Captial One’s first quarter of 2021 was marked by an improvement in auto originations and strong credit performance, in line with what other auto lenders have reported this quarter.
The bank’s auto originations bounced back after dropping in the fourth quarter of 2020 by 18% sequentially to $7.4 billion, according to its Q1 earnings release. Originations clocked in at $8.8 billion, a 20% increase from last quarter and 16% year over year, in line with the lender’s volume seen in the first three quarters of 2020.
Auto outstandings also increased 2% quarter over quarter and 9% YoY to $67.1 billion.
Credit performance for auto improved as 30-day delinquencies dropped 166 basis points (bps) from the fourth quarter and 217 bps YoY to 3.12%. The net charge-off rate for auto loans was flat compared with last quarter at 0.47%, a decrease of 104 bps from a year ago.
“A sharp uptick in used-car values, coupled with a stimulus-driven surge in customer payments, resulted in a negative net charge-off rate in March,” Chief Executive Richard Fairbank said during the lender’s earnings call last week. “We expect the auto charge-off rate to increase from its unusually low level as auction prices normalize and stimulus impact plays out.”
Capital One’s allowance for credit losses for its auto book accounted for 3.9% of balances at $2.6 billion, flat with last quarter when the bank released $32 million in ACL.
The bank joins multiple auto lenders in seeing strong performance as the industry continues to benefit from pandemic-driven record-high car prices and increased consumer demand amid tight supply. Industrywide, non-seasonally adjusted outstandings in 2020 increased 3.3% YoY to surpass $1.225 trillion in the fourth quarter, growth that continued in Q1 2021.
Shares of Capital One [NYSE: COF] were trading at $149.92 as of market close today, up 0.56% from market open. Capital One has a market capitalization of $68.8 billion.
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