SoFi personal loan originations surge 50%

Despite macro headwinds, demand for personal loans, savings accounts and “cross-buy” opportunities drove SoFi Technologies’ performance.

SoFi Bank Total Deposits increased 46% in the fourth quarter to $7.3 billion. Management said in a conference call that his 88% of SoFi Money deposits (across current accounts, savings accounts and SoFi Money cash management) are from direct deposit members.

Management noted that about half of newly funded SoFi Money accounts set up direct deposits within 30 days of account setup.

According to the call commentary, these accounts provide an important means of lifting trading activity between members.

Average spending in Q4 was up 25% from Q3.

Investors cheered the result, sending the stock up about 15% at the market’s opening on Monday.

Personal loan originations of about $2.5 billion in Q4 2022 increased by about $820 million or 50%, offsetting declines of 72% and 84% in student loans and mortgages, respectively.

Diverse revenue streams

In a conference call with analysts, CEO Anthony Noto said the diversification of revenue streams and the fact that the company obtained a national bank license last year make SoFi “incredibly flexible in a rapidly changing environment.” I was able to become

He added that the aforementioned deposit activity “strengthens and diversifies our funding sources, generates impressive returns and improves our net interest income, while enabling us to offer the best interest rates on loans.” By using deposits as a funding source, the company has benefited from lower financing costs for loans and will continue to do so, he said.

Digging a bit into customer profiles, he said the total roster of SoFi Money members has grown by more than 53% year-on-year to reach 2.2 million.

And given the FICO score of 745 for these members, there is, in Noto’s words, “plenty of opportunity” for cross-selling. Financial Services net revenues therefore tripled year-over-year to $64 million.

On the conference call, management also noted that the Technology Platform is also performing strongly, with Galileo’s accounts growing from less than 100 million last year to more than 130 million. In the fourth quarter, Galileo assigned 11 new clients, 36% of new deals were his B2B and 27% of new deals were from outside the US.

Chief Financial Officer Chris Lapointe said: strong credit performance

He said delinquency and write-off rates “remain healthy” and are still below pre-COVID levels. His 90-day personal loan delinquency rate on the on-balance sheet for the quarter was his 34 basis points.

Management also said there is plenty of room for growth in personal loans, which Noto called the company’s “credit box,” with a market share of around 6%, up from 4.5% last year. Looking ahead, there are also opportunities to leverage other deposits, such as SMEs (since SoFi already has a banking license), according to remarks made during the Q&A session.

Noto also said, “We can underwrite IPOs once the IPO market is open…we are the sole retail distribution channel for Riviana IPOs…our members want access to IPOs and we Main Street with access to IPOs.” And in tribute to its B2B-focused partners, the company has expanded its fraud prevention services for Galileo partners, helping companies bring new financial products to their markets. We help you put it in.

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