Stocks Analysis by ValueWalk (Dave Kovaleski) covering: Ally Financial Inc. Read ValueWalk (Dave Kovaleski)'s latest article on Investing.com
The company reported solid third quarter earnings, but the stock was trending lower.was trending lower on Friday despite the online bank reported solid earnings in the third quarter that beat estimates.
Ally is one of the leading auto lenders, having formed out of GM’s auto financing arm back in 2009. So, auto loans still make up the bulk of the business. In terms of the bottom line, the auto lending segment saw an even bigger drop, as income fell 13% year-over-year to $175 million. This was due to higher provision for credit losses of $579 million, which was $135 million than the same quarter a year ago. The higher provisions were prompted by an increase in the retail auto net charge-off rate to 2.24%, which is up from 1.85% a year ago.
Higher net charge-offs indicate a still challenging environment for auto lending, particularly for new cars, with elevated rates and a potentially sluggish economy. The market for new cars is expected to improve in 2025, as rates begin to fall, making new cars more affordable. As the leader in the space, Ally would certainly benefit.
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