Auto loan originations at Capital One Auto Finance Inc. grew more than 23% year over year to $6.8 billion, the company reported in its third quarter earnings statement on Tuesday.
“We liked the earnings profile and resilience of the auto business we’re booking and continue to believe that the through-the-cycle economics of our auto business are attractive,” Richard Fairbank, founder and chief executive of Capital One, said during the company’ earnings call yesterday.
Auto originations also grew 4% between 3Q and 2Q, while net charge off recovery rates were up to 1.85% YoY. Delinquency rates past 30 days past due were down, however, to a rate of 5.67% from 6.10% at the same time a year prior.
“The auto market and competitor practices remain dynamic. While we see opportunities for growth, we remain very vigilant about competitor practices,” Fairbank said on the call. “We continue to focus on resilient originations, and we continue to expect a gradual decrease in margins and a gradual increase in charge-offs as the cycle plays out.”
Fairbank said auto losses are not “fully normalized” yet but he does think they have “inched up a little,” in recent quarters.
“It keeps a little bit outperforming, in a good way, our own expectations of that normalization, but I think there’s a little more normalization still to happen,” Fairbank said during the Q&A. “(The auto business) has a number of things going on in the industry that cause us to be very vigilant, most importantly, the kind of underwriting practices there. But I would say really over the last few years, the actual credit performance has been strikingly good and maybe even a little better than expected.”
