Ally Financial Inc. reported Wednesday that its third-quarter net income jumped sharply on gains in its automotive lending business.
The company, based in Detroit, is the former finance arm of automaker General Motors, but now operates as a standalone auto finance company and bank after a major bailout by the government during the financial crisis. The company had an initial public offering of shares in April.
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Ally reported net income of $423 million, or 74 cents per share, for the most recent quarter. It earned $91 million, with a loss of 27 cents per share, last year. On an adjusted basis it earned 53 cents per share versus 42 cents per share last year.
Analysts polled by FactSet were anticipating earnings of 42 cents per share.
The company's gains were driven by its automotive finance business, which makes up the bulk of its revenue. Net auto financing revenue increased 6 percent year-over-year to $415 million.
Its insurance business posted pretax income of $60 million, down from $83 million a year ago, largely because of a $21 million decrease in underwriting income tied to weather-related losses. Its mortgage business posted a pre-tax loss of $3 million versus $5 million a year ago. And retail deposits for its banking business grew 12 percent year-over-year to $46.7 million.
Ally was nearly wrecked years ago by bad subprime mortgages tied to one of its business units and received a $17.2 billion from the U.S. government at the height of the financial crisis. The company has since transformed itself into a company focused on U.S. auto lending and banking and the U.S. government sold most of its stake in the company in its IPO.
Shares of Ally increased 39 cents, nearly 1.8 percent, to $22.60 by midday Thursday, amid a broader market dip.