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OneMain Holdings (OMF) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 29, 2026

Source: earnings call transcript

Executive summary

OneMain Holdings, Inc. Q2 FY26 — Strong Receivables Growth and Improving Credit Trends

OneMain Holdings delivered a strong second quarter, marked by robust receivables growth and improving early-stage credit trends, reinforcing confidence in the business outlook. The company continues to drive growth through product innovation in personal loans and disciplined scaling of its Auto Finance and credit card segments. While net charge-offs increased year-over-year as expected, management anticipates significant improvement in the second half of the year, supported by proactive underwriting and strategic investments in technology and data.

Highlights

5

  • Managed receivables grew 7% year-over-year to $26.9 billion, driven by strong originations across all products.

  • Originations increased 10% year-on-year to $4.3 billion, with Auto Finance growing 19% and credit card purchase volume up 57%.

  • Early-stage delinquency (30-89 days) declined 7 basis points year-over-year, accelerating improvement from Q1 FY26.

  • Credit card net charge-offs declined 186 basis points year-on-year to 17.7%, with 30-plus delinquency falling 146 basis points.

  • Customer accounts surpassed 4 million, a 14% increase year-over-year, with credit card accounts up over 400,000.

Concerns

5

  • GAAP net income per diluted share decreased to $1.32 from $1.40 in Q2 FY25.

  • Adjusted net income per diluted share decreased to $1.31 from $1.45 in Q2 FY25, primarily due to higher loss provisions.

  • C&I net charge-offs increased 63 basis points year-on-year to 8.2%, and consumer loan net charge-offs increased 58 basis points to 7.8%.

  • The loan loss reserve ratio increased slightly to 11.6% due to the higher reserve rate of the growing credit card business.

  • The 'back book' (originations prior to August 2022) continues to be a headwind, representing 4% of the portfolio but 12% of 30-plus delinquencies.

Guidance & targets

CategoryTargetConfidence
Full-year managed receivables growth
6% to 9%
high materiality
High
Full-year C&I net charge-offs
7.4% to 7.9%
high materiality
High
Full-year OpEx ratio
approximately 6.6%
medium materiality
High
Quarterly Policyholder benefits and claims (PD&C) expense
mid-$50 million range
low materiality
Medium
Funding costs (interest expense as % of average net receivables)
approximately this level
medium materiality
Medium
Loan loss reserve ratio
around 11.7%
medium materiality
Medium
Recoveries
around the first half average
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Personal Loans
Product innovation and enhanced analytics are driving growth and strengthening performance, with new offerings showing promising early results.
Originations growth: 10% YoY (company-wide)Debt consolidation offering: enhanced, helps improve credit scores, lower losses (majority secured)Home fixture secured product: good uptake, strong initial credit results, expanding
————
Auto Finance
Solid growth driven by dealer network expansion and enhanced underwriting, with credit performance in line with expectations and outperforming the broader industry.
Originations growth: 19% YoYReceivables: $3B
—14%——
Credit Cards
Very strong quarter with positive results across all metrics, including significant growth in receivables, customer accounts, and purchase volume, alongside improving credit metrics and profitability.
Receivables increase: $161M (QoQ), nearly $400M (YoY)Customer accounts: 1.3M (total), up 155,000 (QoQ), up over 400,000 (YoY)Customer accounts growth: 44% YoYPurchase volume growth: 57% YoYNet charge-offs: 17.7% (down 186 bps YoY)30-plus delinquency: down 146 bps YoYMarginal operating costs per account: down about 25% YoYTotal revenue yield: 33.6% (up 330 bps YoY)
————

OMF operating KPIs by quarter

OMF operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Active accounts Credit card
<1.2M We delivered strong results for the quarter, with receivables increasing 45% year-over-year to just under $1 billion, and customer accounts are up 40% year-over-year to nearly 1.2 million. Source: earnings call transcript
1.3M Customer accounts increased to 1.3 million, up 155,000 from last quarter and more than 400,000 from a year ago. Source: earnings call transcript
—
Originations
$3.1B First quarter originations of $3.1 billion increased 3% compared to the first quarter of last year, and we see opportunities to continue our growth across our products. Source: earnings call transcript
$4.3B Second quarter originations of $4.3 billion increased 10% compared to the second quarter of last year. Source: earnings call transcript
+38.7%
Consumer loan yield
22.5% Our first quarter consumer loan yield was 22.5%, up 13 basis points year-over-year. Source: earnings call transcript
22.7% Our second quarter consumer loan yield was 22.7%, up 16 basis points from last quarter and 11 basis points year-on-year, even as our lower loss, lower-yield auto book continued to grow as a percentage of our consumer loan portfolio. Source: earnings call transcript
+0.2 pt
30 to 89-day delinquency ratio Excluding Foursight
2.62% 30 to 89-day delinquency on March 31, excluding Foursight, was 2.62%, down 1 basis point compared to a year ago. Source: earnings call transcript
2.82% 30 to 89 delinquency on June 30, excluding Foresight, was 2.82%, down 7 basis points compared to a year ago, improving on the trend we saw last quarter. Source: earnings call transcript
+0.2 pt
Net charge-off ratio Consumer loan
8% Consumer loan net charge-offs, which exclude credit cards were 8.0% of average net receivables in the first quarter, up 19 basis points from a year ago and in line with our expectations. Source: earnings call transcript
7.8% C&I net charge-offs were 8.2% and consumer loan net charge-offs were 7.8%, both in line with our expectations, and we continue to have strong recoveries in the quarter. Source: earnings call transcript
-0.2 pt
Net charge-off ratio Credit card
18% With that in mind, we are seeing improvement in our credit card net charge-offs, which declined 176 basis points year-over-year to 18% in the quarter. Source: earnings call transcript
17.7% Credit card net charge-offs declined 186 basis points year-on-year to 17.7%. Source: earnings call transcript
-0.3 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Economic uncertainty and geopolitical tensions

Not quantified, but acknowledged as creating some risk.

Mitigation:Closely monitoring trends across the consumer and portfolio; unemployment remains low, supporting credit performance.

Back book (originations prior to August 2022) disproportionate delinquency contribution Ongoing

Represents 4% of portfolio but 12% of 30-plus delinquencies.

Mitigation:Front book vintages are performing well, but the back book's negative impact stubbornly remains on the balance sheet.

What to watch in Q3 FY26

Delinquency trends (30-89 days)

next quarter
Current 2.82% (down 7 bps YoY)
Target Continued improvement / decline

Why it matters

Early-stage delinquency is a key leading indicator for future loss performance and management's confidence in H2 FY26 loss improvement.

Our 30 to 89 delinquency declined 7 basis points year-over-year, accelerating the year-over-year improvement from last quarter's 1 basis point decline. In the first half of the year, 30 to 89 delinquency declined 28 basis points. That's better than last year and the pre-pandemic average.

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Q&A highlights

Can you provide more detail on the expected improvement in delinquencies and credit performance in H2 2026 and into 2027, especially given the wide NCO guidance range?

Management reiterated the full-year C&I net charge-off guidance of 7.4% to 7.9%, emphasizing that improving early and late-stage delinquency metrics (30-89 day down 7bps YoY, 30-plus down 4bps YoY, 90-plus up 3bps YoY but better than prior quarter) support this expectation. They noted that achieving the midpoint of the range would require better-than-normal seasonal delinquency trends.

“So all of those delinquency metrics are moving us in the right direction, and they are where we're seeing us land where we expected based on the fourth quarter of last year and last quarter's 90-plus.”

asked by Moshe Orenbuch · answered by Jenny Osterhout

2 min read 6 chapters

Detailed narrative

Product Innovation Driving Personal Loan Growth

OneMain's personal loan business is benefiting from several recent initiatives. An enhanced debt consolidation offering simplifies the loan process, improves customer credit scores, and exhibits lower losses due to its secured nature. The newly introduced home fixture secured product is seeing good uptake and strong initial credit results, with plans for expansion following successful small-scale testing. These innovations, coupled with expanded analytics using bank data, are strengthening underwriting, improving credit outcomes, and increasing pull-through rates.

Strong Performance in Auto Finance and Credit Cards

The company's newer businesses, Auto Finance and credit cards, are experiencing significant growth. Auto Finance originations grew 19% during the quarter, with receivables reaching $3 billion, up 14% year-over-year, driven by dealer network expansion and enhanced underwriting. The credit card business saw receivables increase by $161 million in the quarter and nearly $400 million year-over-year, with customer accounts growing to 1.3 million. Credit metrics for both segments remain strong, with credit cards showing lower losses and delinquency year-over-year.

Technology and AI Investments for Efficiency and Growth

OneMain is actively investing in technology, data, and AI capabilities to enhance business operations and drive efficiency. A new loan origination system is being rolled out to streamline processes for customers and team members. An internal AI tool provides over 9,000 team members with instant access to policies and procedures, boosting productivity and customer service. AI tools are also being used by engineering and product teams to improve the product development life cycle, with controlled piloting in other high-potential areas.

Resilient Consumer and Improving Credit Trends

Despite economic uncertainties, OneMain's customers remain resilient, with industry metrics pointing to a strong consumer. The company's credit performance is robust, with early delinquency trends (30-89 days) showing improvement, declining 7 basis points year-over-year. This positive trend supports management's expectation for lower losses in the second half of 2026 and into 2027. The company maintains a conservative underwriting posture, including a 30% stress overlay since 2022, ensuring disciplined growth.

Disciplined Capital Allocation and Funding Strategy

OneMain's capital allocation priorities remain consistent: investing in the business, extending credit within its risk-return framework, and returning capital to shareholders. The company repurchased 576,000 shares for $32 million in Q2, bringing year-to-date repurchases to $137 million. The balance sheet was further strengthened by issuing a $1.1 billion 3-year revolving ABS at attractive pricing (5.1%), highlighting strong funding access. Net leverage stands at 5.5x, within the target range of 4-6x.

Loan Loss Reserve Dynamics and Recoveries

The loan loss reserve ratio increased slightly to 11.6% from 11.5% last quarter, primarily due to the rapid growth of the credit card business, which carries a higher reserve rate (nearly 2x that of the consumer loan portfolio). Management expects the overall reserve ratio to modestly rise to around 11.7% in the second half of the year. Recoveries were strong at $117 million or 1.9% of average net receivables, driven by internal capability enhancements and opportunistic sales of charged-off loans, with approximately 20% of recoveries from sales.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.