Ally Financial achieved strong financial performance in the second quarter of 2025, with adjusted earnings per share of 99 cents and core pre-tax income reaching $418 million, representing double-digit growth year-over-year. Net interest margin (excluding core original debt instruments) expanded to 3.45%, with asset structure optimization and improved deposit quality laying the foundation for continued margin expansion. The company demonstrated a commitment to sustainable high returns, with a core asset return rate of 13.6%, reaching 10% even when considering AOIC impact. The company is confident in future growth opportunities and is prepared to seize these opportunities.

Ally Bank successfully transformed into a stronger and more profitable institution this quarter through clear strategic focus. Its brand influence continues to deepen, establishing deep trust and loyalty with customers. At the same time, a customer-centric culture has become its significant differentiating advantage. Ally Bank's three core businesses -- dealer financial services, insurance, and corporate financing -- show strong growth potential and returns. Particularly in the dealer financial services sector, the high return and low cost of funds of new fixed-rate retail auto loans, as well as expected annual loss rates, demonstrate its stable business model. Through strategic partnerships, marketing, and community collaborations, the brand further enhances customer trust and loyalty, achieving efficient customer acquisition and deep customer engagement. Additionally, Ally Bank emphasizes its cultural philosophy of "Do It Right," playing a crucial role not only in serving customers but also in supporting employees and community service, thus enhancing employee satisfaction and customer experience.

In this quarter, the automotive finance business has shown strong momentum, with consumer loan initiations reaching $11 billion, benefiting from 3.9 million applications, setting a new record for the highest application volume for the second consecutive quarter. This reflects the advantage of a solid relationship with dealers and business scale, making the company the leading provider of bank auto loans domestically. In the insurance business, the average dealer inventory risk exposure increased by 23% year-on-year, with over 3.9 million active policies, adding over 1 million since the initial public offering. At the same time, the corporate finance department achieved a 31% return on equity, achieving steady growth and attractive returns through long-term partnerships with financial sponsors while maintaining strict risk management. The company is actively exploring organic growth opportunities in existing verticals and considering developing new products and services to increase value-added services.

This digital bank focuses on providing a first-class digital experience and has won multiple awards for customer satisfaction this quarter. They have reached a record high number of customers, reaching 3.4 million, and have achieved net customer growth for 65 consecutive quarters, making them the largest all-digital bank in the country. Although quarterly deposit balance decreased by about $3 billion, it was in line with expectations, mainly due to seasonal tax expenses. The bank expects the deposit balance to remain relatively stable, sufficient to support the balance sheet on the asset side. Deposits account for 90% of total funds, demonstrating the strength and stability of its deposit base. The bank emphasizes that its focused strategy is working, and its market-leading position and brand culture provide strong support.

This conversation provided a detailed introduction to the company's financial performance in the second quarter, emphasizing that despite the sale of the credit card business, the company achieved strong growth in core business through the expansion of profitability of the retail car portfolio, strategic adjustments towards high-yield asset categories, and continuous optimization of deposit pricing. In addition, despite facing macroeconomic uncertainties, the company reduced nonperforming loan rates through improved service strategies and optimized credit portfolios, demonstrating good cost control and credit performance.

This quarter's after-tax expenses amounted to $84 million, with a tax rate of 19%. Due to a recent state law change resulting in the reassessment of tax credits, it is anticipated that the normalized tax rate will be between 22% and 23%. Earnings per share for the quarter were $1.04, with adjusted earnings per share at $0.99. The net interest margin (NIM) increased to 4.5%, primarily due to improvements in retail auto loan and lease income, repositioning of securities trades, deposit repricing, and adjustments in the asset portfolio towards higher-yielding assets. While some factors may no longer contribute to further expansion of the NIM, continued margin expansion is expected from repricing of liquidity savings and time deposits. Adjustments in retail and asset portfolios have also led to significant revenue increases. The institution is confident in maintaining a full-year NIM of 3.4% to 3.5% and a sustainable upper-margin in the long term.

The bank's CET 1 ratio reached 9.9%, exceeding the minimum requirement of $4 billion by Stb. Based on the implementation of AOCI throughout all stages, CET 1 was 7.6%, an increase of ED basis points from the previous year. The priorities of capital management remain unchanged, including driving core business growth, increasing CET 1 levels, capital distribution, and share buybacks. In terms of credit quality, the credit quality trends of all loan portfolios are encouraging, with a decrease in the net charge-off rate and a slight decrease in the net charge-off rate of retail auto loans. Additionally, the ratio of loans overdue by more than 30 days improved for the first time in a year, indicating a positive turning point in credit performance. Reserves have seen an increase of 100 basis points in the reserve coverage rate, while the coverage rate for retail auto loans remains unchanged. The bank will continue to monitor credit trends and enhance digital service capabilities to address current uncertainties.

In the recent performance analysis, it was pointed out that the pre-tax income of the automotive finance business had decreased by $112 million, mainly due to a decrease in lease revenue and a decrease in commercial vehicle balances. Although lease remarketing performance has improved, it is expected that its impact will decrease in the future, as the number of end units decreases and is not covered by residual value guarantees. Commercial vehicle balances are affected by industry trends, inventory levels, and tariffs. However, despite low dealer inventory levels, increased sales activities and reduced financing inventory support dealers' health and profitability. In the insurance business, a core pre-tax loss of $2 million was recorded, despite growth in premiums and investment income, losses increased. Inventory risk exposure increased by 23%, but the weather loss ratio remained stable. In the future, the company will focus on using automotive finance relationships to increase earned premiums and drive long-term capital effective revenue growth.

This financial institution reported strong quarterly financial performance, with core pretax income reaching $96 million and an annualized return on equity of 31%. Net financing income was $1.08 billion, an increase of $4 million from the previous quarter but a decrease of $4 million year-on-year, primarily due to lower fee income amortization. The year-end total of high-risk loans was $11 billion, an increase of $1.3 billion compared to the previous year, demonstrating the company's focus on prudent business growth. Additionally, the company did not add any non-performing loans or set aside any specific reserves, indicating stable credit quality. Looking ahead, the company is maintaining its net interest margin guidance range of 3.4% to 3.5% and expects full-year performance to align with guidance across various interest rate scenarios. The range of expected net charge-offs for retail auto loans has narrowed from 2% to 2.15%, resulting in a full-year comprehensive net charge-off expectation of 1.35% to 1.45%. The company also emphasized its strong strategic positioning in capital, liquidity, interest rate risk, and credit risk, including the strategic use of over $4 billion in excess capital and credit risk transfer.

Allied Bank's deposits account for 90% of its interest-bearing liabilities, and 92% of the deposits are insured by FDIC, both of which are high ratios in the industry. The bank has improved its overall profitability and risk management capabilities through efficient and stable deposit strategies, reducing interest rate risk, proactively lowering high-risk consumer credit exposure, strengthening credit performance, and investing in digital payment strategies. Additionally, the bank has achieved controlled cost reductions for seven consecutive quarters, while strategically investing in areas that drive revenue growth to expand operational leverage.

The company is currently focusing on driving profitable growth in the insurance business, while making investments in key areas such as enhancing network security defense, advancing artificial intelligence capabilities, developing innovative products, and improving customer experience. Cost control is a core part of the company's strategy, and it maintains a high level of attention to the use of every shareholder's capital. By taking measures to improve returns and reduce risks, the company believes it has reached a strong strategic position in the public market. In response to market inquiries, the company provided a detailed explanation of the factors affecting the outlook for net interest income (NIM), including securities repositioning, improvements in lease termination performance, accelerated repayments of retail auto loans, and positive impacts on deposit and CD pricing. Despite short-term asset sensitivity, the company is viewed as liability sensitive in the long run, so changes in interest rates will have an impact on performance. Regarding credit risk control, the company stated that improvements have been made, but growth strategies still need to be approached with caution to ensure stable development.

During the discussion, it was mentioned that although the delinquency performance of car loans has improved, especially considering the stability of the value of used cars, the company still maintains a cautious attitude. Before making any adjustments, the company will make decisions based on data and remain vigilant about the uncertainty of the environment, while also committing to transparency in future decisions.

The discussion focuses on the improving credit trends of the automotive finance company, including reduced delinquency rates, stable default rates, and strong used car prices. These factors are working together to boost the company's confidence in the future. In addition, the company is also considering adjusting its loan strategies to achieve higher returns while closely monitoring market data to make real-time lending decisions.

The discussion is focused on the company's capital return strategy, particularly on the improvement of the Common Equity Tier 1 (CET1) ratio and the impact of organic capital generation on the company's capital return. The company stated that the improvement in its capital ratio is encouraging and is close to the target level, providing confidence for considering stock buybacks. At the same time, the company emphasized that the timing of capital return will not be determined solely based on stress tests, but rather on the fully implemented CET1 ratio and organic capital generation based on strong earnings.

The discussion focused on credit risk management in the car loan business and seasonal loss prediction. Firstly, positive signs in the current loan business were discussed, such as lower delinquency rates and improved asset quality. Subsequently, factors necessary to reduce bad debt rates were explored, including continued improvement in delinquency levels, strong collateral loss rates, and resilient used car prices. Additionally, the discussion mentioned the macro environment, specifically the expected changes in unemployment rates and how the company evaluates and adjusts its risk predictions in response to these changes. Overall, the discussion emphasized the importance of maintaining robust credit management and predicting seasonal losses in the current economic environment.

The discussion focused on the changes in seasonal patterns post-pandemic, particularly regarding the seasonal performance of NCO (non-continuing operating net income) rates and the strategy adjustments for deposit books. It was pointed out that seasonal effects have changed during the pandemic, now being relatively more subdued compared to pre-pandemic times. Additionally, deposit strategies were discussed, including strategies for managing annual deposit balances, transferring rate-sensitive customers, and relying on a more stable and active customer base. Moreover, natural seasonal impacts on deposits were mentioned, such as second-quarter outflows due to tax season, and achieving expected pricing targets after rate adjustments.

The bank transfers the credit risk of some high-quality loans to the capital market through CRT (credit risk transfer) transactions, in order to reduce the risk weight of the loans, effectively improve the CET 1 (Common Equity Tier 1) ratio, and reserve capital space for organic growth and stock repurchases. At the same time, the bank believes that its cost of capital is relatively low through this method, and plans to deploy CRT transactions in the latter half of the current year to further increase the CET 1 ratio. Additionally, the bank has conducted two securities repositioning transactions aimed at balancing the reduction of interest rate risk and increasing NIM (Net Interest Margin), and currently believes that the expected effects have been achieved, and is not considering more such transactions in the near future.

Discussed the profit expectations of the insurance business after experiencing the recent reinsurance cycle, pointing out that despite pricing being similar to last year, the insurance business is still considered a solid and stable investment area that can be addressed by increasing deductibles or attachment points It is an important source of non-gaming revenue for the company.

The discussion focuses on the strategies and limitations of asset growth, particularly on the steady growth of car loans, changes in commercial floor plan balances, and the balance between risk management and return. It mentions a cautious attitude towards retail car loans and the pursuit of returns adjusted for risk, while also emphasizing that capital is not a current limitation.

In the conversation, the speaker emphasized the significant achievements in this quarter's performance, attributing it to a focused strategy and strict execution, especially in three key areas: net interest margin, reduction of car loans, and disciplined use of capital and expenses. Despite being cautious about future growth, the speaker expressed satisfaction and optimism about the current performance and future development trajectory. Additionally, the steady retail loan yield was mentioned, demonstrating the company's strong performance in a competitive environment.

In the recent quarter, despite facing intense competition from banks and other participants, the company still achieved record application volume and stable primary yield. Banks have increased their market share in the auto loan market, with some reporting significant growth in their auto business. The company emphasized its differentiated relationships with dealers and positioning in the market, enabling the company to maintain strong primary volume in the prime loan segment while maintaining discipline in business growth.