Chase Grows Auto Originations
NEW YORK — In reporting its first-earnings, Chase announced that auto originations are up both year-over-year and quarter-over-quarter.
According to officials, the "increase is driven by market share gains in prime segments and new manufacturing relationships."
More specifically, auto originations are up 13 percent on a year-over-year basis and up 7 percent quarter over quarter.
The company originated $6.3 billion of auto loans in the first quarter, compared with $5.9 billion in the prior quarter and $5.6 billion a year ago.
Overall, the company has $45.9 billion in auto loans for the period, compared with $45.3 billion in the prior quarter and $42.5 billion at the same time last year.
Discussing the business segment that includes auto lending, Chase reported net income for this division of $257 million, compared with $730 million in the prior year. The business segment includes mortgage banking and other consumer lending.
Officials indicated that the decrease in net income was largely due to lower non-interest revenue and higher non-interest expense, which they said were partially offset by the lower provision for credit losses.
Net revenue for the segment was $1.9 billion, down $818 million, or 30 percent, from the previous year.
"The decline was driven by lower mortgage fees and related income, partially offset by an increase in net interest income, reflecting the impact of higher auto loan balances and wider auto loan spreads," executives explained.
The company went on to say, "The provision for credit losses, predominately related to the auto and student loan portfolios, was $217 million, compared with $405 million in the prior year. The prior-year provision reflected a $150 million increase in the allowance for loan losses for student loans."
For the business segment, Chase indicated that mortgage loan originations came in at $31.7 billion, down 16 percent from the prior year and 9 percent from the prior quarter.
Total third-party mortgage loans serviced stood at $1.1 trillion, down $73.8 billion, or 1 percent, from the previous quarter.
JP Morgan Chase & Co. as a whole reported net income of $3.3 billion, compared with $2.1 billion in the first quarter of 2009. Earnings per share came in at $0.74, compared with $0.40 in the same time frame of last year.
Jamie Dimon, chairman and chief executive officer, explained, "The firm's net income of $3.3 billion reflected another strong quarter for the investment bank, particularly in fixed income markets, and continued solid performance across asset management, commercial banking and retail banking.
He went on to say, "Our first-quarter earnings generated additional capital, resulting in very strong Tier 1 Capital ratio of 11.5 percent and a Tier 1 Common ratio of 9.1 percent. Total firm-wide credit reserves were more than $39 billion, or 5.6 percent, of total loans. We continued to see delinquencies stabilize, and in some cases improve in our credit portfolios. Ultimately, the health of these portfolios will track the health of the economy."
Looking ahead, he concluded by explaining, "While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends. We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery. Regardless of the economic trends, our company continues to invest for the future, building a better franchise for our clients and customers."