Chase, Wells Fargo ease auto loan growth

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Two of the biggest banks in auto lending are growing their loan business but at a slower pace.

Chase Auto Finance and Wells Fargo Dealer Services both reported a slower rate of growth in auto loans and leases so far this year versus the clip they were on at the end of 2013.

Chase Auto Finance stuck with what it calls a disciplined approach to auto lending in the second quarter, reporting loan and lease originations of $7.1 billion, up about 4 percent versus the year-earlier period. For all of 2013, Chase Auto originations were up 12 percent versus 2012, to $26.1 billion.

“What we’re doing is being consistent on our credit discipline” and “are not participating in some of the growth that others do," Marianne Lake, CFO for parent company JPMorgan Chase & Co., said during a conference call for investors on Tuesday. She said that consistent approach applies to the auto, mortgage and commercial lending sectors.

Last week, Wells Fargo Dealer Services also reported a somewhat slower rate of growth for auto loans in the second quarter, but showed a faster rate of growth than Chase.

“We have remained the No. 1 auto lender in the country while retaining our focus on pricing for risk,” said John Shrewsberry, CFO for parent company Wells Fargo & Co.

Wells Fargo Dealer Services is the nation’s biggest auto lender in volume, including new and used vehicles combined, the company said. Wells Fargo’s volume received a boost when it signed up with General Motors as a preferred lender for subvented loans for West Coast dealerships in 2011. That relationship gradually expanded and it was rolled out nationwide in September 2013.

Wells Fargo’s auto originations were $7.8 billion in the second quarter, an increase of about 9 percent from the year-earlier quarter. For all of 2013, Wells Fargo auto loans were up 14 percent to $27.6 billion.

In answer to an analyst’s question, Shrewsberry said Wells Fargo Dealer Services is taking the appropriate amount of risk, even though delinquencies and credit losses are at or near historic lows. That suggests the bank could afford to take more risk to capture more share.

“We look carefully at what’s going on with FICO scores, and we look at delinquencies and a whole bunch of things there. So no, I don’t think we are taking inappropriate risks,” he said.

You can reach Jim Henry at autonews@crain.com.

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