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 Overall, net income fell to $227 million, or 33 cents per share, in
the first quarter ended March 31, from $1.09 billion, or $2.16, from
the first quarter of 2013. But the year-earlier quarter included
more than $1 billion in income from discontinued operations,
including a $900 million gain from the sale of Ally's Canadian
operations.
Excluding the discontinued operations and the impact of certain
items, the company reported core income of $339 million before
taxes, or 64 percent more than the $207 million it reported a year
earlier.
Expenses fell 17 percent to $710 million as the company streamlined
its business by selling some of its non-U.S. operations. Ally's cost
of funds fell 0.55 percentage points as it called around $9.7
billion in legacy debt in the quarter and added $2 billion of retail
deposits, or 17 percent more than a year earlier.
In Ally's main business of making U.S. auto loans, volume fell 5
percent to $9.2 billion in the quarter.
In the past year, Ally's agreements to make loans and leases that
are partly subsidized by automakers Chrysler Group LLC <FIA.MI> and
General Motors Co <GM.N> have expired, which has weighed on loan
volume.
Ally Chief Executive Michael Carpenter told analysts on a Thursday
conference call that the company is making progress diversifying
away from Chrysler and GM. New loans made through non-Chrysler and
non-GM dealers were up 40 percent compared to a year earlier and now
comprise around one-fifth of total loans.
Pre-tax income in the auto finance business was down marginally to
$339 million from $343 million as the lender set aside more funds to
cover potential future loan losses.
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Ally took a step toward exiting government ownership when $2.38
billion worth of its shares held by the U.S. Treasury started
trading on April 10. This reduced the government's stake to 17.1
percent from 36.8 percent.
Reducing the government's stake to zero, which Carpenter had
previously predicted would happen by the end of 2014, would
contribute toward the company reaching its profitability target,
namely a double-digit core return on tangible common equity.
That objective will get a boost in the second quarter when the bank,
after receiving regulatory approval, will start paying dividends to
its parent company. Executives said the dividend will be between $1
billion and $1.5 billion in the quarter.
The company's market debut failed to click with investors as its
shares fell as much as 5 percent on the opening day. The company's
shares have has since traded largely below the listing price of $25.
Ally's shares were down 0.4 percent to $24.06 on Thursday afternoon.
(Reporting by Anil D'Silva in Bangalore and Peter Rudegeair in New
York; editing by Sriraj Kalluvila and Cynthia Osterman)
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