Ally Financial (NYSE:ALLY) executives said they were encouraged by the company’s performance in 2025 and expressed optimism about 2026 during a fireside chat at a Bank of America event. Sean Leary, Ally’s Chief Financial Planning and Investor Relations Officer, told attendees the company saw “solid operational and execution across all of our businesses” in 2025 and said that progress showed up “on the face of the financials.”
Strategy: “Doubling down” on core franchises
Leary said Ally’s recent strategic shift has centered on “doubling down on the core franchises,” which he described as having evolved materially over the last five to 10 years. He highlighted three key operating businesses—Dealer Financial Services, insurance, and Corporate Finance—supported by what he called a “crown jewel” deposits franchise.
In Corporate Finance, Leary emphasized longstanding relationships with asset managers and private equity firms and a focus on “speed, collaboration, and certainty of execution.” He said the business is expected to grow over time but “not at the expense of risk-adjusted returns.” Leary added that since Ally went public in 2014, the average annualized loss rate in Corporate Finance has been about 30 basis points while the asset base has grown.
On deposits, Leary said the franchise has produced 67 straight quarters of customer growth since the bank launched in 2009. He noted that Ally is “more than core-funded,” with the vast majority of deposits FDIC-insured.
Path to mid-teens returns: margin, losses, and discipline
Leary reiterated Ally’s framework for achieving “mid-teens” returns, saying three conditions need to be met:
- Net interest margin in the “upper threes”
- Retail auto credit losses below 2%
- Discipline on capital and expenses
He said Ally “effectively checked two of those boxes” in 2025, pointing to retail auto credit losses of 1.97%, another year of effectively flat expenses, and a meaningful increase in the CET1 ratio. The remaining piece, he said, is reaching net interest margin in the upper threes.
Discussing the company’s “story of two halves” guidance dynamic for 2026, Leary said Ally expects margin to be flat for “a quarter or two” following Federal Reserve easing late last year, reflecting Ally’s near-term asset sensitivity and medium-term liability sensitivity.
Net interest margin: near-term headwinds, back-half expansion
Leary said Ally exited the year with net interest margin “around 350” and expects a small decline in the first quarter, but maintained confidence in full-year margin of 360 to 370 basis points. He said that setup “implies a really solid degree of margin expansion the back half of the year.”
He also addressed lease-related headwinds, saying the “vast majority” of the lease portfolio is performing in line with expectations, but a “handful” of models—“literally four models”—are underperforming. He attributed the pressure to a combination of factors impacting plug-in hybrid electric vehicles, including the expiration of a tax credit in September, heavy incentives, and certain OEM-specific recalls. Leary said Ally generated lease termination losses in the fourth quarter and expects that phenomenon to continue early in the year.
Looking beyond near-term pressures, Leary said Ally sees structural tailwinds similar to those that drove margin expansion in 2025. He cited “roll-on, roll-off” dynamics as higher-yielding retail auto and Corporate Finance loans (at “9% or greater”) replace lower-yielding mortgage and investment securities (around 3% or lower). On funding, he pointed to CD repricing as a tailwind, noting about $35 billion of CDs maturing in 2026 and estimating a 45 to 50 basis point refinancing benefit tailwind, depending on reinvestment mix.
Auto, credit, and competition
Leary acknowledged intensified auto competition over the past year but said Ally views auto as core to its identity, not “transactional” or “episodic.” He described Ally’s dealer value proposition as a “full-spectrum ecosystem,” including consumer lending, commercial floorplan and acquisition financing, and insurance products tied to dealer profitability.
As evidence of durability, Leary said Ally generated record application flow in 2025, “decisioned $0.5 trillion” in consumer loan and lease applications, and added nearly $44 billion to the balance sheet at 9.7% yields while maintaining a consistent risk posture.
Asked about FDIC charter approvals for GM and Ford, Leary said he would not speculate on competitors’ actions, but argued Ally’s dealer and deposits value propositions have been built over many years and are “not easily replicable.”
On credit, Leary discussed Ally’s retail auto net charge-off guidance range of 1.8% to 2.0% for 2026. He said current performance trends point to the midpoint of the range, with key drivers including delinquency formation, flow-to-loss rates, and used car prices. He noted that unemployment has increased by about 30 basis points over the past 12 months, which influenced how Ally framed year-over-year improvement expectations, while adding that the consumer has remained resilient and portfolio performance has been encouraging. Leary reiterated Ally’s longer-term through-the-cycle loss view of 1.6% to 1.8%.
Insurance, Corporate Finance, deposits, and capital allocation
Leary said Ally’s “bias is for more” in insurance, citing dealer importance, capital efficiency, durable fee income diversification, and returns in excess of the company’s mid-teen target. He cautioned that growth and earnings in insurance are not linear due to factors such as weather volatility, dealer inventory changes, parts inflation affecting vehicle service contracts, and used car price impacts on GAP losses. He said Ally experienced a “one-in-200-year weather event” in 2025 that pushed the combined ratio above 100%, but still generated an ROE “approaching 20%” due to strength in the investment portfolio.
For Corporate Finance, Leary also said the “bias is for more,” emphasizing a consistent approach focused on being lead agent on senior secured, first-out positions sourced by longstanding sponsor relationships. He said the team has shown discipline, pointing to a period in 2024 when the portfolio shrank after opportunities failed to meet return hurdles.
On deposits, Leary said 2025 balances were roughly flat as guided, with improving customer acquisition exiting the year. For 2026, he said asset growth would typically imply deposit growth, but Ally also has alternative funding sources that have been underutilized in recent years. Leary said Ally would still view 2026 as a success even if deposit balances remain “more or less flat,” provided customer retention, customer growth, and progress toward its terminal deposit beta assumption continue.
In capital management, Leary said Ally expects enough capital generation to support loan growth, dividends, continued improvement in the CET1 ratio on a fully phased-in basis—with a stated goal of being “in the nines over time”—and buybacks. He described the approach as an “and question,” not an “or question,” and said buybacks would be balanced against other strategic objectives. He added that valuation plays a role in buyback pacing, and reiterated management’s view that execution toward sustainable mid-teen returns should ultimately address investor skepticism around the company’s valuation multiple.
About Ally Financial (NYSE:ALLY)
Ally Financial Inc is a leading digital financial services company headquartered in Detroit, Michigan. The company offers a comprehensive suite of banking, lending, and insurance products designed for retail and commercial customers. Through its online-only platform, Ally Bank provides checking and savings accounts, certificates of deposit, money market accounts, and home mortgages, emphasizing competitive rates and user-friendly mobile and web experiences.
In addition to its banking operations, Ally Financial is a major player in automotive financing and leasing.
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