SLM (SLM) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Business performance and outlook

• Originations grew 6% year-over-year in Q1, setting a positive trend for the rest of the year.

• Credit performance remains strong, with trends similar to pre-COVID vintages.

• Guidance for the year was reaffirmed, with all key metrics tracking well.

• New borrower assistance programs are performing as expected, with early signs of success.

• More comprehensive data on program performance will be available after Q2.

Loan sales, balance sheet, and capital management

• Over $3 billion in loan sales are on track for the year, with strong market demand and oversubscription.

• Balance sheet growth is targeted at 2%-3% for the year, with flexibility to adjust based on market conditions.

• Share repurchases are funded incrementally from loan sales and executed programmatically.

• Dividend growth is tied to organic earnings, while loan sales fund buybacks; special dividends may be considered if buyback returns diminish.

• CECL transition is a key milestone before increasing dividend payouts.

Credit and borrower assistance programs

• New programs target borrowers in their first 12-24 months post-graduation, a period of peak financial stress.

• The mix of borrowers in assistance programs is similar to pre-COVID, indicating appropriate program sizing.

• Forbearance rates are stable, with expanded grace periods for new-to-repayment borrowers.

• The 2022 spike in loss rates was mainly due to policy changes, with improvement expected to continue.

• No significant impact observed from the federal payment restart; repayment habits remain strong.