By Prakhar Srivastava and Atharva Singh
Jan 30 (Reuters) - SoFi Technologies reported a rise in fourth-quarter profit on Friday, lifted by strong loan demand and rapid growth in its fee‑based businesses.
Fintech lenders have become popular among young customers, who favor faster, app-based platforms over traditional banks that rely heavily on branches for most operations and have long-drawn processes.
Loan demand remains strong as recent interest rate cuts have encouraged refinancing and debt consolidation.
Consumers are shifting high-cost credit-card balances to fintech lenders to take advantage of low-interest personal loans.
SoFi's financial services business, which includes credit card and investing products, saw revenue surge 78% in the quarter ended December 31 to $456.7 million.
Fee-based businesses help insulate fintechs from interest-rate swings. Sofi's revenue from the segment surged 53% from a year earlier.
Founded in 2011 as a student-loan refinancer, SoFi has expanded into personal loans, mortgages, investing and payments, targeting younger, tech-savvy customers.
Total loan originations hit a record of $10.5 billion, up 46% from a year ago, driven by continued strong demand for personal, student and home loans.
CEO Anthony Noto said credit performance remained in line with expectations and overall financial health of its members across spending, investing and credit "remained strong,"
CREDIT CARD CONTRACTION LOOMS
Earlier this month, U.S. President Donald Trump proposed a 10% cap on credit card interest rates, which banks have warned could restrict consumers' access to credit.
"I would expect a meaningful contraction in credit card lending because the economics of revolving balances wouldn't work. People will still need credit and it would leave a massive gap in the market," SoFi CEO Anthony Noto told Reuters.
The lender's fourth-quarter adjusted revenue increased 37% to a record $1 billion from a year earlier.
Its adjusted profit more than doubled to 13 cents per share, compared with 5 cents a year earlier.
(Reporting by Prakhar Srivastava and Atharva Singh in Bengaluru; Editing by Shinjini Ganguli)
