Ally Financial Inc
Q1 2024 Earnings
Did ALLY Beat Earnings? Q1 2024 Results
Ally Financial cleared a low bar in convincing fashion during the first quarter of 2024, posting adjusted EPS of $0.45 against a consensus estimate of $0.33, a beat of 36.36%, even as the year-over-year earnings picture remained under pressure. Revenue of $1.99 billion edged past the $1.96 billion consensus by 1.48%, though the headline figure reflected a steep 47.8% decline from the prior-year period, underscoring the ongoing squeeze from elevated funding costs that compressed net interest margin by 38 basis points year over year to 3.13%. The primary drag was net financing revenue of $1.46 billion, which fell $146 million from a year ago as higher deposit and wholesale funding costs offset improving retail auto loan yields. Looking ahead, management guided full-year net interest margin of 3.25% to 3.30% with an exit rate of 3.40% to 3.50%, signaling confidence in a gradual recovery as higher-yielding loan vintages season through the portfolio and the company prepares for a leadership change with Michael Rhodes taking the CEO role effective April 29.
- Record 3.8 million consumer auto applications driving $9.8 billion origination volume
- Retail auto originated yield of 10.92% with 40% of volume in highest credit quality S-tier
- Retail auto portfolio yield excluding hedges increased 99 bps YoY to 8.65%
- Insurance earned premiums of $349 million, up 13% YoY
- Insurance written premiums of $354 million, up 15% YoY
- Retail deposits up $2.9 billion QoQ to $145.1 billion with 103K net new customers
- Corporate Finance HFI portfolio of $10.1 billion with 31% ROE
- SmartAuction and Passthrough revenue momentum driving dealer value proposition
- Higher funding costs pressured net interest margin down 38 bps YoY to 3.13%
- 2H 2022 vintage working through peak loss period accounting for 41% of Q1 loss content
- Consolidated net charge-off rate of 1.55% vs 1.20% in Q1 2023
- Total available liquidity of $68.3 billion, up $4.9 billion QoQ
- Adjusted efficiency ratio of 60.2% vs 55.8% in Q1 2023
- Core ROTCE of 6.5% vs 12.5% in Q1 2023
- Average retail deposit rate rose to 4.25% from 3.16% a year ago
“Ally's financial and operating results in the first quarter reflect the strength and scale of our market leading franchises. Our teammates remain focused on what we can control, caring for our customers and communities, and consistently executing against our strategic priorities, driving long-term shareholder value.”
Ally Financial CEO, on the earnings call
Forward Guidance & Outlook
For FY 2024, Ally guided net interest margin of 3.25%-3.30% with an exit rate of 3.40%-3.50%. Adjusted other revenue is expected to increase 9%-12% year over year. Controllable noninterest expenses are expected to decline more than 1% YoY, with total adjusted noninterest expense rising less than 2% YoY. Retail auto NCOs are expected at approximately 2.0%, with consolidated NCOs of 1.4%-1.5%. Average earning assets are expected to be flat year over year. The company assumes a 15% tax rate based on a 21% statutory U.S. Federal rate. Management expects Q2 deposit balance declines due to seasonal tax outflows, strong year-to-date growth, and flat asset expectations. Portfolio yield is expected to migrate toward 10% over time as newer, higher-yielding vintages replace older ones.
ALLY YoY Financials
ALLY Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.