Ally Financial adjusted profit rises as costs fall

Thu May 1, 2014 2:10pm EDT
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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...

Traders work at the Post that trades Ally Financial Inc. following the IPO on the floor of the New York Stock Exchange April 10, 2014. REUTERS/Brendan McDermid