Retail Sales & E-Commerce; Payment Priority Surprise; Banks Shifting to Digital
By Tito Donis
May 17, 2020
Source: WSJ, The Daily Shot, PeerIQ
What is the Forbearance to Cure Roll-Rate? (And Forbearance to Charge-Off?) The most often asked question we get asked today is, “will these deferments turn into defaults?” Two data points. Both of these comps are imperfect, but better than nothing. Elevate We dug into the Elevate’s (ELVT) earnings this past week. Elevate is a non-prime, small dollar lender displacing the payday lending space. (Email us for the Elevate earnings takeaways - not enough space in this newsletter!)- Of the loans going into initial deferral, roughly 60% made payments again in April (not clear if fully cured, but certainly made a payment)
- 25% opted for an additional month of deferral, and 15% rolled to delinquency
- Fannie & Freddie: 39% and 44%, respectively
- Ginnie: 30%
- Private Label: 22%
Source: PeerIQ Data & Analytics Platform
Looking at U.S. consumer loans specifically, after a spike in the first couple weeks of April, loans enrolled in hardship programs continue to stabilize around 14%. Reach out to your client representative at PeerIQ if you’d like to incorporate this analysis into your workflows. Expand TALF to Include Consumer Loans? Over at American Banker, friend-of-the-firm, Nat Hoopes makes a case for including investment grade unsecured personal loans in the Fed’s Term Asset-Backed Securities Loan Facility (TALF) program. Regular readers will know that we support this approach; in fact, our own Ram Ahluwalia made a similar case in a podcast with Peter Renton just a few weeks ago. PNC Boosts Warchest, Eyes M&A A number of public companies have not been shy about disclosing their interest in acquisitions. The regional banks are a sector to watch - notably PNC, whose sale of their BlackRock stake adds an ~$14Bn boost to their warchest. Several regional banks are eyeing FinTechs as a way to get an “out of the box digital strategy.” Similarly, an article in American Banker discusses how banks including U.S. Bancorp, Wells Fargo, WSFS, and other banks are accelerating their digital efforts. Forbes has a write-up on potential FinTech acquisition deals worth taking a look at. Industry News:- We Could Stop the Pandemic by July 4 if the Government Took These Steps (Washington Post, 5/15/2020). An original approach that breaks the trade-off between saving lives and the economy.
- Powell’s Gloomy Outlook has Investors Predicting the Fed May Make Another Big Move Soon (CNBC, 5/13/2020) Fed Chairman, Jerome Powell, knocked the idea of the Fed using negative rates to stimulate the economy.
- BankThink The Fed Should Tailor its Business Loan Programs for Consumers (American Banker, 5/12/2020) Nat Hoopes argues that the Fed must do more to meet consumer credit needs by expanding TALF to cover MPL assets.
- Goldman Sachs Now Sees U.S. Jobless Rate Peaking at 25%, Not 15% (Bloomberg, 5/13/2020) Goldman Sachs Group, Inc. economists revised their forecasts to reflect a darker outlook for the U.S. labor market.
- Small Business Loan Approval Rates Dropped to Record Lows in April 2020: Biz2Credit Small Business Lending Index (GlobeNewswire, 5/12/2020) The approval percentage for small business loan applications at big banks plummeted to just 8.9% in April, down from 15.4% in March.
- Fannie Mae, Freddie Mac: Borrowers in forbearance can defer all missed payments until the end of their loan (HousingWire, 5/13/2020) GSEs reveal a new payment deferral option for loans in forbearance.
- The Mortgage Market Never Got Fixed After 2008. Now It’s Breaking Again. (WSJ, 5/09/2020) Big banks have refocused their mortgage operations on wealthier borrowers, but nonbanks have stepped in for borrowers that are underrepresented.
- Coronavirus Lockdowns Trigger Record Drop in Retail Sales, Factory Output (WSJ, 5/15/2020) Retail sales in April fell by 16.4% and industrial production fell by 11.2%.
- The Car is Staging a Comeback, Spurring Oil’s Recovery (Bloomberg, 5/10/2020) Gasoline demand is rebounding.
- OCC Floats New Payments Charter For Stripe, PayPal, And Crypto Firms (Forbes, 5/12/2020) the OCC could potentially offer a ‘payments charter’ that would be of interest to both traditional payment companies like Stripe and PayPal, as well as crypto companies.
- Banks Tore up Digital Scripts Once Pandemic Hit (American Banker, 5/13/2020) Banks like U.S. Bancorp, Wells Fargo, WSFS, and others were already deeply engaged in digital transformations before the COVID-19 pandemic.
- Fintechs For Sale: Post-Covid, It’s Partner Or Perish For Many Startups. Here’s A Buy List. (Forbes, 5/11/2020) Some FinTechs might need to be acquired in order to survive.
- Google: The Next Big Fintech Vendor (Forbes, 5/11/2020) Google’s most recent product launches and partnerships could indicate that it will be the next big FinTech vendor.
- Blind People can ‘See’ Letters Traced Directly Onto their Brains (Science News, 5/14/2020) Scientists have found a way to create vision for blind people by sending signals to their brai