-- US consumer finance companies likely faced seasonal headwinds on loans in the first quarter, but growth is expected to pick up through the rest of the year, RBC Capital Markets said in a note on Friday.
Data through February indicate an expected seasonal decline in loan balances, with slight improvement in year-over-year growth, Jon Arfstrom, associate director of US research at RBC, wrote.
"Although we see very limited direct impacts from recent macro volatility, we remain mindful of the risks of sustained higher energy prices on consumers," Arfstrom wrote. "Solid delinquency trends are driving stable to lower loss expectations, with support from a resilient consumer and tighter underwriting in prior periods."
Arfstrom sees loan balance growth accelerating from here on out.
US consumer inflation reached its highest monthly reading in nearly four years in March as the Middle East conflict sent energy prices sharply higher. Earlier in the week, the US and Iran agreed to a two-week ceasefire, pausing a war that had spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz.
"We will look for confirmation that despite recent macro concerns, the medium-term revenue expectations are consistent," according to the RBC note.
The brokerage lowered its price targets on American Express (AXP), Capital One Financial (COF) and SLM (SLM), to $415, $235 and $28, respectively. The price target on Bread Financial Holdings (BFH) moved to $90 from $83.
RBC continues to recommend American Express for its premium consumer base and strong revenue growth expectations, while also favoring Ally Financial (ALLY). The brokerage highlighted stable to improving credit trends at Synchrony Financial (SYF) and Bread Financial.
"Our coverage universe has been impacted by market volatility, with a more challenging start to 2026," Arfstrom said. "That being said, we see our universe as well positioned to deliver improving growth and healthy credit. Assuming some stability in the broader macro sentiment, we expect solid earnings growth and decent stock price performance in 2026."
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