Chase Auto Finance originated $9.3 billion of auto loans and leases in the third quarter, up from $8.5 billion in 2Q, and up from $8.1 billion at the same time a year prior, the company announced today.
The 30+ day delinquency rate for auto was at 1.08% in the third quarter, down from 1.16% in 2Q, and up only slightly on a year-over-year basis when the rate was at 1.08% in 3Q15.
Allowance for loan losses were also on the rise at $474 million in the third quarter, compared with $449 million in 2Q, and $374 at the same time a year prior. Meanwhile, the net charge-off rate rose to 0.49% from 0.29% in 2Q, and up from 0.40% at the same time a year prior. Chase grew its reserves in auto during the 3rd quarter, but doesn’t anticipate any immediate concerns in regards to charge-offs, said Marianne Lake, JP Morgan Chase & Co.’s chief financial officer, during the company’s earnings call today.
“We built $25 million of reserves this quarter for auto, and we expect to continue. We think the auto opportunity is still strong, we have a great franchise, and we have great manufacturing partnerships which are growing strongly too,” she said. “So, as we grow that portfolio, I would expect us to continue to grow our reserves modestly in 2017. However, we are expecting charge offs to stay under control.”
Lake also reiterated the bank’s plan to pull back on 84-month auto loans, when asked about current competitive environment by Eric Wasserstrom, managing director at Guggenheim Securities LLC, during the call’s Q&A.
“We have recently decided to pull back on 84-month plus term loans on all Fico bands, just as we see where we’re at in the cycle and as we see the risks in that type of lending,” Lake responded. “So we continue to calibrate our underwriting, but I wouldn’t comment on seeing anything specifically.”
