GM Financial profit slips in Q4 as interest rates rise

GM Financial‘s profit is expected to normalize this year after high used-vehicle prices during the past two years contributed to strong earnings results, executives said.

The company said Tuesday that net income fell 33 percent to $605 million in the fourth quarter compared with the same time last year as the lender experienced the effects of lower net leased vehicle income and higher interest costs. Earnings before taxes also fell 33 percent, to $800 million compared with a year earlier.

General Motors‘ captive lender reported originating $3.5 billion in leases in the quarter ended Dec. 31, up 26 percent from the same period a year earlier, and $8.3 billion in retail loans, a 12 percent bump.

For all of 2022, GM Financial’s net income fell 19 percent to $3.1 billion, and its earnings before taxes slid 18 percent to $4.1 billion.

“At GM Financial, the strong credit performance and historically high used-vehicle prices resulted in extraordinary results over the last two years,” GM CFO Paul Jacobson said Tuesday on the automaker’s fourth-quarter earnings call. “For 2023, we expect earnings to normalize in the mid-$2 billion range.”

Jacobson said growth in the lender’s retail and commercial loan portfolio partly offset the decline in net leased vehicle income.

The captive said it paid a $675 million dividend to GM in December, for a total of $1.7 billion in 2022. Jacobson said GM expects a similar dividend this year.

• Total revenue rose slightly, 1.4 percent, in the fourth quarter to $3.3 billion.

• The total delinquency rate rose slightly to 2.8 percent, from 2.4 percent. The delinquency rate for loans 31 to 60 days late grew to 2.1 percent from 1.8 percent.

• U.S. retail penetration was 40 percent in the fourth quarter, down from 45 percent a year earlier.

• GM Financial offered floorplan financing to 43 percent of GM dealers in the U.S. in the fourth quarter.