J.P.Morgan sees return to normal for some consumer finance firms

Navient

11/04/2022 12:16

** J.P.Morgan lowers target multiples on consumer finance
companies by 18% on average due to higher economic uncertainty
and an increased probability of recession 
    ** Card issuers and smaller consumer lending firms are
seeing loan and credit growth levels normalizing, JPM says, and
are positively leveraged to labor markets and improving economy
    ** As payment rates continue to normalize, loan balances may
increase even if spending moderates - JPM
    ** Brokerage says Capital One Financial Corp  COF.N  is its
top pick in card space; downgrades American Express Co  AXP.N 
to 'neutral' from 'overweight' 
    ** For auto finance, credit normalization has likely been
pushed back to H2 2022, JPM says, due to supply chain
bottlenecks 
    ** Student lending will be driven by return-to-campus trends
and policy developments, such as Biden administration's
extension of federal student loan payment holiday until August
31, 2022
    ** Brokerage downgrades Navient Corp  NAVI.O  to
'underweight' from 'neutral' as moratorium on federal student
loans limits consolidation opportunity in loan growth 
    ** Mortgage originators are expected to face strong
headwinds from rising rates and lower refinancing volumes, JPM
says, adding industry has, however, begun to show signs of
rationalization 
    ** Strong labor markets and appreciation in home prices are
likely to create most beneficial credit environment for private
mortgage insurers in 2022, brokerage anticipates; upgrades
Essent Group Ltd  ESNT.N  to 'overweight' from 'neutral'
    

 (Reporting by Sohini Podder in Bengaluru)
 ((sohini.podder@thomsonreuters.com))