Ally Q3 2026 Earnings Rise as Net Interest Margin Expands

Ally Financial (NYSE: ALLY) reported higher third-quarter earnings and revenue as net interest margin expanded, offsetting a larger provision for credit losses and weaker profit in its auto-finance business. The company also issued a revised 2026 outlook that it said reflected confidence in achieving or exceeding its targets.

GAAP net income attributable to common shareholders rose to $401 million from $371 million a year earlier. GAAP earnings per share increased 10% to $1.30, while adjusted EPS climbed 16% to $1.34. Core net income attributable to common shareholders was $412 million, compared with $363 million in the prior-year quarter.

GAAP total net revenue increased to $2.33 billion from $2.17 billion, while adjusted total net revenue rose 9% to $2.35 billion. Net financing revenue grew by $164 million year over year to $1.75 billion. Excluding core original issue discount amortization, net financing revenue was $1.77 billion.

Net interest margin excluding core OID reached 3.66%, up from 3.55% a year earlier and 3.63% in the second quarter. Ally attributed the margin expansion to accretive balance-sheet growth and disciplined deposit pricing. Average earning assets increased to $191.7 billion from $178.7 billion a year earlier, while the average cost of deposits declined to 3.12% from 3.50%.

Profitability and operating efficiency also strengthened. Core return on tangible common equity rose to 13.1% from 12.3%, and the adjusted efficiency ratio improved to 45.7% from 50.0%. Adjusted noninterest expense was $1.24 billion, down slightly from $1.24 billion a year earlier and $1.32 billion in the previous quarter.

Credit costs rise with asset growth

The provision for credit losses increased to $529 million from $415 million a year earlier, including a $106 million reserve build. Net charge-offs were $423 million, compared with $395 million in the third quarter of 2025, while the consolidated net charge-off rate edged down by one basis point to 1.17%.

Retail auto credit indicators were mixed. The retail auto net charge-off rate was 1.89%, up one basis point year over year. The all-in 30-day delinquency rate rose to 4.96% from 4.90%, while the 90-day delinquency rate declined to 0.49% from 0.50%. Ally said the macroeconomic environment remained fluid and continued to warrant underwriting and pricing discipline.

Auto growth accompanied by lower segment profit

Automotive Finance pre-tax income fell to $337 million from $421 million a year earlier, as its provision expense increased by $101 million to $511 million. Ally said the higher provision reflected a current expected credit loss reserve build associated with strong quarterly asset growth and stabilizing credit trends.

Consumer auto originations rose by $1.2 billion year over year to $12.9 billion. Applications increased 20% to a record 4.8 million, and passthrough originations exceeded $1 billion during the quarter. The estimated retail auto originated yield was 9.44%, while S-tier loans represented 44% of originations, down from 47% in the second quarter.

U.S. auto earning assets ended the quarter at $125.6 billion, up $10.2 billion from a year earlier. Retail auto and Corporate Finance loans together increased 12% year over year.

Insurance generated $80 million of GAAP pre-tax income and $75 million of core pre-tax income. Earned premiums were $369 million, up $5 million, while written premiums increased 1% to $388 million. Insurance losses declined by $6 million to $135 million, and the combined ratio improved to 98.6% from 102.6% a year earlier.

Corporate Finance reported pre-tax income of $98 million, up from $95 million. Held-for-investment loans grew to $15.8 billion from $11.3 billion, with the portfolio consisting entirely of first-lien, floating-rate loans. The segment generated a 22% return on equity, while criticized assets represented 8% of the portfolio and non-accrual loans remained below 1%.

Corporate and Other, which includes Ally Invest and Mortgage, recorded pre-tax income of $52 million, compared with a loss of $82 million a year earlier. Net financing revenue doubled to $256 million, while total assets declined by $3.3 billion to $53.5 billion, including a $1.6 billion reduction in mortgage held-for-investment assets.

2026 outlook and capital position

For 2026, Ally expects net interest margin excluding core OID of 3.60% to 3.65%. The company forecasts average earning assets to increase 5% to 6%, adjusted other revenue to grow 2% to 4%, and adjusted noninterest expense to range from flat to 1% higher.

Management expects the retail auto net charge-off rate to be 1.8% to 2.0%, tracking toward the midpoint, and the consolidated net charge-off rate to be 1.2% to 1.3%, tracking toward the lower end. The projected tax rate is 20% to 22%.

Ally ended the quarter with a common equity Tier 1 ratio of 10.2%, including $4.9 billion of CET1 capital above its 7.1% Federal Reserve requirement. The company completed a $6 billion auto credit-risk transfer transaction that generated about 25 basis points of capital at issuance and repurchased $178 million of shares. It declared a fourth-quarter common dividend of $0.35 per share.

Retail deposit balances totaled $142 billion, with 92% insured by the Federal Deposit Insurance Corp. Deposits accounted for 86% of funding, while available liquidity was $61.2 billion, equivalent to 5.2 times uninsured deposits.

Ally cautioned that its outlook remains subject to economic conditions, interest rates, inflation, fiscal and monetary policy, vehicle demand and values, balance-sheet composition, strategic initiatives, and the impact of tariffs and other trade policies. The company also noted that ratings downgrades or ratings that fail to meet investor expectations could raise borrowing costs or restrict access to capital markets.