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Q3 Auto Originiations Up at Wells Fargo, Chase Auto Finance

October 20, 2015

SAN FRANCISCO and NEW YORK — Wells Fargo reported last week a 10% increase in third-quarter auto originations from a year ago, while Chase Auto Finance realized a 19% increase in originations from the year-ago period.

Wells Fargo’s third quarter auto originations, which were up 2% from the prior quarter, totaled $8.3 billion, with bank officials noting that new auto sales were at their highest levels in a decade.

“Auto loans were up $39 billion, or 7%, from last year,” said John Shrewsberry, Wells Fargo’s CFO. “We had record new originations in the third quarter … reflecting the strong auto market while we have remained disciplined in our approach.”

Wells Fargo’s net charge-off rate was 31 basis points of average loans, up slightly from the prior quarter due primarily to seasonally higher auto losses.

Auto originations for Chase Auto Finance grew to $8.1 billion in the third quarter, with officials noting that loans skewed toward the prime space.

Net income for Chase’s card, commerce solutions and auto finance divisions totaled $1.1 billion, a 6% decrease from a year ago, according to the company. Combined net revenue totaled $4.8 billion, a 2% increase. Additionally, noninterest expense for card, commerce solutions and auto rose 8% to $2.2 billion, driven by higher auto lease depreciation and higher marketing expense.

Chase stated that third-quarter results reflected a continued steady growth in new-vehicle sales and stable used-car values.

“We saw average loan and lease balances up 9% and the pipeline is good,” said Marianne Lake, JP Morgan Chase CFO. “Finally, on credit, the net charge-off rate for the quarter was 241 basis points, and we expect net charge-offs of around 250 basis points over the medium term.”

Overall, JP Morgan Chase reported net income of $6.8 billion, or $1.68 per share for the third quarter 2015 — an increase of22% from a year ago. Net revenue fell 6% to $23.5 billion.

Wells Fargo reported net income of $5.8 billion, or $1.05 per diluted common share — up 1% from a year ago. Revenue was up 3% at $21.9 billion.

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