Big banks slow auto lending

Wells Fargo and Chase, two of the biggest banks in auto lending, posted increases in consumer auto originations in 2014 but at a slower rate of growth than in 2013.

In fact, in Wells Fargo’s case, a more cautious approach in the final months of 2014 resulted in a fourth-quarter dip, the company said.

“While we continued to benefit from the strong auto market, new originations [counting fourth-quarter originations for all vehicles, new and used] were down from a year ago, reflecting our continued risk and pricing discipline in a competitive market,” Wells Fargo CFO John Shrewsberry said.

Biggest auto lender?

The company’s consumer auto originations were $6.7 billion in the fourth quarter, down 1 percent vs. the 2013 quarter. But that quarter would have been tough to beat. In the fourth quarter of 2013, Wells Fargo’s originations were up a hefty 26 percent year over year.

For all of 2014, Wells Fargo consumer originations were $29.9 billion, up 8 percent from the previous year. Pending year-end reports from a few other lenders, that probably would make Wells Fargo Dealer Services the biggest U.S. auto lender for 2014, counting new and used vehicles combined.

In 2013 Wells Fargo consumer auto originations rose 14 percent year over year.

Steady growth

Chase Auto Finance said the fourth quarter of 2014 was its 13th consecutive quarter of combined loan and lease growth. “In auto, results continue to reflect steady growth in new vehicle sales as well as stable used-car values,” said Marianne Lake, CFO for J.P. Morgan Chase & Co. in New York.

For the fourth quarter, Chase Auto originations were $6.9 billion, up 8 percent from the year-earlier period. In the 2013 quarter, Chase Auto originations were up 16 percent year over year.

Chase Auto’s charge-off rate for bad loans was just 0.45 percent in the fourth quarter, up from 0.39 percent a year earlier. In a Jan. 14 conference call, J.P. Morgan Chase executives disagreed with an analyst who asked whether a recent uptick in auto loan delinquencies could be a “canary in a coal mine,” possibly indicating trouble in other consumer lending segments, such as credit cards.

“I hate to say I’m confident about anything,” Lake said, “but that’s not our expectations.” CEO Jamie Dimon said auto loans performed “unbelievably well” in the credit crisis and the Great Recession. The recent increase in auto delinquencies is a “return to norm,” he said.

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