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Ally Financial Inc. (ALLY)·Q1 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $0.58, a beat versus Wall Street consensus, while GAAP EPS was a loss of $(0.82) due to a $495M pre-tax securities repositioning; adjusted total net revenue was $2.065B and net interest margin ex-OID rose to 3.35% . EPS consensus for Q1 was $0.42*, and revenue consensus was ~$1.97B*, implying an EPS beat and revenue miss (GAAP basis) [Values retrieved from S&P Global].
  • Strategic actions: sale of Ally Credit Card closed 4/1, generating a total 40 bps CET1 uplift; two securities repositioning trades reduced duration/AOCI volatility (offset by the $495M loss) and improved interest rate risk profile .
  • Auto finance remained scaled with $10.2B consumer originations from a record 3.8M applications; originated yield 9.80%, S-tier 44%; retail auto NCOs 2.12% and delinquency trends improving in flow-to-loss behavior .
  • Insurance written premiums rose 9% YoY to $385M, but Q1 saw record weather losses ($58M net) compressing insurance profitability; deposit balances grew to $146.1B with 92% FDIC insured and NIM trajectory intact; guidance reiterated .
  • Potential stock reaction catalysts: EPS beat on adjusted basis; maintained FY guide despite GAAP loss; CET1 strengthening from card sale; deposit repricing tailwinds to NIM; improving retail auto loss trajectory .

What Went Well and What Went Wrong

  • What Went Well
    • “Ally delivered solid first quarter results” with adjusted EPS $0.58, core pre-tax $247M, adj. net revenue $2.1B, and NIM ex-OID up 2 bps QoQ; strong execution across core businesses .
    • Auto franchise scale: $10.2B originations from a record 3.8M applications; originations yield 9.80%, S-tier 44%; retail auto NCOs 2.12% and favorable flow-to-loss trends indicating normalization below 2% over time .
    • Capital strengthened: card sale contributed 40 bps CET1 uplift (20 bps in-Q1 and 20 bps post-close); deposit base robust with $146.1B and 92% FDIC insured .
  • What Went Wrong
    • GAAP loss driven by $495M pre-tax loss on securities repositioning; GAAP total net revenue $1.541B fell sequentially and YoY on repositioning impact .
    • Insurance segment pressured: record net weather losses of $58M led to insurance pre-tax income of $2M despite written premium growth .
    • Corporate & Other pre-tax loss widened to $(737)M on repositioning and card sale impacts (including goodwill impairment), lifting adjusted noninterest expense YoY .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
GAAP EPS ($)1.06 0.26 (0.82)
Adjusted EPS ($)0.95 0.78 0.58
GAAP Total Net Revenue ($B)2.103 2.026 1.541
Adjusted Total Net Revenue ($B)2.058 2.088 2.065
Net Interest Margin (as reported)3.22% 3.30% 3.31%
Net Interest Margin (ex OID)3.25% 3.33% 3.35%
Core Pre-Tax Income ($MM)188 310 247
EPS/Revenue vs EstimatesQ3 2024Q4 2024Q1 2025
Primary EPS Consensus Mean ($)——0.42*
Actual Adjusted EPS ($)0.95 0.78 0.58
Revenue Consensus Mean ($B)——~1.97*
Actual GAAP Total Net Revenue ($B)2.103 2.026 1.541
  • EPS beat: Q1 Adjusted EPS 0.58 vs 0.42* → significant beat. Revenue: GAAP total net revenue 1.541B vs ~1.97B* → miss on GAAP revenue; adjusted revenue was 2.065B .
  • Values with asterisks are from S&P Global.

Segment Pre-Tax Income ($MM)

SegmentQ3 2024Q4 2024Q1 2025
Automotive Finance175 397 375
Insurance102 36 2
Corporate Finance95 120 76
Corporate & Other(166) (444) (737)
Pre-Tax (Continuing Ops)233 109 (284)
Core Pre-Tax Income188 310 247

KPIs

KPIQ3 2024Q4 2024Q1 2025
Consumer Auto Originations ($B)9.4 10.3 10.2
Retail Auto Originated Yield (%)10.54% 9.63% 9.80%
Retail Auto NCOs (%)2.24% 2.34% 2.12%
Insurance Written Premiums ($MM)384 390 385
Retail Deposits ($B)141.4 143.4 146.1
FDIC Insured (%)92% 92% 92%

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 Pro Forma)Current Guidance (Q1 2025)Change
NIM (ex OID)FY 20253.40%–3.50% 3.40%–3.50% Maintained
Retail Auto NCOFY 20252.00%–2.25% 2.00%–2.25% Maintained
Adjusted Other RevenueFY 2025Flat YoY Flat YoY Maintained
Adjusted Noninterest ExpenseFY 2025Flat YoY Flat YoY Maintained
Average Earning AssetsFY 2025Flat YoY Flat YoY Maintained
Tax RateFY 202522%–23% 22%–23% Maintained
Consolidated NCOFY 20251.35%–1.50% 1.35%–1.50% Maintained
Common DividendQ2 2025$0.30/share $0.30/share (declared 4/16) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4)Current Period (Q1 2025)Trend
NIM trajectory, deposit betasAsset/liability repricing; target ~70% beta; medium-term NIM high-3s possible post-card NIM ex-OID 3.35%, deposit rates cut ~20 bps late Q1; ~$11B Q2 CD maturities tailwind Improving trajectory
Retail auto credit lossesCurtailment actions; 2.0–2.25% 2025 guide; vintage rollover supportive Retail auto NCOs 2.12%; flow-to-loss trends favorable; full-year range maintained Normalizing lower
Securities repositioningEV lease accounting shift in Q4; potential restructuring ahead Two repositioning trades; $495M pre-tax loss; reduced duration/AOCI volatility Balance sheet derisking
Card sale impactAgreement announced Q4; ~40 bps CET1 uplift expected Closed 4/1: total 40 bps CET1 uplift (20 bps Q1 + 20 bps post-close) Capital strengthening
Tariffs/macro uncertaintyNoted uncertain macro; deposit competition Monitoring tariff impacts; mix/pricing responsive; macro watch Vigilant/cautious
Insurance/weatherStrong premiums in 2024; volatility acknowledged Record net weather losses $58M; reinsurance renewed; growth continues Loss volatility elevated
Corporate FinanceRecord earnings; high-quality first-lien portfolio $76M pre-tax; 25% ROE; asset growth to $10.9B Accretive growth
Digital brand/marketingBrand strength, deposits growth WNBA official banking partner announced; reinforcing brand Brand investment up

Management Commentary

  • CEO Michael Rhodes: “Our performance demonstrates the importance of our focused approach, disciplined execution… On April 1st, we successfully closed the sale of Ally Credit Card… These strategic actions strengthen our balance sheet, reduce risk, and support the sustainability of our returns over time” .
  • CFO Russ Hutchinson: “We are well positioned to grow net financing revenue through retail auto yield expansion, portfolio shift toward higher-yielding asset classes and repricing our deposits lower… EPS was $0.58 adjusted” .
  • On credit: “Retail auto net charge-offs… represent the first year-over-year decline since 2021, reflecting pricing and underwriting actions…” .
  • On NIM path: “Cost of funds declined 20 bps QoQ… we lowered liquid deposit rates by ~20 bps late in the quarter; ~95% of CD portfolio matures this year” .

Q&A Highlights

  • NIM outlook and deposit strategy: Management reiterated FY NIM ex-OID guide (3.40–3.50), citing deposit repricing, CD maturities (~$11B in Q2), and benefits from securities repositioning; acknowledged card removal reduces NIM but offsets via lower credit/expenses .
  • Credit trajectory to sub-2%: Favorable flow-to-loss rates and stable used values support low end of 2.00–2.25% range, but elevated delinquency and macro uncertainty warrant caution; full range maintained .
  • Curtailment unwind/yield: Any unwind will be gradual and data-driven; Q1 originated yield uplift largely due to S-tier mix shift (49%→44%) .
  • Used car prices and tariffs: Outlook still elevated vs pre-pandemic; tariffs could support used values and severity, but too early to quantify .
  • Vintage rollover: 2022 vintage expected to be ~10% of book by year-end; rollover progressing as expected .

Estimates Context

  • EPS: Adjusted EPS $0.58 vs consensus $0.42* → bold beat.
  • Revenue: GAAP total net revenue $1.541B vs consensus ~$1.97B* → miss on GAAP revenue; adjusted total net revenue $2.065B benefited from adjusted other revenue .
  • Consensus counts: EPS (# est.) 18*, revenue (# est.) 13* for Q1.
    Values marked with asterisks are from S&P Global.

Key Takeaways for Investors

  • Balance sheet repositioning is front-loaded: the $495M loss reduces AOCI volatility and duration, enabling steadier NIM expansion despite a GAAP hit; focus on adjusted metrics and NIM ex-OID trajectory .
  • Capital position improved with card exit (40 bps CET1 uplift total); pro forma CET1 9.7%, providing optionality for growth and eventual buybacks when appropriate .
  • Retail auto credit normalization is underway; watch delinquency trends and flow-to-loss behavior—management continues to target sub-2% over time, guided at 2.00–2.25% for 2025 .
  • Deposit repricing and CD maturity ladder should accelerate cost-of-funds decline through 2025, supporting NIM ex-OID expansion .
  • Insurance growth remains strong, but weather volatility can pressure quarterly results; reinsurance program renewed to mitigate outsized events .
  • Corporate Finance provides accretive, less credit-volatile earnings with 100% first-lien exposure; continued measured growth supports returns diversification .
  • Near-term trading implication: EPS beat on adjusted basis and reiterated guide are supportive; GAAP loss headline may cap reaction—focus on NIM/credit trajectories and CET1 strengthening as catalysts .

Additional Q1 press releases:

  • Declared quarterly common dividend of $0.30 per share (payable May 15, 2025) .
  • Announced WNBA partnership as official banking partner (brand investment and engagement) .

Note on estimates: Values marked with asterisks (*) are retrieved from S&P Global.