Ally Financial Q2 EPS rises 22% on asset growth, margin expansion
Ally Financial reported a 22% increase in adjusted EPS to $1.21 for Q2 2026, with adjusted net revenue rising 10% to $2.3 billion. The company achieved an 11 basis point sequential improvement in net interest margin to 3.63% and grew retail auto and corporate finance assets by $8 billion. Ally returned over $300 million to shareholders and increased its CET1 ratio by 20 basis points to 10.1%. The company updated its full-year guidance, projecting asset growth of 3-5% and tightening its consolidated net charge-off range to 1.2-1.3%.
*this image is generated using AI for illustrative purposes only.
Ally Financial reported a 22% increase in adjusted earnings per share (EPS) to $1.21 for the second quarter of 2026, driven by asset growth and margin expansion. Adjusted net revenue rose 10% year over year to $2.3 billion. The company returned over $300 million to shareholders through share repurchases and maintained a strong balance sheet, with the Common Equity Tier 1 (CET1) ratio increasing 20 basis points year over year to 10.1%.
The company's net interest margin (NIM) improved 11 basis points sequentially to 3.63%, supported by disciplined deposit pricing and accretive asset growth. Retail auto and corporate finance assets grew by $8 billion, reflecting a strong dealer-centric approach and record application volumes. Retail deposit balances stood at $144 billion, and the digital bank saw a 7% increase in customer growth.
Financial Performance
Ally Financial's core Return on Tangible Common Equity (ROTC) increased to 11.8%. The company's adjusted other revenue was $573 million, up $42 million year over year, driven by momentum in insurance, SmartAuction, and pass-through programs. Provision expense was $430 million, up $46 million year over year, primarily due to CECL reserve builds associated with strong asset growth.
Adjusted noninterest expense was $1.3 billion, up 5% year over year, in line with expectations. The company recognized a one-time $15 million expense related to the early redemption of its Series B preferred stock, which is excluded from adjusted results.
Segment Highlights
| Segment | Key Metric | Performance |
|---|---|---|
| Dealer Financial Services | Applications | Record 4.6 million, up 17% YoY |
| Dealer Financial Services | Originations | $13.3 billion, up 21% YoY |
| Insurance | Written Premiums | $382 million, up 9% YoY |
| Corporate Finance | Portfolio Size | $13.7 billion, up 25% YoY |
| Corporate Finance | Return on Equity | 32% |
| Digital Bank | Retail Deposit Balances | $144 billion |
| Digital Bank | Customers | 3.6 million, up 7% YoY |
Outlook
Ally Financial updated its guidance for the full year. The company now expects average earning assets to grow 3% to 5%, compared to the previous range of 2% to 4%. The consolidated net charge-off (NCO) range was tightened to 1.2% to 1.3%, down from the prior 1.2% to 1.4% range. Management remains confident in achieving a sustainable upper 3s net interest margin, with the potential to exit the year above the high end of the 3.6% to 3.7% range.
How will Ally Financial sustain its net interest margin expansion if interest rates decline in the second half of the year?
What strategies will the company employ to maintain record application volumes as economic conditions potentially shift?
Is the increase in provision expense indicative of broader credit deterioration, or is it strictly a result of portfolio growth?
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