UPDATE: This article includes an interview with Ally CFO Russ Hutchinson, another with Truist analyst Brian Foran and quotes from Ally’s second-quarter earnings call.
Ally Financial soared past Wall Street’s expectations in the second quarter. But its auto lending business, the bank’s specialty, still struggled with some tariff-induced hurdles.
“Even as things feel like they’re turning a corner,” Brian Foran, an analyst at Truist Securities, told American Banker, “it just seems like there’s always something getting in the way.”
From April through June 2025, the auto-lending picture at Ally was complex. Income in the company’s automotive finance unit totaled $472 million — up $97 million from the first quarter, but down $112 million from the second quarter of 2024. And the dealer financial services unit, which provides financing to car dealerships, earned $500 million in the second quarter, down $44 million year over year.
One obstacle was the chaos over
The result was that cars spent less time on lots, which in turn meant less need for loans to dealerships — and less profit for Ally.
“It’s not like dealers are hurting. In actual fact, they’re doing pretty well from a profit standpoint,” Foran said. “It’s just that as soon as the car arrives on the lot, it’s back out the door to someone who’s already pre-ordered it.”
Ally Chief Financial Officer Russ Hutchinson acknowledged this predicament, but said it also had positive “side effects.”
“It’s not necessarily a bad thing for us,” Hutchinson told American Banker in an interview. “We actually think it’s kind of a good thing, in that it reflects a healthy consumer and a healthy dealer.”
Foran was skeptical of this point.
“At the end of the day, lower floorplan loans means lower net interest income,” he said.
The news was not all bad for Ally’s auto lending business. The Detroit-based bank reported $11 billion in auto loan originations, driven by 3.9 million consumer applications — a new quarterly record, it said.
“This sustained momentum of application flows speaks to the strength of our dealer relationships and the scale of our franchise, and reinforces our position as the top bank auto lender in the country,” Ally CEO Michael Rhodes said Friday during a call with analysts.
Meanwhile, the bank’s overall earnings surged past Wall Street’s expectations. In the second quarter, net income was $324 million, far outpacing analysts’ average estimate of $242.6 million, according to S&P. It also marked a 70% increase from the same period last year.
Earnings per share came out to $1.04, beating estimates of 77 cents.
Revenue for the quarter rose to $2.08 billion, up 3% year over year and slightly surpassing estimates of $2.04 billion, per S&P.
Read more on bank earnings:
The results were a far cry from this year’s
This was primarily because Ally sold off $2.5 billion of its investment portfolio, in order to ease pressure on underwater bonds and free up capital to buy more liquid securities.
One quarter later, the restructuring appears to have yielded benefits. Much of the growth in revenue during the second quarter, Ally said in its earnings release, was thanks to a $35 million jump in the value of equity securities.
“Ally’s focused strategy is working, and you’re starting to see it in our results,” Rhodes said.
Apart from auto lending, Ally’s other units showed mixed results. The insurance segment took in $28 million in income, up $68 million from the same period last year. But the company’s corporate finance unit earnings fell $13 million year over year to $96 million.
“It’s mostly good news, but with some flies in the ointment,” Foran said.