Bank earnings continued to report this week. Overall, earnings are benefitting from gains in non-trading and fee-revenue businesses, including lending and asset management. However, earnings are under pressure due to continued pressure on fixed income and commodities trading revenues, and a one-time impact from the changes in the tax code. Citigroup and MS reported strong earnings this week, while Goldman Sachs and American Express missed their estimates.
Goldman Sachs posted its first quarterly loss in 6 years as its trading revenue was impacted by losses in commodities trading. GS, continuing on its strategic objective to generate $13 Bn in loans in 3 years, also announced that Marcus is now offering home improvement loans. These loans would range from $3,500 to $40,000, carry terms of 3 to 6 years, no origination fees, and 5 day turnaround. GS will be entering a market dominated by GreenSky, a marketplace lender that enjoys a funding advantage from its model of distributing loans to credit unions and participating banks. (PeerIQ provided a ‘tear down’ summary of the GS lending ambitions in aprior newsletter).
Morgan Stanley’s earnings were boosted by record wealth management feesgenerated. American Express’ earnings were weighed down by a $2.6 Bn tax charge. Amex increased its loan loss provisions to $833 Mn and net charge-offs were 10 bps higher at 2.1%. Citigroup beat earnings estimates, even though it took a $22 Bn loss related to tax law changes, but emphasized the potential gains from the drop in tax rates to 24%.
In regulatory news, the CFPB is considering potential changes to key sets of rules against payday lending, which would potentially repeal the requirement for lenders to test the ability to repay loans in 30 days. The rules would also remove the cap on the number of payday loans that a borrower can take.
FinTech innovation continues. PeerStreet, an A16HZ backed platform for investing in real-estate backed loans, announced a “30 days note” product. The product enables investors more liquidity by allowing them to invest in notes with 30-day terms. Investors can now put short-term cash to work in real estate backed loan investments and earn higher returns than alternatives in the money market or commercial paper market.
In securitization news, SoFi is issuing a $720 Mn student loan deal which Moody’s has rated AAA on its A classes. The deal has a 4% overcollateralized balance and the A tranches have 9.3% credit support. The weighted average credit score is 772, and the average loan balance is $74k. 94% of the loans are refinancing of existing student loan debt.
With that, we are pleased to announce a second slate of recent additions to the PeerIQ team. Since PeerIQ’s $12 MM Series A this past August, we have been investing in scaling up the organization and expanding our suite of offerings.
Our recent batch of engineering hires include recovering lawyers, NASA scientists, HFT traders, and chess masters:
Matt Wojcieszek – Software Engineer
Matt is a full-stack Software Engineer at PeerIQ, where he focuses on developing and extending PeerIQ’s core analytics platform. A recent graduate, who co-foundeda social networking app in college, Matt enjoys tackling problems where local actions produce global results, ranging from algorithmic game theory to network security.
Matt earned his B.S.E. in Networked and Social Systems Engineering from the University of Pennsylvania.
Franklin Chou, J.D. – Software Engineer
Franklin is a full stack software engineer currently focused on modeling data relationships in PeerIQ’s application backend. Prior to joining PeerIQ, Franklin served as a judicial clerk at the New Jersey trial court level. There, he helped implement state-wide bail reform which removed cash bail in favor of data-driven release determinations.
Franklin received his B.A. from the New Jersey Institute of Technology and his J.D. from Seton Hall.
Ross Cohen – Software Engineer
As a part of the data engineering team, Ross is dedicated to streamlining the data onboarding process and generating new insights. Ross comes to PeerIQ after receiving his Master’s degree in applied physics. He looks forward to bringing this data experience and his problem-solving skills to PeerIQ.
Harman Singh – DevOps Engineer
Harman is a DevOps Engineer at PeerIQ, responsible for optimizing platform performance and managing our back-end systems. Before PeerIQ, Harman was a Devops Engineer at Societe Generale Corporate Investment Bank, where he focused on low latency and high-frequency trading technologies.
Harman earned his M.Sc. in Computer Science from NYU.
Jun Kui Chen, Ph.D. – Data Insights Analyst
As part of PeerIQ’s data insights team, Jun manages data onboardings, codes ingestion rules, and client reporting. Jun’s expertise is in Python, Hadoop and Spark for data processing and analysis.
Jun recently graduated from Columbia University, where he earned his Ph.D. in Cellular, Molecular and Biomedical Studies. He also earned his B.A. magna cum laude from Hunter College.
Visit www.peeriq.com/careers to see open roles.
Special Topic: State of FinTech Lending
For this week’s special topic, we recommend an interview with CrowdFundInsider Andrew Dix and PeerIQ CEO Ram Ahluwalia. Topics covered include:
- What are expected ABS volumes for 2018?
- Are banks creating greater competition or partnering with lenders?
- What is the buzz amongst public equity investors looking at online lenders?
- Is Big Tech a real competitive threat for banks and online lenders?
PeerIQ in the News:
- PeerIQ CEO Ram Ahluwalia: 2017 Saw a Resurgence of Growth in Online Lending (CrowdFundInsider, 1/18/18)
- PeerIQ Releases Q4 2017 Marketplace Lending Securitization Tracker(Lend Academy, 1/16/18)
- Marketplace Lenders Push Ahead (AB Alert, 1/19/18) Marketplace lenders expect to keep increasing their origination and securitization volumes this year, despite stronger competition from banks.
- Credit score changes would saddle banks with risk to help nonbanks(AmericanBanker, 1/16/18) The FHFA is evaluating whether originators can also use the VantageScore model as an alternative to FICO.
- Consumer watchdog considering repeal of payday lending rule (NBC, 1/16/18) The CFPB is considering potential changes to key sets of rules against payday lending, which would potentially repeal some lender requirements and caps.
- Goldman Sachs to offer home-improvement loans via its Marcus subsidiary(MarketWatch, 1/16/18) Continuing its push into Marketplace lending, Goldman Sachs’ Marcus platform will now offer no-fee, fast turnaround home improvement loans.
- Goldman Sachs’ Online Lending Platform Marcus Has Originated Over $2 Billion in Loans, Deposits Rise to Over $ 5 Billion (CrowdFundInsider, 1/17/18) Online lending platform Marcus topped $2 Bn in loan originations and online deposits of over $5 Bn.
- Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A LLC (Moodys, 1/16/17) Moody’s has rated the A classes on SoFi’s latest deal AAA.
- Funding Circle’s fund unveils Citibank deal (p2pfinancenews, 1/17/18) Funding Circle’s listed fund has inked a deal with Citibank, whereby the financial institution indirectly channels £50m to small businesses through the peer-to-peer lending platform.
- PeerStreet Launches New Investment Product: 30-Day Notes (Businesswire, 1/17/18) Investors can now participate in 30-day investments to increase their level of liquidity.
- Podcast 134: Gary Lieberman of Laurel Road (LendAcademy, 1/12/18) The CEO and Chairman of Laurel Road, formerly Darien Rowayton Bank (DRB), shares how he built a small community bank into a leader in student loan refinancing.
- Why Dolphins are Deep Thinkers (The Guardian, 7/2/03) If AI does not take over the world, the Dolphins have their eye on the prize.