Ally Financial Inc.’s auto originations fell 13% to $9.4 billion for the second quarter, versus $10.8 billion at the same time a year prior, according to the bank’s earnings released today.
While there are some smaller verticals within the auto industry that could yield further growth, such as commercial services and other transportation finance opportunities, the size of Ally’s footprint in auto is “about as big as it gets,” Chief Executive Jeffery Brown said on the company’s earnings call.
“We’re comfortable originating in this $36 to $40 billion range, on an annual basis,” Brown said. “But I don’t think that, absent something strategic, you’d expect something much broader than that on the auto side.”
Net charge-offs rose to 0.94% in the second quarter, from 0.65% the same time a year prior. Halmy attributed the increase to the company’s sale of super-prime assets, while retaining loans with lower credit scores and higher losses.
“As we generally sell lower yielding, but lower loss loans, these loan sales have contributed to raising the charge-off rate on auto loans,” Halmy said.
The bank plans to hold a special conference call next week to discuss consumer credit quality, but Halmy assured analysts on today’s call that Ally is not seeing any cause for concern. “We watch the U.S. consumer very closely, we watch early warning indicators very closely, and we see a very healthy U.S. consumer,” he said.
Ally later today will releases details on next week’s call.
Ally stock [ticker: ALLY] is trading 1.25% higher today, as of 1:36 pm ET.
