While large banks have been pulling back from the auto finance space — or at least tempering growth amid rising delinquencies and charge-offs — Capital One Financial Corp. has been the exception as it grew its portfolio three times faster this year than its closest bank competitor, according to data compiled by the analytics company Trefis.
Overall the industry has grown to a new record high of $1.1 trillion in auto loan outstandings, but banks lost share in that overall market in 2017. The combined marketshare of the five largest banks in the industry — JPMorgan Chase, Ally Financial Inc., Wells Fargo & Co., Capital One and Bank of America — shrunk to 25.3% compared with 26.2% the year prior, according to the report published by Nasdaq.
Despite that pullback among Capital One’s peers, the bank grew its auto portfolio by 15.1% year over year in the third quarter, compared with 4.9% growth from the next fastest growing company in the space — Bank of America.
“[Capital One] continues to focus on growing its auto lending operations — a strategy that could potentially keep charge-off rates elevated in the near future if the bank does not maintain strict lending standards,” Trefis said in the report. “While Capital One’s auto loan charge-off rates have been hurt over recent quarters, we believe that the bank’s expertise in the card lending industry — which also has a similar high-risk, high-return profile — should benefit its auto lending arm.”
Ally Financial still grew its portfolio by 3.9% in the third quarter, but JPMorgan Chase remained more stagnant at 0.9% growth while Wells Fargo scaled back its portfolio by 11.8% amid a consolidation of its service centers and its forced insurance scandal.
The banks remain in their respective rankings with Ally maintaining its status as the largest portfolio at $67.1 billion. However, Capital One has quickly gained on Wells Fargo and threatens to secure a spot as the third largest bank lender in the country. Capital One’s portfolio sits at $53.3 billion compared with $55.5 billion at Wells Fargo.Like This Post