(Adds executive comments, share price)
By Peter Rudegeair
NEW YORK, July 29 Ally Financial Inc
reported a bigger-than-expected quarterly profit on Tuesday as
auto lending jumped 11 percent to the second-highest level in
the company's history.
The former financing arm of General Motors Co said it
had earned $323 million, or 54 cents per share, in the second
quarter. Analysts on average had expected 32 cents a share,
according to Thomson Reuters I/B/E/S.
In the year-earlier period, Ally had a loss of $927 million,
or $2.73 per share, that included a $1.6 billion charge for a
bankruptcy settlement involving its legacy mortgage unit.
Revenue increased 18 percent to $1.3 billion from $1.1
Ally extended $10.9 billion in auto loans in the latest
quarter, up from $9.8 billion a year earlier. Used-car loans
totaled $3.1 billion during that time, a company record.
U.S. regulators have warned that the riskiness of auto
lending has been rising as banks and financial companies have
been easing terms, going after less creditworthy borrowers and
offering loans that exceed the value of the cars they go toward
Ally Chief Financial Officer Chris Halmy told analysts on a
Tuesday conference call that despite aggressive competition, the
company has not sacrificed its lending criteria in pursuit of
There has been "a lot of noise about loosening lending
standards," Halmy said. "We really haven't shifted our risk
appetite over the last two years."
The bank said the share of its auto loans that went to
subprime borrowers was 9 percent in the first half of 2014, the
same level as in both 2012 and 2013.
Income from auto lending rose 21 percent to $461 million
before taxes from $382 million.
Because of harsh hailstorms in the U.S. Midwest, Ally's
insurance business reported weather-related losses of $124
million and an overall loss of $23 million.
Ally's shares were up 0.6 percent at $24.17 in morning
(Editing by Bernadette Baum and Lisa Von Ahn)