Cat Financial FY/17 NBV of $11.2B Up 3% Year/Year



Cat Financial reported revenues of $2.69 billion for 2017, an increase of $94 million, or 4%, compared with 2016. Profit was $586 million, a $202 million, or 53%, increase from 2016.

The increase in revenues was primarily due to a $61 million favorable impact from higher average financing rates and a $48 million favorable impact from lending activity with Caterpillar, partially offset by a $29 million unfavorable impact from lower average earning assets.

Retail new business volume for 2017 was $11.22 billion, an increase of $316 million, or 3%, from 2016. The increase was primarily driven by higher volume in Asia/Pacific, partially offset by decreases in Latin America and North America.

During Q4/17, retail new business volume was $3.42 billion, an increase of $553 million, or 19%, from Q4/16. The increase was primarily driven by higher volume in Asia/Pacific, Europe and North America.

Profit before income taxes was $590 million for 2017, compared with $561 million for 2016. The increase was primarily due to a $33 million increase in net yield on average earning assets and a $30 million favorable impact from lending activity with Caterpillar, partially offset by a $38 million increase in general, operating and administrative expenses primarily due to higher incentive compensation.

The provision for income taxes reflects an annual tax rate of negative 1% for 2017, compared with 30% for 2016. The provision for income taxes for 2017 includes a net benefit of $151 million due to the enactment of U.S. tax reform legislation on December 22, 2017. The provisionally estimated net benefit includes a $334 million write-down of net deferred tax liabilities to reflect the reduction in the U.S. corporate tax rate from 35% to 21% beginning January 1, 2018, partially offset by the cost of a mandatory deemed repatriation of non-U.S. earnings. The decrease in the annual tax rate is primarily due to this net benefit, an increase in available foreign tax credits and changes in the geographic mix of profits.

At the end of 2017, past dues were 2.78%, compared with 2.38% at the end of 2016. Write-offs, net of recoveries, were $114 million for 2017, compared with $123 million for 2016.

As of December 31, 2017, the allowance for credit losses totaled $365 million, or 1.33% of net finance receivables, compared with $343 million, or 1.29% of net finance receivables at year-end 2016.
Cat Financial reported Q4/17 revenues of $678 million, an increase of $36 million, or 6%, compared with Q4/16. Q4/17 profit was $271 million, a $186 million, or 219%, increase from Q4/16.

The increase in revenues was primarily due to a $12 million favorable impact from higher average earning assets, a $9 million favorable impact from higher average financing rates and a $9 million favorable impact from lending activity with Caterpillar.

Profit before income taxes was $133 million for Q4/17, compared with $122 million for Q4/16. The increase was primarily due to a $16 million increase in net yield on average earning assets, a $7 million favorable impact from returned or repossessed equipment, a $5 million favorable impact from higher average earning assets and a $4 million favorable impact from lending activity with Caterpillar. These favorable impacts were partially offset by an $11 million increase in provision for credit losses and an $11 million increase in general, operating and administrative expenses primarily due to higher incentive compensation.

The provision for income taxes reflects an effective tax rate of minus 107% in Q4/17, compared with 29% in Q4/16. The provision for income taxes in Q4/17 includes a net benefit of $151 million due to the enactment of U.S. tax reform legislation on December 22, 2017. The provisionally estimated net benefit includes a $334 million write-down of net deferred tax liabilities to reflect the reduction in the U.S. corporate tax rate from 35% to 21% beginning January 1, 2018, partially offset by the cost of a mandatory deemed repatriation of non-U.S. earnings. The decrease in the effective tax rate is primarily due to this net benefit, an increase in available foreign tax credits and changes in the geographic mix of profits.

“We are pleased with the overall performance of our business during 2017, including continued good portfolio health and operational execution during the year,” said Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar. “With our ongoing focus on expanding our ability to serve customers globally through financial services solutions, we remain well-positioned to serve the needs of Caterpillar, Cat dealers and our growing customer base worldwide.”


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