More Job Openings than Job Seekers, PeerIQ’s LEI report, Marcus Update

by | Jun 9, 2018 | Blog | 0 comments

Greetings,

The Labor Department reports that that job openings have outnumbered job-seekers for the first time since record-keeping began in 2002. The US unemployment rate dropped to 3.8% in May, the lowest since Neil Armstrong first set on the moon in 1969.  Market participants expect the Fed to continue the rate hike campaign amidst a tight labor market, wage growth, and signs of rising inflation and long-term interest rates.

PeerIQ CEO Ram Ahluwalia spoke with Julie Verhage and Shelly Hagan at Bloomberg about how we have definitively entered the late stage of the credit supply; a period characterized by increased competition and supply of credit, greater borrower demand, and a recovery in average debt-to-income levels. Accordingly, credit card companies are proactively readying for a turn in the credit cycle by increasing loss reserves.

PeerIQ’s 2Q2018 Lending Earnings Insights report delves into quarterly earnings at credit card issuers, banks and fintech lenders. You can download the report here. PeerIQ is hosting a webinar summarizing insights from the “Lending Earnings Insights 2Q2018” on Wednesday 6/13 at 3 p.m. EDT. We look forward to hosting you! Click here to register and to add the invitation to your calendar.

 

 

This week featured a wave of fintech financing news. Cross River Bank, led by former banker Gilles Gade, raised $27 Mn in senior unsecured notes. CRB will use the funds for marketplace lending, payments, strategic financing, business and commercial real estate lending. BlueVine, an online small business lending platform, secured $60 Mn in Series E funding to expand its lending program, in a round led by Menlo Ventures. Last month BlueVine also got a $200 Mn credit facility from Credit Suisse.

Sunlight Financial, which lends money to install and upgrade solar systems, raised $50 Mn in private equity from FTV Capital to expand its financing programs. LendStreet, an online consumer debt restructuring and consolidation platform, raised $7 Mn in Series A and $110 Mn in debt from Prudential Financial, to expand operations. MoloFinance, a UK-based startup that is designing digital mortgages, raised GBP 3.7 Mn in their latest seed round.

 

GS Marcus Update

Goldman Sachs’s President and co-COO David Solomon presented the company’s vision for Marcus at the Alliance Bernstein Strategic Decisions Conference. GS is investing heavily in Marcus for the long term and expects it to be “very big, very profitable”. Below are some of the highlights from the talk:

  1. Personal loans are just the start, with possible expansion opportunities for Marcus into mortgages, credit cards, auto loans and insurance. There are 4 key product areas – Borrow, Spend, Save, Protect with 12 separate products listed with a focus on Clarity Money. Since its launch Marcus has served ~1.5 Mn customers with $3+ Bn loans originated and $20+ Bn in online deposits.Source: Goldman Sachs
  2. GS views their lack of legacy banking software as a competitive advantage and has invested heavily in building their platform. GS has invested, through capital spending and operating losses, $600 Mn, including reserves, up by $100 Mn.
  3. GS is building Marcus as a business “for the next 50 years” but is expanding the personal loan program cautiously as the credit cycle may turn. GS wants to integrate the consumer platform with its wealth management business.

No question that Marcus – and the lending and wealth management initiatives more generally –will be a significant driver of ROE in several years time and the company is investing to make it a success. As we noted in a prior newsletter, banks that lack on online banking capability do not have a seat at the table and will likely close the gap Marcus is creating via M&A.

PeerIQ Webinar

PeerIQ is hosting a webinar by CEO Ram Ahluwalia on “Lending Earnings Insights 2Q2018” on Wednesday 6/13 at 3 p.m. EDT. We look forward to hosting you! Click here to register and to add the invitation to your calendar.

We will bring to bear the full weight of our data & analytics resources to help market participants understand where we are in the credit cycle. Look forward to speaking with you then.

PeerIQ in the News:

  • Credit Card Issuers Beef Up Reserves in Anticipation of Losses (Bloomberg, 6/7/18) PeerIQ CEO Ram Ahluwalia spoke with Julie Verhage and Shelly Hagan at Bloomberg on how credit card companies are preparing for a turn in the credit cycle by increasing loss reserves. Ram said, “These companies must see early indicators of deterioration in their models. They started doing this a couple of quarters ago.”

 Industry Update:

Lighter Fare: