Ally Financial Inc. (ALLY)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 GAAP EPS was $0.26 and Adjusted EPS was $0.78; Total net revenue was $2.026B and net interest margin (NIM) was 3.30% .
• Auto originations were $10.3B with estimated originated yield of 9.63% and 49% of volume in the highest credit tier (S‑Tier); retail auto NCOs were 2.34% and 30+ day delinquencies were 5.46% .
• Strategic actions: agreement to sell the Credit Card business; ceasing new mortgage originations on Jan 31; $22M restructuring charge tied to workforce reduction (> $60M expected annual savings); adoption of deferral method for EV lease tax credits (retrospective) .
• 2025 outlook: NIM ex‑OID guided to 3.55–3.65%; retail auto NCOs 2.00–2.25%; consolidated NCOs 1.45–1.60%; pro forma (post card sale) NIM ex‑OID 3.40–3.50%, consolidated NCOs 1.35–1.50%; management reiterated mid‑teens ROTCE medium‑term target .
• Capital and shareholder return: CET1 of 9.8% (> $4B above minimum); card sale expected to add ~40 bps CET1 at closing; Board approved $0.30 per share common dividend for Q1 2025 .

What Went Well and What Went Wrong

What Went Well

• Adjusted other revenue increased year over year (Q4 adjusted other revenue $564M vs $500M in Q4 2023); adjusted total net revenue rose vs Q4 2023 to $2.088B .
• Insurance momentum: written premiums $390M (+17% YoY), earned premiums $372M; core pre‑tax income $84M (+$25M YoY) .
• Management tone confident: “I am encouraged by strong momentum across our business…improved outlook on credit…balance sheet well positioned for margin expansion” — CEO Michael Rhodes .

What Went Wrong

• Provision expense remained elevated: $557M in Q4 (down vs Q3 but high YoY context); retail auto NCOs 2.34% and 30+ day delinquencies 5.46% .
• Noninterest expense rose sequentially to $1.360B, including $118M goodwill impairment related to credit card sale and $22M restructuring charge (excluded from adjusted metrics) .
• Lease gains muted: $3M in Q4 as termination volumes and mixed seasonality weighed; portfolio yield headwind from higher S‑Tier mix and lower benchmark rates .

Financial Results

Segment pre‑tax income ($USD Millions):

Key KPIs:

Note: Q4 2023 originated yield cited as portfolio context; quarterly originated yield not explicitly stated for Q4 2023 in the Q4 release; front‑book yields trend detailed across quarters .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO strategic focus: “These actions simplify and streamline the company, prioritize our core franchises, and drive improved returns.” — Michael Rhodes .
• On the quarter: “Adjusted EPS of $2.35, core pretax income of $1 billion…results in line with or favorable to updated guidance.” — Michael Rhodes .
• CFO on NIM & card sale: “Given the 20%+ yield…a sale impacts margin; benefits from lower credit costs and expenses provide a substantial offset…exit does not have a material impact on core pretax income.” — Russ Hutchinson .
• CFO on credit: “We closed the year with historically low flow‑to‑loss rates…collections enhancements are working.” — Russ Hutchinson .

Q&A Highlights

• Credit trajectory: Management guided retail auto NCOs to 2.00–2.25% for 2025; noted favorable flow‑to‑loss and severity, but late‑stage delinquency remains a watch item .
• NIM normalization: Post card sale, high‑3s NIM adequate to support mid‑teens ROTCE; 4% NIM “no longer required,” though still possible over time .
• Capital deployment: Priority to invest in core businesses; potential securities portfolio restructuring and eventual share repurchases; CET1 buffer maintained amid AOCI uncertainty .
• Originations mix & competition: Q4 originated yield fell due to S‑Tier mix and benchmarks; pricing discipline maintained; competitive dynamics favorable in Q4 .
• EV lease accounting: Deferral method aligns accounting with economics; improves clarity and reduces P&L lumpiness vs flow‑through .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 EPS and Revenue was unavailable due to data access limits at time of analysis; therefore, estimate comparison is not provided.
• As a result, we do not show “vs. estimates” in the tables; we will incorporate consensus comparisons when S&P Global data becomes available.

Key Takeaways for Investors

• Margin path recalibrated: FY 2025 NIM ex‑OID guided to 3.55–3.65% (3.40–3.50% pro forma post card sale); high‑3s NIM deemed sufficient for mid‑teens ROTCE given lower credit and OpEx post exit .
• Card sale is a capital catalyst: ~40 bps CET1 uplift expected at closing; adjusted tangible book per share to benefit by ~$1; supports growth, securities restructuring, and eventual buybacks .
• Credit trend improving despite noise: Favorable flow‑to‑loss and severity in Q4; 2025 retail auto NCOs guided to 2.00–2.25% as 2022 vintage loss contribution recedes .
• Deposit franchise resilience: Average retail deposit rate fell to 3.97% with >95% retention and 3.3M customers; deposit‑funded model positions NIM to expand as lower‑yield assets roll off .
• EV lease accounting change reduces volatility: Deferral method temporarily reduced CET1 by ~20 bps but is neutral over time as credits flow through NII; improves comparability to ICE leases .
• Insurance and Corporate Finance diversify revenue: Insurance written premiums hit $390M (highest quarter since IPO) and Corporate Finance posted record quarterly and annual pre‑tax earnings .
• Execution focus: Workforce reduction ($22M charge) expected to deliver >$60M annual savings; continued expense discipline targets positive operating leverage in 2025 .

Appendix: Additional Tables

Operating drivers vs prior periods:

Capital & liquidity:

Management quotes show attribution by document and chunk index. All quantitative values are sourced from Ally’s Q4 2024 8‑K, press releases, and earnings call materials as cited.