Ally Financial Profit Driven Higher by Boom in Auto Sales

Ally Financial Inc. said profit in its fourth quarter soared as the Detroit lender saw auto originations rise and retail deposits grow.

One of the nation's biggest auto lenders, Ally's auto-finance franchise has driven results in recent quarters. The company lost a big chunk of its auto-lending business last year when General Motors Co. largely squeezed it out of its lucrative subsidized-leasing business, but Ally has worked to recoup much of that lost business.

In the fourth quarter, consumer auto originations edged up to $9.3 billion from $9 billion a year earlier. Gains in the Chrysler channel, Ally said, continued to buoy originations and excluding GM, originations jumped 35% from the year-ago period.

Meanwhile, retail deposits grew 16% from a year earlier to $55.4 billion as the lender, formerly known as GMAC and spun off from GM in 2006, added more customers and saw increased demand for savings products. For the year, Ally exceeded its own targets for both retail deposit growth and auto originations, according to Chief Executive Jeffrey Brown.

Looking ahead, Mr. Brown said Ally is on track to deliver 15% growth in earnings per share this year, translating to about $2.30 in adjusted per-share profit. Analysts have predicted $2.37, according to Thomson Reuters. Ally redeemed $1.3 billion in remaining Series G preferred securities during the quarter, a move the CEO said removes the restriction on offering common equity distributions and positions Ally to meet its objective of initiating a dividend and share repurchase program in 2016.

Overall, Ally reported a profit of $263 million, up from $177 million a year earlier. On a per-share basis, Ally reported a loss of $1.97 a share because of the redemption of preferred securities. Excluding that redemption, among other items, Ally earned 52 cents a share, up from 40 cents a year earlier and a penny better than analysts' average estimate.

Shares in the company, down 14% since the start of the year through Monday's close, were inactive in premarket trading.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

February 02, 2016 09:35 ET (14:35 GMT)

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