How Have The Auto Lending Portfolios Of U.S. Banks Changed Over The Last Five Years?

The banks with the largest auto-lending units in the U.S. – JPMorgan Chase, Ally Financial, Wells Fargo, Capital One and Bank of America – accounted for more than 25% of all outstanding auto loans in the country at the end of 2016. Notably, banks account for less than 37% of all U.S. auto loans (the rest coming from specialized car finance companies, including the finance arms of car manufacturers). This implies that the market share of these 5 banks among U.S. commercial banks is nearly 70%.

The figure for each bank is as reported in their latest quarterly earnings disclosures. Bank of America combines its auto lending portfolio with other specialty loans in its quarterly reports, so the figure here is taken from its latest call report as filed with the FDIC here. The total portfolio of auto loans by all commercial banks in the U.S. is from weekly data compiled by the Federal Reserve, accessible here. The total auto loans outstanding in the country is taken from the website of the Federal Reserve Bank of St. Louis here.

The auto industry has seen a marked increase in outstanding loans in recent years, with data compiled by the Feds showing that total auto loans have jumped from just over $800 billion at the end of 2012 to over $1.1 trillion now – an increase of almost 40% in four years. While an important factor behind the growth has been the steady improvement in economic conditions since 2011, the growth rate has been unusually high. This is primarily because auto lenders have lowered their credit requirements and are offering higher loan amounts for used cars, while cutting loan interest rates to attract more customers.

JPMorgan ended 2016 as the biggest auto lender among the banks – surpassing the leader Ally Financial for the first time since the latter became a bank holding company in late 2008. The diversified banking giant reported growth at an average rate of 5.7% over the last four years – below the 6.6% growth rate in total auto loans in the country. On the other hand, Capital One has seen its auto loan portfolio swell by more than 12% annually over the same period – with a significant focus on sub-prime auto lending. The chart below shows Capital One’s total auto lending portfolio over the years and our forecast for the same. You can see how changes to this figure affects our price estimate for the bank by modifying the forecast.

See full Trefis analysis for Wells Fargo | JPMorgan | Capital One | Bank of America

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