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Earnings SoFi reports strong performance in first quarter 2025 earnings

SoFi reported Q1 results yesterday, and we were impressed, particularly with their Loan Originations (and the Loan Platform Business in particular).

SoFi's Q1 performance showcased significant momentum, especially within its Loan Platform Business (LPB), where the company originates loans for third-party partners. Total originations hit a record $7.2 billion, fueled by a standout $5.5 billion in personal loans – a 69% year-over-year surge. Notably, $1.6 billion of this personal loan volume came directly from the LPB, demonstrating its growing scale.

This "game changer," as CEO Anthony Noto called it, allows SoFi to monetize a wider applicant pool (including the 70-80% typically rejected for balance sheet loans) in a capital-light way. The LPB generated $96.1 million in high-margin (~50%) fee revenue in Q1 alone, significantly boosting SoFi's shift towards fee-based income, which now constitutes 41% of adjusted net revenue.

Demand for SoFi's Loan Platform Business (LPB) from partners is robust, evidenced by $8.3 billion in new funding secured this year through partnerships with Blue Owl ($5B), Fortress ($2B), and a Fortress-Edge Focus joint venture ($1.2B). This robust pipeline supported $1.6 billion in LPB loan originations in Q1 alone, with additional volume expected in Q2. Reflecting this potential, SoFi management anticipates the LPB will become the company's third $1 billion revenue business.

Beyond direct revenue, the LPB strengthens SoFi's ecosystem by keeping members engaged through loan servicing, reinforcing the Financial Services Productivity Loop. While facing the typical risks of the lending market, the LPB's growth, strong partner demand, and strategic fit highlight its increasing importance to SoFi's future success and profitability.

Other key takeaways (as noted by BofA Global Research and in SoFi’s 8K)

• Borrowers remain high-income and of high credit quality. Average personal loan user income of $158k and a FICO score of 758, while student loan borrowers average $134k of income and a FICO of 769. Credit trends also improved q/q for both personal and student loans.

• Cross-buying remains strong, with 32% of new products in the quarter being adopted by existing SoFi members. Additionally, 90% of SoFi+ members were existing members.

• Credit Cards up 20% YoY

• Referred Loans up 73% YoY (this is the Loan Platform Business)

• Checking & Savings up 41% YoY

[SoFi] [BofA Global Research] [American Banker]

LendingClub's profits get hit by macroeconomic uncertainty

LendingClub, the online lender known for its personal loans and digital banking services, saw Q1 profits fall short due to "macroeconomic uncertainty" and a significant increase in loan loss provisions, at $58.1 million, up from $31.9 million a year ago. Net income landed at $11.7 million and earnings per share at 10 cents, both under analyst expectations. Still, revenue climbed to $217.7 million. The company also announced the acquisition of Cushion, an AI-powered financial assistant that helps customers track bills, make payments, and monitor loans. LendingClub also doubled down on its Bay Area roots with a $74.5 million real estate deal in San Francisco. [American Banker]

Credit-Card Companies Brace for a Downturn

Credit card giants like JPMorgan Chase, Citigroup, and Synchrony are bracing for a potential downturn by tightening lending, beefing up reserves, and shifting focus to wealthier customers. Despite steady spending in early 2025, delinquencies are creeping back to pre-COVID levels, and signs like more consumers making only minimum payments are making lenders nervous. “The focus right now is on the future, which is obviously unusually uncertain,” JPMorgan Chase finance chief Jeremy Barnum told analysts. U.S. Bancorp said it’s revamping its card strategy to prioritize premium offerings and target more affluent households — a smart bet, given the top 10% of earners now account for roughly half of all U.S. spending, according to government data. Meanwhile, American Express is cruising ahead, buoyed by high-income cardholders and a 7% bump in Q1 U.S. spending. [WSJ]

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