Q4 2023 Summary
Published Jan 7, 2025, 8:01 PM UTCInitial Price$26.58October 1, 2023
Final Price$34.92December 31, 2023
Price Change$8.34
% Change+31.38%
- Ally Financial's Q4 2023 loan yield expanded to 10.8%, achieving an annual yield of 10.69%, demonstrating effective management of loan yields.
- The company leverages its large application volume and strong dealer relationships to optimize yields through flexible pricing and credit strategies, giving it a unique competitive advantage.
- Ally's Credit Card business delivers compelling returns with a gross revenue yield including fees of 27%, providing significant resilience to absorb loss volatility and enhancing the overall return profile.
- Uncertainty regarding the Allowance for Loan and Lease Losses (ALL): Management finds it hard to comment on the future outlook of ALL due to various macroeconomic factors, including expectations of unemployment mean-reverting to 6% over the medium term, which could negatively impact credit quality.
- No further increases in loan yields expected: Management does not expect yields to continue rising, indicating that the company's ability to improve net interest margin through higher loan yields may have reached its limit, potentially affecting future profitability.
- Peaking charge-offs from 2022 vintage loans: The company is experiencing peaking charge-offs from the 2022 vintage loans in the first half of the year, suggesting elevated credit losses in the near term, which may pressure earnings.