Ally Financial’s Q3 Earnings Report Coming Frida

Ally Financial Inc ALLY will release its third-quarter earnings on Friday before the market opens. Investors are keen to hear about the company’s credit issues.

In September, CFO Russell Hutchinson mentioned at a New York event that the company is experiencing increased problems with borrowers in its auto lending business.

With delinquencies and charge-offs higher than expected, tomorrow’s earnings report is crucial for understanding its financial impact in Q3.

Key Facts: In Q2, Ally’s total revenue was $2.08 billion, down 1.6% from the previous year, affected by inflation and high interest rates. Its net income dropped 58% to $327 million due to rising loan losses, reaching $490 million in provisions for credit losses. The net interest margin decreased from 4.03% to 3.39%.

Ally’s auto lending business has been under pressure, with Q2 auto originations at $10.7 billion, down from $13.3 billion last year. The delinquency rate for retail auto loans rose to 3.81% from 3.53%.

Future Outlook: Trends have worsened heading into Q3. Delinquencies in the auto segment rose by 20 basis points, and charge-offs increased by 10 basis points, mainly due to inflation and a weakening job market. Hutchinson highlighted these issues as major risks for the company.

Ally’s stock has been unstable as concerns about loan losses and general economic conditions increase, particularly after last month’s disappointing jobs report and uncertainty around Federal Reserve policies.

While Ally hasn’t changed its earnings guidance, management is focused on capital and expense management to handle these challenges.

Analysts are looking closely at Ally’s Q3 results for any signs of credit metric deterioration and potential changes in forward guidance.

Investing in ALLY Stock: To buy Ally Financial shares, you’ll need a brokerage account. Many platforms offer fractional shares, allowing you to invest without buying a full share; for instance, you can purchase 2.78 shares of Ally at $35.93 for $100.

If you’re interested in betting against the stock, you’ll need access to an options trading platform. You can short the stock or buy put options to profit from a price decline. Ally Financial’s 52-week high is $45.46, and its low is $22.54.