Equifax, Inc. · NYSE:EFX
Equifax — Corporate Update (August 2024)
39 slides from Equifax's corporate update, Aug 15, 2024
Slide 1: Alternative Data in Fintech: Overcoming Barriers for Market Success
Alternative Data in Fintech: Overcoming Barriers for Market Success August 15, 2024 | 2PM ET
Slide 2: The opinions, estimates, and forecasts presented herein are for general information use only. This
The opinions, estimates, and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any repres
Slide 3: Agenda
Macroeconomic Update Credit Trends Discussion Q&A PROPRIETARY | 3
Slide 4: Speakers
Dr. Robert Wescott David Sojka Brett Manning Tom Aliff President Risk Advisor Principal Product Manager Risk Advisory Leader Keybridge, LLC Equifax Upstart Equifax PROPRIETARY | 4
Slide 5: Macroeconomic Update
Macroeconomic Update Robert Wescott, Ph.D. Keybridge Research LLC PROPRIETARY | 5
Slide 6: Macroeconomic Update
Macroeconomic Update 6
Slide 7: Key Areas to Monitor in the Second Half of 2024
We just saw “healthy” U.S. GDP growth of 2.8% in 2024Q2. Why have financial markets been slumping? And why are recession fears becoming more widespread? What needs to be watched? Key Areas to Monitor in the Second Half of 2024 Japanese Yen “Carry Trade” Slowing Job Growth Worried Stock Markets Stres
Slide 8: Japanese yen carry trade explained
Let’s start by clearing up the issue of the Japanese yen “carry trade”. What is it is and why did it contribute to the crash of global financial markets on August 5? Consider this example. January 2, 2024 Bank of Japan interest rate: -0.1%, $1 = 141 yen • A “smart” dollar-based investor borrows $1 m
Slide 9: Slowing job growth
Slowing job growth: July’s report highlighted recent cooling in the labor market and job openings are at their lowest level in nearly three years. The tripping of the “Sahm Rule” makes many nervous. Job Growth is Slowing Job Openings are Now Below Pre-Pandemic Levels M/M change in total non-farm pay
Slide 10: Labor market cooling: workweek and overtime hours
Other signs of labor market cooling include a falling average workweek and fewer weekly manufacturing overtime hours. Both are now below pre-pandemic levels and still trending down. The Average Workweek Has Been Shortening… …as Manufacturing Overtime Hours are Falling Average weekly hours worked, al
Slide 11: Stock market declines and consumer wealth
Meanwhile, the early August declines in the stock market, which included a 6% drop in the S&P 500, knocked $2.7 trillion off stock market wealth, potentially eroding consumer spending power. Unfortunately, when households experience a decline in their equity holdings, they tend to cut their consumer
Slide 12: Consumer spending is feeling tired
Consumer spending is feeling “tired”. Consumer spending has exceeded income growth in 7 of the past 8 months, which has caused the household saving rate to drop to nearly a 50-year low. Spending Growth is Outpacing Income Growth The Savings Rate is Near Record Lows Percentage point difference betwee
Slide 13: Inflation and the Fed's Next Move
Inflation and the Fed’s Next Move 13
Slide 14: Wage growth tracker and voluntary quit rate
The gradually softening labor market has brought the “quit rate” down and wage demands are now clearly easing. This chart provides evidence that the Fed’s high rates have been working. Wage Growth Tracker and Labor Turnover (“Voluntary Quit”) Rate % change, all workers Labor Turnover Rate (R) Averag
Slide 15: Unit labor costs and inflation
Also, smaller compensation gains combined with solid productivity growth are bringing smaller increases in unit labor costs. These smaller increases have been allowing inflation to ease. As Labor Costs Fall, Inflation Falls Unit labor costs and CPI inflation, Y/Y % change, quarterly CPI Unit Labor C
Slide 16: Target rate probabilities for September FOMC meeting
In the wake of this good inflation news and the cool July jobs report, the market is pricing in a 25 basis point cut in September. However, weak IP, ISM, and employment data could make 50 bp more likely. Target Rate Probabilities for September FOMC Meeting Fed funds rate expressed in basis points (x
Slide 17: Emerging Trends with Gen Z Consumers
Emerging Trends with Gen Z Consumers 17
Slide 18: Meet Gen Z: marriage and kids
Meet Gen Z (up to 27 years old): Compared with prior generations, fewer are married and have kids. While most still plan to marry, they are less interested in having kids—a powerful global trend. Fewer Young Adults Are Married… Gen Z Is Interested in Getting Married… Percent of young adults who are
Slide 19: Gen Z financial strains and delinquency risk
Financially, Gen Z consumers are facing more strains. Credit delinquency risks are particularly high for auto loans and credit cards. Cars got expensive with Covid and chickens are coming home to roost. Transition into Serious Delinquency for Auto Loans Transition into Serious Delinquency for Credit
Slide 20: Gen Z living with parents and receiving support
Amidst growing affordability concerns, more Gen-Z’s are now living with their parents and relying on them to help with groceries, rent, medical costs, and cellphone bills. More Young Adults Live With Parents Many Receive Support From Parents 53% of Adults Aged 18-44 Are Still on Percent who are livi
Slide 21: Gen Z preferences shifting product markets
Gen Z consumer preferences are shifting product markets. Gen Z is especially interested in products that are ethical, practical, and a good value. Used goods and retro goods are viewed as “cool”. Thrifting Lab Grown Rings Dumb Phones 58% of Gen Z and Millennials say Half of engagement ring stones Ge
Slide 22: Gen Z preferences on cars
Likewise, Gen Z has different preferences on cars. They are less interested in owning and using cars, and would rather take Ubers, use public transit, or walk. Many work remotely and do not commute at all. Gen Z Drives Less than All U.S. Adults Gen Z is Increasingly Less Interested in Owning an EV P
Slide 23: Audience Poll
Audience Poll PROPRIETARY | 23 PROPRIETARY | 23
Slide 24: Consumer Credit Trends
Consumer Credit Trends PROPRIETARY | 24 PROPRIETARY | 24
Slide 25: Editorial note
Editorial note • With today’s topic, FinTech and Alternative data, we are presenting the information in a different format. • For full access to the standard charts and graphs, please reach out to the Equifax Risk Advisory team at RiskAdvisors@Equifax.com PROPRIETARY | 25
Slide 26: Origination Trends lenders should know
Origination Trends lenders should know Comparison of the overall Market versus FinTech lenders As of April 2024, consumer originations has slowed across cards, personal loans, and private label cards: Mkt Mkt FT Mkt FT Mkt FT Mkt FT First mortgage Total originations on Originations on Originations o
Slide 27: Consumer debt outstanding, June 2024
As of June 2024, consumer debt outstanding has increased for all categories in the overall Market, but decreased with FinTech lenders for total consumer debt, non-revolving debt and Auto debt: Mkt FT Mkt FT Mkt FT Mkt FT Mkt FT Total US Outstanding revolving Outstanding Total outstanding Total outst
Slide 28: Consumer debt month over month
When looking month over month, we see FinTech consumer debt and non-revolving debt improve. The Non-revolving debt was the only improvement for the overall Market: Mkt FT Mkt FT Mkt FT Mkt FT Mkt FT Total US Outstanding revolving Outstanding Total outstanding Total outstanding consumer debt debt Non
Slide 29: June utilization and credit limits
June Utilization increased across all products. Credit Limits have risen for the Bankcard as well as for Home Equity. Credit Limits and Utilization Rates- year over year comparison Limit Utiliz% Limit Utiliz% Limit Utiliz% Limit Utiliz% Limit Utiliz% Bankcard Limits Private Label Limits & Revolving
Slide 30: June delinquencies year over year
June Delinquencies on all of the products shown below, increased year over year except for Personal Loan, which improved. As of June 2024, serious delinquencies by balance: Mkt FT Mkt FT Mkt FT Mkt FT Mkt Auto 60+ Bankcard 60+ Private Label 60+ Unsecured Personal Mortgage 90+ delinquency delinquency
Slide 31: June delinquencies month over month
June Delinquencies on all of the products shown below decreased month over month, except for Auto and Mortgage. As of June 2024, serious delinquencies by balance: Mkt FT Mkt FT Mkt FT Mkt FT Mkt Auto 60+ Bankcard 60+ Private Label 60+ Unsecured Personal Mortgage 90+ delinquency delinquency delinquen
Slide 32: Card 60+ vintages for 2022
Card 60+ Vintages for 2022 are worse overall and for Fintech lenders. The overall Market 12mo vintage for 2022 is 45% worse than 2019. FinTech vintage at 12mo for 2022 is 37% worse than 2019, FinTech Source: Equifax: www.equifax.com/business/market-pulse-credit-trends; Data through June 2024; Not Se
Slide 33: Auto 60+ vintages for 2022
Auto 60+ Vintages for 2022 are worse the overall market and for Fintech lenders. 2023 improves after 16mo. FinTech Source: Equifax: www.equifax.com/business/market-pulse-credit-trends; Data through June 2024; Not Seasonally Adjusted PROPRIETARY | 33
Slide 34: Audience Poll
Audience Poll PROPRIETARY | 34
Slide 35: Alternative Data in Fintech
Alternative Data in Fintech PROPRIETARY | 35 PROPRIETARY | 35
Slide 36: Q&A
wl ae | | nl om { Q&A Market Pulse a ee EQUIFAX PROPRIETARY | 36
Slide 37: Focus on Forward
Focus on Forward Turn insights into action ● All Equifax data and insights presented today come from the Equifax Consumer Credit Trends reports and the Main Street Lending Report, which are available at equifax.com/marketpulse ● Go beyond traditional scores with deeper insights on consumer payment h
Slide 38: Visit equifax.com/marketpulse
Visit equifax.com/marketpulse ● Register for the September 19 webinar ● Download our monthly Main Street Lending Report ● Download our U.S. National Consumer Credit Trends Reports Follow our Equifax Also check for out the Business podcast LinkedIn PROPRIETARY | 38
Slide 39: Market Pulse
Market Pulse