Santander ramps up reserves by $2.5B
Santander Consumer USA has increased its allowance for credit losses by $2.5 billion due to Day 1 CECL impacts and additional reserves for COVID-19, the company announced in its first-quarter earnings report today.
SCUSA postponed its earnings conference call this morning due to technical difficulties and has not yet rescheduled.
The Dallas-based subprime lender increased its CECL allowance by approximately $2 billion as it elected to defer CECL’s effect on regulatory capital for two years, joining Ally Financial, Bank of America and Capital One. The lender also set aside $442 million of additional reserves due to the coronavirus.
Total allowance for credit losses clocked in at $5.5 billion on a total portfolio of $47.6 billion.
SCUSA’s 30-day delinquencies improved during the quarter, decreasing 10 basis points year over year at 8.3% of the total portfolio. Conversely, late stage delinquencies — 60 days past due — increased 40 bps YoY to 3.6%.
Yet, net charge-offs improved dropping 90 basis points YoY to 7.7% of the portfolio.
Meanwhile, originations were nearly flat at $7 billion, a 1% decrease. Overall, Chrysler Capital’s penetration rate increased to 38.9% on 447,000 units sold, the highest penetration rate in the last year.
Santander’s liquidity remains at $50 billion as of quarter end, with 45% available warehouse capacity syndicated by 13 banking partners. The subprime lender and largest issuer in automotive capital markets was also able to securitize a total of $2.1 billion in deals during the first quarter, including a $965 million nonprime transaction in the second week of April.
