Ally Financial credit and margin updates negative, says RBC Capital

RBC Capital notes Ally Financial management discussed credit trends during an investor conference and said the company expects higher delinquencies and net charge offs, or NCOs, for Q3 due to some pressures on their 2023 vintage. On the margin outlook, the prior guidance called for sequential quarterly margin expansion of 5 to 15 basis points, but today management updated their expectations and the margin is now expected to decline on a sequential basis for Q3, added the analyst. The firm, which says “this all seems manageable,” adds that higher credit costs and a lower margin will pressure numbers in the near term and “that is a disappointment for the company.” The firm would expect the stock to be under pressure today, but maintains an Outperform rating and $49 price target on Ally shares.