Originations: Totaled $2.5 billion, down 10% from a year ago.
Credit Performance: Loan net charge-offs were 8.6%.
OpEx Ratio: Was 6.6%.
Future Guidance
Managed Receivables: Expected to end the year with approximately $24 billion, which includes about $1 billion from Foursight acquisition.
Total Revenue Growth: Anticipated to be in the range of 6% to 8%.
Interest Expense Ratio: Projected to be approximately 5.2% of average net receivables.
Consolidated Net Charge-Offs: Expected in the range of 7.7% to 8.3%, with a peak in the first half of 2024.
Operating Expense Ratio: Forecasted to be around 6.7% for the full year.
Trends, Market Conditions, Sentiment
Credit Trends: Clear evidence that credit tightening actions have begun to positively impact delinquency and ultimately losses.
Consumer Health: Despite healthy wage growth and low unemployment, elevated interest rates and the increase in living expenses pose challenges.
Strategic Initiatives: Expansion of product offerings, including the BrightWay credit card and auto finance, is key for long-term growth.
Cost Management: Targeted expense actions, including reduction in headcount and real estate, underline a disciplined expense management strategy.
Capital Allocation: Continues to focus on profitable originations and strategic acquisitions like Foursight for diversification and growth. Additionally, a commitment to a strong regular dividend and modest share repurchases underscores confidence in the business model.
Market Outlook: Despite current uncertainties, including the macroeconomic environment and interest rate volatility, proactive management of portfolio and a conservative credit posture are expected to navigate potential challenges.
Notable Quotes
”We feel very good about the results this quarter, especially the credit trends…” - Doug Shulman, CEO, on the positive impacts of credit management strategies.
”…we are seeing clear evidence that the credit tightening actions we have taken over the last couple of years are driving delinquency and ultimately losses in the right direction.” - Doug Shulman, emphasizing the effectiveness of tightened credit measures.
”For our customer who makes on average $65,000 to $70,000 a year, their average income is up about 25% compared to pre-pandemic, but the cost of everyday expenses in aggregate from food, to housing, to gas is also up over 20%.” - Provides a snapshot of the consumer financial health landscape.
”We are using these competitive advantages to position OneMain for the future and expand our addressable market in a highly disciplined manner and drive profitable growth.” - On strategic initiatives aimed at leveraging OneMain’s strengths for future growth.
”Our top priority to invest in the business to position us for ongoing success has not changed.” - Reaffirmation of long-term strategic focus and investment in growth.
