Ally Financial (ALLY) Management Meeting Highlights 3%NIM and Possible Upcoming Share Repurchase - Credit Suisse

Credit Suisse analyst Moshe Orenbuch reiterated an Outperform rating and $34.00 price target on Ally Financial (NYSE: ALLY) after meeting with the company's CFO, Jennifer LaClair who confirmed reiterated that the company expects 3% NIM in the near-term as the retail auto portfolio’s
yield grinds upward. Additionally, fresh origination yields have been strong, coming on at ~7% through 2Q despite being slightly lower in Q3. The retail yield dynamic will stabilize total asset yields while liability costs decline. CDs continue to roll off, some above 2%, and are being replaced by CDs at sub 1% rates. Management also highlighted that deposit costs fell faster than expected, which was different than the prior cycle, and deposit costs should rise slower if rates increase allowing for improved margins.

The analyst stated that the company hopes to begin repurchases in January 2021 pending regulatory approval. He stated "Personal vehicle ownership is increasing due to COVID-19 and Ally has seen this continue into 4Q20. Ally has maintained focus on the 620-719 FICO segment where they don’t see as much competition as in super prime and prime. Regarding other FICO bands, they curtailed some subprime lending at the beginning of 2020, and reallocated to certain prime pockets. The strong focus on the dealer as well as some of the partnerships (discussed below) have helped the company grow originations at higher risk adjusted returns. The company has focused more on returns than absolute growth, which has also helped NIM".

For an analyst ratings summary and ratings history on Ally Financial click here. For more ratings news on Ally Financial click here.

Shares of Ally Financial closed at $30.71 yesterday.

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