Ally Financial Inc., poised to go public later this year and repay the rest of its bailout funds, reported lower quarterly income in its auto- and home-lending units.
Ally posted a $146 million first-quarter profit, a 10% drop from $162 million a year earlier. It has reported profits in five consecutive quarters.
The company's core business, which finances sales of vehicles made by former parent General Motors, Chrysler, Saab and the recreational-vehicle maker Thor Industries, reported a 15.8% drop in first-quarter income of its North American auto finance unit. The unit made $518 million, compared with $612 million a year earlier.
Five years after General Motors Corp. sold a majority stake in what was then called General Motors Acceptance Corp., Ally Financial now is setting its sights on used cars.
"The used market is a great growth opportunity for us," Bill Muir, president of Ally Financial, told analysts Tuesday on a conference call. "We used to focus on selling the new vehicle as a captive-type lender but as an independent we are growing the used business. Used could get equally as big as the new business but it could take some time."
Despite the drop in profit, originations of domestic auto loans rose 93% compared with a year ago.
"We've seen a steady influx of people coming back into the market," Muir said.
Ally's mortgage operations, which include Residential Capital LLC, posted a $34 million profit, a 78% drop from its $156 million profit a year earlier.
Michael Carpenter, Ally's CEO, said the company is in the early stage of looking at how it can cross-sell products to its large customer base.
Deposits at Ally's banking subsidiaries in the U.S. and Canada grew 4% from a year earlier to $40.7 billion.
Ally filed for an initial public offering in March.
"We also took some very important steps during the quarter toward repaying the U.S. taxpayer's investment in Ally, including the sale of $2.7 billion of Ally trust preferred securities to third-party investors," Carpenter said in a release.
