JPMorgan Chase Chief Financial Officer Marianne Lake attributed the origination slowdown to an “extremely” competitive auto market. “We’re seeing competition from people who have different economic drivers in our sight, credit unions, and captives,” Lake said, noting that Chase is willing to lose marketshare to maintain returns.
Chase Auto Finance’s portfolio inched up 1.6% year over year, to $83.5 billion, despite a 14.6% decrease in originations, to $7 billion. Delinquencies 30 days or more past due increased 4 basis points to 0.93% of the portfolio. Charge-offs, on the other hand, decreased to 0.38% of the bank’s portfolio, compared with 0.52% in the year-prior period.
Meanwhile, fourth-quarter originations at Wells Fargo Auto increased 9.3% year-over-year to $4.7 billion, yet outstandings fell 15.5% to $45.1 billion. The smaller portfolio reflects a “focus on growing high-quality auto loans following transformational changes made to the business,” Chief Financial Officer John Shrewsberry said in an earnings call, adding that the auto portfolio should start to grow by midyear.
Fourth-quarter delinquencies dropped to 3.4% of the indirect loan portfolio, compared with 3.6% in the fourth quarter of 2017. Net charge-offs fell to 1.2% — compared with 1.4% during the prior-year period — as a result of the higher quality originations, according to the earnings report.
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