Cat Financial reported Q1/18 revenues of $690 million, an increase of $28 million, or 4%, compared with Q1/17. First-quarter 2018 profit was $91 million, a $24 million, or 21%, decrease from Q1/17.

The increase in revenues was primarily due to a $19 million favorable impact from higher average earning assets and a $16 million favorable impact from higher average financing rates, partially offset by an $11 million unfavorable impact from lower lending activity with Caterpillar.

Profit before income taxes was $124 million for Q1/18, compared with $167 million for Q1/17. The decrease was primarily due to a $51 million increase in provision for credit losses, partially offset by a $16 million increase in net yield on average earning assets.

The provision for income taxes reflects an estimated annual tax rate of 23% in Q1/18, compared with 30% in Q1/17. The decrease in the estimated annual tax rate is primarily due to the reduction in the U.S. corporate tax rate beginning January 1, 2018 along with changes in the geographic mix of profits.

During Q1/18, retail new business volume was $2.54 billion, an increase of $202 million, or 9%, from Q1/17. The increase was driven by higher volume in Asia/Pacific, Mining, Europe and North America, partially offset by decreases in Caterpillar Power Finance and Latin America.

At the end of Q1/18, past dues were 3.17%, compared with 2.64% at the end of Q1/17, primarily due to increases in the Caterpillar Power Finance and Latin America portfolios.

Write-offs, net of recoveries, were $30 million for Q1/18, compared with $15 million for Q1/17. The largest contributors to the increase were the Latin America and Caterpillar Power Finance portfolios.

As of March 31, 2018, the allowance for credit losses totaled $403 million, or 1.45% of finance receivables, compared with $346 million, or 1.28% of finance receivables at March 31, 2017. The allowance for credit losses at year-end 2017 was $365 million, or 1.33% of finance receivables. The increase in the allowance for credit losses was primarily driven by the Caterpillar Power Finance and Mining portfolios.

“Cat Financial’s core asset portfolio continues to perform well despite some remaining weakness in our Caterpillar Power Finance and Latin American portfolios,” said Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar. “The global Cat Financial team is focused on actively managing portfolio health and continuing to serve Caterpillar customers and Cat dealers worldwide through financial services solutions.”