Santander Consumer USA reduces sub-prime finance

Auto finance specialist Santander Consumer USA Holdings (SC) has reported its 2016 income was $766 million, while total auto originations were down 20% over the year, at $21.9 billion.

As of the end of the fourth quarter 2016, SC reported a drop in the number of finance deals in the sub-prime sector, which now stand at 22.1%, down from 23.4% as of the end of the fourth quarter 2015. In addition, the proportion of its leasing portfolio in the prime sector increased to 13.8%, from 12.2%.

Net leased vehicle income increased 41% to $123 million in the fourth quarter 2016 from $87 million in the fourth quarter 2015 due to continued leasing portfolio growth.

“Full year 2016 results demonstrate SC’s continued profitability and solid returns, earning net income of $766 million while also taking a measured approach to originations in a competitive market and improving the credit quality of our balance sheet. As expected, our 2016 vintage-level loss performance continues to come in better than 2015.

e expect this positive trend will be reflected in nominal gross losses in future quarters. We continue to believe our consistent focus on disciplined underwriting, compliance and being simple, personal and fair in everything we do is setting SC up for long-term, sustainable and differentiated success,” said Jason Kulas, president and chief executive officer.

During the year SC increased the amount of dealers participating in the dealer VIP program to approximately 500 dealers, and increased dealer receivable originations (“floorplan”) more than 60% versus 2015.

However, SC’s fourth quarter 2016 result show a 36% drop in total Chrysler Capital originations, at $2.5 billion.

Izzy Dawood, chief financial officer, said: “Executing the agreement to flow assets to Banco Santander is a top priority in the first quarter of 2017. Along with the national roll out of the dealer VIP program with our Fiat-Chrysler dealers and our continued focus on dealer floorplan lending through Santander Bank N.A. we believe these strategies will positively impact our volume with Chrysler.”