Ally Financial Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sanjay Sakhrani - KBW - Analyst : Thank you. Good morning. Michael, maybe first one for you. Just a question on the evolving uncertainty as it relates to tariffs. How do you think it impacts your business?

Question: Sanjay Sakhrani - KBW - Analyst : That's very comprehensive. Russ, just a 2-parter on the NIM. Maybe you could just talk about one, sort of the rate backdrop and how that aligns with your guidance? Like, do you think you can get to the high end of that range given the rate outlook, just what was factored in before and what's factored in now? And then secondly, just talk about the mix of originations you're seeing now and sort of how that plays into the yield dynamics and the competitive backdrop may be?

Question: Jeff Adelson - Morgan Stanley - Analyst : Hey, good morning, thanks for taking my questions. I guess just to circle back on the NIM. I appreciate that you're not giving specific quarterly NIM guidance from here. But just given all the puts and takes we have with card coming off you've done the securities repositioning. It seems like you're saying you're now past the worst of this mix issue on the lease residual side. So I guess just curious if you could maybe speak to what we should be expecting from here maybe in 2Q. It just seems like for the rest of the year, you're still sort of thinking about a $3.4 to $3.55 for the average of the rest of the year. Should we be thinking about second quarter is more flat or up from here? Thanks.

Question: Jeff Adelson - Morgan Stanley - Analyst : Great. And as my follow-up, just on the credit performance. You've seen some really nice stabilization the past few quarters. You've highlighted a lot of the actions you've taken in your collections and mitigation practices. Just kind of as we think about the trajectory to getting back down to 2% or below loss rate, how quickly do you think you can get there? I mean, the delinquency trends in the vintage basis look pretty good. I know the back half of the year is seasonality, but maybe on a seasonally adjusted basis, is there a case for you getting to below 2% by the end of the year?

Question: Robert Wildhack - Autonomous Research - Analyst : Morning guys, Russ, it sounded like you were still willing to unwind curtailment over time. I'm wondering if there's been any change to the absolute or aggregate amount of unwind you'd be willing to consider, given the current environment today? And to the extent that there is, could you just comment on how that might weigh on originated yield and the NIM outlook?

Question: Robert Wildhack - Autonomous Research - Analyst : And then could you just comment on what kind of used car price outlook is embedded in your outlook and your underwriting today and remind us of the sensitivity there should used car prices end up increasing in a big way sometime this year?

Question: Moshe Orenbuch - TD Cowen - Analyst : Great, thanks. Most of my questions actually have been asked and answered. But maybe going back to Sanjay's question about the origination yield. Is there a way to unpack how much of the change is driven by the various different factors. You talked a little bit about premium amortization. Obviously, you've got the benefit from a lower Stier and then other kind of pricing changes. Like is there a way to just unpack those?

Question: Moshe Orenbuch - TD Cowen - Analyst : But it isn't -- you're saying the 5% decrease in the STR was not more than all of that change in the portfolio in the kind of new origination yield?

Question: Moshe Orenbuch - TD Cowen - Analyst : Okay. And maybe you talked a lot about the vintage delinquency. Could you talk a little bit about where the portfolio sits now? Obviously, we have the stuff as of year-end in the 10-K, but can you talk about like where it will sit or maybe perhaps at midyear? And at what point you get kind of that level of increased confidence that enough of that book is kind of in the -- out of the '22 vintage or perhaps even out of the '23 vintage, and you're now concentrated on the '24 and '25 vintages?

Question: John Armstrom - RBC Capital Markets - Analyst : Thanks. Good morning.

Question: John Armstrom - RBC Capital Markets - Analyst : Most of my questions have been asked and answered. I think it's about margin and credit. Those are the two things. But Michael, a bigger picture question for you. You've been in the chair for a while, and the card business has now gone. What are you focused on from a strategic point of view? What are your top couple of priorities from here?