Auto Originations Up 17 Percent in 3Q, Reports Capital One
An increase in auto and commercial loan originations helped fuel a 1 percent profit gain in the third quarter for Capital One Financial Corp., the company reported last week.
MCLEAN, Va. — An increase in auto and commercial loan originations helped fuel a 1 percent profit gain in the third quarter for Capital One Financial Corp., the company reported last week.
Commercial loan increased 9 percent to $32.1 billion, while auto originations increased 17 percent from the second quarter – 40 percent from the year-ago period – to $3.4 billion.
The company’s net income for the period was $813 million, up $10 million from the year-ago period but down $98 million from the second quarter.
"We believe the period of shrinking loans through the Great Recession has come to an end," said Richard D. Fairbank, Capital One's chairman and CEO.
In consumer banking, loan balances were up modestly as strong growth in auto loans was partially offset by an expected runoff of the home loan portfolio, company officials said. In the auto finance segment, charge-off and delinquency rates increased in the quarter, which officials said is consistent with expected seasonal patterns. Year over year, charge-offs and delinquencies improved 102 basis points and 108 basis points, respectively.
Auto finance credit performance remains strong, with originations continuing to perform better than originations from 2007 and 2008. Auto finance credit metrics also are near their all-time lows, driven by the company’s efforts to retrench and reposition the business, tight underwriting and loss mitigation actions through the recession and continued strength in used car auction prices.
Other strong segments included revolving credit card loans, which grew 0.5 percent to $276 million in 3Q, and commercial banking which saw ending loans increase 2.9 percent and net charge-offs reach their lowest levels since 3Q 2008, according to Capital One.
“Our strong third quarter results demonstrate that we remain well-positioned to win in the marketplace and deliver shareholder value," said Richard D. Fairbank, Capital One's chairman and CEO. "We expect that the acquisitions of ING Direct and the HSBC US Card Business will deliver attractive financial results in the near-term."
In June, Capital One announced that it would online bank ING Direct for $9 million. Company officials said it is still waiting for regulators to OK its purchase. Also pending is the banks purchase of HSBC’s credit card portfolio for $2.6 billion, which was announced in August. Company officials said the acquisition should close by the end of the year.
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