Ally Financial Posts Mixed Q2 Earnings

Ally Financial Inc ALLY reported Q2 adjusted revenues of $2.066 billion (-7% Y/Y), missing the consensus of $2.090 billion. 

Net financing revenue stood at $1.57 billion, down from $1.76 billion a year ago, on higher funding costs given the rapid increase in short-term rates. 

Adjusted EPS of $0.96, beating the consensus of $0.92.

Deposits totaled $154.3 billion, higher than $140 billion a year ago, with 2.9 million customers.

Net interest margin stood at 3.38%, decreasing 66 bps Y/Y, mainly due to higher funding costs. 

Provision for credit losses increased to $427 million from $304 million a year ago, with credit normalizing off from historical lows and modest reserve build.

CET1 capital ratio stood at 9.3% in Q2 vs 9.6% a year ago. 

"At Ally Bank, we're now approaching 3 million customers as we posted our 57th consecutive quarter of customer growth. Our digital, consumer-oriented deposit franchise remained a source of strength as 92 percent of balances are FDIC insured and we generated $0.5 billion of retail balance growth in the quarter. Dealer Financial Services continues to demonstrate the benefits of scale. We've tightened underwriting standards, but the ability to decision 3.5 million consumer auto applications allowed us to generate $10.4 billion of consumer originations at accretive risk-adjusted returns. Within Insurance, earned premiums of $312 million were the highest since our IPO," said CEO Jeffery J. Brown.

ALLY now expects a net interest margin of 3.4% (vs 3.5% earlier) in 2023. 

Price Action: ALLY shares are trading higher by 3.25% at $29.06 on the last check Wednesday.