Ally Financial reported a net loss of $210 million in the third quarter

Article by Christian A., on November 3, 2011

In the third quarter, Ally Financial Inc.'s core automotive franchise recorded a hefty volume growth; however, its pre-tax income was flat on the automotive side. Ally said that these “unacceptable" results in mortgage operations have pulled down the company to a net loss of $210 million overall. This was the first net loss of Ally ever since the fourth quarter of 2009.

This is lower than the net profit of $269 million recorded in the third quarter of 2010. Ally, which is formerly known as GMAC Financial Services, is the preferred lender for GM and the Chrysler Group. In late 2008, Ally turned into a bank holding company as part of a government bailout and restructuring.

This transpired together with the bankruptcy restructuring in 2009 for former parent GM as well as Chrysler. On the automotive aspect, the U.S. consumer originations amounted to $10 billion in auto loans and leases in the third quarter of 2011. This is higher than the $8.3 billion posted in the previous year. The total figure includes a bigger proportion of leases, subprime loans, and contracts from dealers outside the GM and Chrysler networks.

Ally President Bill Muir said that this is in line with Ally's growth strategy for auto finance, as well as less dependence on subvented loans and leases from GM and Chrysler. Ally's North American auto finance business had a flat pre-tax income, mostly due to Ally’s stronger gain in the year-ago quarter over the higher values for off-lease vehicles. The Pre-tax income for the North American auto business totaled $551 million, even compared to the previous year. Ally said that without the lease gains, this figure would have been $476 million, an improvement from $384 million.

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