Direct Lending Helps Grow PNC’s Auto Outstandings 10%

PNC Financial Services Group Inc.’s auto outstandings were up 10% to $12.3 billion, from $11.1 billion during the same quarter a year prior, the bank reported in its first-quarter earnings report.

The Pittsburgh-based bank attributed some of the growth to its direct-lending product called Check Ready, during the company’s earnings call yesterday.

Direct lending could actually “change the growth trajectory of consumer lending” at PNC, Chief Executive William Demchak said previously, during the company’s 2016 third-quarter earnings call. At the time, he said those effects wouldn’t materialize until the second half of 2017, though.

On yesterday’s earnings call, however, he said some of those effects are already impacting the portfolio.

“You will start seeing differentiated growth rates — in fact, you already see it between our direct product and our indirect product line,” Demchak said.

Check Ready is available as a web portal online now, and the bank plans to launch a mobile application for the product in the second quarter of this year, which will enable consumers to apply for a loan at home or in the dealership from their phone, Demchak said. As a result, PNC expects direct lending growth to continue through 2017.  

First quarter delinquencies 30 to 59 days past due grew to $35 million, up 6% compared to the same period last year. However, because of growth in the overall portfolio, delinquencies make up a smaller portion of the book — 0.28%, compared to 0.30% in 1Q16.

Delinquencies further out, at 60 to 89 days past due, grew to $10 million, up 25% compared to the same period the year prior. As a percentage of the portfolio, those delinquent loans make up 0.8% of the portfolio, up from 0.7% year over year.

Learn more about the tech and disruption in the industry at Auto Finance Innovation 2017, May 17-18 in San Diego. Visit www.autofinanceinnovation.com and to learn more about the Auto Finance Risk & Compliance Summit, visit www.afrcs.com.