Ally Financial Q3 Earnings Beat on Higher Revenues but Stock Dips 2.3%
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Ally Financial’s ALLY third-quarter 2024 adjusted earnings of 95 cents per share surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line reflected a rise of 14.5% from the year-ago quarter.
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In the reported quarter, the company witnessed an increase in revenues and lower expenses. Also, capital ratios increased, which was a positive. However, a decline in net finance receivables and loans and deposits were the undermining factors. Also, an increase in provisions hurt results to some extent. In light of these negatives, shares of the company lost 2.3% following the earnings release.
After considering non-recurring items, net income available to common shareholders (on a GAAP basis) was $330 million compared with $269 million in the prior-year quarter.
ALLY’s Revenues Increase, Expenses Down
Total GAAP net revenues were $2.1 billion, up 6.9% from the prior year quarter. However, the top line marginally missed the Zacks Consensus Estimate of $2.12 billion.
Net financing revenues were down 2.9% from the prior-year quarter to $1.49 billion. The decline was primarily due to higher funding costs and lower average earning assets. Our estimate for net financing revenues was $1.56 billion.
The adjusted net interest margin was 3.25%, down 1 basis point year over year.
Total other revenues were $615 million, jumping 41.4% from the prior-year quarter. We projected other revenues of $517.8 million.
Total non-interest expenses decreased marginally year over year to $1.23 billion, reflecting a disciplined approach to expense management. Our estimate for expenses was $1.29 billion.
The adjusted efficiency ratio was 52.1%, stable compared to the year-ago period.
Ally Financial’s Credit Quality Deteriorates
Non-performing loans were $1.27 billion as of Sept. 30, 2024, down 15.6% year over year. Our estimate for the metric was $1.32 billion.
In the reported quarter, Ally Financial saw net charge-offs of $517 million, up 13.4% from the prior-year quarter. We had projected net charge-offs of $516 million. The company also reported a provision for loan losses of $645 million, up 27% from the prior year quarter. Our estimate for provisions was $589.2 million.
ALLY’s Loan Balances Fall, Deposits Decline Marginally
As of Sept. 30, 2024, total net finance receivables and loans amounted to $133.8 billion, down 1% from the prior quarter end. Our estimate for the metric was $136.1 billion. Deposits declined marginally from the prior-quarter end to $152 billion. We projected deposits of $151.3 billion.
