UPDATE 2-OnDeck profit beats estimates on record loan growth, shares rise

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(Reuters) – OnDeck Capital Inc beat analysts’ estimates for fourth-quarter profit, driven by higher loan growth and interest income, sending the online lender’s shares up more than 5 percent in early trading on Tuesday.

Fintech firms have grown in popularity and even managed to claim some market share from traditional financial institutions on the back of their superior technological prowess, which digitally savvy customers find more convenient to use.

Lenders such as OnDeck and its rival LendingClub have benefited from the fintech boom and the shorter turn around time in disbursing loans when compared to institutional banks.

New York-based OnDeck said loan originations surged 21 percent to a record $658.5 million in the quarter ended Dec.31, while net interest income rose 26 percent to $105.4 million.

The company forecast current-quarter adjusted net income of $5 million to $9 million, while analysts on average were estimating $8.5 million, according to IBES data from Refinitiv.

Gross revenue in the current quarter is expected to be between $108 million and $112 million, higher than analysts’ expectation of $106.09 million.

Net income attributable to common shareholders rose to $14 million, or 18 cents per share, in the fourth quarter, from $5.1 million, or 7 cents per share, a year earlier.

Adjusted for one-time items, the company, which lends to small businesses online, earned $15.9 million, or 20 cents per share, beating the average analyst estimate of 16 cents.

Including the latest reported quarter, the company has surpassed analysts’ estimates for at least six out of the last eight quarters.

The company said it expects adjusted net income in 2019 to be between $30 million and $40 million, while analysts were expecting $44.4 million.

OnDeck’s shares were trading higher at $7.78 before the opening bell.

Reporting By Aparajita Saxena in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur

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