Ally Financial Inc. sold $1.6 billion of mostly super-prime auto loans in the second quarter, which contributed to a 29 basis-point rise in charge-off rates, an Ally spokeswoman told AFN. Net charge-offs for the quarter rose to 0.94%, from 0.65% in the prior-year period. “The loan sales did contribute to an increase in the charge-off rate, as most of the assets sold were in the super-prime category, which have lower risk and, therefore, lower returns,” the spokeswoman said.
As part of its overall balance sheet management, Ally has so far this year sold $4.1 billion of loans in a combination of whole loan sales and securitizations in the capital markets. “You should continue to expect modest year-over-year increases [in charge-offs], given the mix optimization that has been underway for a while now,” Chief Financial Officer Christopher Halmy said during the company’s earnings call last week. “While we originate across the spectrum, we’re looking at a lot of the super-prime loans, where we don’t see the real profitability, and looking to sell those loans.”
Ally does not operate an originate-to-sell model, but “if we see opportunity to sell some loans to drive returns, we will explore it,” the spokeswoman said, adding that the market “was robust” in the first half of this year.
