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Ally Financial Q2 Earnings Miss on Lower Loans & Deposits
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Key Takeaways
ALLY posted Q2 adjusted EPS of 99 cents, missing estimates but rising 35.6% year over year.
Lower loans and deposits weighed on results, but revenues and net financing income increased.
Non-interest expenses declined 1.8%, and the adjusted efficiency ratio improved to 50.9%.
Ally Financial’s (ALLY - Free Report) second-quarter 2025 adjusted earnings of 99 cents per share handily missed the Zacks Consensus Estimate of $1.01. However, the bottom line reflected a jump of 35.6% from the year-ago quarter.
Results were primarily hurt by a decline in net finance receivables and loans and deposits. However, the rise in total revenues, net finance revenues and lower provisions was a tailwind. Further, a decline in non-interest expenses was another positive.
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 Dip
Total quarterly GAAP net revenues were $2.08 billion, up 2.9% from the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $2.12 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 Fall
As 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 Bag
Non-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 Improve
As 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 Financial
Ally 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
Capital One (COF - Free Report) 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 - Free Report) 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.
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Ally Financial Q2 Earnings Miss on Lower Loans & Deposits
Key Takeaways
Ally Financial’s (ALLY - Free Report) second-quarter 2025 adjusted earnings of 99 cents per share handily missed the Zacks Consensus Estimate of $1.01. However, the bottom line reflected a jump of 35.6% from the year-ago quarter.
Results were primarily hurt by a decline in net finance receivables and loans and deposits. However, the rise in total revenues, net finance revenues and lower provisions was a tailwind. Further, a decline in non-interest expenses was another positive.
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 Dip
Total quarterly GAAP net revenues were $2.08 billion, up 2.9% from the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $2.12 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 Fall
As 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 Bag
Non-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 Improve
As 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 Financial
Ally 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. Quote
Currently, 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 Peers
Capital One (COF - Free Report) 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 - Free Report) 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.