Ally: Auto Finance Business ‘Resilient’

By Staff Writer July 21, 2020 347

 

Ally Financial reported total net review of $1.61 billion, up 4 percent year-over-year, with adjusted total new revenue of 1.53 billion down 2 percent year-over-year.

Net income was $241 million, with $0.64 EPS and $0.61 adjusted EPS.

On the auto finance side, pre-tax income of $329 million was down $130 million year-over-year, primarily due to higher provision for credit losses associated with COVID-19 variables and lower net financing revenue.

Jeffrey Brown CEO of Ally Financial
Jeffrey Brown CEO of Ally Financial

Net financing revenue of $989 million was $33 million lower year-over-year, driven by lower commercial auto portfolio yield and balance and losses on off-lease vehicles, partially offset by higher retail auto portfolio yield, which increased 20 basis points (bps) year-over-year to 6.77 percent, excluding the impact of hedges. Provision for credit losses increased $76 million year-over-year due to COVID-19 variables. The retail auto net charge-off rate was 0.76 percent, down 20 bps year-over-year. Consumer auto originations decreased to $7.2 billion from $9.7 billion in the prior year period and included $4.3 billion of used retail volume, or 60 percent of total originations, $2.0 billion of new retail volume and $0.9 billion of leases. End-of-period auto earning assets decreased $11.6 billion year-over-year from $114.7 billion to $103.2 billion, as an increase in consumer auto earning assets was more than offset by a decline in commercial earning assets. End-of-period consumer auto earning assets were up $0.3 billion year-over-year, driven by growth in operating lease assets. End-of-period commercial earning assets of $21.7 billion were $11.9 billion lower year-over-year, driven by industry-wide vehicle inventory declines.

“Against a difficult and shifting backdrop, we remain focused on serving our customers at the highest level, and our solid operational and financial foundation positions us to continue supporting our customers,” said Ally Chief Executive Officer Jeffrey Brown. “We finished the quarter with robust capital and liquidity levels and observed improved trends across our key businesses. Our resilient and adaptable auto finance business saw meaningful improvement toward the end of the quarter, delivering $7.2 billion of consumer originations, and maintaining estimated retail auto originated yields above 7 percent for the ninth consecutive quarter, a tremendous accomplishment given the low interest rate environment.”

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Last modified on Wednesday, 29 July 2020 14:09

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