Ally Financial Inc
Q2 2024 Earnings
Did ALLY Beat Earnings? Q2 2024 Results
Ally Financial delivered a sharply stronger-than-expected second quarter, posting adjusted earnings per share of $0.97 against a consensus estimate of $0.64, a beat of 51.56%, even as revenue of $2.00 billion came in just shy of the $2.03 billion analysts had anticipated, falling 1.48% below forecast and 49.3% below the year-ago period. The headline profit improvement was driven in large part by a $37.00 million tax benefit tied to electric vehicle lease originations, which pushed the effective tax rate to negative 14.4%, alongside a meaningful sequential recovery in net interest margin, which expanded 14 basis points quarter over quarter to 3.30% as retail deposit costs began to ease. Credit quality also offered some relief, with the consolidated net charge-off rate declining to 1.26% from 1.55% in the prior quarter, though full-year retail auto NCO guidance was nudged up to approximately 2.1%. Looking ahead, Ally raised its full-year NIM outlook to approximately 3.30% with an exit rate of 3.45% to 3.50%, and now expects its effective tax rate to land between 0% and negative 5% for the year.
- Net interest margin expansion of 14 bps quarter over quarter to 3.30% excluding Core OID as deposit costs stabilized
- Tax benefit of $37 million driven by strong EV lease originations resulting in negative 14.4% effective tax rate
- Retail auto net charge-off rate improved to 1.81% from 2.27% in Q1 due to seasonal trends
- Consumer auto originations of $9.8 billion with 10.59% estimated retail originated yield
- Insurance written premiums of $344 million up 15% year over year
- Retail auto portfolio yield excluding hedges increased 99 bps year over year to 8.86%
- Corporate Finance pre-tax income up $26 million year over year driven by higher income spreads
- Adjusted efficiency ratio improved to 53.2% from 60.2% in Q1 2024
- Core ROTCE improved to 14.0% from 6.5% in Q1 2024
- Average retail deposit rate declined 7 bps to 4.18% from 4.25% in Q1
“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.”
Ally Financial CEO, on the earnings call
Forward Guidance & Outlook
Ally updated its full-year 2024 financial outlook: NIM expected at approximately 3.30% with an exit rate of 3.45%-3.50% (raised from prior 3.25%-3.30% with 3.40%-3.50% exit rate); adjusted other revenue growth of approximately 12% YoY (up from 9%-12%); retail auto NCO rate of approximately 2.1% (up from 2.0%); consolidated NCO rate of 1.45%-1.50% (narrowed from 1.40%-1.50%); controllable noninterest expense down more than 1% YoY with total adjusted noninterest expense up less than 2% YoY; average earning assets down 1% YoY (previously flat); and effective tax rate of 0% to negative 5% (sharply lower from prior 15% guide, driven by EV lease tax credits). The company expects used vehicle values to decline approximately 5% for the full year, with an additional 2% decline in the second half.
ALLY YoY Financials
ALLY Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.