Ally Financial Inc (ALLY) Q3 2024 Earnings Call Highlights: Navigating Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Adjusted EPS: $0.95, includes significant tax credits related to EV lease volumes.

  • Core Pretax Income: $188 million.

  • Net Financing Revenue (excluding OID): $1.5 billion, lower year-over-year.

  • Adjusted Other Revenue: $556 million, up 13% from the prior year.

  • Provision Expense: $645 million, increased due to higher net charge-offs and reserve build.

  • Net Interest Margin (excluding OID): 3.25%, decreased 5 basis points from the prior quarter.

  • Retail Deposits: $141 billion, declined $600 million within the quarter.

  • Retail Auto Origination Yield: 10.5%, consistent with prior quarter.

  • Insurance Written Premiums: $384 million, a quarterly record since IPO.

  • Corporate Finance Assets: $10.3 billion, increased $600 million quarter-over-quarter.

  • Retail Auto Net Charge-Offs: 224 basis points, up 43 basis points quarter-over-quarter.

  • Credit Card Net Charge-Offs: 9.9%, down from 12.6% in the prior quarter.

  • EV Lease Originations: $1.1 billion, representing 12% of total origination volume.

  • Core Pretax Income (Insurance): Up $15 million year-over-year.

  • Core Pretax Income (Corporate Finance): $94 million.

  • Mortgage Pretax Income: $27 million.

  • Quarterly Dividend: $0.30 for the fourth quarter.

Release Date: October 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Ally Financial Inc (NYSE:ALLY) reported strong growth in its insurance business, achieving a quarterly record of $384 million in written premiums.

  • Retail deposits at Ally Bank reached $141 billion, with 92% being FDIC insured, highlighting a strong and stable deposit base.

  • Corporate finance is on track for its highest annual earnings ever, demonstrating strong returns and solid credit performance.

  • The company has been successful in reducing controllable expenses, contributing to improved capital management.

  • Ally Financial Inc (NYSE:ALLY) has taken significant actions to improve credit quality, with 40% of auto loan originations in the highest credit tier.

Negative Points

  • Ally Financial Inc (NYSE:ALLY) faces challenges with elevated net charge-offs, particularly in the retail auto segment, which increased by 43 basis points quarter-over-quarter.

  • The company anticipates continued volatility in interest rates, which may impact net interest margin (NIM) in the near term.

  • Provision expenses increased due to higher net charge-offs and potential losses from Hurricane Helene, impacting financial performance.

  • The company is experiencing pressure from elevated delinquencies, which are higher than expected and contribute to uncertainty in credit performance.

  • Ally Financial Inc (NYSE:ALLY) has revised its full-year NIM outlook to approximately 3.2%, reflecting temporary margin pressure and competitive deposit dynamics.

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