Ally Financial adjusted profit rises as costs fall
By Peter Rudegeair and Anil D'Silva
(Reuters) - Auto-lender Ally Financial Inc (ALLY.N: Quote), which went public in April, reported on Thursday a rise in adjusted quarterly profit as the company cut both its financing costs and operating expenses.
Overall, net income fell to $227 million, or 33 cents per share, in the first quarter ended March 31, from $1.09 billion, or $2.16, from the first quarter of 2013. But the year-earlier quarter included more than $1 billion in income from discontinued operations, including a $900 million gain from the sale of Ally's Canadian operations.
Excluding the discontinued operations and the impact of certain items, the company reported core income of $339 million before taxes, or 64 percent more than the $207 million it reported a year earlier.
Expenses fell 17 percent to $710 million as the company streamlined its business by selling some of its non-U.S. operations. Ally's cost of funds fell 0.55 percentage points as it called around $9.7 billion in legacy debt in the quarter and added $2 billion of retail deposits, or 17 percent more than a year earlier.
In Ally's main business of making U.S. auto loans, volume fell 5 percent to $9.2 billion in the quarter.
In the past year, Ally's agreements to make loans and leases that are partly subsidized by automakers Chrysler Group LLC FIA.MI and General Motors Co (GM.N: Quote) have expired, which has weighed on loan volume.
Ally Chief Executive Michael Carpenter told analysts on a Thursday conference call that the company is making progress diversifying away from Chrysler and GM. New loans made through non-Chrysler and non-GM dealers were up 40 percent compared to a year earlier and now comprise around one-fifth of total loans.
Pre-tax income in the auto finance business was down marginally to $339 million from $343 million as the lender set aside more funds to cover potential future loan losses. Continued...