Auto Strengthens Fifth Third Quarter Consumer Portfolio

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Support for indirect car loans again Fifth Third Banktotal consumer portfolio, offsetting declines in mortgage balances and home equity.

The bank saw an 18% year-over-year increase in indirect guaranteed consumer loans, mostly made up of indirect auto loans, according to last week’s income supplement. Indirect secured consumer outstandings reached $ 13.7 billion in the fourth quarter, up from $ 11.5 billion in the same period a year ago.

To put that figure into context, $ 10.7 billion of its 11.5 billion indirect consumer loans guaranteed in 2019 were for auto loans, according to Big Wheels auto finance data.

Fifth Third Bank’s indirect consumer portfolio grew steadily over the past year, recording sequential increases of 6% in the fourth quarter, 4% in the third quarter and 3% in the second quarter. The average yield on indirect consumer loans at the end of the year, however, fell by 15 basis points to 3.93% compared to the end of 2019.

Fifth-Third’s indirect secure consumer portfolio net cancellation rate reached 0.28% in the fourth quarter, an increase of 17 basis points from the previous quarter, but a decrease of 28 basis points from the previous quarter. at the same time a year ago.

The bank also saw an increase in the number of indirect consumer loans guaranteed under a deferral program during the fourth quarter, to 2% from 1% in September. Deferrals, however, fell from 10% of the portfolio in June at the height of the COVID-19 pandemic. Of the consumers who left a deferral program, 92% are now up to date with their payments.

“We continue to see lower than normal consumption loss rates. We saw them below normal in 2020. We expect this to continue in 2021 as the impact of the stimulus measures trickle down to the portfolio, ”said Richard Stein, the bank’s chief credit officer. , when calling for results.

As expected, the bank reduced its allowance for credit losses as a percentage of the secured indirect consumer loan portfolio by 2 basis points to 0.97%, or $ 132 million, down from 0. 99%, or $ 128 million from the previous quarter.

Meanwhile, the rate on 30- to 89-day delinquent loans totaled 0.33 percent of the bank’s entire portfolio, an increase of 4 basis points from the third quarter and a stable year-over-year level, according to presentation of results. Automobiles make up about 34.4% of banks’ consumer portfolio, which also includes home equity loans, credit cards and residential mortgages.

Fifth Third is present in 10 states, including Florida, Georgia, North Carolina, Ohio, and West Virginia. The bank had $ 6.8 billion in auto assemblies in 2019, according to Big wheels.

Fifth Third Bancorp shares [Nasdaq: FITB] were trading at $ 28.44 at the market close, down 4.40% since the market opened. Fifth Third has a market cap of $ 20.26 billion.

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