Ally Financial Inc. reported first-quarter net income of $655 million on Thursday. That’s an 18% drop from where the company is today a year ago.
Among the quarterly highlights, company officials said, were $1.7 billion in direct-to-consumer mortgages, which was relatively flat year-over-year given the contraction in the overall mortgage market. . Ally Bank’s existing deposit customers accounted for 37% of direct-to-consumer origination volume in the quarter.
However, pre-tax mortgage finance income fell 52% to $11 million.
Overall, Ally officials said investors can expect a return on investment of 16% to 18% and continued growth for the business through the introduction of new products, including mortgage loan services.
Company officials added that Ally had factored an expected recession over the next two years into its reserves and was preparing for a 6.5% unemployment rate in 2023.
During the earnings call, officials at the Detroit-based company said Ally hit a record 52 consecutive quarters of retail deposit growth and added four new states to its market, which now has 46 states. and Washington DC.
Company officials said net financing income was $1.69 billion, up $321 million year-over-year, due to lower financing costs and continued strength in automotive prices and origination volumes, and partially offset by lower balances in the commercial automotive portfolio.
The company primarily focuses on auto loans. Pretax auto finance income fell 10% to $725 million.
Other income decreased $123 million year over year to $442 million, largely due to a $66 million decline in the fair value of equity securities in the quarter, compared to a $17 million increase in the fair value of equity securities in the prior year quarter . Adjusted other income, excluding change in fair value of equity securities, was down $41 million year-over-year to $508 million due to strong investment gains over the previous year, Ally officials said.
“Ally delivered another quarter of strong financial and operational results in a rapidly changing market environment,” said Jeffery J. Brown, CEO of Ally. “The first quarter results included record net financing income for the seventh consecutive quarter and a basic return on tangible equity of nearly 24%.”
Brown said the company’s success is underpinned by years of strategic positioning in established automotive and banking franchises, as well as growing momentum in its new consumer businesses.
“While the operating environment continues to be dynamic, I remain confident in the businesses we have built and our ability to navigate and add value in a variety of market contexts,” he said. . “Ally will continue to leverage the strengths of our market-leading positions within automotive finance and Ally Bank to deepen and strengthen relationships with our growing customer base, which now numbers over 10.5 million customers.”