General Motors Financial Co. continues to be the exception to the trends in the industry as the company reported growing originations and lower delinquencies and charge-offs, during its third-quarter earnings report yesterday.
Retail loan originations and leases grew 12.7% and 6.5% year over year, respectively. GM Financial originated $4.6 billion worth of retail installment contracts in the quarter, up from $4.1 billion in the same period the year prior. Likewise, lease originations topped $6.5 billion, up from $6.1 billion in 3Q16.
Yet, the company’s outstanding net finance receivables remained flat year over year at $31.4 billion.
All this growth comes at a time when many of the major banks and financial institutions are tightening underwriting standards and pulling back originations amidst higher delinquencies and losses. Yet, GM Financial improved its collections during the quarter.
Net charge-offs dropped to $151 million during the quarter, compared with $156 million in the same period the year prior. That 3% decline in charge-offs was paired with a 110 basis point drop in delinquencies in the third quarter.
However, the company is expecting “headwinds” in the fourth quarter from depreciating used-car values.
“With recoveries, we started seeing a lower year-over-year decline in the latter part of the second quarter and the third quarter, [but it was] somewhat impacted by hurricane issues,” Chuck Stevens, executive vice president and chief financial officer of General Motors, said during the earnings call. “When you think about the timing of the depreciation and everything else, most of that is going to impact 4Q.”
