Staveless SoFi technologies posted strong second-quarter earnings as weak student loan origination was offset by growth in personal loans and deposits well above our expectations. SoFi’s net revenue increased 57% year over year and 9.7% from last quarter to $362.5 million. As we incorporate these results, we do not expect to materially change our $15 fair value estimate for SoFi.
SoFi sees strong deposit growth
SoFi’s lending business, which remains the company’s largest segment, saw revenue rise 55% from a year ago to $257 million. The sector continues to benefit from rapid growth in net interest income, which increased 101% year-over-year and 21% quarter-over-quarter to $114 million. Increasing net interest income was a primary goal of SoFi’s acquisition of a national banking charter, as it allows SoFi to retain customer deposits and use them to fund its banking arm. ready. Deposit growth impressed in the quarter, rising 135% from last quarter to $2.7 billion. We expected the high rates offered by SoFi’s bank accounts to act as a tailwind to the company’s deposit-raising efforts, but these results are impressive, with deposits now accounting for around 40% of total SoFi funding. the company.
SoFi personal loan origination up 91%
SoFi’s loan origination volume was more mixed, with total origination increasing 8.7% from a year ago but falling 3.4% from last quarter. Personal loans remained strong, with origination up 91% from a year ago to $2.5 billion. That was offset by weakness in student loans and mortgages, which fell 54% and 58%, respectively, to $399 million and $332 million. Federal student loan forbearance remains a major headwind for SoFi, with student loan volume in the quarter representing about 25% of pre-pandemic volume. While forbearance is set to end on August 31, our current projections include a supposed extension to 2023 as student loan servicers have been instructed not to send billing notices to borrowers. This means forbearance will likely remain a headwind for SoFi in 2022.