Ally Expects Margin Increase Due to Growth in Consumer Loans

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Ally Financial in Detroit expects its net interest margin to rebound as it takes out more auto and consumer loans.

Jennifer LaClair, chief financial officer of Ally, did not reveal how much she expects the margin to widen during comments made Tuesday at the Barclays Global Financial Services conference, although she said that the number is expected to stand out as a “bright spot” when the $ 184 billion-asset company releases third-quarter results.

Ally’s margin narrowed 26 basis points in the second quarter from a year earlier to 2.40%.

Consumption mounts are expected to double from a quarter earlier, to $ 175 million. Ally’s main line of business – auto loans – remains the headliner, LaClair said. Ally is forecasting $ 9 billion in auto assemblies in the third quarter, with an average return of 7%.

“We are excited about the viability of our business,” said Ally CFO Jennifer LaClair.

Full-year fixtures will be between $ 30 billion and $ 35 billion, she added.

LaClair also had a positive credit quality assessment, noting that about 85% of the 1.3 million coronavirus deferrals he granted to retail auto customers were back at the end of August. .

“We believe the deferral balance weighed on stocks and view the progress on expiry and the strong performance of the deferral accounts as a gradual positive,” Jeffries analyst John Hecht wrote in a note to clients. .

Overall, 30-day defaults made up about 2% of the auto portfolio as of August 31. Payment defaults of 60 days or more totaled 0.4%. Both measurements were significantly lower than a year earlier.

“We are very satisfied with the viability of our business,” said LaClair. “We believe we have answered all the questions about our model.

The growth in consumer lending reported by Ally comes less than a month after announcing a partnership with Mastercard’s Vyze unit that will allow Ally to offer retail point-of-sale loans at rates of 9.99% to 26.99%.

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