Ally Financial Reports Third Quarter 2015 Financial Results
Improved net financing revenue, excluding original issue discount (OID), continued to drive strong results and totaled $981 million in the third quarter of 2015, up from $936 million a year ago. Revenue from retail auto loan growth more than offset a decline in net lease revenue. Further, Ally continued to reduce its cost of funds, resulting in a quarter-over-quarter 9 basis point increase to net interest margin (NIM), excluding OID, and ended the quarter at 2.67 percent. Credit performance during the quarter was in line with expectations with strong retail auto loan growth primarily driving $211 million of provision expense for the quarter, up from $102 million in the third quarter of 2014. Non-interest expenses declined by $68 million, or 9 percent year-over-year, resulting from continued expense reduction efforts and lower weather-related losses in the insurance operations. The adjusted efficiency ratio improved to 44 percent for the quarter, from 46 percent in the prior quarter and 49 percent in the prior year period.
Consumer auto originations remained robust at $11.1 billion for the quarter, increasing from $10.8 billion last quarter and down from $11.8 billion in the same period last year, with the company on track to exceed its originations target in the high $30 billions for 2015. Gains in the Growth2 and Chrysler channels continued to drive consumer auto originations, and excluding GM lease and subvented, originations increased 36 percent year-over-year. Separate from originations, during the quarter the company also completed a previously announced purchase of $607 million of consumer loans and leases from Mitsubishi Motors Credit of America.
"Ally's third quarter results demonstrate the ongoing strength of the operations and continued progress on our goals to diversify the business, achieve our financial targets and build upon our leading digital platform," said Ally Chief Executive Officer Jeffrey Brown. "Auto originations were strong at $11.1 billion for the quarter and $31.7 billion year-to-date, and we remain on track to surpass our target for the year, despite the shifts in the business. The business is well-positioned in the marketplace, increasingly more diversified and poised to provide consistent returns."
Brown continued, "Driving greater efficiencies in our capital and funding structure also remains a priority, and our efforts include deposit growth and funding more assets at the bank. In the third quarter, Ally posted retail deposit growth of $1.8 billion quarter-over-quarter and funded 76 percent of its auto originations through Ally Bank. Addressing the remaining Series G securities continues to be a key area of focus in the near term, as well. By concentrating on these legacy capital instruments in the coming months, Ally will be positioned to have a more normalized capital structure to clear the path for more traditional opportunities to return excess capital to shareholders."
"Building on our strengths in digital financial services, Ally recently crossed two key milestones – we surpassed one million retail deposit customers in September, and we sold our five millionth vehicle on our online auto remarketing platform in October. The continued growth of these platforms is a testament to our capabilities in delivering compelling products online and via mobile applications that resonate with customers."
"As we look ahead, our opportunities lie in our inherent strengths – a strong culture of agility and innovation, a proven track-record in digital financial services, a respected customer-centric brand, and a foundation of 5.5 million customers. We have taken initial steps in deepening our customer relationships and expect to expand our customer offerings in the year ahead," he concluded.