Navient Q3 Earnings Beat on NII Growth & Lower Expenses, Provisions Up

Navient Corporation NAVI reported third-quarter 2025 adjusted earnings per share (EPS) of 29 cents, surpassing the Zacks Consensus Estimate of 18 cents. It reported earnings of 28 cents in the prior-year quarter.

Results benefited from an improvement in net interest income (NII) and lower expenses. However, a decrease in other income, along with higher provision for loan losses, acted as a spoilsport.

Results included a $1.17 per share impact from higher provisions for loan losses driven by elevated delinquency balances, the forecasted macroeconomic outlook, and the extension of the FFELP portfolio. Additionally, there was a net benefit of 8 cents per share to net interest income from lower prepayment rate assumptions, and regulatory and restructuring-related expenses of 4 cents per share. After considering these, GAAP net loss was $86 million compared with a net loss of $2 million in the prior-year quarter.

Navient’s NII Rise & Expenses Decline

NII rose 4.2% year over year to $146 million in the third quarter. It surpassed the Zacks Consensus Estimate by 2.8%.

Total other income decreased 92.6% year over year to $23 million.

Provision for loan losses was $168 million, up from $42 million in the prior-year quarter.

Total expenses decreased 67.8% year over year to $110 million.

NAVI’s Quarterly Performance of Segments

Federal Education Loans: The segment generated a net income of $35 million, which rose 29.6% year over year.

As of Sept. 30, 2025, the company’s net FFELP loans were $28.9 billion, down 8.1% sequentially.

Consumer Lending: This segment reported a net loss of $76 million against a net profit of $27 million in the year-ago quarter.

The private education loan delinquency rate greater than 30 days was 6.1% compared with 5.3% in the prior-year quarter.

As of Sept. 30, 2025, the company’s private education loans were $15.4 billion, which decreased 3.4% from the prior quarter. Navient originated $528 million of private education refinance loans in the reported quarter.

Business Processing: The company no longer provides Business Processing segment services after the sale of the government services business in February 2025.

Navient’s Liquidity

To meet liquidity needs, NAVI expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities, or issue additional unsecured debt.

Notably, the company had $571 million of total unrestricted cash and liquid investments as of Sept. 30, 2025.

Navient’s Capital Distribution Activities

In the third quarter, the company paid $16 million in common stock dividends.

In the reported quarter, Navient repurchased shares of common stock for $26 million. As of Sept. 30, 2025, the company also authorized a new $100 million share-repurchase program, in addition to approximately $26 million remaining under the prior authorization.

Our Take on NAVI

Navient has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken to control expenses are expected to support financials in the upcoming period. The company’s third-quarter results were benefited from higher NII and decrease in expenses. However, higher provisions remain a near-term concern.

Navient Corporation Price, Consensus and EPS Surprise

Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote

Currently, NAVI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Navient’s Peers

Capital One’s COF third-quarter 2025 adjusted earnings of $5.95 per share widely surpassed the Zacks Consensus Estimate of $4.20. The bottom line also compared favorably with $5.48 in the prior quarter.

COF’s results benefited from an increase in net interest income (NII) and non-interest income, and lower provisions. Also, higher loans and a stable deposit balance supported the performance. However, a rise in expenses was undermining the factor.

Ally Financial’s ALLY third-quarter 2025 adjusted earnings of $1.15 per share surpassed the Zacks Consensus Estimate of 99 cents. Further, the bottom line reflected a significant jump from the year-ago quarter.

Results primarily benefited from a rise in net finance revenues and lower provisions. Also, a marginal rally in loan balances supported ALLY’s results to some extent. However, a decline in other revenues and higher non-interest expenses were the undermining factors.

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This article originally published on Zacks Investment Research (zacks.com).

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