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Key Takeaways
- Ally Financial reported strong fourth quarter results and announced a deal with Synchrony Financial.
- Ally’s earnings per share (EPS) and revenue came in higher than analysts’ estimates.
- The financial services provider sold its point-of-sale financing arm to Synchrony, in a deal that includes $2.2 billion in loan receivables.
- Ally’s share price hit its highest level since August 2022.
Ally Financial ( ALLY ) shares jumped Friday as the company posted better-than-expected results and announced it was selling its point-of-sale financing arm to Synchrony Financial ( SYF ).
Ally, known primarily as a provider of auto loans, reported fourth quarter earnings per share (EPS) of $0.45, with total net revenue of $2.1 billion. Both exceeded analysts’ estimates.
The company said that net financing revenue in its auto finance business rose by $5 million to $1.3 billion, boosted by higher interest rates. Pre-tax income at its insurance unit was up $28 million to $129 million, primarily because of elevated earned premiums.
In a separate release, Ally noted the deal with Synchrony includes $2.2 billion in loan receivables. It added that the portfolio “includes relationships with nearly 2,500 merchant locations and supports more than 450,000 active borrowers in home improvement services and healthcare.”
Ally CEO Jeff Brown said selling the Ally Lending arm was part of “a broader initiative to invest resources in growing scale businesses and strengthening relationships with dealer customers and consumers.”
Financial considerations for the purchase were not disclosed. The transaction is expected to close in the current quarter.
Ally Financial shares were up 10.4% at $35.46 about half an hour before Friday’s closing bell, trading at their highest level since August of 2022. Synchrony Financial stock was up 3.1% at $36.89.