General Motors Financial released 2Q12 earnings this afternoon, reporting a net income of $136 million, up from $96 million in 2Q11.
Loan originations totaled $1.5 billion for the quarter, up from $1.4 billion in 1Q12 and up from $1.3 billion in 2Q11. Lease originations of GM vehicles were $394 million for 2Q12, up from $384 million in 1Q12 and up from $173 million in 2Q11, the company said.
The percentage of loans for new GM vehicles remained “steady” at 31% of total loans originated, said GM Financial President and CEO Dan Berce during the company’s earnings call. GM’s current subprime loan penetration is 8.7%, up from 6.9% a year ago and above the industry average of 5.9%, he added.
“The origination growth that we saw this quarter and that we expect to see going forward results from market expansion as the auto industry experiences increased consumer demand for new vehicles,” he said. “That said, we typically see some seasonality in consumer demand for subprime loans and expect our origination volumes to flatten over the back half of the year.”
Consumer finance receivables 31-to-60 days delinquent were 4.1% of the portfolio at June 30, compared with 4.4% at midyear 2011. Accounts more than 60 days delinquent were 1.5% of the portfolio at June 30, compared with 1.7% a year ago.
“The credit performance for our June quarter was nothing short of phenomenal,” Berce said. “Credit metrics will seasonally weaken in the back half of the year, and we expect to see delinquency and losses increase sequentially for the September and December quarters, consistent with our history.”
Annualized net credit losses were 1.5% of average consumer finance receivables for the quarter ended June 30, compared with 2.4% for the quarter ended June 30, 2011. For the first half of the year, annualized consumer net credit losses were 2.0%, down from 3.2% last year.
Berce went on to note that one of the company’s achievements this quarter was its lowest-ever priced securitization. During the June quarter, the company executed two securitization transactions totaling $2.3 billion. Its most recent transaction— a $1.2 billion issuance in June, carried an all-in cost of funds of 1.9% – the lowest priced transaction in GM Financial’s history, CFO Chris Choate explained.