DEARBORN, Mich. – Ford Motor Credit Co. reported net income of $497 million in the third quarter of 2010, an increase of $70 million from earnings of $427 million a year earlier. On a pre-tax basis, Ford Credit earned $766 million in the third quarter and $2.5 billion in the first nine months of 2010, compared with $677 million and $1.3 billion, respectively, in the previous year.
The increase in pre-tax earnings primarily reflected a lower provision for credit losses and lower depreciation expense for leased vehicles, offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure primarily from cross-border intercompany lending.
“The quality of our portfolio remains high and, linked with our solid business fundamentals, we continue to support Ford Motor Company's business with strong profits and distributions,” Ford Credit Chairman and CEO Mike Bannister said.
On Sept. 30, Ford Credit’s on-balance sheet net receivables totaled $83 billion, compared with $93 billion at year-end 2009. Managed receivables were $85 billion on Sept. 30, down from $95 billion on Dec. 31, 2009. The lower receivables primarily reflected the transition of Jaguar, Land Rover, Mazda, and Volvo financing to other finance providers and lower industry and financing volumes in 2009 and 2010 compared with prior years.
On Sept. 30, managed leverage was 6.3 to 1. Ford Credit distributed $1 billion to its parent in the third quarter of 2010 and expects to distribute $1 billion in the fourth quarter for a total of $2.5 billion of distributions in 2010.
Ford Credit expects profits in the fourth quarter to be lower compared with recent quarters because of smaller expected improvements in the provision for credit losses and depreciation expense for leased vehicles. For full-year 2011, Ford Credit expects to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lower lease depreciation expense and the non-recurrence of credit loss reserve reductions of the same magnitude as 2010.
