ALLY Q1 Earnings Top on Higher Net Finance Revenues & Lower Provisions

Core Insights - Ally Financial reported first-quarter 2025 adjusted earnings of 58 cents per share, exceeding the Zacks Consensus Estimate of 43 cents, reflecting a 41.5% increase from the previous year [1] Financial Performance - The company completed the sale of Ally Credit Card on April 1, 2025, and executed two securities repositioning transactions to reduce AOCI volatility and improve interest rate risk [2] - Total GAAP net revenues for the quarter were $1.54 billion, down 22.9$1.94 billion; adjusted total revenues were $2.07 billion, up 3.2$1.49 billion, driven by lower funding costs, with an adjusted net interest margin of 3.35%, up 16 basis points [5] - Total non-interest expenses rose 24.9% year over year to $1.63 billion, exceeding the estimate of$1.20 billion; adjusted expenses, excluding repositioning-related charges, increased 1.7% to $1.32 billion [6] Asset Quality and Provisions - Total net finance receivables and loans were$130.1 billion, down 1.7% from the prior quarter; deposits slightly declined to $151.4 billion [7] - Non-performing loans increased to$1.42 billion, up 13.2% year over year; net charge-offs were $507 million, down 5.9$191 million, a decrease of 62.3%, attributed to a reserve release related to the sale of Ally Credit Card [9] Capital Ratios - As of March 31, 2025, the total capital ratio improved to 12.8% from 12.5% year over year; the tier 1 capital ratio rose to 11% from 10.8% [10] Strategic Outlook - The company's restructuring initiatives, balance sheet repositioning, and rising consumer loan demand amid higher interest rates are expected to support financial performance; however, weak credit quality and elevated operating expenses present near-term challenges [11]