Expected leasing decline drives lower GM Financial Q1 earnings

A dip in lease income contributed to GM Financial’s drop in first-quarter earnings, which fell 39 percent to $584 million, the company reported Tuesday. The captive lender in the same quarter of 2022 earned $962 million.

The lender’s first-quarter earnings before taxes were $771 million, down from $1.3 billion the same time last year.

General Motors CFO Paul Jacobson in an earnings call attributed the drop to a decrease in net lease vehicle income, which was expected. That was driven by “lower lease sales mix as a result of reduced new-vehicle production since Q3 2021 and lower net gains on lease terminations.”

Higher cost of funds also impacted results vs. 2022, but that was partially offset by higher effective yields on new originations and growth in the loan portfolio, he added.

The lender said in its fourth-quarter and year-end earnings call in January that it expected earnings to normalize in 2023 after strong credit performance and historically high used-vehicle prices boosted results during the last two years.

“Our full-year GM Financial expectations of EBT adjusted in the mid-$2 billion range and dividends similar to 2022 have not changed,” Jacobson said.

GM Financial originated $9.1 billion in retail loans in the first quarter, up from $8.1 billion in the same period last year. It also originated $3.9 billion in retail leases, up from $3.5 billion in the first quarter of 2022.

The recent banking crisis has had “no material impact” on GM Financial, Jacobson said, adding the captive paid a $450 million dividend to GM in the first quarter.

Other earnings highlights:
• Total revenue rose 5.9 percent in the first quarter to $3.3 billion.
• Loans 31 to 60 days late grew to 1.8 percent of the portfolio, up from 1.7 percent. Accounts more than 60 days delinquent were 0.5 percent of the portfolio, unchanged from last year.