Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2018 Earnings Presentation
31 slides from Ally Financial's earnings presentation, Apr 26, 2018
Slide 1: Ally Financial Inc. 1Q 2018 Earnings Review
Ally Financial Inc. 1Q 2018 Earnings Review April 26, 2018 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
Forward-Looking Statements and Additional Information This presentation and related communications should be read in conjunction with the financial statements, notes, and other information contained in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Slide 3: GAAP and Core Results - Quarterly
GAAP and Core Results - Quarterly ($ millions except per share data) 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 GAAP net income attributable to common shareholders ("NIAC") $ 250 $ 181 $ 282 $ 252 $ 214 (1)(2) Core net income attributable to common shareholders $ 300 $ 310 $ 292 $ 265 $ 224 GAAP earnings per com
Slide 4: First Quarter Highlights
First Quarter Highlights ➢ Adjusted EPS(1) of 68 cents – up 42% YoY ➢ Adjusted total net revenue(1) of $1.46 billion – up 5% YoY ➢ Consumer auto originations of $9.5 billion – record Used volume ➢ Retail auto portfolio yield up 24 bps YoY while net charge-off rate down 7 bps YoY ➢ Retail deposit gro
Slide 5: Core Metric Trend
Core Metric Trend Adjusted Earnings per Share(1) Adjusted Total Net Revenue(2) ($ millio ns) $0.70 $0.68 $1,492 $1,472 $1,480 $0.65 $1,463 $0.58 $1,399 $379 $0.56 $1,383 $1,391 $388 $381 $0.54 $0.54 $1,372 $394 $0.52 $0.51 $0.52 $0.52 $1,353 $1,344 $0.46 $0.48 $1,301 $1,313 $388 $1,295 $374 $392 $39
Slide 6: First Quarter Financial Results
First Quarter Financial Results ($ millions except per share data) Increase / (Decrease) vs. 1Q 18 4Q 17 1Q 17 QoQ YoY Net financing revenue (excluding Core OID) (1) $ 1,069 $ 1,113 $ 995 $ (44) $ 73 Net financing revenue (as reported) 1,049 1,094 979 (45) 70 (2) 394 379 396 15 (2) Other revenue (ex
Slide 7: Net Financing Revenue
Net Financing Revenue • Net financing revenue (excluding Core OID)(1) of $1,069 million up $73 million YoY driven by asset and deposit growth and liability mix shift − NIM of 2.64%; NIM (excluding Core OID)(1) of 2.69% up 5 bps YoY • Net financing revenue (excluding Core OID)(1) declined QoQ due pri
Slide 8: Deposits
Deposits • Retail deposits growth of $3.7 billion – record for Ally Stable, consistent growth of retail deposits for a first quarter Deposit Levels (EOP) ($ billions) − YoY growth of $11.7 billion $93.3 $97.4 $90.1 $84.5 $86.2 $15.8 $15.3 • Cumulative retail portfolio beta of 21% since 3Q 15 $14.5 $
Slide 9: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of 9.2% Capital Ratios(1) and Risk-Weighted Assets − 6 bps impact to CET1 from recently adopted 12.8% 13.2% 12.9% 12.7% 12.5% accounting standards 11.4% 11.2% 11.1% 11.1% 11.0% 9.3% 9.4% 9.6% 9.5% 9.2% − Earning assets increased 2x RWA growt
Slide 10: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 1.01% Provision Expense 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 0.88% 0.86% 0.85% 0.84% 0.75% Retail Auto $ 275 $ 267 $ 260 $ 314 $ 286 $ 253 0.66% 0.54% Commercial Auto - 1 6 (2) 2 6 Mortgage Finance (8) 1 1 4 2 2 Corporate Finan
Slide 11: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $268 million in Increase/(Decrease) vs. 1Q, down $20 million YoY and down $17 million QoQ Key Financials ($ millions) 1Q 18 4Q 17 1Q 17 Net financing revenue $ 909 $ (30) $ 17 – Net financing revenue up YoY due to higher retail assets
Slide 12: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.1 $9.5 $8.9 $8.6 41% 42% $8.2 $8.1 48% 47% 45% 50% 40% 39% 44% 36% 41% 40% 8% 11% 14% 10% 13% 11% 27% 28% 30% 29% 26% 28% 50% 44% 44% 42% 40% 39% 37% 32% 30% 32% 32% 30% 4Q 16
Slide 13: Insurance
Insurance • Pre-tax income of $27 million Increase/(Decrease) vs. Key Financials ($ millions) 1Q 18 4Q 17 1Q 17 • Core pre-tax income(1) of $62 million up $22 million Premiums, service revenue earned and other $ 262 $ 5 $ 18 YoY and down $18 million QoQ Losses and loss adjustment expenses 63 9 (25)
Slide 14: Corporate Finance
Corporate Finance • Pre-tax income of $29 million Increase/(Decrease) vs. • Core pre-tax income(1) of $34 million up $9 million YoY Key Financials ($ millions) 1Q 18 4Q 17 1Q 17 Net financing revenue $ 46 $ - $ 12 and up $2 million QoQ Total other revenue (adjusted) (1) 13 1 (5) (1) – Net financing
Slide 15: Mortgage Finance
Mortgage Finance • Pre-tax income of $8 million, down $1 million YoY Increase/(Decrease) vs. and up $6 million QoQ Key Financials ($ millions) 1Q 18 4Q 17 1Q 17 Net financing revenue $ 43 $ 9 $ 9 – Higher net financing revenue YoY and QoQ driven Total other revenue 1 - 1 by asset balance growth from
Slide 16: 2018 Outlook
2018 Outlook 2018 Target (1) Adjusted EPS growth (YoY) 20 - 30% (1) Core ROTCE 10.5 - 11.5% (1) Net financing revenue (excld Core OID) up 3 - 6% (1) Other revenue (excld change in fair value of equity securities) relatively flat Provision expense flat to down 10% Noninterest expense up 4 - 6% Retail
Slide 17: Conclusion
Conclusion ➢ Continued execution along strong earnings growth path ➢ Auto finance business optimizing retail auto returns ➢ Strong customer growth supports the long-term strategic path ➢ Deposit growth provides structural support for long-term earnings growth path ➢ Focused on building scale in prod
Slide 18: Supplemental Charts
Supplemental Charts
Slide 19: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 1Q 18 4Q 17 1Q 17 4Q 17 1Q 17 Automotive Finance $ 268 $ 285 $ 288 $ (17) $ (20) Insurance 27 80 40 (53) (13) Dealer Financial Services $ 295 $ 365 $ 328 $ (70) $ (33) Corporate Finance 29 32 25 (3) 4 Mortgage Financ
Slide 20: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 84% up 9 pts YoY Growth in Bank Funded Assets • Deposits at 64% of total funding (ex Core OID balance) ($ billions) up 6 pts YoY $164.3 $164.0 $167.1 $170.0 $162.1 • $3.1 billion of new secured funding in 1Q 18 – $2.1 billion retail aut
Slide 21: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. asset and liability management, corporate overhead Key Financials ($ millions) 1Q 18 4Q 17 1Q 17 Net financing revenue $ 39 $ (21) $ 35 allocation activities, the legacy mortgage portfol
Slide 22: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 1Q 18 4Q 17 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous -100 bp $ (39) $ (88) $ (22) $ 15 +100 bp $ (4) $ (51) $ (18) $ (106) Stable rate environment n/m $ (30) n/m $ (14) (1) Ne
Slide 23: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 1Q 18 (1) 4Q 17 1Q 17 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Balance Net Operating Loss (Federal) $ 274 $ - $ 274 $ 302 $ 848 Tax Credit Carryforwards 1,998 (983) 1,015
Slide 24: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures The following are non-GAAP financial measures which Ally believes are important to the reader of the Consolidated Financial Statements, but which are supplemental to and not a substitute for U.S. GAAP measures: Adjusted Earnings per Share (
Slide 25: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 1Q 15 Numerator ($ millions) GAAP net income attributable to common shareholders $ 250 $ 181 $ 282 $ 252 $ 214 $ 248 $ 20
Slide 26: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 1Q 15 Numerator ($ billions) GAAP shareholder's equity $ 13.1 $ 13.5 $ 13.6 $ 13.5 $ 13.4 $ 13.3 $ 13.6 $ 13
Slide 27: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 Numerator ($ millions) GAAP net income attributable to common shareholders $ 250 $ 181 $ 282 $ 252 $ 214 Discontinued operations, net of tax 2 (2) (2) 2 (1
Slide 28: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 Numerator ($ millions) GAAP noninterest expense $ 814 $ 769 $ 753 $ 810 $ 778 Rep and warrant expense 0 0 0 0 0 Insurance expense (231) (213) (218) (280) (239) Adjusted noninterest e
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Regulatory Capital - Basel III transition to fully phased-in ($ billions) 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 Numerator Common equity tier 1 capital (transition) $ 13.1 $ 13.2 $ 13.2 $ 13.1 $ 12.9 DTAs arising from NOL and tax credit carryforward
Slide 30: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) 1Q 18 4Q 17 1Q 17 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP
Slide 31: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Original issue discount amortization expense QUARTERLY TREND ($ millions) 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 1Q 15 Core original issue discount (Core OID) amortization expense (1) $ 20 $ 19 $ 18 $ 17 $ 1