OneMain Holdings’ OMF fourth-quarter 2024 adjusted earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.12. However, the bottom line declined 16.5% from the year-ago quarter's level.

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In the reported quarter, the company witnessed an increase in net interest income (NII). Also, loan balances improved, which was a positive. However, a rise in provisions and total other expenses were undermining factors. Further, a decline in total other revenues was a negative. Shares of OMF lost 3.2% on Friday due to these concerns.

After considering non-recurring items, net income available to common shareholders (on a GAAP basis) was $126 million, down from $165 million in the prior-year quarter.

For 2024, adjusted earnings per share was $4.89, which outpaced the consensus estimate of $4.58 but declined 9.9% year over year. Net income available to common shareholders (GAAP basis) was $509 million, down 20.6%.

OMF’s NII Rise, Expenses Up

NII was up 10% from the prior-year quarter's level to $1.01 billion. The increase was primarily driven by higher average net finance receivables, partially offset by a rise in average debt to support receivables growth and higher average cost of funds. 

Total other revenues were $160 million, down 14% from the prior-year quarter's figure. The decline was due to a fall in almost all the components except other income. 

Total other expenses rose 10.3% to $482 million on account of higher operating expenses.

Credit Quality Deteriorates for OneMain Holdings

The provision for finance receivable losses was $523 million, up 17.3% from the prior-year quarter, mainly due to a $59 million increase in the allowance for finance receivables.

In the reported quarter, OneMain Holdings recorded net charge-offs of $463 million, up 11.6% from the prior-year quarter. The company reported 30-89 days delinquencies of $743 million, up 7.8%.

On the other hand, the allowance ratio of 11.48% was down from 11.62% in the prior-year quarter.

OMF’s Net Finance Receivable Rise, Debt Increase

As of Dec. 31, 2024, total net finance receivables amounted to $23.6 billion, up 2.1% from the prior quarter end. Long-term debt increased 1.4% from the prior quarter end to $21.4 billion.

OneMain Holdings’ Share Repurchase Update

In the reported quarter, the company repurchased 75 thousand shares for $3 million.

Our View on OneMain Holdings

OneMain Holdings’ efforts to grow credit card and auto finance loans alongside relatively lower interest rates and strategic acquisitions are expected to support its financials. Further, a decent balance sheet and liquidity position are another positive. However, rising expenses and deteriorating asset quality are woes.

Currently, OneMain Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of OMF’s Peers

Ally Financial’s ALLY fourth-quarter 2024 adjusted earnings of 78 cents per share handily surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line indicated a jump of 95% from the year-ago quarter.

Results benefited from a rise in net finance revenues. Further, lower expenses and a decline in credit costs provided support. However, lower other revenues, a decline in net finance receivables and loans and deposits were the undermining factors for ALLY.

Capital One’s COF fourth-quarter 2024 adjusted earnings of $3.09 per share handily surpassed the Zacks Consensus Estimate of $2.66. The bottom line also compared favorably with $2.24 in the prior-year quarter.

COF’s results gained from higher NII and non-interest income along with rise in loans and deposits. Also, provisions declined during the quarter. However, the increase in expenses was the undermining factor.

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