Peer IQ Insights for Q1 2018

Peer IQ released its 2018 first quarter “Lending Earnings Insights,” which analyzes lender performance with a focus on credit performance trends. They analyze data across three main lender segments: Fintechs and Non-banks, Large banks, and Card issuers. Below are some highlights from Peer IQ’s analysis on this year’s first quarter:

Credit re-normalization continues
“Credit re-normalization continues across all major lending groups. Credit performance this quarter is mixed. We observe improvements, and record low delinquencies from ONDK, OMF, and FinTechs in particular. LendingClub expects 31 bps lower charge-offs going forward due to tighter credit standards. At Discover – a bellwether for personal loan performance – the net charge off rate jumped 92 bps YOY to 3.62% – the largest increase in several years.

Card issuers
“Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. American Express increased loan loss provisions 33% although loan growth was only 14%.”

Banks and FinTech
“Bank FinTech partnerships, and M&A continues. Banks are either partnering with FinTechs or investing in beefing up their technology capabilities in payments, lending, digital banking and wealth management. Banks like JP are partnering with Amazon by rolling out co-branded checking accounts and credit cards. A specter is haunting financial services – the specter of Amazon.”

Lenders Pass the Buck on to Borrowers
“Lenders are taking actions to pass rising rates on to borrowers to protect margins and investor returns. Lenders are also trying to reduce all-in funding costs by reducing the credit spreads on their securitizations.”

Todd Stone was a reporter for deBanked.