Friday, June 27, 2014

Wells Fargo largest auto lender, report says

Wells Fargo has overtaken vehicle-finance giant Ally Financial to become the largest automobile lender among depository institutions, according to a report this week.

As of the end of the first quarter, San Francisco-based Wells Fargo had $52.6 billion in outstanding auto loans compared with Ally's $51.9 billion, according to the report by SNL Financial. From the first quarter last year, Wells Fargo's auto loans grew $5.4 billion.

Wells Fargo's gains have partially come from Ally’s loss of a preferred-lender arrangement with General Motors, the report said. Ally is seeking to diversify the manufacturers and dealers with which it does business after losing such arrangements with GM and Chrysler within the past year or so.

Ally, formerly the financing arm of General Motors Corp, said the SNL report does not capture all of the company's auto-lending activity in the first quarter, because it omits lease originations and originations from Ally's commercial services group. Ally's auto originations for the quarter totaled $74.9 billion when the other figures are factored in, the lender said.

Auto lending has been a bright spot for lenders at a time when they are coping with weak revenue growth in a low-interest-rate environment. But as lenders become more competitive to make auto loans, regulators have grown worried about risky practices.

On Wednesday, the Office of the Comptroller of the Currency noted in a report that there is a "loosening underwriting standards" and "increased layering of risk" in the indirect auto lending industry. In indirect auto lending, a lender provides financing through an auto dealer.