Ally’s Earning Drop as Leases and Loans Shrink

Auto retail lending giant Ally Financial Inc. says its net income fell 6% to $248 million in October-December because of higher expenses and a greater provision for lending losses. Pretax income from continuing operations dropped 12% to $380 million.

Reported net financing revenue for the period slipped 2% to $976 million. Declining used-car values and a shrinking lineup of leasable vehicles ate into financing operations, according to the company.

Ally says used-car deals accounted for 41% of all originations, up four points. The number of lease contracts shrank three points to 8%.

The company wrote $8.2 billion in new leases and loans in the quarter, down 12% from the same period in 2015. General Motors and Fiat Chrysler Automobiles contributed 37% and 27%, respectively, of originations.

For the full year, Ally’s reported net revenue from financing climbed 5% to $3.9 billion. Net income dropped 17% to $1.1 billion compared with 2015, when results were elevated by a one-time gain for the sale of the company’s stake in a Chinese joint venture.