Bank of America grew its auto portfolio by $3 billion in 2017, but expects some “softening” in the coming year, the company reported in fourth-quarter earnings this week.
Average loans and leases topped $53 billion in the quarter compared with $50 billion during the same period the year prior. Although the company does not break out its auto portfolio, charge-offs were up in its indirect and direct segment, which combined auto, student, and unsecuritized loans.
The bank charged-off $64 million from that subcategory in the fourth quarter, up from $43 million during the same period the year prior.
“Auto has been growing strongly historically,” Paul Donofrio, the company’s chief financial officer, said on an earnings call this week. “That’s going to soften or has softened.”
Last year, Bank of America was able to “modestly” grow its lease book through Volvo Car Financial Services by virtue of the OEM’s growing line of high-end luxury vehicles that pushed more consumers into leasing, David Hollodick, senior vice president of consumer vehicle lending at Bank of America, told Auto Finance News.
“It really hasn’t been a play to do more leasing, it’s just been an output of what they are doing from a vehicle mix and sales perspective,” Hollodick said. “It’s going to be one of those years where it’s sort of blocking and tackling. Run the business, be prudent, there is no reason to stretch for volume.”
Last year, Bank of America launched a direct lending platform that is already starting to see some success, Donofrio said on the call.
“Half of all our retail direct loan applications are originated digitally following the recent rollout of our digital auto shopping capabilities last quarter,” he said, noting that the bank’s direct book is still relatively small overall.
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