OneMain Holdings, Inc. (NYSE:OMF) Q1 2023 Earnings Call Transcript

Micah Conrad: Yes, I think there’s been a lot going on over the last few years. So I would say our RORs for 2020, 2021 and 2022 are certainly not what we would consider to be normal. But I also on the first quarter, because of the seasonally high loss rate tends to be on the lower end for cap gen ROR simply because of having a loss rate of 7.7% on loans in the quarter. I think as we go through the year, again, I gave you a little bit of guidance at the beginning of the Q&A session here on where we thought some of the trends were heading, with an expectation of losses dropping by 100 basis points in each of the third and fourth quarter relative to what we think the first half looks like. That certainly right there is after tax about 70 basis points of ROR on top of what we’re seeing.

So I don’t think — I wouldn’t say that anything we’re seeing has changed our views on the long-term health of the business and our profitability. We’ve got a lot of levers here. We certainly can tighten credit really quickly. We’re seeing good demand. We’re competitive in the marketplace. We’ve got the stability of our interest expense. And I keep coming back to it but our fixed cost base and our ability to have loans at a marginal cost of expense is really, really powerful. We’re adding new business lines with our credit card. We’ve expanded our acquisition channels from beyond our traditional branch network with our secure distribution channel expansion, and all of that comes with very, very attractive marginal returns on our receivables.

So we feel very, very good about the future and nothing about our profitability has been impaired by anything we’re seeing today.

Doug Shulman: Look, everyone, thank you for joining us. We are more than happy to do any follow ups with Pete, our IR team, or Micah and I and hope everyone has a great day.

Micah Conrad: Thanks.

Operator: Thank you. This does conclude today’s OneMain Financial’s first quarter 2023 earnings conference call. Please disconnect your line at this time, and have a wonderful day.