Ally Financial saw 3rd quarter net income drop by 76% to $91 million

Article by Anita Panait, on November 7, 2013

Ally Financial posted a 76-percent drop in net income to $91 million in the third quarter of 2013, no thanks to downsizing and a one-time charge of $107 million for settling mortgage-related claims with the Federal Housing Finance Agency and the Federal Deposit Insurance Corp. The company logged an 11-percent decline in revenue in the quarter to $1.11 billion.

Ally called the flat volume figures at its automotive operations a positive achievement, given a hyper-competitive market and the loss of subvented business from Chrysler Group. Ally chief executive Michael Carpenter said during a conference call that the company has “massively diversified” its business and cut its reliance on subvention from the carmakers. He said that Ally is making “a strategic transformation,” from a captive to “being very much a market-driven auto finance competitor.”

Ally’s US consumer originations in the quarter were flat at $9.6 billion in auto loans and leases. That included a higher mix of leases and used cars. Leases accounted for 29 percent of total figure in the third quarter of 2013, compared to just 27 percent a year earlier. Used cars accounted for 27 percent, up from 24 percent.

The company logged a less than a percent surge in third-quarter pretax income for auto finance to $339 million in 2013 from $337 million in 2012. It should be noted that around 35 percent of the company’s net income in the third quarter of 2012 was from now discontinued operations. Ally has disposed most of its overseas operations to GM Financial in April.

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