RE:Goeasy update I have estimated the financial impact on this interest rate cap. Given the above, which states the average interest rate to decrease by 270 basis points from its loan portfolio, then operating income would be lower by ~ $70m had the cap been in place. However, this impact will gradually be felt in future accounting periods as older loans come off its books.
The operating income in 2022 was ~ $332m and so we would expect a 20% drop. However, the company continues to grow its loan book portfolio so this would only lower the growth rate on earnings but it certainly will not derail the company. I would guesstimate that it sets them back by about 1 year.
This is the way I look at it. If the company doubles its earnings every 3-5 years, then instead, we will double every 4-6 years.
No big deal.