SoFi Personal Loan Performance Suffers
A story in the Wall Street Journal last week reported that SoFi borrowers are missing their loan payments at an unexpectedly high rate. The emerging trend is part of the reason the company is said to have missed its internal fourth quarter earnings projections. According to a letter SoFi penned to investors that the WSJ obtained, the company had to mark down the “value of certain personal loan assets due to lower-than-expected credit performance.”
$202.3 million of SoFi’s $9 billion in consumer loans since inception had gone into default as of November 30th, 2017, deBanked learned through a report. Consumer loans had been made to a total of more than 266,000 individual borrowers.
A recent ratings agency chart shows the default rates of SoFi Managed Portfolio consumer loans have been increasing since 2015 and that defaults are starting to occur even earlier in the repayment cycle. The April 2015 vintage, for example, showed a default rate near 0.0% by the twelfth month. The April 2017 vintage, by contrast, had already exceeded a default rate of .5% in month eight.
Last March, Bloomberg reported that the company’s personal loan losses at that time were high enough to breach bond triggers that the loans were backed by.
The consumer loan space has become very crowded as of late, with SoFi not only competing against online upstarts like Lending Club and Prosper, but also against banking stalwarts like Goldman Sachs and Discover.Last modified: February 11, 2018