The delay in releasing its second-quarter financial report has affected the shares of Santander Consumer USA Holdings Inc’s (NYSE:SC), which went into a plunge. The shares of the Banco Santander SA’s car-financing unit suffered a blow of a 15% fall to $10.09. Its stock was not spared either and had a 25% decline through July 22. It seems like the discount enlargement and credit loss allowance methodologies’ issues are not doing any good to the company.
The company is currently under evaluation by the bank and its auditors who are trying to unravel the mystery behind the accumulation of loan discounts over the life of a loan. According to analysts at Jefferies, there are chances that the “slope” of the curve applied to loans may be the source of impending losses by the SC. The analysts also say that there are no anticipated impacts on earnings from the potential change.
What next for the lender?
According to Jefferies analysts, the SC’s loans have maintained an overwhelming majority of their value perhaps as a result of the discounts that ranged from 1% – 5%. The lender may not have commented on this, but a statement reveals that it is in steady discussions with current and previous accountants to try and get a solution to its current issues.
The Dallas-based company seems optimist of putting these matters on its back even though the ruling may set back prior financial statements. Bearing in mind that this is the second delay in filing of financial statements, JPMorgan Chase & Co. analysts are also predicting some weakness in the stock. This may raise a concern with the investor especially in the areas of processes and controls at the company.
More about Santander Consumer USA
The company that manages assets of more than $53 billion ha its nonexecutive chairwoman, Blythe Masters resigned from her roles. Masters who is less than a year old since joining SC said that she preferred being Santander Consumer USA’s group senior advisor.