Santander Consumer USA grew originations of Chrysler retail loans 24% year over year to $1.9 billion, reflecting a strategy started last fall to get into a “good rhythm” with the OEM, Santander Chief Executive Scott Powell said during the company’s first-quarter earnings call.
“There’s no magic to it,” Powell said, noting that Santander is simply working more closely with the OEM. “[We enacted] general improvements and are optimizing pricing for risk across all our channels, and especially with Chrysler,” Powell said. “We’re taking a much more granular approach to how we are pricing for risk and finding those opportunities for improvement.”
Santander has held steady on its credit band and expected return on assets, he added. Last quarter, the lender increased lease originations — secured primarily by Chrysler vehicles — 31% year over year, to $2.1 billion. Although Santander’s total originations were up 18% year over year, the company’s portfolio remained flat at $26 billion in outstandings.
The company’s originations peaked in 2015 and now that “back book” of loans are coming to term and the lender is looking to replenish the portfolio largely with Chrysler Capital loans and leases, Chief Financial Officer Juan Carlos Alvarez de Soto said on the call.
“We’ve had a very good start to the year in terms of originations and credit performance, and we feel good about where we are going into the second quarter,” he said. “But in terms of balance sheet growth, remember that our assets are paid down fairly quickly, so [we need to] replace the [originations coming due], and we plan to take advantage of the opportunities the market gives us at the right risk adjusted returns.”