Loans

Rocket’s net loss in fourth quarter was $233 million



Rocket Cos. lost $233 million in the final months of 2023, pushing it into a deep loss for the full year.

Executives at the Detroit-based giant on Thursday touted the company’s artificial intelligence bona fides and cost cutting amid declining quarterly and annual results. Predicting a difficult periodthird-quarter net income fell from $114.9 million, but improved $492.6 million Net loss as of end-2022.

In the fourth quarter of 2023, Rocket’s full-year net loss reached $390 million, which was also a sharp decline from the $699.9 million profit reported during the market decline at the end of 2022. Rocket reported fourth-quarter adjusted net income of $885 million – CFO and treasurer Brian Brown attributed the above-guidance number to stronger origination metrics.

“We achieved these results during one of the worst quarters for mortgage originations in recent history,” he said on a conference call Thursday night.

Rocket Mortgage counted $17.2 billion in total loan volume between October and December last year, down 22% quarterly and down 9% from the same period in 2022. In 2023, loan volume reached $78.7 billion, down sharply from $133 billion in 2022.

Raw transaction volume in the direct-to-consumer channel was $10.36 billion and in the Rocket Partner Network (including Rocket Pro TPO) was $8.46 billion, down both quarterly and year-over-year. There was also a sharp decline in deal value per pipeline compared to the same period last year. same time last year.

brown and Varun Krishna Rocket’s cost cuts were highlighted during Thursday’s conference call, with annual expenses falling to $4.2 billion in 2023 from $5 billion in 2022. The company said it had cut its project list by more than 80%, slashing or switching to upgrade loans for solar projects including Rocket Auto and Rocket Solar.

rocket Prominent artificial intelligence focus The company said its underwriters did not need to intervene in nearly two-thirds of revenue verifications in December, a five-fold increase from a year and a half ago.

“Artificial intelligence is something that you have to have the right to win. And the right to win means you have to own the assets,” Krishna said. “Because we have these elements of scale, that’s why we want to be a donor.”

The bank’s sales margin grew 268 basis points, down from 276 basis points in the third quarter but up from 217 basis points in the same period in 2022.Brown told one investor it’s hard to say when the company will hit the 300 basis points of headroom GOS has had over the past few years, but Production capacity withdraws from the market It will help.

“Now we’re starting to really see it play out in terms of pricing competitiveness,” Brown said of industry capacity cuts.

Rocket ended the year with $6.4 billion in mortgage servicing rights, a number that has declined slightly over the past five quarters. The company is bidding aggressively for MSR, and Brown said supply is not large while other industry players are bidding aggressively.

The CFO also expressed confidence in Rocket Recent comments from Treasury Secretary Janet Yellen This suggests that non-bank lenders may fail under market pressure. Rocket’s balance sheet and $9 billion in liquidity is one of, if not the strongest in the industry.

“It’s something we’ll keep a close eye on, but in many cases new regulations like this can actually increase our competitive advantage and sometimes even increase the moat around the business,” he said.





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