Quarterly profits at Santander Consumer USA Holdings fell sharply as the Dallas company has been steadily scaling back on lending to customers with significantly blemished credit histories.
The $39 billion-asset company, a subsidiary of the Spanish banking giant Banco Santander, reported earnings of $143.4 million in the first quarter, or 31% less than a year earlier. Earnings per share were 40 cents, 4 cents better than the average estimate of analysts compiled by FactSet Research Systems.
The subprime auto lender in recent months
“We’re being more conservative on payment-to-income, loan-to-values, [and] our contractual terms are relatively flat,” said CEO Jason Kulas, discussing competition in the auto market during a conference call with analysts.
Competition in the auto market remains fierce, and Santander remains focused on maintaining solid risk-adjusted yields, Kulas said.
Net interest income declined 8% to $1.1 billion. The net interest margin dipped 15 basis points to 11.2%. The provision for loan losses fell 4% to $635 million.
Noninterest income declined 28% to $55.5 million on lower servicing fees as well as accounting adjustments on a portfolio of personal loans that is currently held for sale.
Operating expenses rose 5% to $305.1 million mostly from higher compensation costs.
