Ally moves on from GM

Ally Financial saw fourth-quarter and full-year 2015 profit and net income increase, while auto loan and lease originations remained relatively flat or increased slightly, despite losing its preferred status as exclusive leasing partner with General Motors (GM).

Net income rose 12% to $1.3 billion for 2015 and 49% to $263 million for the fourth quarter. Revenue increased 6% to $3.76 billion for the year and 19% to $995 million in the quarter.

Ally Financial’s auto loan and lease originations grew 3% to $9.3 billion during the quarter, up from $9 billion in the same period the previous year. The company posted $41 billion in originations for the year, exceeding its originations target for 2015.

The company said it had deployed ‘a disciplined originations strategy’ as it shifted capital previously used to support GM incentivized originations toward new and used retail financing contracts. Gains in the growth (non-GM/Chrysler dealers) and Chrysler channels continued to drive consumer auto originations, and excluding GM lease and subvented business, originations increased 35% year-over-year.

The growth channel originated $12.7 billion loans and leases in 2015, a 53% increase year over year. Chrysler originations were up 41% to $9.6 billion compared with the year before. GM nonsubvented originations rose 21% to $15.2 billion.

However, Ally’s GM subvented loan and lease originations dropped by 74% to $3.4 billion.

New retail standard loans and leases made up 47% of total loans and leases, compared with 34% a year earlier. Used-vehicle loans and leases made up 36% of originations in 2015, compared with 29% in 2014.

“Ally’s performance in 2015 reflected the fundamental strength and adaptability of our operations and the successful execution of the multi-year plan to improve profitability,” stated Ally CEO Jeffrey Brown. “We exceeded our operational targets for retail deposit growth and auto originations, and we achieved a sustainable return on tangible common equity of more than 9%.”

Greater funding efficiency

Brown continued: “Importantly, the steps we have taken in 2015 position us well for the future. The redemption of the Series G preferred securities paved the way to pursue share repurchases and shareholder dividends. The growth in retail deposits drives greater funding efficiency and stability, and an expanding customer base provides opportunity for broader and deeper relationships”.

“Our auto finance business is more diversified than ever, and our leading presence in the industry enabled us to shift capital from incentivized business toward retail auto contracts and post $41 billion in auto originations last year, which will be a significant contributor toward a consistent earnings stream in the future.”

“Looking to 2016, we are well-positioned to thoughtfully pursue customer expansion opportunities, participate in the ongoing shift toward digital financial services, maintain a keen focus on risk management, and deliver estimated earnings per share growth target of 15%,” Brown concluded.

Ally’s active dealer network increased 5% in 2015 to more than 17,500 dealers, the company said. As a part of that growth, Ally developed financing relationships with Mitsubishi, Aston Martin, McLaren and Beepi, an online car buying platform, in 2015.