Ally Financial Swings to Profit in 2nd Quarter
Ally Financial Inc. swung to a profit in the second quarter as the firm bounced back from a year-ago quarter weighed down by a massive charge, while its core auto-lending business logged strong originations.
The Wall Street Journal reported that the Detroit-based company, which went public in April in an effort to repay its government bailout, posted a profit of $323 million, or 54 cents a share, compared with a loss of $927 million, or $2.73 per share in a year-earlier quarter weighed down by a $1.6 billion on-time charge tied to the bankruptcy of its mortgage subsidiary Residential Capital.
On an adjusted basis, earnings were 42 cents a share, versus a loss of 13 cents a share a year ago. Analysts were looking for 33 cents a share in earnings, according to Thomson Reuters.
“Ally had a solid quarter out of their auto business,” said Barclays analyst Jason Goldberg in an interview. “They did well in new cars, they did well in used cars, and auto leasing remains strong,”
The company’s auto-lending business logged a profit of $461 million, up from $382 million in the prior-year period. Consumer auto originations were up 11% from a year earlier to come in at $10.9 billion, marking the second strongest quarterly auto originations that Ally has seen so far.
On a conference call, Chief Financial Officer Christopher Halmy said the strong results were partly driven by record used auto originations. He also noted that Ally’s views on credit standards have stayed the same since 2012. “There’s been a lot of noise out there as to loosening of credit standards but we really haven’t shifted our risk appetite over the past two years,” he said.
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