Ally Financial Inc Q4 2024 Earnings Call Summary

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

Question: Ryan Nash - Goldman Sachs - Analyst : Hey, good morning, everyone.

Question: Ryan Nash - Goldman Sachs - Analyst : So Russ, maybe to start on credit. You highlighted the better-than-expected performance in the fourth quarter due to a handful of items like recoveries, flow to loss. And if I think about the fourth quarter loss rate, it feels like you're at or slightly below a 2% seasonally adjusted loss rate. When I look at the slides, slide 12, you show the problem vintages are becoming smaller. The new ones are outperforming. You've continued to move up in a tier. So I guess my question is, given the guide of 2% to 2.25%, just how do you see -- and I know you gave a lot of color when you were going through them. But how do you see losses progressing? And could we actually exit the you're at a level that is below that 2% seasonally adjusted loss rate?

Question: Ryan Nash - Goldman Sachs - Analyst : Got it. And then maybe as my follow-up, a two-part question. Post the sale of the card business, I think you highlighted 40 basis points of capital. And even with CECL day 1, it should put you above 10%. And I know in your remarks, Russ, you talked about a handful of potential uses, growth. And then you talked about securities restructuring. So my first question, can you maybe just give more color in terms of like what the size and parameters of a restructuring could be? And then post the sale of the card, Russ,, you talked about being positioned for a sustainably higher NIM. Do you still believe Ally is a 4% NIM company? And what are the drivers to getting there? And if not, what do you think the more normal NIM of the company is?

Question: Ryan Nash - Goldman Sachs - Analyst : I'm at a follow up. So thank you, Russ.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods. - Analyst : I heard, Russ, you talked about some of the movements in the originated yield this quarter and expecting to reprice higher. I'm just curious, how much of this is just sort of the selection of consumers you're getting versus competition? I know like Capital One is coming back into the market, some other banks have talked about. Maybe you can just talk about the competitive dynamics.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods. - Analyst : And you're not --

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods. - Analyst : Got it. And then just a follow up question to the previous line of questioning in terms of all these different moves that you made. I know Russ, you kind of reiterated the midteens ROTC target. But as far as like timing, does that change anything because like, obviously some of these NIM -- the NIM impacts from the EV credits are immediate and they come back over time. I'm just curious as we think about timing of achieving them, does that pushed it out in any way?

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods. - Analyst : Thank you.

Question: Robert Wildhack - Autonomous Research US LP - Analyst : Morning guys. I wanted to unpack some of your comments around unwinding curtailment actions. All else equal, I mean, how much of a benefit do you think that is to the originated yield? And then what's the primary driver behind that decision, given some of the volatility around credit in the past, it sounds like you're still being reasonably conservative with respect to the macro going forward, too. I'm wondering why not keep the pedal down on the S-Tier volume.

Question: Robert Wildhack - Autonomous Research US LP - Analyst : Okay. And then we know that the EV lease accounting change benefits the NIM. I was wondering if there was any way you could give some more context to that. Could you comment on what the 2025 NIM guide would have been had you not made the accounting change?

Question: Robert Wildhack - Autonomous Research US LP - Analyst : Yeah,. okay, appreciate the color there. Thank you.

Question: Moshe Orenbuch - TD Cowen - Analyst : Thanks. Wanted to dig in a little bit on some of the mitigation actions that you were talking about, Russ. Could you just give us a little more detail as to what you did that kind of allowed for those low flow through rates in the quarter and what that might mean REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 2:00PM, ALLY.N - Q4 2024 Ally Financial Inc Earnings Call as you go forward to those borrowers have a period of time where they've got to perform. Like how should we think about that? Thank you.

Question: Moshe Orenbuch - TD Cowen - Analyst : Got it. Very helpful. As a follow-up, you talked about capital allocation towards growth in the business. The guidance that you gave for 2025 includes kind of flat earning assets. Just talk a little bit about your thoughts about, number one, like what is the NIM impact in '25 of the mix upgrade? And secondly, like, when would you be more comfortable allowing earning assets to grow within that capital plan?

Question: Mark DeVries - Deutsche Bank - Analyst : Thank you, Russ. I was hoping you could provide some of the same context around the NIM guidance in terms of what gets you to the high and low end of the range that you provided around the charge off guidance?