Wells Fargo, Chase boost auto originations in 2Q

© Can Stock Photo / tigger11th

Wells Fargo and JPMorgan Chase recorded auto origination levels last quarter unseen in several years, according to results filed with the Securities and Exchange Commission.

Wells Fargo Auto originated $6.3 billion of loans last quarter, up 43% year over year and up 17% from a two-year high recorded last quarter. Outstandings for the San Francisco-based bank fell 4% year over year to $45.7 billion, but increased 2% compared with 1Q19.

“As we were implementing changes [to our auto business], we ceded marketshare as expected and reduced the size of our auto portfolio,” Wells Fargo Interim Chief Executive Allen Parker said in an earnings call yesterday. “Now with most of these transformational changes complete, our auto portfolio returned to growth in the second quarter for the first time since 2016.”

Net charge-offs at Wells Fargo declined 47 basis points — to 0.46% of the portfolio, which the bank attributed to higher recoveries, lower losses driven by higher quality originations, and lower outstandings. Likewise, 30-day delinquencies decreased 64 basis points to 2.30% from the prior-year period, which it also attributed to higher quality originations.

Meanwhile, JPMorgan Chase originated $8.5 billion of loans and leases, its highest quarterly volume since $8.8 billion recorded in the third quarter of 2017. Even so, Chase’s average auto loan and lease portfolio fell year over year to $83.6 billion from $83.8 billion. The New York-based bank noted increased year-over-year expenses related to higher auto lease depreciation.

Net charge-offs related to the auto business fell 4 basis points, year over year, to 0.27%. However, 30-day delinquencies rose 5 basis points to 0.82%.

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