Tue, Apr. 28, 8:59 AM
- Those looking for confirmation of Santander Consumer's (NYSE:SC) improving credit and loan growth trends got it from Q1 results this morning, says BTIG's Mark Palmer, reiterating his Buy rating and boosting the price target to $28 from $26.
- Those worried about credit deterioration thanks to SC's focus on subprime auto loans needn't be: Net charge-offs of 6.7% in Q1 slid from 8.6% the previous quarter, and the delinquency rate fell to 3.2% from 4.5%.
- Loan originations stayed strong and ROAE of 31.2% jumped from 29.1%, while ROAA added about 40 bps to 3.5%.
- The $28 price target is based on 10x estimated 2015 EPS of $2.78
- Previously: More on Santander Consumer's Q1 results (April 28)
- Previously: Santander Consumer beats by $0.15, misses on revenue (April 28)
Tue, Apr. 28, 7:27 AM
- Q1 net income of $289.2M or $0.81 per share vs. $247M and $0.69 in Q4, $81.5M and $0.23 one year ago. Core net income of $157.3M or $0.44 per share up 84% Y/Y.
- Total originations of $7.4M vs. $7.3B one year ago - $2.5B i Chrysler retail loans, $1.1B in Chrysler leases for own portfolio, and $404M in Chrysler leases for an affiliate.
- Finance receivables of $30.7B up 21% from a year ago.
- Asset sales of $1.5B slips from $1.7B.
- Net charge-off ratio of 6.7% up 30 basis points. Credit loss provisions of $606M vs. $699M.
- Conference call at 10:30 ET
- Previously: Santander Consumer beats by $0.15, misses on revenue (April 28)
- SC flat premarket
Tue, Apr. 28, 7:19 AM| Comment!
Mon, Mar. 16, 8:15 AM
- Never mind rising delinquencies and regulatory investigations into the subprime auto industry's lending practices, not to mention the particularly poor credit quality of this batch of loans, Santander Consumer USA (NYSE:SC) had no trouble finding buyers for its latest $712M deal.
- Many of the borrowers had significantly lower credit scores than in past deals, and Moody's expects losses as high as 27% on the paper vs. 17% on Santander's most previous securitization.
- "You do deals when there is demand," says an analyst. "And this deal indicates that there is demand out there for subprime auto paper."
- It's not rocket science. Yields on the highest-rated slice of the Santander bond were 1.02%, or 90 basis points higher than the equivalent-duration Treasury bond. If you're a European investor, it's more than triple-digit basis points higher.
Mon, Mar. 2, 9:08 AM
- As it works to shore up its relations with regulators (including an expected fail in the stress test this week), Santander Holdings USA has - as expected - chosen former JPMorgan consumer bank chief Scott Powell as its CEO, reports the WSJ.
- The unit owns Santander Bank as well as 60.5% of subprime lender Santander Consumer USA (NYSE:SC).
- It's the latest move by Ana Botin who took over Santander (NYSE:SAN) in September after her father's sudden passing. In addition to shaking up management in Spain, she's cut the dividend and raised $9B in capital.
- Today's move is less about changing the business plan of Santander's U.S. unit, and more about getting back in the good graces of American regulators, reports the Journal, citing a number of sources.
Mon, Mar. 2, 8:30 AM
- One of this country's largest participants in the bubbly subprime auto lending market, Wells Fargo (NYSE:WFC), reports the NYT, for the first time is imposing a cap on the amount of subprime loans it will offer - no more than 10% of overall auto loan originations, which last year was about $30B.
- The move could have big effect as Wells Fargo - having sidestepped the worst of the mortgage mess - has earned a reputation for knowing something about managing risk.
- The cap is already being felt across the auto market, and dealers are noting the bank increasingly rejecting loans which previously might have been accepted.
- Capital One (NYSE:COF), Santander Consumer (NYSE:SC), Ally Financial (NYSE:ALLY) ... ball's in your court now.
- Previously: Ally mulling return to mortgages, credit cards (Feb. 20)
Wed, Feb. 25, 5:03 PM
- At issue are allegations the company illegally seized cars from military members. Should the deal be approved by a judge, it would be the largest fine ever over auto repossessions.
- The Servicemembers Civil Relief Act requires lenders to get a court order prior to action - given those in the service are occasionally sent overseas, leaving finances in peril - but prosecutors says SC failed to do so and completed 760 repossessions against those protected by that law.
- Santander says it's since strengthened controls to prevent improper repossessions.
Thu, Feb. 19, 9:25 AM
- There are 17 separate subprime auto ABS issuers actively at work in the market right now, and subprime auto ABS has returned to its pre-crisis levels of 25-30% of total auto ABS, write the Wells Fargo team of John McElravey and Ryan Brinkoetter.
- Behind the surge are improved consumer finances and the need to begin replacing an aging vehicle fleet. The strong demand has lifted both new and used car prices, thus stabilizing the collateral values behind the loans - the virtuous part of George Soros' reflexivity!
- For lenders - Santander Consumer (NYSE:SC) and Ally Financial (NYSE:ALLY) - come to mind - they've been able to enjoy higher margins in subprime lending, while net losses have been contained.
Tue, Feb. 10, 3:39 PM
- Missed payments are on the rise, loan maturities are being stretched, lending standards are weakening, and losses on auto-loan backed ABS are on the rise, but that's just part of the problem, writes John Carney.
- Auto financing has caught the eye of regulators at the state and federal level, and if the mortgage-lending probes taught us anything, it's that early-on, most forecasts significantly underestimated the costs of settling these investigations. In addition to the fines, there's the cost to lenders of repurchasing soured loans.
- Want more? The DOJ is getting even more aggressive. It settled for money in the mortgage cases, but in the currently ongoing forex probes, Justice has let it be known that criminal guilty pleas will be required.
- Leaning against such ill winds: The size of the auto market is just a fraction of the mortgage market, and - unlike a lot of mortgage debt - auto loans performed well even during the financial crisis.
- Watching with interest: Santander Consumer (SC +1.9%), Ally Financial (ALLY +2.2%), and Blackstone (BX +1.4%) - whose Exeter arm stood among the top 3 in issuance of subprime auto-loan ABS just year.
Tue, Feb. 3, 8:36 AM
- Q4 net income of $247M or $0.69 per share vs. $191.4M and $0.54 one year ago. ROE of 29.1% vs. 17.3%. ROA of 3.1% vs. 1.8%.
- Total originations of $6.1B vs. $5.8B one year ago. Full-year originations up 33% Y/Y.
- Finance receivables, loans and leases, net up 23% Y/Y to $28.8B.
- Credit loss provisions fell to $560M in Q4 from $770M in Q3 and $629M a year ago. The allowance for loan loss ratio falls to 11.5% from 12.1% a quarter earlier. This boosted EPS by $0.11 per share. "Based on the trends we are seeing in the market as well as in our portfolio, we remain confident in the adequacy of our coverage," says the CFO.
- Conference call at 9 ET
- Previously: Santander Consumer beats by $0.13, revenue in-line (Feb. 3)
- SC +2.2% premarket
Tue, Feb. 3, 6:45 AM| Comment!
Mon, Feb. 2, 5:30 PM
Dec. 11, 2014, 4:11 PM
- The New York Department of Financial Services has subpoenaed the auto-lending divisions of Ford (NYSE:F), Honda (NYSE:HMC), Hyundai (OTC:HYMLF), Nissan (OTCPK:NSANY), and Volkswagen (OTCQX:VLKAY), along with Santander (SAN, SC) and TD Bank over their lending practices, reports the NY Post, with an official announcement coming as soon as tomorrow.
- The move comes amid other investigations over auto-lending by the CFPB and the NYC Department of Consumer Affairs.
- Previously: FRBNY: Q3 auto loans highest in nearly a decade (Nov. 25, 2014)
Dec. 9, 2014, 12:45 PM
Dec. 9, 2014, 10:23 AM
- Banco Santander (SAN -2%) is considering a buyout of Santander Consumer USA (SC +9.6%) reports Bloomberg. The spike in SC triggered a circuit breaker, and the shares are just now trading again.
- To review: Santander Consumer USA was taken public at the start of this year, but Banco Santander got put in the penalty box by the Fed for accepting a dividend from the U.S. operation in the spring. Any future payouts will first require Fed permission.
Nov. 25, 2014, 4:47 PM
- Auto loan originations were $105B in Q3, according to the New York Fed's Household Debt and Credit report, with auto loan balances - now at $934B - up for the 14th consecutive quarter.
- The 90-day delinquency rate of 3.1% fell 20 basis points from Q2.
- Among those watching with interest are sizable auto lenders like Capital One (NYSE:COF), Santander Consumer (NYSE:SC), and Ally Financial (NYSE:ALLY).
SC vs. ETF Alternatives
Santander Consumer USA Holdings Inc is engaged in indirect origination of retail installment contracts principally through manufacturer-franchised dealers in connection with their sale of used and new automobiles and light-duty trucks to retail consumers.
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