Santander Consumer USA Holdings in Dallas reported higher profits due to a spike in gains on loan sales.
The $36 billion-asset subprime auto lender earned $285.5 million in the second quarter, up 16% from a year earlier. Earnings per share were 79 cents, beating an estimate of analysts polled by Bloomberg by 5 cents.
Asset sales drove the rise in quarterly profits. Total fee-based income jumped 51%, to $209 million. Investment income which includes gains from securitization was $86.7 million, compared with $21.6 million a year earlier.
Net interest income rose 16%, to $1.3 billion. The provision for credit losses increased 25%, to $739 million, which the company attributed to "seasonality," as well as higher margins on its retained portfolio.
Total originations increased 13%, to $7.6 billion.
The net interest margin dipped 4 basis points, to 13.9%, while the return on average assets declined by 20 basis points, to 3.2%.
Santander Consumer USA is a unit of the Spanish banking giant Banco Santander.