Dealer interest and application flow have been strong at TD Auto Finance, TD Bank President and CEO Bharat Masrani told investors at the Barclays 2011 Global Financial Services Conference in New York today.
TD Auto was formed earlier this year, when TD Bank bought Chrysler Financial from Cerberus Capital Management for $6.3 billion.
Though still in its early months, Masrani is pleased with the unit’s progress so far. “We’ve been very happy with the dealer sign ups and that has exceeded our expectations,” he said. “We are seeing good application flow from the dealers.”
Stiff competition has proven somewhat of a challenge, though, and resulted in softer margins. “To some extent, by our entry, it has created a competitive response which is to be expected,” he said. “I see over time the business to not only meet our expectations, but to exceed them and deliver to our franchise in the U.S.”
Still, competition is a very strong component of TD Bank’s strategy in the U.S., and an asset generator like Chrysler Financial was very attractive to the U.S portion of its business, he noted.
With Chrysler Financial, TD Bank added “$6 billion in high-quality auto loans to our balance sheet to accelerate our asset-gathering capabilities and to leverage our excess deposits,” said Masrani, who is also group head of U.S. personal and commercial banking for TD Bank Group. “We are one of the few banks that can grow through acquisition or organically.”
TD is the sixth-largest bank in North America by branches, serving 20 million customers. The bank reported $1.6 billion in adjusted earnings for the third quarter, up 21% from the previous quarter.
