Ally Financial (ALLY) Q3 2024 earnings summary

Executive summary

• Net income attributable to common shareholders was $330 million for Q3 2024, up year over year, driven by a tax benefit from EV lease originations and higher adjusted other revenue, partially offset by higher provision expense and lower net financing revenue.

• GAAP EPS was $1.06 and adjusted EPS was $0.95, both up year over year; return on equity was 11.0% and core ROTCE reached 13.1%.

• Total net revenue reached $2.1 billion, a 7% increase year over year, with strong insurance and deposit performance.

• Deposit margins reached historical highs, and corporate finance is on track for record annual earnings.

• CEO highlighted strong execution in core businesses and disciplined capital deployment amid a challenging environment.

Financial highlights

• Net financing revenue (ex-OID) was $1.5 billion, down year-over-year due to lower earning assets and higher funding costs.

• Adjusted other revenue rose 13% year-over-year to $556 million, driven by insurance and other streams.

• Provision for credit losses increased to $645 million, reflecting higher net charge-offs and reserve build in retail auto.

• Net interest margin (ex-OID) was 3.25%, down slightly year-over-year; retail auto portfolio yields rose 13 bps quarter-over-quarter.

• Efficiency ratio improved to 58.3%, with adjusted efficiency ratio at 52.1%.

Outlook and guidance

• Full-year 2024 NIM outlook updated to ~3.2%, assuming 50 bps Fed funds decrease by year-end.

• Retail auto NCOs expected at 2.25%-2.3% for 2024; consolidated loss rate at 1.5%-1.55%.

• Adjusted non-interest expense guidance unchanged; controllable expenses to be down >1% year-over-year.

• Medium-term NIM target remains 4%, with margin expansion expected as deposit betas adjust in a lower rate environment.

• Management expects underlying trends in Dealer Financial Services, Deposits, and Corporate Finance to support future growth and shareholder value.