For the first time in its eight-year history, GM Financial has paid a hefty dividend to its automaker parent.
On Oct. 30, the finance company paid $375 million to General Motors for full-year 2018. It will continue to return some amount to GM annually until it consistently holds 50 percent of GM retail sales penetration in the U.S. and the captive's balance sheet growth levels off, GM Financial CFO Susan Sheffield said.
"Then we can look at returning all the net income," she said. "That would be more early 2020s."
The dividend amount will vary year to year, she said. Still, "we wouldn't be paying the dividend if we didn't think that we could pay something on a sustainable basis," she said.
Since 2010, GM Financial has built out its lending platform, continued to increase its share of GM retail loans and leases, and purchased the international business.
"So we've needed to retain all our capital to support that growth," Sheffield said.
Financing 50 percent of GM's retail sales in the U.S. has been an important goal in delivering on GM Financial's goals, she said. "We talk about loyalty and retention and are a true captive at those levels."
GM Financial refers to its leverage ratio -- measured as net earning assets to tangible net worth -- to determine how and when to transfer capital back to GM.
"We felt like it was the appropriate time to start returning the capital back to the parent," Sheffield said.