Deposit surge, fewer charge-offs highlight Ally’s 4Q results

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Fewer auto loan charge-offs and an increase in the value of equity securities pushed Ally Financial’s fourth-quarter profit higher.

Net income at the $179 billion-asset Detroit company rose 60% to $290 million, compared to the same period a year earlier. Earnings per share of 92 cents were a dime better than the mean estimate of analysts compiled by FactSet Research Systems.

Several one-time items helped profits, including a $95 million increase in the fair value of equity securities, which added 18 cents to net income.

Net financing revenue increased 4.5% to $1.2 billion. The loan-loss provision dropped 10% to $266 million on lower retail auto loan charge-offs.

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Net finance receivables and loans rose 6.5% to $127.7 billion. Originations of consumer auto loans increased 2% to $35.4 billion.

Total deposits rose 13.9% to $106.2 billion, as Ally added new customers at a brisk pace through the high rates it pays for savings accounts and certificates of deposit through its online bank. About 55% of the new customers that Ally added in the fourth quarter are millennials. The deposit growth came at a cost, as the interest paid on deposits increased 68% to $523 million.

Noninterest revenue declined 21% to $104 million, as the company recorded an $87 million loss on investments.

Noninterest expense climbed 4.6% to $804 million, as its marketing costs climbed due to a new advertising campaign. Ally did not break out its total marketing costs.

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