Moody's Corporation · NYSE:MCO
Moody's — Aftershock Fintech Webinar (September 2020)
22 slides from Moody's's conference presentation, Sep 10, 2020
Slide 1: Aftershock: The Impact of COVID-19 on Lending in the 2nd Half of 2020
Aftershock: The Impact of COVID-19 on Lending in the 2nd Half of 2020 David Fieldhouse, Director, Business Analytics John Toohig, Head of Whole Loan Trading, Raymond James September 2020 XXXXX, Title
Slide 2: From Recession to Recovery
1 From Recession to Recovery
Slide 3: CARES Act Supports Income Through Q3
CARES Act Supports Income Through Q3 Disposable personal income, $ tril, SAAR, change from 2019Q4 6 Rental and interest income Dividend Income Proprietors' income Labor income 4 Eased pass-through limits Expanded UI benefits Recovery rebates Automatic stabilizers Disposable personal income 2 0 -2 20
Slide 4: Going Off the Fiscal Cliff
Going Off the Fiscal Cliff Monthly change in federal debt, $ bil, 2020 1,350 1,200 Stimulus 1,050 checks peak 900 Tax filing 750 deadline Extra 600 postponed UI expires 450 300 CARES Act 150 0 Jan Feb Mar Apr May Jun Jul Aug Sources: U.S. Treasury, Moody’s Analytics 4
Slide 5: A Second Wave of Structural Unemployment
A Second Wave of Structural Unemployment U.S. Unemployment Rate (U-3), % 18 Baseline Scenario Alt. Scenario 0 Alt. Scenario 1 16 Alt. Scenario 2 Alt. Scenario 3 Alt. Scenario 4 14 12 10 8 6 4 2 20 21 22 23 24 Source: Moody’s Analytics 5
Slide 6: An Update on Credit Cards, Consumer Loans and Fintech Lending
2 An Update on Credit Cards, Consumer Loans and Fintech Lending
Slide 7: Secured and Unsecured Markets Split
Secured and Unsecured Markets Split Outstanding balances, % change yr ago 7 6 Auto Residential Unsecured 5 4 3 2 1 0 -1 -2 -3 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 Sources: CreditForecast.com, Moody’s Analytics 7
Slide 8: Savings Soared
Savings Soared Outstanding balances, % change yr ago 40 7 35 6 % disposable income (L) 30 % pre-pandemic level (L) 5 $ tril (R) 25 $ tril pre-pandemic level (R) 4 20 3 15 10 2 5 1 0 0 18 19 20 Sources: BEA, Moody’s Analytics 8
Slide 9: Uneven Spending Effects by Income Class
Uneven Spending Effects by Income Class % of households by income group reporting that CARES Act stimulus payments were used or will be used mostly to… <$25K Pay off debt/add to savings $25K-<$35K Cover expenses $35K-<$50K $50K-<$75K $75K-<$100K $100K-<$150K $150K-<$200K ≥$200K 0 20 40 60 80 100 Sou
Slide 10: Retail Winners & Losers
Retail Winners & Losers % change, Jul vs Feb 2020 Clothing Restaurants Gasoline Furniture Electronics Misc. Gen. merchandise Health & personal Vehicles Building materials Food stores Sporting goods Online Total -24 -18 -12 -6 0 6 12 18 24 Sources: Census Bureau, Moody’s Analytics 10
Slide 11: Bank Card Borrowers Pull Back: Prime More So
Bank Card Borrowers Pull Back: Prime More So %, YoY balance difference 20 15 Subprime Near Prime Prime 10 5 0 -5 -10 -15 -20 -25 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Sources: CreditForecast.com, Moody’s Analytics 11
Slide 12: Lending Standards Are Tight
Lending Standards Are Tight Net % tightening, Senior Loan Officer Survey 80 Credit card Auto Other non-mortgage 60 40 20 0 -20 -40 12 13 14 15 16 17 18 19 20 Sources: Federal Reserve, Moody’s Analytics 12
Slide 13: Delinquency Rates Trend Down
Delinquency Rates Trend Down 60 days delinquent, % of outstanding balance, 3-mo MA, ann 25 Auto ConsumerFinance Residential Card 20 15 10 5 0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Sources: CreditForecast.com, Moody’s Analytics 13
Slide 14: Accommodations Level Off
Accommodations Level Off Share of balances with possible accommodations, % 11 10 Auto 9 Card Consumer finance 8 Home equity 7 First mortgage 6 Other 5 4 3 2 1 0 Feb Mar Apr May Jun Jul Sources: Equifax, Moody’s Analytics 14
Slide 15: Card Accommodations Vary By Geography
Card Accommodations Vary By Geography Card Balances (%) in Possible Accommodation 6.19 -9.49 4.79 – 6.19 3.81 – 4.79 2.83 – 3.81 Sources: Equifax, Moody’s Analytics 15
Slide 16: Longer Terms Drive Personal Loan Growth
Longer Terms Drive Personal Loan Growth Consumer installment originations, $ bil, NSA 16 60+ 25-59 13-24 7-12 <=6 14 12 10 8 6 4 2 0 10 11 12 13 14 15 16 17 18 19 20 Sources: CreditForecast.com, Moody’s Analytics 16
Slide 17: Fintech Finds Risk/Opportunity With Younger Borrowers
Fintech Finds Risk/Opportunity With Younger Borrowers Total delinquency rate, % of $, <35 years old 9 Bankcard Consumer Installment, 3yr+ 8 7 6 5 4 3 2 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Sources: CreditForecast.com, Moody’s Analytics 17
Slide 18: Personal Bankruptcy Expected to Rise Next Year
Personal Bankruptcy Expected to Rise Next Year Bankruptcies: Personal - Total, (#, SAAR) for United States 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Sources: Administrative Office of U.S. District Courts, Moody
Slide 19: Uncertainty in Bankcard
Uncertainty in Bankcard Default rate, % of $, annualized 14 12 10 8 6 4 2 Baseline S1 S3 S4 0 05 06 07 07 08 09 10 10 11 12 13 13 14 15 16 16 17 18 19 19 20 21 22 22 23 24 Sources: CreditForecast.com, Moody’s Analytics 19
Slide 20: Contact Us
Contact Us: John Toohig Head of Whole Loan Trading Raymond James John.Toohig@RaymondJames.com David Fieldhouse Director Moody’s Analytics David.Fieldhouse@moodys.com
Slide 21: Contact Us: Economics & Business Analytics Offices
Contact Us: Economics & Business Analytics Offices West Chester, EBA-HQ London Prague Singapore +1.610.235.5299 +44.20.7772.5454 +420.22.422.2929 +65.6511.4400 121 North Walnut Street, Suite 500 One Canada Square Washingtonova 17 6 Shenton Way West Chester PA 19380 Canary Wharf 110 00 Prague 1 #14-0
Slide 22: Moody's copyright and credit rating disclaimer
© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most “MOODY’S”). All rights
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