- Wednesday, October 16, 2024
Ally Financial, a Detroit-based bank holding company, reported a decrease in profit for the second quarter of this year. However, adjusted earnings were higher than anticipated by analysts.
Profit Decline
The company's profit for the quarter amounted to $301 million, or 99 cents per share, compared to $454 million, or $1.40 per share, in the same quarter of the previous year.
Better Than Expected Earnings
After removing one-time items, the adjusted earnings per share stood at 96 cents. Analysts surveyed by FactSet had predicted adjusted earnings of 93 cents per share.
Flat Total Revenue
Ally Financial's total revenue remained stagnant at $2.08 billion, slightly below the projected $2.09 billion.
Factors Contributing to Decline
The decrease in earnings was mainly influenced by lower net financing revenue, higher provision for credit losses, and increased noninterest expenses. However, these factors were partly offset by a rise in other revenue from the company's insurance and consumer banking businesses.
Net Financing Revenue Drop
Net financing revenue experienced a decline of $191 million, reaching $1.6 billion. This was primarily due to a significant increase in funding costs resulting from rising short-term rates. Nevertheless, Ally Financial still benefited from promising auto pricing, floating rate assets, and growth in unsecured products.
Higher Credit Loss Provision
The company's provision for credit losses saw a substantial increase of $123 million compared to the previous year, reaching $427 million. This adjustment was necessary as credit levels returned to normal after historical lows.
All Rights Reserved © 2024
Post a comment