Despite that auto originations “stepped up a little” in the first quarter, Capital One Financial Corp. will remain cautious in its auto lending, particularly subprime, Chairman and Chief Executive Richard Fairbank said during an earnings call.
“Our message is really the same as we had last quarter,” he said. Capital One sees “less growth opportunity” in the auto business, but remains both “vigilant and very much working” to capture the opportunities that are consistent with its underwriting.
The McLean, Va.-based lender hit $5.8 billion in auto originations in 1Q, a 13% growth year over year, according to the earnings report. Originations shrank in 4Q15, particularly in subprime, but originations growth was stronger in subprime in 1Q, Fairbank said.
“We had good success with our originations programs, and it appears that competitive intensity may have softened a bit in the quarter,” he said. However, CapOne feels “the same way” about the auto business as it has for the last several quarters. “We remain very vigilant about competitor practices, and in our underwriting we assume used-car prices declined further. We continue to focus on resilient originations and we continue to expect gradual or normalization of margin and credit,” he added.
