Home Auto Citizens Bank Reduces Auto Loan Offerings in the U.S.

Citizens Bank Reduces Auto Loan Offerings in the U.S.

Citizens Financial Group, a U.S. lender, has reduced its auto loan portfolio from a peak of $14.5 billion in December 2021 to about $10 billion as of now and plans to further reduce it to $5 billion to $6 billion by 2024. This is due to the risk of a recession, tight spreads, and limited cross-selling opportunities. The bank is also selectively extending credit and has let go of 30 to 50 loan officers in the mortgage business. Moody’s Investors Service recently cut the outlook for U.S. auto financing arms to negative, citing the likelihood of higher delinquency and provisioning. Warren Kornfeld, a Moody’s analyst, said that banks recognize the growing risks in auto lending outside of the super prime segment.

In light of the potential recession in 2023, Citizens Financial Group is cautious about its lending business. They have reduced their auto loan portfolio from a peak of $14.5 billion to about $10 billion and plan to reduce it further to $5 to $6 billion by 2024. This is due to tight spreads, limited cross-selling opportunities, and higher delinquency and provisioning risk. Furthermore, they selectively extend credit and have let go of 30 to 50 loan officers in the mortgage business. Moody’s Investors Service has cut the outlook for U.S. auto financing arms to negative. Warren Kornfeld, a Moody analyst, believes banks recognize the growing risks in auto lending outside the super prime segment.

Given the potential for recession in 2023, it is important for lenders to be cautious when it comes to their lending business. Citizens Financial Group is taking the necessary steps to reduce its auto loan portfolio and selectively extend credit to protect its business. They are also monitoring the risks in auto lending outside the super prime segment and taking the necessary steps to reduce their exposure. By doing so, they are ensuring that their business is safe and secure in the event of a recession.

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