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Ally Financial sees auto finance income grow in Q2 on higher net financing revenue

Ally FinancialInc. reported second-quarter net income of $360 million, up from$182 million in the year-ago quarter.

Results for the most recent quarter were impacted by a $29million year-over-year increase in weather losses. The company noted thatweather losses were higher than historical levels due to severe hailstorms. Theimpact of weather losses was countered by a tax benefit of $98 million from aU.S. tax reserve release related to a prior-year federal tax return.Second-quarter 2015 results included a $155 million pretax charge for theextinguishment of legacy, high-cost debt.

Ally Financial posted second-quarter GAAP EPS of 71 cents,compared to a GAAP loss per common share of $2.22 in the second quarter of 2015.

Core pretax income in the second quarter was $431 million,compared with $435 million in the year-ago period despite weather losses.

Excluding repositioning items, core pretax income was $413million, up from $263 million in the second quarter of 2015.

Second-quarter adjusted EPS was 54 cents, up from 46 centsin the year-ago period.

The S&P Capital IQ consensus normalized EPS estimate forthe second quarter was 51 cents.

The automotive finance segment reported pretax income of$426 million for the second quarter, compared with $373 million in theprior-year quarter. The increase was attributed to higher net financing revenue.

The insurance segment had a pretax loss of $18 million,compared with income of $15 million, due to higher insurance weather losses andlower investment gains, partially offset by lower nonweather-related lossesfrom fewer vehicle service contract claims. Total investment income was $34million, down $7 million from the year-ago quarter. Written premiums fell $26million year over year to $237 million in the quarter due to increased dealerreinsurance participation and discontinuation of the agent channel.

The mortgage finance operations saw pretax income of $9million, compared to a loss of $3 million in the year-ago period. Net financingrevenue climbed to $26 million due to a year-over-year asset increase of $2.4billion. Expenses were higher in the most recent quarter but the impact waspartially countered by lower provision due to lower purchase volume.

Corporate finance reported pretax income of $14 million, anincrease from $10 million in the year-ago period. Net financing revenueincreased 32% year over year to $29 million due to higher asset levels.

Ally Financial's adjusted efficiency ratio improved to 43.7%from 45.6% in the prior-year quarter.

At AllyBank, retail deposits increased to $61.2 billion as of March 31, up$9.5 billion year over year, with growth driven largely by savings products.