Ally Financial Inc. is focused on its risk adjusted return in auto, according to Diane Morais, chief executive and president of Ally Bank.
“Our approach this year has been to continue to optimize risk adjusted return, we’re doing a little less nonprime, and a little less prime. We’re really kind of focused in the belly of the curve, if you will,” Morais said during the Morgan Stanley Financials Conference today. “We’re seeing our risk adjusted return about 60 basis points higher [on average] through the first quarter, so right now everything is holding up in line with our expectations.”
Amid conversation regarding a weakening in the industry’s overall consumer credit performance, Ally has not experienced any deterioration, according to Morais. “We’re really seeing our fundamentals remain very consistent with our expectations, and we’ve seen no change of any import,” she said.
Although the bank is currently not able to book auto loans to consumers with credit scores below 620, it is in a “constructive dialogue” with regulators to have that restriction lifted, Morais said. “We don’t have a time frame, but we do expect that to eventually be eased,” she said.
Ally Bank is also working on diversifying its overall product offering outside of auto finance, particularly in digital wealth management, in an effort to boost its growing deposit base, Morais said, which in turn could reduce the bank’s involvement in the ABS market.
“Another incredibly important aspect of the online brokerage business are the deposits that come along with it,” she said. “So if we can get additional $2-to-$4 billion of low cost deposits over the next few years that allows us to continue to reduce our capital markets footprint and drive down the company’s funding cost.”
