Ally Financial Inc. (ALLY) Earnings & Analysis

Latest quarter

Ally reported Q2 FY2026 revenue of $4.1 billion, compared with $3.9 billion a year earlier, and diluted earnings per share of $1.18, compared with $1.04. Its filing attributed the increase in income from continuing operations primarily to higher financing and other revenue, partly offset by higher expenses and credit provisions.

The filing said higher average earning assets and lower deposit funding costs increased net financing revenue and other interest income. It also said consumer auto loan revenue rose as originations grew and higher-yielding loans replaced maturing assets. Automotive Finance pretax income nevertheless declined, with higher interest expense, provisions and noninterest expense partly offsetting revenue growth.

Ally reported free cash flow of $1.4 billion, compared with $947.0 million a year earlier. The company reported gross margin of 62.8%, compared with 59.1%, and operating margin of 13.2%, compared with 11.2%.

For the later quarter ended September 30, 2026, Ally’s adjusted EPS was $1.34 against a $1.32 consensus. Revenue was 2.32% above consensus, although reported revenue and the estimate both rounded to $2.3 billion.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q2 call, CEO Michael Rhodes said auto applications and originations increased from a year earlier, while approval and pull-through rates were maintained. CFO Russell Hutchinson said Ally had aligned dealer rewards and its commercial strategy to encourage dealers to send more applications. Hutchinson said the resulting flow lets Ally target originations while managing yield and credit.

Hutchinson said the mix of auto originations shifted toward higher-credit-quality borrowers during the quarter, reflecting seasonality and Ally’s measured credit posture. Asked about the effect on pricing and margin, he said pricing increased within comparable segments, although the change in mix outweighed that increase in the overall originated yield. He said Ally expected the S-tier share to move lower over time and that the mix could support originated yield independently of benchmark rates.

On funding, Hutchinson said lower deposit costs drove much of the sequential improvement in net interest margin. He said deposit-pricing changes still had an effect to come and that maturing certificates of deposit were rolling into liquid deposits or other certificates at lower rates. Over a longer period, he said lower-yielding mortgages and mortgage-backed securities were rolling off as Ally grew its auto and corporate finance portfolios.

Asked about credit, Hutchinson said consumer affordability and gasoline prices remained issues and that Ally was watching delinquencies, total loss rates and used-vehicle prices. Rhodes said some consumers were deciding month by month how and what to pay, and that tax refunds had less effect on delinquency than Ally had expected.

Hutchinson said higher-than-expected retail originations led to additional credit-reserve builds. On capital allocation, he said Ally intended to support business growth and its dividend before repurchases, but did not give a volume for future repurchases.

Guidance

On the Q2 call, Hutchinson said Ally raised its expected growth range for average earning assets, citing consumer auto originations and corporate finance growth. He also said Ally narrowed its expected range for consolidated net charge-offs from the range shared in January, while retaining the same lower bound.