Ally Financial Inc. Reports Quarterly Results for the Period Ended March 31, 2025

Ally Financial Inc. Reports Strong Performance Despite Challenges

Ally Financial Inc., a leading financial services company, has released its quarterly financial report for the period ending March 31, 2025. Despite facing a number of headwinds, the company has managed to deliver solid results, showcasing the resilience of its diversified business model.

Overview of Financial Performance

Ally reported total net revenue of $1.54 billion for the first quarter of 2025, down 23% from the same period in 2024. This decline was primarily driven by lower investment gains and higher noninterest expenses, which offset an increase in net financing revenue and other interest income.

The company incurred a loss from continuing operations of $225 million, compared to income of $143 million in the prior-year quarter. This was largely due to the impairment of goodwill related to the sale of the Ally Credit Card business, as well as higher insurance losses and loss adjustment expenses.

Despite the challenging environment, Ally’s Dealer Financial Services business, which includes its Automotive Finance and Insurance operations, remained a strong performer. The Automotive Finance segment generated $1.36 billion in total net revenue, while the Insurance segment contributed $394 million. The Corporate Finance business also contributed $133 million in total net revenue.

Automotive Finance Segment Highlights

Ally’s Automotive Finance operations, one of the largest in the country, continued to demonstrate its resilience. The segment’s income from continuing operations before income tax expense was $375 million, down 22% from the prior-year quarter.

The decrease was primarily driven by higher interest expense and net depreciation expense on operating lease assets, which offset an increase in consumer automotive loan financing revenue. The company’s portfolio yield for consumer automotive loans, excluding the impact of hedging activities, increased by 47 basis points compared to the same period in 2024, reflecting a shift in portfolio mix as higher-yielding originations replaced lower-yielding assets.

Ally’s consumer automotive loan and operating lease originations increased by $397 million, or 4%, year-over-year, driven by strong industry new vehicle sales and continued momentum in electric vehicle lease contracts. The company’s relationships with both OEM-franchised and non-OEM-franchised dealers, as well as its comprehensive suite of products and services, position it well to adapt to the evolving automotive industry.

Insurance Segment Highlights

Ally’s Insurance operations earned income from continuing operations before income tax expense of $2 million, compared to $70 million in the prior-year quarter. The decrease was primarily driven by an increase in insurance losses and loss adjustment expenses, as well as lower net investment gains.

Insurance premiums and service revenue earned increased by 6% to $364 million, driven by growth in the vehicle inventory insurance program due to higher dealer inventory levels and new relationships. However, the segment’s combined ratio, a key measure of underwriting profitability, increased to 106.5% from 97.6% in the prior-year quarter, primarily due to higher weather-related losses.

Corporate Finance Segment Highlights

Ally’s Corporate Finance operations earned income from continuing operations before income tax expense of $76 million, down 24% from the prior-year quarter. The decrease was primarily due to lower net financing revenue and other interest income, as well as higher provision for credit losses.

The segment’s net financing revenue and other interest income was $104 million, down 13% from the same period in 2024, driven by lower average earning assets and lower fee income. The provision for credit losses increased by $15 million, primarily due to portfolio growth and higher specific reserve activity.

Corporate and Other Segment

Ally’s Corporate and Other segment, which includes centralized corporate treasury activities, the management of the company’s consumer mortgage portfolio, and the results of Ally Invest and Ally Credit Card, incurred a loss from continuing operations before income tax benefit of $737 million, compared to a loss of $467 million in the prior-year quarter.

The increase in loss was driven by lower total other revenue, primarily related to the company’s balance sheet repositioning of a portion of its available-for-sale securities, and higher noninterest expense, which included the impairment of goodwill related to the sale of Ally Credit Card. These factors were partially offset by lower provision for credit losses and higher net financing revenue.

Credit Performance and Risk Management

Ally’s credit performance remained strong, with total consumer nonperforming finance receivables and loans decreasing by $152 million to $1.2 billion at March 31, 2025. The company’s net charge-offs from total consumer finance receivables and loans were $507 million, down from $539 million in the prior-year quarter, reflecting lower net charge-offs within the consumer automotive portfolio.

The company’s allowance for loan losses decreased by $316 million from the prior quarter to $3.4 billion, representing 2.5% of total finance receivables. This decrease was primarily driven by the reversal of allowance for loan losses from the transfer of Ally Credit Card to operations held-for-sale, partially offset by a higher allowance associated with the consumer automotive portfolio.

Ally continues to employ a robust risk management framework to identify, monitor, and manage current and emerging risks, including credit risk, insurance/underwriting risk, liquidity risk, market risk, and operational risk. The company also actively manages its exposure to climate-related risks, which have been identified as an emerging risk.

Outlook and Strategic Initiatives

Despite the challenging macroeconomic environment, Ally remains well-positioned to navigate the evolving landscape. The company’s diversified business model, strong dealer relationships, and focus on innovation and digital capabilities position it for long-term success.

Ally’s strategic initiatives include further strengthening its dealer-centric automotive finance and insurance businesses, expanding its Corporate Finance operations, and continuing to enhance its digital offerings through Ally Invest and other platforms. The company is also actively managing the run-off of its consumer mortgage portfolio and the sale of its Ally Credit Card business.

As the automotive industry continues to evolve, with substantial investments in electrification by manufacturers and suppliers, Ally is well-prepared to support its dealer partners and consumers. The company has provided and continues to provide financing for battery-electric and plug-in hybrid vehicles, positioning it to remain a leader in automotive financing.

Conclusion

Ally Financial Inc. has demonstrated its resilience in the face of a challenging macroeconomic environment. While the company faced headwinds that impacted its overall financial performance, its core business lines, particularly Automotive Finance and Insurance, continue to deliver solid results.

Ally’s focus on innovation, digital capabilities, and its dealer-centric approach positions it well to navigate the evolving automotive industry and capitalize on emerging opportunities. The company’s robust risk management framework and proactive approach to managing emerging risks, such as climate-related risks, further strengthen its long-term sustainability.

As Ally continues to execute on its strategic initiatives, investors and stakeholders can expect the company to remain a leading provider of financial services, committed to supporting its customers and communities.