* Adjusted pre-tax profit $339 mln vs $207 mln a
* Overall net income falls 79 percent to $227 mln
(Adds executive comments, share price move)
By Peter Rudegeair and Anil D'Silva
May 1 Auto-lender Ally Financial Inc,
which went public in April, reported on Thursday a rise in
adjusted quarterly profit as the company cut both its financing
costs and operating expenses.
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
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
and General Motors Co 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.
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
(Reporting by Anil D'Silva in Bangalore and and Peter Rudegeair
in New York; Editing by Sriraj Kalluvila and Cynthia Osterman)