OneMain expands lending as credit loss provisions rise
OneMain Holdings expanded managed receivables and new consumer lending in the third quarter. Its provision for receivable losses increased from 488 million dollars to 615 million dollars, while net income declined. Interest expense also rose as the lender financed growth with additional debt and faced a higher funding cost.
Economics & Markets··Midday
New consumer lending increases
OneMain Holdings, a US consumer lender, announced its third-quarter financial results. The release included figures for lending and financial performance for the quarter ended in September.[1], [2]
Managed receivables grew 9 percent year on year to 28.1 billion dollars at September 30. This total includes sold loans that OneMain services for other parties. Consumer loan originations increased 17 percent, from 3.9 billion dollars to 4.5 billion dollars. In the Consumer and Insurance segment, total revenue rose 7 percent to 1.7 billion dollars, with interest income also up 7 percent to 1.5 billion dollars.[1]
Loss provisions and funding expenses rise
The provision for receivable losses increased from 488 million dollars to 615 million dollars. The allowance balance rose by 146 million dollars during the quarter. Interest expense climbed 8 percent to 345 million dollars. OneMain attributed that increase to additional debt used to support receivables growth and a higher funding cost.[1]
Consumer loans more than 30 days delinquent represented 5.34 percent, while loans more than 90 days delinquent represented 2.26 percent. The annualized net charge-off ratio stood at 6.89 percent. That was above the prior-year figure of 6.67 percent, but below the preceding quarter’s 7.77 percent.[1]
Net income falls while capital generation grows
Pretax income declined from 263 million dollars to 233 million dollars and net income fell from 199 million dollars to 185 million dollars. Diluted earnings per share decreased from 1.67 dollars to 1.60 dollars. Adjusted net income in Consumer and Insurance fell from 227 million dollars to 174 million dollars, while adjusted segment earnings per share declined from 1.90 dollars to 1.51 dollars.[1]
Management’s capital generation measure rose from 272 million dollars to 284 million dollars. It removes the after-tax change in the loss allowance from adjusted segment income while retaining current-period net charge-offs. OneMain repurchased 538,000 shares for 34 million dollars. Quarter-end debt principal was 24.4 billion dollars and cash totaled 936 million dollars. A dividend of 1.05 dollars per share is payable November 13 to shareholders registered November 9.[1]
