ALLY Q2 Earnings Top on Higher Net Finance Revenues & Lower Provision (Revised)

Ally Financial’s ALLY second-quarter 2025 adjusted earnings of 99 cents per share surpassed the Zacks Consensus Estimate of 78 cents. Further, the bottom line reflected a jump of 35.6% from the year-ago quarter.Results benefited from a rise in net finance revenues and other revenues. Further, lower non-interest expenses and reduced provision provided support. However, a decline in net finance receivables and loans and deposits were the undermining factors. After considering non-recurring items, net income attributable to common shareholders (GAAP basis) was $324 million compared with $191 million in the prior-year quarter.ALLY’s Revenues Increase, Expenses DipTotal quarterly GAAP net revenues were $2.08 billion, up 2.9% from the prior-year quarter. Also, the top line surpassed the Zacks Consensus Estimate of $2.03 billion. Adjusted total revenues were $2.06 billion, unchanged from the prior-year quarter.Net financing revenues grew marginally from the prior-year quarter to $1.53 billion. The rise was primarily driven by lower funding costs. Further, the adjusted net interest margin was 3.45%, up 9 basis points. Our estimate for net financing revenues was $1.54 billion.Total other revenues were $566 million, up 12.1% year over year. The rise was primarily due to other profits on investments. We projected other revenues of $470 million.Total non-interest expenses decreased 1.8% year over year to $1.26 billion. Our estimate for expenses was $1.28 billion. Further, adjusted non-interest expenses also declined to $1.32 billion as no repositioning-related charges were recorded.The adjusted efficiency ratio was 50.9%, down from 52.7% in the year-ago period. A fall in the efficiency ratio indicates an improvement in profitability.ALLY’s Loan & Deposit Balance FallAs of June 30, 2025, total net finance receivables and loans amounted to $129.8 billion, down marginally from the prior quarter. Our estimate for the metric was $134.4 billion.Deposits declined 2.3% to $147.9 billion. We projected deposits of $153 billion.Ally Financial’s Credit Quality: Mixed BagNon-performing loans were $1.36 billion as of June 20, 2025, up 11.8% year over year. Our estimate for the metric was $1.33 billion.In the reported quarter, Ally Financial saw net charge-offs of $366 million, down 15.8% from the prior-year quarter. We had projected net charge-offs of $521.6 million.The company reported a provision for loan losses of $384 million, down 15.9% year over year. The decline was attributable to the reserve release associated with the sale of Ally Credit Card and lower retail auto net charge-offs. Our estimate for provisions was $528.5 million.Capital Ratios of Ally Financial ImproveAs of June 30, 2025, the total capital ratio was 13.2%, up from 12.7% in the prior-year quarter. The tier 1 capital ratio was 11.4%, up from 11% as of June 30, 2024.Also, the common equity tier 1 (CET1) capital ratio increased to 9.9% from 9.6% in the prior-year quarter.Our View on Ally FinancialAlly Financial’s business restructuring initiatives, balance sheet repositioning efforts, and rising demand for consumer loans alongside relatively higher interest rates will likely strengthen its financials. Further, the decline in non-interest expenses is likely to provide marginal support. However, weak credit quality amid a tough operating backdrop remains a key near-term headwind.Ally Financial Inc. Price, Consensus and EPS Surprise Ally Financial Inc. price-consensus-eps-surprise-chart | Ally Financial Inc. QuoteCurrently, Ally Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Release Dates of ALLY’s PeersCapital One COF is slated to announce second-quarter 2025 results on July 22. Over the past seven days, the Zacks Consensus Estimate for COF’s quarterly earnings remained unchanged at $3.83 per share. This implies a 21.97% increase from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Navient NAVI is slated to announce second-quarter 2025 results on July 30. Over the past seven days, the Zacks Consensus Estimate for NAVI’s quarterly earnings has remained unchanged at 29 cents. This implies a 39.58% decline from the prior-year quarter.(We are reissuing this article to correct a mistake. 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Click to get this free report Capital One Financial Corporation (COF): Free Stock Analysis Report Ally Financial Inc. (ALLY): Free Stock Analysis Report Navient Corporation (NAVI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks