Goldman growing its unsecured consumer debt, especially at a time when many speculate that a recession could be looming, said UBS analyst Brennan Hawken.

Marcus now has $45 billion in customer deposits in the United States and the U.K., and has issued $5 billion in personal loans, according to Solomon’s email.

While the amount of loans is small compared to the bank’s overall balance sheet, Hawken said investors would likely prefer Goldman stick to using its consumer business to add deposits, as opposed to personal loans or credit card debt.

“People want Goldman to be Goldman,” Hawken said. Goldman declined comment for this article.

The Apple Card’s wide interest rate range indicates that some customers might have lower credit scores, said Josh Siegel, chief executive of StoneCastle Financial Corp. However, the bank may not necessarily keep that risk on its books.

“They might securitize the debt, which wouldn’t be anything new for an investment bank,” Siegel said. “I can’t imagine that Goldman Sachs, all of a sudden, especially with where we are in the credit cycle, is going to go long on unsecured consumer debt.”

As this is Goldman’s first foray into credit cards, it may take the bank a year or two to assess the quality of its credit decisions, according to an industry expert who declined to be named.

The same person said that the stated range of possible interest rates on unpaid balances was too wide to clearly show how much credit risk Goldman expects to take.

Credit risk concerns aside, analysts said that Goldman’s decision to launch its first credit card in partnership with one of the world’s biggest companies gives it the opportunity to gain consumer market share.

While Apple says its card is “created by Apple, not a bank,” according to its website, the Goldman Sachs logo will appear on the back of the card.

“For Goldman this is a play for massive distribution without having to contort too much,” said Lex Sokolin, global director of fintech strategy and partner at Autonomous Research.

“It makes their brand way better at least in the retail and mass affluent marketplace.”