Fifth Third Bank is the latest in a string of banks to reduce its volume of auto loan originations in order to “improve return on shareholders’ equity,” the company stated in its fourth quarter earnings report.
The bank did not break out originations specifically, but the company’s auto outstandings dropped 13% year over year to $10.1 billion in the quarter, compared to $11.6 billion the year prior.
While there was a decline in indirect auto originations last year, the bank expects leasing to rise in the coming year, executives said on the earnings call.
Not surprisingly, Fifth Third Bank saw an uptick in net charge-offs in their auto portfolio for the year, which has been a theme among nearly all earnings this season.
Auto net charge-offs came to $11 million for the quarter, up from $9 million the year prior. That’s a 22.2% increase YoY, but as a percentage of average loans and leases, charge-offs only represented 0.40% of the portfolio, up from 0.31% a year ago.
Delinquencies 90 days past due actually fell to $9 million, compared to $10 million the year prior, however, the company did not break out 30-day delinquencies for its auto portfolio.
