Ally's Portfolio Grows Amid Decline in Losses | Auto Finance News | Auto Finance News

Ally’s Portfolio Grows Amid Decline in Losses

Ally’s Detroit Center (Via Ally Press Room)

Ally Financial’s net charge-off rate decreased by the largest margin since the company’s IPO in 2014 while the bank’s auto originations grew by double digits, the company stated in its 2Q18 earnings report.

The net charge-off rate for the second quarter was 1.04% of the total portfolio, down 16 basis points compared to the same time the year prior.

Meanwhile, Ally’s auto origination grew to $9.6 billion, up 11% compared with $8.6 billion the same period the year prior. This includes $4.9 billion of used-retail volume, $3.4 billion of new-retail volume, and $1.2 billion of leases.

The lender attributes the increase in auto loans to a strategy that began roughly two years ago of lending to a larger full-spectrum credit band. For example, the industry average for used FICO is 650, but Ally’s average is 680 resulting in originations at a tighter risk range, Chief Executive Jeffrey Brown said on the call. 

“Our success in diversifying and optimizing the auto finance business helped drive higher risk-adjusted returns, with retail auto portfolio yield increasing 28 bps year-over-year,” Brown said in a press release. “Additionally, consumer originations increased by $1.0 billion versus the prior year period as we continued to diversify and grow our dealer relationships.”

Delinquencies 60 days or more remained relatively flat, growing to 0.49% from 0.47% the previous year.

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