Ford Motor Credit Co., GM Financial, and Capital One Auto Finance all grew their portfolios in the first quarter despite a mixed environment for originations, delinquencies, and charge-offs.
Ford Motor Credit
Ford Motor Credit originated 93,000 loans in the first quarter down from 98,000 the same period the year prior. Despite that, the company grew its US consumer lending portfolio by 6% year over year to $55.2 billion.
For the foreseeable future, Ford Credit will maintain the period-end portfolio size for the foreseeable future as it looks to manage risk, Chief Financial Officer Robert Shanks said on the call.
“We want to better manage that. So that’s the reason primarily that we’re going to cap them at least for the foreseeable future,” he said.
Charge-offs were down 3% year over year to $93 million as auction values improved versus a year ago by about 1% at constant mix and drove lease residual improvement.
“We now expect full-year average auction values to decline just 1% to 2%,” Robert Shanks, chief financial officer, said on the call.
Retail loan originations were down to $5.1 billion for the quarter compared with $5.6 billion the same period the year prior. Operating lease originations were down as well totaling $5.7 billion for the quarter compared with $6.3 billion in 1Q17
Much like Ford, GMF still managed to grow the overall retail portfolio by 4.6% to $34.3 billion.
Retail finance receivables 31-60 days delinquent were 3.7% of the portfolio, up 60 basis points year over year. Late-stage delinquencies were also up 30 basis points to 1.7% of the portfolio for the quarter. That increase in delinquencies led to an 11% year over year rise in net charge-offs to $172 million for the quarter.
Capital One Auto Finance
“The auto business continues to grow,” Richard Fairbank, chief executive, said on the call. “First quarter auto originations were strong and ending loans were up 10% year-over-year, competitive intensity in auto is increasing, but we still see attractive opportunities to grow. Consumer banking revenue for the quarter increased about 4% from the first quarter of last year driven by growth in auto loans and deposit.”
Net charge-offs made up 1.53% of the bank’s auto portfolio, a decline of 11 basis points year over year. Delinquencies of 30 or more days were increased 12 basis points to 5.15% of outstandings, while nonperforming auto loans also increased 14 basis points to 0.5% of the portfolio.
“In auto, we remain cautious about used car prices and our underwriting assumes that prices decline,” Fairbanks said on the call. “As the cycle plays out, we continue to expect that the auto charge-off rate will increase gradually.”