Core Insights - Ally Financial reported a strong performance in 2025, with adjusted earnings per share of $3.81, a 62% increase year over year, and core return on tangible common equity (ROTCE) of 10.4%, up more than 300 basis points compared to 2024 [2][5] - The company executed strategic actions including exiting non-core businesses and repositioning its investment securities portfolio, which contributed to improved profitability and credit performance [3][5] Financial Performance - Adjusted net revenue for 2025 was $8.5 billion, reflecting a 3% year-over-year increase, or 6% when excluding the impact of the credit card business sale [2][5] - Retail auto originations reached $43.7 billion, an 11% increase, with 43% of the volume in the highest credit tier [5][6] - The digital bank ended the year with $144 billion in retail deposits, maintaining a customer base of 3.5 million, marking 17 consecutive years of growth [9] Credit and Risk Management - Retail auto net charge-offs (NCOs) for the fourth quarter were reported at 2.14%, down 20 basis points year over year, with full-year retail auto NCOs at 1.97%, below prior guidance [14] - The company processed a record 15.5 million applications, allowing for selective originations and maintaining underwriting discipline [6][8] 2026 Guidance - For 2026, Ally expects a net interest margin (NIM) of 3.6% to 3.7%, retail auto NCOs of 1.8% to 2.0%, and low single-digit growth in other revenue [4][18] - Expense growth is anticipated to be around 1%, with continued investments in AI, cyber, and customer experience [18] Capital Management - Ally ended 2025 with a Common Equity Tier 1 (CET1) ratio of 10.2% and announced a $2 billion share repurchase authorization [20][21] - The adjusted tangible book value per share increased nearly 20% over the past year, ending at $40 [21]

Financial Data and Key Metrics Changes - Adjusted EPS for 2025 was $3.81, up 62% year-over-year, with core ROTCE at 10.4%, an increase of over 300 basis points compared to 2024 [7][11] - Adjusted net revenue reached $8.5 billion, a 3% increase year-over-year, and a 6% increase when excluding the impact of the card sale [11][12] - CET1 ended the year at 10.2%, with a fully phased-in CET1 of 8.3%, up 120 basis points during the year [11][37] Business Line Data and Key Metrics Changes - Retail auto and corporate finance loans increased by 5% in 2025, driven by strong performance in core franchises [13] - Dealer Financial Services originated $43.7 billion in consumer loans, an 11% increase year-over-year, with a 9.7% origination yield [16] - Insurance written premiums exceeded $1.5 billion, marking a record for the company [18] Market Data and Key Metrics Changes - Retail deposit balances reached $144 billion, reinforcing the company's position as the largest all-digital direct bank in the U.S. [19] - The company served 3.5 million customers, marking the 17th consecutive year of customer growth [20] Company Strategy and Development Direction - The company undertook a strategic refresh in 2025, focusing on investing in areas with clear competitive advantages [6] - A $2 billion open-ended share repurchase authorization was announced, indicating confidence in future growth opportunities [14] - The company aims for organic growth while also considering share repurchases as a capital deployment option [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, emphasizing the importance of bridging strategy to execution and focusing on strong volumes with appropriate margins [89] - The company remains cautious about macroeconomic uncertainties, particularly regarding the labor market and used vehicle values [95][101] - Management highlighted the importance of maintaining expense discipline while investing in core franchises and technology [91][96] Other Important Information - The company executed two credit risk transfer transactions totaling $10 billion in notional retail auto loans, enhancing capital efficiency [12] - Adjusted non-interest expense was approximately flat year-over-year, with controllable expenses down 1% [30] Q&A Session Summary Question: NIM progression and drivers - Management confirmed expectations for NIM to be down quarter-over-quarter in Q1 but expressed confidence in a strong exit trajectory for the year [70][72] Question: Retail auto coverage ratio and reserve releases - Management indicated that reserve releases are not factored into return expectations, focusing instead on prudent credit management [78][80] Question: 2026 guidance and risks - Management expressed optimism for 2026, highlighting strong fundamentals and the importance of monitoring macroeconomic factors [89][95] Question: Credit performance and delinquencies - Management acknowledged that while delinquencies are improving, macroeconomic factors like unemployment could impact future performance [102][104] Question: NIM upper bound and ROE expectations - Management clarified that achieving a high threes NIM is essential for reaching mid-teens ROE targets, with no changes needed in operational strategy [111][116]

Financial Data and Key Metrics Changes - Adjusted EPS for 2025 was $3.81, up 62% year-over-year [7] - Core ROTCE increased to 10.4%, up more than 300 basis points compared to 2024 [7] - Adjusted net revenue reached $8.5 billion, a 3% increase year-over-year, and a 6% increase when excluding the sale of the card business [11] - CET1 ended the year at 10.2%, with fully phased-in CET1 at 8.3%, up 120 basis points in 2025 [11][37] Business Line Data and Key Metrics Changes - Retail auto and corporate finance loans grew by 5% in 2025, driven by strong momentum in core franchises [13] - Dealer Financial Services originated $43.7 billion in consumer loans, an 11% increase year-over-year [16] - Written premiums in insurance exceeded $1.5 billion, marking a record for Ally [18] - Corporate finance delivered a 28% ROE with strong year-over-year growth in the loan portfolio [18] Market Data and Key Metrics Changes - Retail deposit balances reached $144 billion, reinforcing Ally's position as the largest all-digital direct bank in the U.S. [19] - The customer base grew to 3.5 million, marking the 17th consecutive year of customer growth [20] Company Strategy and Development Direction - The company undertook a strategic refresh in 2025, focusing on investing in areas with clear competitive advantages [6] - A $2 billion open-ended share repurchase authorization was announced, indicating confidence in future growth [14] - The focus remains on organic growth while also considering share repurchases as a capital deployment option [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, emphasizing the importance of bridging strategy to execution [89] - The company is focused on building strong volumes with appropriate margins in the auto franchise and continuing momentum in corporate finance [90] - Management remains cautious about macroeconomic uncertainties, particularly regarding the labor market and used vehicle prices [95][101] Other Important Information - The company executed two credit risk transfer transactions totaling $10 billion in notional retail auto loans [12] - Adjusted non-interest expense was approximately flat year-over-year, with controllable expenses down 1% [30] Q&A Session Summary Question: Clarification on NIM progression - Management confirmed expectations for NIM to be down in Q1 but expressed confidence in a strong exit trajectory for the year [70][72] Question: Retail auto coverage ratio - Management indicated that reserve releases are not factored into return expectations and are balancing credit quality against macroeconomic uncertainties [78][80] Question: Contextualizing 2026 - Management expressed optimism for 2026, focusing on strong fundamentals and disciplined expense management while being cautious about macroeconomic risks [89][95] Question: Credit performance and delinquencies - Management acknowledged that while delinquencies are improving, macroeconomic factors like unemployment could weigh on future performance [102][104]

Financial Data and Key Metrics Changes - Adjusted EPS for 2025 was $3.81, up 62% year-over-year [4] - Core ROTCE increased to 10.4%, up more than 300 basis points compared to 2024 [4] - Adjusted net revenue reached $8.5 billion, a 3% increase year-over-year, and a 6% increase when excluding the sale of the card business [5] - CET1 ended the year at 10.2%, with a fully phased-in CET1 of 8.3%, up 120 basis points in 2025 [5][19] Business Line Data and Key Metrics Changes - Retail auto and corporate finance loans grew by 5% in 2025, driven by strong performance in core franchises [6] - Dealer Financial Services originated $43.7 billion in consumer loans, an 11% increase year-over-year [8] - Insurance written premiums exceeded $1.5 billion, marking a record for the company [9] - Corporate finance achieved a 28% ROE with strong growth in the loan portfolio [9] Market Data and Key Metrics Changes - Retail deposit balances reached $144 billion, reinforcing the company's position as the largest all-digital direct bank in the U.S. [10] - The company served 3.5 million customers, marking the 17th consecutive year of customer growth [10] - Retail auto net charge-offs for the year were 1.97%, below the 2% mark, indicating strong credit performance [23] Company Strategy and Development Direction - The company undertook a strategic refresh in 2025, focusing on areas with clear competitive advantages [3] - A $2 billion open-ended share repurchase authorization was announced, indicating confidence in future growth [7] - The company aims to maintain expense discipline while investing in core businesses and technology [15][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, emphasizing the importance of bridging strategy to execution [46] - The company is focused on building strong volumes with appropriate margins and pricing in the auto franchise [47] - Management acknowledged macroeconomic uncertainties, particularly regarding the labor market and used vehicle prices [50][54] Other Important Information - The company executed two credit risk transfer transactions totaling $10 billion in notional retail auto loans [6] - Adjusted tangible book value per share increased by nearly 20% over the past year [20] Q&A Session Summary Question: NIM progression and drivers - Management confirmed expectations for NIM to be down quarter-over-quarter in Q1 but expressed confidence in a strong exit trajectory for the year [37][39] Question: Retail auto coverage ratio - Management indicated that reserve releases are not factored into return expectations, focusing instead on prudent credit management [41][44] Question: 2026 outlook and risks - Management highlighted optimism for 2026, with a focus on maintaining strong fundamentals and managing macroeconomic risks [46][50] Question: NIM upper bound and ROE expectations - Management clarified that achieving mid-teens ROE requires high threes NIM, sub-2% retail auto NCO rate, and disciplined capital and expense management [60]

Ally Financial Inc. 4Q 2025 Earnings Review January 21, 2026 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 4Q 2025 Preliminary Results Forward-Looking Statements and Additional Information 2 4Q 2025 Preliminary Results GAAP and Core Results: Quarterly | | | | | | Quarterly Trend | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | ($ millions, except per share data) | 4Q 25 | | 3Q 25 | | 2Q 25 | | | 1Q 25 | 4Q 24 | | | GAAP net income (loss) at ...

Financial Performance - Full-Year 2025 earnings per share (EPS) was $2.37, with adjusted EPS of $3.81, while fourth quarter EPS was $0.95, adjusted EPS at $1.09[2] - Full-Year 2025 total net revenue reached $7.9 billion, with pre-tax income of $1.1 billion and a return on common equity (ROCE) of 6.0%[3] - The company reported a GAAP Net Income Attributable to Common Shareholders of $742 million for FY 2025, compared to $558 million in FY 2024, marking a 33% increase[71] - Total Net Revenue for FY 2025 was $7,914 million, a decrease from $8,181 million in FY 2024[74] - Adjusted Total Net Revenue increased to $8,451 million in FY 2025 from $8,243 million in FY 2024[76] - Core Pre-Tax Income rose to $1,628 million in FY 2025, up from $1,047 million in FY 2024, showcasing strong profitability growth[76] Revenue and Financing - Fourth quarter net financing revenue was $1.6 billion, an increase of $89 million year-over-year, with a net interest margin (NIM) of 3.48%, up 18 basis points[15] - Net financing revenue in Q4 2025 was $1.3 billion, a decrease of $34 million year-over-year, driven by lower average commercial balances and lease vehicle termination mix dynamics[28] - Net Financing Revenue (excluding Core OID) increased to $6,242 million in FY 2025 from $6,070 million in FY 2024[76] - The average retail deposit portfolio yield was 3.35% for Q4 2025, down 62 basis points year-over-year and down 13 basis points quarter-over-quarter[45] Credit and Losses - Provision for credit losses decreased by $689 million year-over-year, primarily due to improvements in retail auto net charge-offs (NCOs) and the sale of Credit Card[22] - Provision for credit losses totaled $478 million, down $17 million year-over-year, with a retail auto net charge-off rate of 2.14%, decreasing 20 basis points year-over-year[30] - GAAP Provision for Credit Losses decreased to $1,477 million in FY 2025 from $2,166 million in FY 2024, reflecting improved credit quality[76] Deposits and Customer Base - Retail deposits grew to $143.5 billion, serving 3.5 million customers, marking 17 consecutive years of growth[3] - Retail deposits reached $143.5 billion, up $99 million year-over-year and up $1.7 billion quarter-over-quarter, representing 87% of Ally's funding portfolio[44] - Customer retention rate improved to 85%, up from 80% in the previous quarter[91] Strategic Initiatives - The company executed a $2 billion open-ended share repurchase program, signaling confidence in future performance[3] - The company has made strategic repositioning efforts related to extinguishing high-cost legacy debt, which is expected to enhance financial stability[66] - The company anticipates continued focus on strategic initiatives to enhance its market position and financial performance moving forward[85] Insurance Performance - Insurance segment achieved record written premiums of $1.5 billion, demonstrating strong growth and synergies with Auto Finance[6] - Insurance pre-tax income in Q4 2025 was $91 million, an increase of $55 million year-over-year, supported by $369 million of earned premiums[34] - Full-year 2025 pre-tax income for Insurance was $200 million, up $32 million year-over-year, primarily due to an increase in the fair value of equity securities[36] Operational Efficiency - Adjusted Efficiency Ratio improved to 51.9% in FY 2025 from 54.1% in FY 2024, indicating enhanced operational efficiency[74] - Noninterest expense for the full year increased by $207 million, mainly due to goodwill impairment associated with the sale of Credit Card[23] - Adjusted Noninterest Expense (excluding repositioning) was $5,041 million in FY 2025, slightly up from $5,029 million in FY 2024[76] Future Outlook - The company expects Q4 2023 revenue guidance of $1.7 billion, indicating a 13% growth from Q3 2023[91] - New product launch scheduled for Q1 2024, anticipated to drive an additional $200 million in revenue[91] - Market expansion efforts in Europe projected to contribute an additional $100 million in revenue by mid-2024[91] - Investment in R&D increased by 25% to $300 million, focusing on innovative technologies[91]

Core Insights - Ally Financial Inc. reported its fourth quarter and full year 2025 results, indicating a significant performance review [1] Group 1: Financial Performance - The company will host a conference call to discuss its performance, scheduled for 9 a.m. ET [1] - The call will include a review of the results and a question and answer session [1] Group 2: Conference Call Information - Participation in the conference call is available via webcast or dial-in [2] - The webcast will be live on Ally's Investor Relations website [2] - Pre-registration is required for dial-in participation, with a unique registrant ID provided upon registration [3] Group 3: Company Overview - Ally Financial Inc. is a financial services company with the largest all-digital bank in the nation and a leading auto financing business [4] - The company offers a range of services including deposits, securities brokerage, investment advisory, auto financing, and insurance [4] - Ally also has a corporate finance business that provides capital for equity sponsors and middle-market companies [4]

Group 1 - Goldman Sachs was founded in 1869 and is recognized as the world's second-largest investment bank by revenue [1] - The company is ranked 55th on the Fortune 500 list of the largest U.S. companies [1]

Core Viewpoint - Deutsche Bank has released a report on the outlook for the U.S. consumer finance sector in 2026, focusing on the earnings guidance of seven companies, which is expected to have a greater impact on stock prices than the actual Q4 performance [1] Group 1: Company-Specific Guidance - American Express (AXP): Deutsche Bank expects a short-term revenue growth slowdown to 8.5% for FY2026, below the market expectation of 9.0%, with diluted EPS projected at $17.75, slightly above the consensus of $17.56 [2] - Synchrony Financial (SYF): Projected loan receivables growth of 4.75% for 2026, exceeding the market expectation of 3.14%, but net revenue forecasted at $15.7 billion, below the market's $16.5 billion [2] - Ally Financial (ALLY): Expected average earning assets growth of 1.7% in 2026, with net interest margin rising to 3.72%, slightly above the market expectation of 3.70% [3] - OneMain Holdings (OMF): Projected management receivables growth of 6.55% for 2026, below the market expectation of 8.00%, with revenue growth of 6.15%, also slightly below the consensus [3] - SoFi Technologies (SOFI): Management reiterated EPS guidance of $0.55-$0.80 for 2026, with a midpoint forecast of $0.67, significantly above the market consensus of $0.58 [4] - Navient Corp (NAVI): Expected NIM for private education loans to rise to 2.81% in 2026, with core EPS projected at $1.15, benefiting from market opportunities due to the cancellation of the GRAD PLUS program [5] Group 2: Market Trends and Influences - The guidance from these companies is expected to influence stock prices more than their Q4 actual performance, highlighting the importance of forward-looking statements in the consumer finance sector [1] - The report indicates that the consumer finance sector is experiencing varying growth rates, with some companies facing challenges due to market saturation and regulatory changes [2][3][4]

Core Viewpoint - Ally Financial (ALLY) is expected to report quarterly earnings of $1.01 per share, reflecting a 29.5% increase year-over-year, with revenues projected at $2.13 billion, a 5% increase from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised upward by 0.4% in the last 30 days, indicating analysts' reassessment of their initial estimates [2]. - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3]. Key Financial Metrics - Analysts estimate 'Insurance premiums and service revenue earned' to be $364.22 million, a decrease of 1% year-over-year [5]. - 'Net financing revenue' is projected to reach $1.60 billion, indicating a year-over-year increase of 5.8% [5]. - 'Total other revenue' is expected to be $529.70 million, reflecting a 2.5% increase from the prior year [5]. Revenue and Income Projections - The estimated 'Total financing revenue and other interest income' is $3.42 billion, a decrease of 3.1% from the previous year [6]. - 'Other income, net of losses' is projected at $149.94 million, suggesting a decline of 10.2% year-over-year [6]. - The expected 'Net interest margin (as reported)' is 3.5%, up from 3.3% in the same quarter last year [6]. Efficiency and Asset Metrics - The consensus estimate for the 'Efficiency Ratio' is 55.9%, down from 67.1% in the same quarter last year [7]. - 'Total interest-earning assets (Average Balances)' are expected to reach $181.96 billion, slightly lower than the $182.17 billion reported in the same quarter last year [7]. Loan and Capital Ratios - Analysts forecast 'Non-performing loans (NPLs)' to be $1.22 billion, down from $1.49 billion reported in the same quarter last year [8]. - The projected 'Book value per share' is $41.78, an increase from $37.92 in the same quarter last year [8]. - The 'Total Capital Ratio' is expected to be 13.3%, slightly up from 13.2% in the same quarter last year [9]. - The 'Tier 1 Capital Ratio' is projected at 11.0%, down from 11.3% a year ago [9]. Stock Performance - Shares of Ally Financial have returned -1.7% over the past month, contrasting with the Zacks S&P 500 composite's +1.6% change, and the company holds a Zacks Rank 3 (Hold), indicating expected performance in line with the overall market [9].