SoFi Technologies (NASDAQ:SOFI) has released its second-quarter earnings report, showcasing an impressive performance fueled by significant growth in deposits and personal loan originations. The company experienced a remarkable 37% surge in net revenue compared to the previous year, amounting to $498 million. Better margins were achieved through increased revenue against fixed costs, leading to a notable improvement in net loss, which reduced to $47.5 million from last year’s $95.8 million. Approximately half of this increase is attributed to the time value of money, while the remaining portion is due to lower near-term expense growth projections, as we anticipate SoFi to achieve profitability by 2024.
Despite facing intensifying competition, SoFi’s momentum in accumulating deposits remains strong, evidenced by a substantial 73.6% growth in deposits, amounting to $12.74 billion compared to the previous year. The acquisition of a bank charter has been a pivotal factor in facilitating this rapid expansion of the deposit base, enabling the company to significantly grow its loan portfolio and enhance its funding structure simultaneously.
The lending arm of SoFi, its largest segment, recorded a 29% increase in revenue from the previous year, reaching $331 million. The growth was primarily attributed to net interest income, which soared by 103% to $231.9 million, while noninterest income experienced a 30% decline. This expansion was predominantly driven by robust loan growth, with the larger deposit base allowing SoFi to increase its loan portfolio by an impressive 119% compared to the previous year, now reaching $18.2 billion.
Despite facing some challenges, SoFi had a robust quarter for loan originations, with a remarkable 37% increase compared to the previous year, totaling just under $4.4 billion. Once again, personal loans stood out as the bright spot, with total originations soaring by 51% from the previous year, reaching $3.7 billion. Student loan originations, on the other hand, remained relatively stable at $395 million. As the student loan forbearance period comes to an end, we anticipate an improvement in SoFi’s student loan originations, although higher interest rates may hinder their return to the levels witnessed in 2019 for the time being.
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Author Faith Yakubu 
