Ally Financial's net interest margin is expected to widen in the second half of the year as $18 billion in high-cost certificates of deposit mature, allowing the digital bank to replace them with lower-rate funding. The company reported a first-quarter net interest margin of 3.5%, up 17 basis points year over year, and guided for 3.6% to 3.7% for the full year. Net income reached $291 million, or $0.93 per share, compared with a net loss of $253 million a year earlier, driven by an 8% increase in net financing revenue and a 24% decline in noninterest expenses. Ally also saw record auto loan applications of 4.4 million and originations of $11.5 billion, with average loan yields rising to 9.27%. The stock trades at 8 times forward earnings.
Ally Financial IncHigh-cost CDs maturing will lower funding costs, expanding net interest margin and boosting earnings.