With their reputations shedding much unneeded baggage from the credit scandal of 2008 and onward, the financial sector is starting to emerge not only intact, but stronger.
One such outlet is New York-based Ally Financial (NYSE: GOM), which found its first-quarter profit around $1.1 billion U.S. It’s still a gratifying figure, compared to the $310 million U.S. of the prior-year quarter, though still below the heroic $1.4 billion U.S. in the final quarter of fiscal 2012.
One agent of this surge is the U.S. government-controlled auto lender $900-million U.S. gain on the sale of its Canadian operations, while core pre-tax income also climbed.
But all was not sweetness and light: the company reported a core pre-tax loss of $6 million U.S. in the first quarter of 2013, compared to core pre-tax income of $111 million U.S. in the comparable prior year period.
Ally is 74% owned by the U.S. government after receiving $17.2 billion in funds through the Treasury Department's Troubled Asset Relief Program during the financial crisis. The former in-house financing arm for General Motors Co. (NYSE: GM) has been emerging from mortgage misfortunes that dogged its financial results and shed international businesses to repay its bailout.
On Wednesday, Ally said that including dividends and interest, it will have paid about $6.1 billion to the U.S. Treasury as of May 15, reflecting more than one-third of the investment made in the company.
In early April, Ally completed the sale of the majority of its operations in Europe and Latin America to General Motors Financial Company, Inc., a wholly-owned subsidiary of General Motors Co.
Ally received approximately $2.6 billion U.S. in total proceeds, which was comprised of an approximately $2.4-billion U.S. payment at closing and $190 million in dividends paid prior to the closing. So far, international divestments have amounted to $6.7 billion U.S., or about 70% of the proceeds expected from when all this is over and done with.
It’s a harbinger for the lender when its second-quarter bottom line is examined in August.
With approximately $166.2 billion U.S. in assets as of March 31, Ally operates as a bank holding company. Its stock hit a new 52-week high on May 1 at $25.50 U.S., a height to which it returned on Friday, May 3. Its 52-week low is $22.05, to which it fell on June 4 of last year.
