In it's initial report since coming public three weeks ago, Ally Financial (ALLY) reports core pre-tax income for Q1 of $339M, up 64% Y/Y. Results were boosted by a continued decline in cost of funds, off 15 bps from Q4 and 55 points from a year ago. Helping is a boosted retail deposit base, up 17% Y/Y. Net interest margin grew 46 basis points.
Noninterest expense of $710M fell from $865M in Q4, improving the efficiency ratio to 55% from 73%.
ROTCE of 6.5% improves from 3% for 2013.
The keys for Ally, says BTIG's Mark Palmer, are improved funding costs and expense cuts leading to boosted ROTCE. All three check out in Q1, he says, reiterating his Buy rating and $31 price target.