Ally Financial Inc., the auto and home lender preparing to go public, reported first-quarter profit fell 9.9 percent as income declined at its two core units.
Net income declined to $146 million from $162 million in the same period a year earlier, Detroit-based Ally said today in a statement. The closely held company is 74 percent owned by the U.S. government after at least three taxpayer-funded bailouts valued at $17.2 billion, and has filed with securities regulators to sell shares to the public, reported Bloomberg.
Chief Executive Officer Michael Carpenter, 64, returned the company to profitability last year by refocusing on auto lending and reducing risk in the mortgage business. Ally, known as GMAC when it was a unit of General Motors Co., is the primary lender to GM and Chrysler Group LLC dealers. It's also among the top five U.S. mortgage originators and servicers.
"While core pre-tax income was lower due to the moderation of certain factors that benefited us last year, we expect profitability to improve over time, as our cost of funds continues to decline, our credit mix becomes more balanced and the original issue discount from bond exchanges runs off," Carpenter said in the statement.
Net income from continuing operations in North American auto finance fell to $518 million in the first quarter from $612 million in the year-earlier period, the company said.
The mortgage business posted a $34 million profit from continuing operations, compared with a gain of $156 million in the first three months of 2010.
Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 13.1 million in March, according to Woodcliff Lake, New Jersey-based researcher Autodata Corp. For the first quarter, GM sold almost 600,000 autos while Chrysler sold almost 300,000, the companies reported.
Ally filed for an IPO in March without setting the size, price and timing. The sale may take place at the end of the second quarter, two people familiar with the matter said in February. Underwriters include Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.
