Ally Financial beats Q2 estimates, shares surge 5% on strong auto finance results

NEW YORK - On Friday, Ally Financial Inc. (NYSE:ALLY) reported second-quarter earnings that exceeded analyst expectations as the company’s auto finance business showed strong performance despite ongoing economic pressures.

The company’s stock was up 5.02% in pre-market trading following the announcement.

The digital financial services company posted adjusted earnings per share of $0.99, significantly above the analyst consensus of $0.81. Revenue reached $2.1 billion, surpassing estimates of $2.04 billion. Net financing revenue remained stable at $1.52 billion when excluding core OID.

Ally’s auto finance segment delivered pre-tax income of $472 million, up $97 million from the previous quarter, driven by seasonally lower losses and stabilization in lease remarketing trends. The company reported retail auto portfolio yield excluding hedge effects of 9.19%, up 8 basis points quarter-over-quarter.

“I am encouraged and energized by the progress we have made as an organization over the first half of the year. Our results demonstrate sound strategic positioning and disciplined execution, contributing to an improving financial trajectory. These results reflect the power of focus from our 10,000+ colleagues and our ongoing commitment to unlocking the full potential of our core franchises," said Chief Executive Officer, Michael Rhodes. "This unified focus strengthens my conviction in the path toward improved returns and long-term shareholder value creation."

Net charge-offs improved significantly to $366 million from $507 million in the first quarter, with the consolidated net charge-off rate declining to 1.10% from 1.50% in the previous quarter. The company maintained a strong capital position with a CET1 ratio of 9.9%.

Ally updated its 2025 outlook, narrowing its retail auto net charge-off forecast to 2.00%-2.15% from the previous 2.00%-2.25% range, while maintaining its net interest margin guidance of 3.40%-3.50%.

The company’s deposit base remained solid at $143 billion, with 88% of its funding coming from deposits. Ally also reported that its corporate finance business delivered a strong 31% return on equity for the quarter.

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