What is driving Navient Corp (NASDAQ: NAVI) stock

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Navient Corp (NASDAQ: NAVI) stock rose 7.58% on 21st July, 2020 and continued its bullish momentum on 22nd July, 2020 (as of 11:14 am GMT-4 ; Source: Google finance). FFELP Loan delinquency rate declined by 22% from 10.5% to 8.2%. Forbearance rate rose 106% from 12.9% to 26.6%, after peaking at 28.5% earlier in second-quarter 2020. EBITDA of the company for the second quarter decreased by $3 million to $8 million, mainly due to contract terminations/expirations in the second half of 2019 and the impact of COVID-19 on certain activities.

The company reported GAAP net income of $125 million in the second quarter of FY 20 compared to net income of $153 million in the year-ago quarter. The company’s adjusted diluted Core Earnings per share were of $0.91 for the second quarter compared to $0.74 in the year-ago quarter. For the quarter, there has been 18% increase in the net interest income.

Additionally, the company has paid $31 million as common stock dividends. The company posted the adjusted tangible equity ratio of 3.6%. The company had issued $1.3 billion in term ABS during the quarter. The company had $1.6 billion of cash as of June 30, 2020.

Meanwhile, Federal Education Loans segment, Core Earnings had increased to $146 million compared to $131 million in the year-ago quarter. Net interest income of the segment grew $26 million mainly due to an increase in unhedged floor income as a result of the decrease in interest rates. Provision for loan losses declined $5 million.

Moreover, in Consumer Lending segment, the company originated $238 million of Private Education Refinance Loans compared to $846 million in the year-ago quarter. Core Earnings of the segment were $87 million compared to $85 million in the year-ago quarter. Net interest income of the segment rose $2 million mainly driven by the growth of the Refinance Loan portfolio. Provision for loan losses declined $19 million mainly due to the adoption of CECL on January 1, 2020. The provision of $41 million in the second-quarter 2020 were mainly due to an increase in anticipated losses due to COVID-19’s negative impact on the current and forecasted economic conditions. Furthermore, in Business Processing segment, the company delivered the core Earnings were $6 million compared to $7 million in the year-ago quarter. The revenue of the segment declined $1 million mainly due to contract terminations and expirations that occurred in the second half of 2019, as well as the impact of COVID-19.

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