SoFi Technologies Inc. continues to win praise for its banking efforts after the digital financial-services company gave an upbeat earnings forecast.
SoFi Technologies Inc. continues to win praise for its banking efforts after the digital financial-services company gave an upbeat earnings forecast and touted the benefits of its banking charter for the broader business.
The acquisition of a small community bank about a year ago enabled SoFi SOFI to become a bank holding company. At the time, SoFi expected the banking move to lower its cost of funding and enable more competitive lending rates, and now its latest earnings report is showing some of the early results of its banking efforts.
He added that SoFi’s deposits grew 46% sequentially “as a result of [SoFi’s] competitive rate offerings with [annual percentage yields] of 3.75% for checking/savings which are consistently repriced to remain competitive.”MoffettNathanson analyst Eugene Simuni wrote that so-called neobanks have to decide whether to become “real” banks themselves or partner with third-party banks for deposits. SoFi’s choice to do the former seems to be paying off, in his view.
By using these deposits to finance loans, he said, SoFi has been able to rake in significant net interest income within its financial services business while also providing the lending business with a low-cost, stable funding source, which he characterized as “a unique advantage in a challenging credit market environment.”
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