- Though core ROTCE remains an important metric for investors in Ally Financial (ALLY +4.5%), writes BTIG's Mark Palmer, the key number for near-term performance will be the percentage of originations generated by GM - the lower the better, given Ally's vulnerability to a sudden shift of more of GM's business to its own finance arm.
- Palmer notes the percentage of GM-driven loan originations fell to 45% in Q2 from 52% a quarter earlier. Originations from non-GM, non-Chrysler channels increased by 55% Y/Y.
- Though ROTCE declined 90 basis points from Q1 to 8.2%, management says it continues to target core ROTCE of 9-11% by year-end, and notes the full impact of capital actions has yet to be realized.
- Palmer reiterates a Buy rating and $32 price target.
- Previously: More on Ally Financial's Q2 beat (July 28)
- Previously: Ally Financial beats by $0.01, misses on revenue (July 28)