How are lending stocks holding up as interest rates rise as fast as they have?

Nick Sundich Nick Sundich, May 4, 2023

Just how would Lending stocks would perform amidst higher interest rates? Theoretically they would do better, but that is not guaranteed when interest rates rise as fast as they have. This is not just because of uncertainty surrounding consumers’ ability to pay, but even the company’s ability to meet repayments of their own financing facilities.

 

No time to do stock research, but you still want to invest?

 

Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.

 

GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY

 

2 Lending stocks provide updates today

Personal lender MoneyMe (ASX:MME) unveiled 3Q23 results. Overall it is better off than 12 months ago, but some metrics went backwards compared to the previous quarter. Gross revenues amounted to $61m, contract revenues were $375m, the NIM was 13% and customer receivables were $1.18bn. These were up 75%, 9% and 2% from 12 months ago, but all down ~5% quarter on quarter. Its NIM was 13%, up from 11% 12 months ago but down from 14% just 3 months ago. Its undrawn funding was up 154% thanks to its refinancing just a couple of months ago, but it only had $14m in unrestricted cash.

Turning now to Humm (ASX:HUM), which provides commercial finance as well as consumer finance. Group volume was $965.2m, up 11% from 12 months ago. But commercial and consumer lending could not have been more different. Its commercial arm grew 39% to $382.2m while consumer finance was down 2% to $583.0m.

 

What does this mean?

Just as is the case with big banks, lending stocks are not as well off from rising rates as you may think. Demand for new loans and net interest margins are down. So lending stocks aren’t necessarily the place to be right now.

 

Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.

 

GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY

 

There’s no credit card needed – the trial expires automatically.

 

How are lending stocks holding up as interest rates rise as fast as they have? 1

 

Stocks Down Under
Average rating:  
 0 reviews

Recent Posts

ASIC

The Humm saga showed ASIC has significant powers

At the end of last month, ASIC dropped a bombshell on Humm (ASX:HUM) and its investors. For roughly 24 hours, the…

Voluntary administration

So you stock went into voluntary administration … Is it all over now or will you get any of your money back?

Voluntary administration – these are the two words that no investor wants to hear. What will happen next and will…

CET1 ratio

CET1 ratio: If you invest in banks, you need to know this

In this article we look at the Common Equity Tier 1 (CET1) ratio – what it is and why it…