Ally Financial Inc. (NYSE:ALLY) delivered stronger-than-expected second-quarter results on Friday, propelled by a solid performance in its core auto finance division. Shares of the digital banking firm rose 5.02% in pre-market trading following the earnings release.
The company reported adjusted earnings per share of $0.99, well ahead of Wall Street’s forecast of $0.81. Total revenue for the quarter reached $2.1 billion, beating the consensus estimate of $2.04 billion. Net financing revenue held steady at $1.52 billion when excluding core original issue discount (OID).
Pre-tax income from Ally’s auto finance segment climbed to $472 million, marking a $97 million improvement over the previous quarter. The gains were supported by reduced seasonal losses and stable leasing trends. The yield on its retail auto loan portfolio, excluding hedge effects, rose slightly to 9.19%, up 8 basis points from Q1.
“Focus on the core where we have relevant scale and demonstrated differentiation within the marketplace continues to drive strong operational results,” said Jeffrey Brown, CEO of Ally Financial. “Our disciplined approach is delivering results across our businesses.”
Credit quality also improved, with net charge-offs dropping to $366 million from $507 million in Q1. This brought the overall net charge-off rate down to 1.10% from 1.50% previously. Ally’s capital position remained healthy, with a Common Equity Tier 1 (CET1) ratio of 9.9%.
The company tightened its full-year 2025 guidance for retail auto net charge-offs to a range of 2.00% to 2.15%, down from the earlier 2.00% to 2.25% forecast. It reaffirmed its net interest margin outlook of 3.40% to 3.50%.
Ally’s deposit base remained robust at $143 billion, with 88% of funding sourced from deposits. Meanwhile, its corporate finance division delivered a strong 31% return on equity during the quarter.
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