**SoFi Technologies Raises Revenue Guidance on Deposit Growth and Lower Funding Costs**
SoFi Technologies Inc. experienced a significant rise in its shares after the online bank adjusted its revenue guidance. The company cited the benefits of deposit growth and lower funding costs on loans as the driving force behind this decision.
New Revenue Guidance
SoFi now expects its adjusted net revenue for this year to be between $1.97 billion and $2.03 billion. This range is an increase from the company’s previous forecast of $1.96 billion to $2.02 billion, as mentioned in its recent announcement.
Deposits Drive Growth
One of the key factors contributing to SoFi’s positive revenue outlook is the increase in deposits. The company managed to bypass the issues faced by the regional banking industry, which experienced a run on deposits leading to the collapse of several lenders earlier this year. SoFi’s bank charter allowed it to weather these challenges and take advantage of deposit growth.
Competition with Largest Banks
Anthony Noto, SoFi’s Chief Executive Officer, revealed that the company is primarily taking market share from the largest banks in the country, rather than regional banks. He explained that many of the big US banks have shifted away from offering unsecured personal loans and mortgages, which are services provided by SoFi.
Impressive Deposit Growth
SoFi stated that its total deposits at the end of the second quarter reached $12.7 billion, a significant increase from $7.34 billion at the end of the previous year. This growth in high-quality deposits has resulted in a lower cost of funding for the company’s loans, giving it a competitive advantage.
Student Loan Business Outlook
While SoFi reported relatively depressed earnings for its student loan refinancing business in the second quarter, Noto expressed optimism for the future. He expects the business to improve in the third and fourth quarters, and to make an even stronger comeback next year. The student loan business was once the company’s most profitable until the Covid-19 payment moratorium disrupted its operations. However, with the moratorium being lifted soon, SoFi anticipates a boost in this segment.
Share Performance
SoFi’s shares have performed exceptionally well this year, having more than doubled in value. The announcement of the adjusted revenue guidance further propelled the shares, as they jumped by as much as 22%. This increase represents the largest intraday gain since last August. As of 1:14 p.m. in New York, SoFi’s shares were up by 18%.
In conclusion, SoFi Technologies Inc. is on a positive trajectory with its revised revenue guidance, driven by deposit growth and lower funding costs. The company’s focus on taking market share from the largest banks in the US has proven successful. Additionally, its student loan business is expected to rebound as pandemic-related restrictions ease. SoFi’s shares have experienced significant growth and continue to perform well in the market.
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