JPMorgan Chase & Co named a new head of auto finance on Monday as the bank tries to boost its lending in a red-hot area where it has lost market share in recent years.
Thasunda Brown Duckett, 39, said in an interview that she hopes to help the bank make profitable car loans without taking too much risk by looking at factors that lenders may not have traditionally considered in evaluating a borrower's ability to pay. JPMorgan may find it is okay to lend to more customers with lower scores, Duckett said.
Duckett replaces Marc Sheinbaum, whom the bank said had "asked to pursue other opportunities." Sheinbaum told Reuters in May 2011 that competition for auto loans had already come back aggressively after retreating in the financial crisis, and that lenders' margins were being squeezed.
He stopped short of saying that competitors were becoming reckless in lending money to consumers who couldn't repay loans, but JPMorgan Chase has given up market share in recent years. Its auto loan balances rose just 3 percent between December 2010 and the end of 2012. Industry-wide, outstanding loans rose about 13 percent over that period to $719 billion, according to data from consumer credit rating service Experian.
JPMorgan Chase is the biggest bank in the United States by assets, but is only the fourth-biggest auto lender by Experian's count.
Sheinbaum did not return a call seeking comment on Monday.
The shift in leadership shows the needle that JPMorgan Chase must thread as the auto lending market heats up. The bank, like most lenders, is under pressure to boost profits, and staying relatively cool on the auto loan market could result in the bank lagging its rivals.
But in any lending cycle, some banks will eventually take too many risks, whether it be on subprime mortgages that triggered the financial crisis in 2007 and 2008, or commercial real estate that sapped the strength of banks in the early 1990s.
Duckett, known in the bank as "T," said she believes there are "opportunities for us to expand that credit box to be able to help more customers."
To help build the bank's loan book, Duckett said she will strengthen JPMorgan Chase's relationships with manufacturers and with car dealers who can send customers to the bank.
She also plans to step-up marketing of car loans to people who use JPMorgan products and its network branches. The company has some 5,600 branches, the second-most of any U.S. bank.
She also hopes to capture some of the pent-up demand for new cars from dependable customers who have put off financing purchases until they were more confident about the economy.
Duckett was previously JPMorgan Chase's national retail sales executive for mortgage banking, a post in which she managed 4,000 employees.
(Reporting by David Henry in New York; Editing by Bernard Orr)