MicroStockHub
SoFi (NASDAQ:SOFI) CEO Anthony Noto foresees the Federal Reserve reducing interest rates by 75 basis points in 2024, a move he said will benefit loan demand for his company and free up investment cash for other companies.
Policymakers should jumpstart rate cuts with a big reduction of 50 basis points, Noto said at the Goldman Sachs Communacopia + Technology Conference on Monday.
“You’re much better off cutting 50 basis points now because you’ll spur more economic activity next year because corporations are making decisions about next year now,” he said. “If they know they have 50 basis points on a huge balance sheet of debt, they could do more hiring, they could do more investing, even having that information.”
SoFi (SOFI) is facing the prospect of operating in a “stable” economy and lower rates, and lower rates gives the company “a lot more freedom” on its balance sheet, said Noto, who became the CEO of SoFi in 2018.
“We’ll underwrite as much as we can in home loans, given the nature of the business being capital light,” he said. In student loans, “we would be pretty aggressive there as well in lowering rates to give people good savings,” he said.
Loan demand overall is “up meaningfully over the last 18 months,” he said. “A 100 turn basis points lower from here will only make those loans more attractive to buyers, in addition to some of the other programs that we have,” he said.
Lower borrowing costs for companies will allow them to reduce their debt expenses, and spend more on technology and hiring, which would help SoFi’s (SOFI) tech-platform business, Noto said.
The “least appreciated” aspect of SoFi’s business is creating “products on top of the products,” Noto said. Among potential products, the company is internally testing a product called “Cash Coach,” within its app. The product looks at all the cash held at SoFi and other connected places and suggests to users how to better optimize the money.
Noto paid off a $1,659 credit card balance on “Cash Coach’s” suggestion “because it’s a better return than actually not,” he said.
Sofi (SOFI) shares closed Monday’s session up 1.2%. The shares were down ~28% YTD vs. S&P 500’s (SP500) gain of ~15%.
