Ally Financial Inc. shares experienced a notable surge of 2.91%, closing at $39.57 on October 17, 2025, following the release of their stronger-than-expected third-quarter earnings report.
The financial services firm showcased impressive profit growth, primarily attributed to a rise in retail auto originations and enhanced credit quality. Their steady financial performance reflects not only a persistent consumer demand but also disciplined cost management, vital in today’s competitive market.
Earnings Beat Driven by Higher Profit and Strong Margins
In the latest quarter, Ally reported a substantial profit of $371 million, a significant leap from $171 million in the same period last year. This translates to a 116% increase in GAAP earnings per share, which soared to $1.18. Adjusted earnings also stood at a strong $1.15 per share, indicating a robust recovery in the firm’s core profitability. Total net revenue reached an impressive $2.2 billion, underscored by a core return on tangible common equity of 15.3%.
Pre-tax income witnessed a healthy increase to $513 million, showcasing an improvement of $248 million year-over-year. Despite a slight drop in net financing revenue to $1.3 billion due to decreased lease gains and commercial assets, a reduction in the provision for credit losses to $410 million (down $169 million from the previous year) significantly bolstered overall profitability.
The yield on Ally’s retail auto portfolio, excluding hedges, rose by 22 basis points to 9.21%, reflecting the impact of higher-yielding vintages. Additionally, the net charge-off rate improved to 1.88%, a 36-basis-point reduction compared to the prior year, highlighting the firm’s effective risk management and enhanced credit stability.
Auto Originations and Deposit Growth Strengthen Core Business
Ally originated $11.7 billion in consumer auto loans during the quarter, a slight increase from $11.5 billion in the previous year. Notably, used retail loans constituted 60% of the total, with 42% of originations falling within the highest credit tier. Retail auto earning assets grew to $93.6 billion, demonstrating consistent portfolio expansion.
The insurance segment also contributed to Ally’s strong performance, reporting pre-tax income of $79 million, although slightly lower due to valuation changes in equity securities. Core insurance income saw an improvement to $52 million, driven by higher investment returns, while written premiums remained stable at $385 million year-over-year.
Retail deposits climbed to $141.8 billion, reflecting a $0.4 billion annual increase, despite a minor quarterly decline. The company successfully added 44,000 new customers, bringing the total to 3.4 million, and maintained an impressive 88% core deposit funding ratio, indicative of strong liquidity and customer retention.
Capital and Liquidity Support Future Growth
Ally reported a common equity tier 1 ratio of 10.1%, indicating improved capital strength. Notably, the company’s credit risk transfer program contributed an additional 20 basis points to CET1 during the quarter. Total cash and securities amounted to $29.4 billion, while total liquidity stood at a robust $66.6 billion.
Continuing its commitment to shareholder returns, Ally declared a quarterly dividend of $0.30 per share, consistent with previous payouts, while opting not to repurchase shares in favor of maintaining balance sheet resilience. With steady retail deposit growth and solid credit metrics, Ally is reinforcing its position in the consumer finance landscape.
As Ally Financial continues to navigate a competitive market landscape with rising profitability, stable credit trends, and expanding auto originations, it is well-positioned to enhance its core operations and deliver sustainable value to its shareholders.
