OneMain Holdings Inc. will use part of its savings from the reduction in the federal corporate tax rate to raise its minimum wage for employees and provide a special bonus, President and CEO Jay Levine said.
The company also plans to use the extra money to boost marketing of its brand to elevate awareness of its loan products, Levine said during a conference call to discuss quarterly earnings.
The healthy economy and lower tax rate present the consumer lender with a number of opportunities to improve business, he said.
"Historically, additional income in our customers' pockets has been beneficial for everyone," the CEO said. OneMain will also put more money into training programs, technology and business operations, according to a presentation that accompanied its earnings presentation. The initiatives will likely push expenses for its consumer and insurance segment up about 5%.
The extra money from lower taxes can increase loan demand or improve credit. The company has not noticed any shift in consumer trends since federal tax reform took effect, either with more paydowns or more borrowing, but OneMain anticipates trends to emerge, he said.
The company also plans to improve debt collections by doing more recovery for charged-off accounts in-house, Levine said.
OneMain posted an $81 million fourth-quarter 2017 GAAP charge from remeasuring the value of its deferred tax assets and other tax adjustments following the corporate rate reduction. The company anticipates an effective tax rate of about 24% going forward.