Ally Financial Inc., posted a huge jump in its net profit for the first quarter of 2013 to $1.1 billion from $310 million in the same period in 2012. Interestingly, the auto lender posted a $6 million in core pretax loss in the first quarter of 2013, compared with a core income of $111 million a year earlier. Ally’s net profit for the first three months of 2013 was mainly attributable to gains from selling assets.
Ally chief executive Michael Carpenter is selling company assets and narrowing the auto lender’s focus to U.S. auto lending and retail banking. He targets to repay the $17.2 billion in taxpayer bailout money that gave the US government a 74-percent stake in the company. Carpenter could launch an initial public offering if he can protect the auto lender from legal claims tied to its Residential Capital unit, which collapsed financially due to losses on subprime home loans.
According to Ward’s Automotive Group data, cars and light trucks sold at an average 15.2 million annualized rate in the U.S. during the first quarter of 2013, compared with 15.3 million in the fourth quarter of 2012. The last time the annualized rate surpassed 15 million was in the fourth quarter of 2007. In April, Ally finalized the sale of contracts for the right to handle billing and collections on $115 billion in outstanding mortgages.
The transactions for so-called servicing rights with Ocwen Financial Corp. and Quicken Loans Inc. resulted to around $850 million in proceeds. Ally also earned $2.6 billion in proceeds from selling most of its operations in Europe and Latin America to General Motors.