Net income fell nearly 60 percent for Ally Financial Inc., one of the largest U.S. auto lenders, in the second quarter as the lender absorbed further impact from the coronavirus pandemic. Volatile used-vehicle values, record-high unemployment and more than a million consumers exiting forbearance protections were among the reasons the bank allocated more funds to shield from potential auto loan losses for the second half of the year.
Ally reported net income of $241 million Friday, down from $582 million in the second of quarter 2019, though an improvement from the $319 million net loss it suffered in the first quarter. Adjusted revenue slid 1.9 percent to $1.53 billion in the second quarter.
The Detroit lender is bracing for losses in the back half of the year as expansive payment deferral programs are set to expire. Thirty percent of the auto customers Ally granted payment deferrals were slated to come out of forbearance in the second quarter, with the remaining 70 percent set to expire in the third quarter.
"Against a difficult and shifting backdrop, we remain focused on serving our customers at the highest level, and our solid operational and financial foundation positions us to continue supporting our customers," CEO Jeffrey Brown said in a statement. "Our resilient and adaptable auto finance business saw meaningful improvement toward the end of the quarter."
Shares of Ally closed Friday's trading down 5 percent to 21.29.