July 30, 2021
Cat Financial reported second-quarter 2021 revenues of $646 million, an increase of $5 million, or 1%, compared with the second quarter of 2020. Second-quarter 2021 profit was $142 million, an increase of $83 million, or 141%, compared with the second quarter of 2020.
The increase in revenues was primarily due to a $17 million favorable impact from returned or repossessed equipment and a $7 million favorable impact from higher average earning assets, partially offset by an $18 million unfavorable impact from lower average financing rates.
Second-quarter 2021 profit before income taxes was $189 million, an increase of $100 million, or 112%, compared with the second quarter of 2020. The increase was primarily due to a $75 million decrease in provision for credit losses, a $25 million increase in net yield on average earning assets and a $17 million favorable impact from returned or repossessed equipment. These favorable impacts were partially offset by a $31 million increase in general, operating and administrative expenses, mostly due to higher short-term incentive compensation expense.
The provision for income taxes reflected an estimated annual tax rate of 25% in the second quarter of 2021, compared with 27% in the second quarter of 2020.
During the second quarter of 2021, retail new business volume was $3.52 billion, an increase of $786 million, or 29%, from the second quarter of 2020. The increase was mainly driven by higher volume in North America, EAME and Mining, partially offset by a decrease in Caterpillar Power Finance.
At the end of the second quarter of 2021, past dues were 2.58%, compared with 3.74% at the end of the second quarter of 2020. Past dues decreased across all portfolio segments as global markets generally improved. Write-offs, net of recoveries, were $54 million for the second quarter of 2021, compared with $30 million for the second quarter of 2020. As of June 30, 2021, the allowance for credit losses totaled $402 million, or 1.46% of finance receivables, compared with $441 million, or 1.64% of finance receivables, at March 31, 2021. The allowance for credit losses at year-end 2020 was $479 million, or 1.77% of finance receivables.
“We were pleased with the continued improvement in portfolio health and strong performance of our business during the second quarter, reflecting good operational execution by the global Cat Financial team,” said Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. “Our team remains focused on executing the strategy to help Caterpillar customers and dealers succeed through financial services solutions.”