Originations were up and delinquencies down for General Motors Financial Co. in the first quarter.
The captive financing arm of automaker GM reported net income of $112 million. By comparison, the company had earned $77 million in 1Q11.
Originations, too, were on the rise last quarter, to $1.4 billion from $1.2 billion in the prior quarter and $1.1 billion for 1Q11. The outstanding balance of finance receivables totaled $10 billion at March 31.
Loan performance, meanwhile, has been on the mend for GM Financial. Payments 31-to-60 days late improved to 3.2% from 3.8% in the prior-year period, and chargeoffs fell to 2.5% from 4.0%.
Lease originations of GM vehicles totaled $384 million for the first quarter, up from $314 million the previous quarter and $311 million for 1Q11. Leased vehicles, net, totaled $1.1 billion for 1Q12.
After the earnings announcement, JPMorgan Securities reiterated its “overweight” rating on GM Financial.
“We favor GMF’s relatively low leverage vs. peers (GMF’sFY11 debt to tangible equity ratio of 2.6x compares to 9.5x for Ford Credit) and niche focus on the profitable below prime segment of the market,” wrote Eric Selle, a JPMorgan Securities credit analyst, in a research note. “The company has demonstrated its ability to service this segment well by its solid finance margins and ability to survive the 2008 financial crisis.”
