- GAAP EPS: $0.86, reflecting a 105% increase quarter-over-quarter but a 13% decrease year-over-year.
- Net Income: $266 million, down 12% year-over-year due to lower net financing revenue and higher noninterest expenses.
- GAAP Total Net Revenue: $2.0 billion, a slight 1% increase quarter-over-quarter but a 4% decrease year-over-year.
- Net Interest Margin (NIM): 3.27%, down 11 basis points year-over-year, impacted by higher funding costs.
- Retail Deposits: $142 billion, a $3 billion decrease quarter-over-quarter due to seasonal tax outflows, but marking the 61st consecutive quarter of retail deposit customer growth.
- Consumer Auto Origination Volume: $9.8 billion, with 44% of volume within the highest credit quality tier.
- Insurance Written Premiums: $344 million, up 15% year-over-year, driven by strong performance in P&C and F&I segments.
On July 17, 2024, Ally Financial Inc (ALLY, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Ally Financial, a leading consumer auto lender and diversified financial services company, reported significant improvements in several key financial metrics.
Company Background
Formerly the captive financial arm of General Motors, Ally Financial became an independent publicly traded firm in 2014. It is one of the largest consumer auto lenders in the country, with over 70% of its loan book in consumer auto loans and dealer financing. Ally also offers auto insurance, commercial loans, credit cards, and holds a portfolio of mortgage debt, providing a diversified business model that includes brokerage services.
Financial Performance and Challenges
Ally Financial Inc (ALLY, Financial) reported a GAAP EPS of $0.86 and an adjusted EPS of $0.97 for Q2 2024. The company achieved a GAAP total net revenue of $2.0 billion and an adjusted total net revenue of $2.042 billion. Despite a year-over-year decrease in GAAP net income attributable to common shareholders from $301 million to $266 million, the company saw a significant quarter-over-quarter increase of 106% from $129 million in Q1 2024.
Key challenges included higher funding costs and increased provisions for credit losses, which rose by $30 million year-over-year to $457 million. Noninterest expenses also increased by $37 million, driven by higher weather losses in insurance and higher servicing expenses within the auto segment.
Financial Achievements
Ally Financial's achievements in Q2 2024 include a strong net interest margin (NIM) of 3.27%, with NIM excluding Core OID at 3.30%, up 14 basis points quarter-over-quarter. The company also reported a common equity tier 1 ratio of 9.6%, an increase of 18 basis points quarter-over-quarter, and executed its first credit risk transfer transaction in Q2.
Ally originated $9.8 billion in consumer auto loans, with a retail auto originated yield of 10.59%. The company also saw a 15% year-over-year increase in insurance written premiums, reaching $344 million.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 | QoQ Change | YoY Change |
|---|---|---|---|---|---|
| GAAP Net Income Attributable to Common Shareholders | $266 million | $129 million | $301 million | 106% | -12% |
| Adjusted EPS | $0.97 | $0.45 | $0.96 | 115% | 1% |
| GAAP Total Net Revenue | $2.0 billion | $1.986 billion | $2.079 billion | 1% | -4% |
| Adjusted Total Net Revenue | $2.042 billion | $1.989 billion | $2.066 billion | 3% | -1% |
Analysis and Commentary
Ally Financial Inc (ALLY, Financial) demonstrated resilience and strategic growth in Q2 2024, despite facing higher funding costs and increased provisions for credit losses. The company's strong performance in auto loan originations and insurance premiums highlights its robust market position and diversified revenue streams.
"In the second quarter, Ally delivered strong financial and operating results. We continue to execute within our market-leading franchises, creating value for our customers by embracing our Do It Right culture," said Chief Executive Officer, Michael Rhodes.
Ally's ability to maintain a stable net interest margin and improve its common equity tier 1 ratio indicates a well-managed balance sheet and effective risk management strategies. The company's focus on high-quality auto loan originations and customer growth in retail deposits underscores its commitment to sustainable growth and customer satisfaction.
For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Ally Financial Inc for further details.
