Sallie Mae, previously known as SLM, has reported a significant improvement in its financial performance, leading to an increase in its earnings guidance for 2024. In the fourth quarter, the student-lending giant posted a profit of $168 million, a notable recovery compared to the loss of $77 million in the same period last year.
Strong Growth and Improved Financials
Sallie Mae's earnings per share for the quarter reached 72 cents, a substantial improvement from the loss of 33 cents per share recorded a year ago. This positive outcome exceeded expectations, as analysts surveyed by FactSet had estimated earnings per share of 88 cents.
Moreover, the company's net interest income for the quarter witnessed growth, increasing to $386 million from $381 million in comparison to the previous year. This achievement surpassed analyst projections of $376.5 million.
Reduced Provision for Credit Losses
A noteworthy improvement was seen in Sallie Mae's provision for credit losses, which decreased to $16 million in the fourth quarter, significantly down from $297 million recorded in the same period a year ago. The reduction was attributed to various factors, including lower loan commitments, quicker prepayment speeds, and improved staffing.
Upgraded Earnings Guidance
Impressively, Sallie Mae also revised its adjusted earnings guidance for 2024. The company now expects earnings in the range of $2.60 to $2.70 per share, reflecting a 5-cent increase at both ends compared to its prior guidance.
These positive financial results and increased earnings guidance demonstrate Sallie Mae's commitment to enhancing its financial performance and providing better value to its stakeholders.
Written by Dean Seal
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