Ally Financial's Q4 Earnings Surge, Shares Rise

New York, January 18, 2023 - Ally Financial Inc.'s fourth-quarter earnings soared, driven by a better-than-expected net interest margin, reduced provisions for bad debt, and lower expenses.

* Net income jumped 74% to $108 million, or 26 cents per share.
* Loan-loss provisions of $557 million fell below analysts' estimates of $656.9 million.
* Net interest margin expanded 11 basis points year-over-year to 3.3%, with Ally forecasting a NIM of 3.55% to 3.65% for 2023.

Ally also announced a deal with CardWorks Inc. to divest its credit-card business and a $2.3 billion loan portfolio.

However, the company's credit quality has been impacted by rising net charge-offs in its consumer auto loan portfolio, particularly those originated in 2022. The fourth-quarter retail auto net charge-off rate increased 13 basis points to 2.34% year-over-year.

Ally expects net charge-off rates to range from 2% to 2.25% in 2023. Nevertheless, the company remains optimistic about its financial outlook, citing strong momentum across its businesses, improved credit outlook, and disciplined expense management.

"As we enter 2023, I am encouraged by the strong momentum across our business," said CEO Michael Rhodes. "This optimism is driven by an improved outlook on credit, a balance sheet well positioned for margin expansion, and continued disciplined management of expenses and capital."

Ally's shares surged as much as 8.7%, the highest intraday gain in a year. They closed Wednesday's trading session at $40.33, up 5.6%.