Ally 1Q Profits Decline; CEO Forging New Path
Bloomberg reported that net income for the three months ended March 31 slid to $227 million, or 33 cents a share, from $1.1 billion, or $2.16, a year earlier. Excluding some items, core pretax profit rose 64% to $339 million as net interest margins improved and expenses fell, Ally said.
Pretax profit in automotive finance, Ally’s largest business unit, fell 1.2% to $339 million as the lender set aside more funds to cover potential future loan losses.
CEO Michael Carpenter has refocused Ally, the former GMAC finance unit of General Motors, on its auto-lending roots and repaying the last of the U.S. bailout that once totaled more than $17 billion. To improve profitability, Carpenter said last month he plans to reduce expenses by $400 million and expand commercial banking.
Carpenter said in the statement his plan will “improve net interest margin, reduce controllable expenses and normalize regulatory requirements over time.” Regulators have agreed to let the Ally Bank unit begin paying “substantial” dividends to the parent company, he said today during a conference call with investors.
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