Ally Financial Inc. said its profit fell in the most-recent
quarter, hurt by a charge for early debt extinguishment, while
automotive-finance originations were relatively flat.
Adjusted earnings topped Wall Street expectations by a penny,
while revenue fell short of estimates.
The Detroit lender, formerly known as GMAC and spun off from GM
in 2006, posted earnings of $182 million, down from $323 million in
the prior-year period. On a per-share basis, Ally reported a loss
of $2.22 a share, compared with earnings of 54 cents a share in the
year-before period.
The loss was largely due to a redemption of preferred securities
that resulted in a $155 million charge, Ally said. Excluding the
impact of one-time items, per-share profit rose to 46 cents from 42
cents.
Net financing revenue increased 1.6% to $927 million.
Analysts had expected 45 cents in per-share profit and $1.2
billion in net financing revenue, according to FactSet.
Ally is one of the nation's biggest auto lenders and the
company's auto-finance franchise has driven results in recent
quarters. In its latest period, though, originations in the segment
were relatively flat from a year earlier at $10.8 billion.
Earlier this year, Ally replaced Chief Executive Michael
Carpenter after he reacted angrily to news that former parent
company General Motors Co. had largely squeezed Ally out of GM's
lucrative subsidized-leasing business. His successor, Jeffrey
Brown, said in April that Ally is "effectively done" with GM leases
moving forward and will offset the loss by finding growth
elsewhere. The company is aiming to have more than $30 billion in
originations in 2015.
Excluding GM-lease originations, consumer originations jumped
36% from a year earlier, led by a 37% increase in originations from
Chrysler, made by Fiat Chrysler Automobiles NV.
Growth in retail deposits helped offset lackluster auto
originations. The company's Ally Bank business posted 13% growth in
retail deposits to a total of $51.8 billion as of June 30. Ally
said it expanded its retail customer base by 16% during the
quarter.
Ally's insurance business, meanwhile, reported $15 million in
pretax income from continuing operations, versus a $23 million loss
in the year-before period. The improvement was on account of
increased underwriting income resulting from improved weather
losses, Ally said.
The lender's mortgage business reported pretax income of $9
million, a third of what it reported a year earlier due largely to
a reduction in loan loss reserves in the prior year.
The lender's shares are down about 8% so far this year and were
inactive premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Rachel
Louise Ensign at rachel.ensign@wsj.com
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