TD Auto Finance is increasing U.S. auto loans without increasing risk, with the trade-off of lower margins on the low-risk, “super-prime” category, the bank said.
Mike Pedersen, group head of U.S. banking, said the bank is growing its U.S. share in larger commercial loans and super-prime auto.
“Good quality, but lower margins. You’d want us to do this business,” he told analysts, investors and media in a conference call on Aug. 27.
U.S. indirect auto loans outstanding at Toronto-based TD Bank were $18.3 billion at the end of its third fiscal quarter, which closed July 31, up 12.2% from a year ago. In 2014, outstandings increased 8.1% from 2013, to $16.1 billion.
“The stuff we’re writing is better than our portfolio, so we are improving our risk posture in this business and we are comfortable with it,” Pedersen said. “We’re not chasing the stretchy stuff.”
