The rebound in demand for cars – sparked by Americans’ reluctance to fly or use public transport amid the coronavirus pandemic – has driven auto loan arrangements at Ally Financial to a five-year high .

Ally, one of the nation’s three largest auto lenders, granted $ 9.8 billion in auto loans in the third quarter, its highest total since the same period in 2015. Its consumer auto loan arrangements n ‘totaled $ 7.2 billion in the second quarter, as stay-at-home orders depressed car sales.

Ally executives said on Friday they believed the surge in activity between July and September was less due to pent-up demand and more to changes in consumer behavior that took hold during the COVID-19 crisis. They noted, for example, that the use of public transportation and apps like Uber and Lyft have declined sharply amid consumer fears of catching or spreading the virus.

This trend “gives us a lot of opportunity,” Ally CEO Jeffrey Brown said in the company’s third quarter earnings call on Friday. “I don’t think it’s necessarily short-lived. It may be an alteration of the environment for the next two years.

Ally also said that cutting consumer spending on travel and entertainment has made Americans more likely to spend money on car purchases. And as the public travels less frequently, road trips are becoming more attractive options.

“People start looking to drive to a new place or go to a campground, and you need a vehicle to do that,” CFO Jennifer LaClair said in an interview. “So it has become a new opportunity for consumers to have some freedom and flexibility in their lives that does not involve being surrounded by a lot of people and exposing themselves to COVID.”

Strong demand for auto loans generated strong earnings and earnings gains in the quarter. Revenue was up 5.2% from the same quarter last year to nearly $ 1.7 billion, while profits were up 25% year-over-year, to $ 476 million.

“Overall this has been a very strong quarter for Ally,” Piper Sandler analyst Kevin Barker wrote in a research note on Friday. Shares of the company rose 3.4% at the end of Friday’s trading, to $ 28.82

At other banks that released third quarter results, auto credit trends have so far been mixed. JPMorgan Chase reported a 25% increase in auto loan and lease originations from the same period a year earlier, but Wells Fargo saw a 22% drop in originations.

Despite the low interest rate environment, Ally’s yield on retail auto loans edged up from the second quarter to 6.56%.

LaClair said the $ 185 billion asset Ally was able to avoid yield compression in part due to its strong position in the used car market, where interest rates tend to be higher than for new vehicles.

“We have been able to be very picky about what we put on the balance sheet,” she said.

Credit quality is also holding up well, although business executives have recognized that defaults will increase dramatically at some point.

In the third quarter, 2.25% of Ally auto loans were at least 30 days past due, up slightly from the second quarter, but still sharply down from 3.32% in third quarter of 2019. Credit performance was supported by government stimulus measures. payments, forbearance offers and cutting consumer spending in other areas, the company said.

LaClair said Ally expects losses to rise sharply, given the country’s 7.9% unemployment rate, but not until next year. The company set aside $ 147 million in loan loss provisions after hiding a total of nearly $ 1.2 billion in the first half of the year.

“Our caveats suggest that we expect credit to deteriorate fairly quickly,” LaClair said. “I think you have to determine the actual severity of the losses, as well as the timing around those losses.”