Fifth Third’s Auto Outstandings Continue to Decline Amid Pullback

Fifth Third Bank’s auto loans and leases outstanding dropped 10% in the fourth quarter, the bank reported in an earnings call this morning.

Fifth Third did not break out originations specifically, but the bank’s balances dropped to $9.2 billion in the fourth quarter compared with $10.2 billion compared to the same period the year prior.

The decline reflects Fifth Third Bank’s decision to reduce its portfolio 30% by 2019. The bank planned in 2017 to shrink its auto loan portfolio to $7 billion, declining at a rate of about $1.5 billion per year. Fifth Third has managed to make the portfolio more portfolio as yields increased 26 basis points year over year in the quarter.

The strategy led to a decline in charge-offs during the quarter. Net charge-offs declined to $10 million in 4Q17 from $11 million during the same time a year prior. As a percentage of average loans and leases, net charge-offs were 0.45% of the portfolio, up from 0.40% during the same period last year.

On the other hand, delinquencies 90 days or more past due rose to $10 million compared with $9 million the year prior. As a percentage of loans, the rate rose to 0.11% from 0.09% last year.