Ally Financial is reporting a 2017 net income of $929 million, compared to $1,037 million in the prior year. Results were impacted by a $119 million charge to net income largely due to a revaluation of Ally’s net DTA in the fourth quarter of 2017, as well as a $98 million tax benefit in the second quarter of 2016 from a tax reserve release.
Further, increased net financing revenue was offset by higher noninterest expense and provision for loan losses, as Ally invested in establishing new businesses and growing existing businesses while shifting to originate a more profitable auto loan portfolio mix, which has now largely normalized.
“In 2017, we successfully continued down our strategic and financial path to becoming the leading digital financial services company and delivering strong earnings growth,” said Jeffrey Brown, Ally’s CEO. “Operationally, we navigated shifting dynamics within the auto industry with a strong focus on credit discipline and delivering improving risk-adjusted margins. We made progress expanding our consumer and commercial product offerings across mortgage, wealth management and corporate finance and look to build scale in the coming years. Ally Bank had a record year, increasing retail deposits by $11.3 billion while adding nearly 200 thousand customers.”
Net financing revenue, including $71 million of OID expense, improved to $4.2 billion, up $314 million from the prior year, driven by the expansion of retail loan and commercial margins, higher asset balances and strong deposit growth more than offsetting a decline in net lease revenue.
Other revenue was $1.5 billion for 2017, up $14 million over the prior year.
Provision for loan losses increased $231 million over 2016, due to the deliberate shift to originate a more profitable full credit spectrum portfolio mix as well as higher loan balances and additional reserves associated with the hurricanes experienced in the third quarter of 2017.