Ally Financial Corp. (Ally) lauded its decision to move away from mortgage servicing and the home loan side of the business in its recent third-quarter earnings report, which clearly shows the financial firm more profitable when compared to year ago levels.
Ally attributes this increase in earnings partly due to the success of focusing on its core auto finance business.
The company posted a profit of $384 million in the third quarter of 2012, down from a net loss of $210 million a year earlier. Part of this earnings lift comes from a pre-tax income of $559 million, compared to a core pre-tax loss of $752 million a year earlier.
The company’s core auto financing business is proving to be a solid bet for Ally, according to the firm’s earnings report.
“The U.S. auto finance franchise continued to produce strong and consistent results despite a highly competitive market, with earning assets up 21% and net financing revenue up 22% from last year,” said Ally CEO Michael Carpenter in a press release. “In addition, the insurance business had the highest level of written premiums since 2008.”
Ally Financial, which put its lending unit Residential Capital into bankruptcy, saw the successful auction of its former mortgage servicing portfolio and lending operations in October.
And the company is not finished making its exit from the mortgage finance space. Last month, Ally Bank said it would begin looking for alternatives, or the possible sale, of its MSR portfolio and mortgage lending operations.
“The steps we are taking, coupled with the strength of the underlying auto finance and direct banking franchises, will support Ally’s plan to repay the remaining U.S. Treasury investment and thrive going forward,” said Carpenter.