Wells Fargo Auto originations clocked in at $5.4 billion in the third quarter, a decline of 22% year over year and 5% from last quarter, largely due to pandemic-related shutdowns. Outstandings came in at $48.5 billion, a 4% increase YoY and a 1% decrease from the second quarter.
Stimulus programs and payment assistance for consumers are delaying an uptick in delinquencies and charge-offs, according to the earnings report. Thirty-plus day delinquency rates for consumer auto loans sat at 1.66%, a decrease of 70 basis points from the prior year and 2 bps from last quarter. Net charge-offs sat at 0.25% in the third quarter, a decrease of 40 bps YoY and 63 bps quarter over quarter.
Still, the San Francisco-based bank increased its allowance for credit losses for auto loans 4% from last quarter to $1.2 billion, or 2.53% of its portfolio, with the expectation that those figures would increase as stimulus programs and payment assistance for consumers come to an end.
As of Sept. 30, the seven-day average number of new daily payment deferrals granted declined 97% from a peak in April, with 6% of auto loans in deferral status, a 4-point decrease from last quarter, when 10% of the bank’s auto loans were in deferral status, according to Wells Fargo.
“As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums,” Chief Executive Charlie Scharf said in the statement.
Shares of Wells Fargo & Co. [NYSE: WFC] were trading at $23.43 as of 12:40 p.m. ET, down 1.31% since market open. Wells Fargo has a market market capitalization of $94.72 billion.