OneMain Profit Slides as Loan-Loss Provisions Hit Five-Quarter High
OneMain Holdings posted diluted earnings of $1.32 a share in the second quarter, down from $1.93 in the first quarter as loss provisions climbed to $610 million.
OneMain Holdings (OMF), the consumer finance company that lends to subprime and near-prime borrowers, reported second-quarter diluted earnings of $1.32 a share, down from $1.40 in the prior-year quarter and down from $1.93 in the first quarter of 2024. Net income fell to $152 million from $167 million a year earlier, a 9% decline, and dropped 33% from the $226 million reported in the first quarter.
The sequential drop stemmed from a sharp rise in credit costs. Provision for finance receivable losses reached $610 million in the quarter, up 19% from $511 million a year earlier and up 31% from $465 million in the first quarter, the highest quarterly provision in the trailing five quarters. Pretax income fell to $196 million from $214 million in the prior-year period and from $296 million in the first quarter. Return on assets slipped to 2.3% from 3.4% in the first quarter.
Credit quality showed mixed signals. The net charge-off ratio rose to 7.77% from 7.19% a year earlier but improved from 8.02% in the first quarter. The 90-plus-day delinquency ratio ticked up to 2.15% at June 30 from 2.12% a year earlier, while improving sequentially from 2.53% at March 31. The 30-plus-day delinquency ratio held flat year over year at 5.17%, also improving from 5.37% at the end of the first quarter.
Revenue grew even as credit costs weighed on earnings. Total revenue rose 6% to $1.6 billion, driven by a 6% increase in interest income to $1.4 billion. Managed receivables grew 7% to $26.9 billion at June 30 from $25.2 billion a year earlier, up roughly 3% from $26.1 billion at the end of the first quarter. Consumer loan originations rose 10% to $4.3 billion, accelerating from $3.1 billion in the first quarter, a roughly 39% sequential increase. Operating expense rose 6% to $439 million, due to receivable growth and strategic investment spend.
The company's credit card business continued to expand faster than its other lending lines. Net finance receivables in that segment grew 52% to $1.14 billion at June 30 from $752 million a year earlier, outpacing 15% growth in auto finance and 2.5% growth in personal loans. Net leverage held roughly steady at 5.5x adjusted capital, matching the year-earlier level and up slightly from 5.4x at March 31.
Book value per basic share rose to $29.40 at June 30 from $27.99 a year earlier, up from $29.21 at the end of the first quarter. Capital generation rose to $229 million from $222 million a year earlier and from $194 million in the first quarter.
OneMain repurchased about 576,000 shares for $32 million in the quarter, a slower pace than recent periods, and maintained its quarterly dividend at $1.05 a share.