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Ally's net income drops in Q4'16 on higher provision, noninterest expenses

Ally Financial Inc. reported fourth-quarter 2016 net income of $248 million, down from $263 million in the prior-year period.

The company attributed the year-over-year decline in net income to increased provision and noninterest expenses. Provision expense increased to $267 million for the quarter from $240 million due to higher retail auto loan provision. Total noninterest expenses rose year over year to $721 million from $668 million.

Fourth-quarter GAAP EPS was 52 cents, compared with a loss of $1.97 per share in the year-ago quarter.

Core pretax income for the quarter was $395 million, down from $446 million in the prior-year period. Adjusted EPS for the quarter was 54 cents, compared with 52 cents in the year-ago period.

The S&P Capital IQ consensus normalized EPS estimate for the fourth quarter was 48 cents.

The automotive finance segment had pretax income from continuing operations of $298 million, down from $333 million in the year-ago quarter.

Pretax income from continuing operations for the insurance segment dropped year over year to $69 million from $78 million.

For the mortgage finance segment, pretax income from continuing operations increased year over year to $15 million from $9 million.

Corporate finance reported pretax income from continuing operations of $31 million, up from $9 million in the prior-year quarter.

The company's adjusted efficiency ratio was 46.4%, compared with 43.6% in the fourth quarter of 2015.

At Ally Bank, retail deposits climbed to $66.6 billion at Dec. 31, 2016, an increase of $2.7 billion from the previous quarter and $11.1 billion from the year-ago period.

For the full year 2016, Ally Financial reported net income of $1.07 billion, down from $1.29 billion in 2015. GAAP EPS for the year was $2.15, compared with a loss of $2.66 in 2015.

Adjusted EPS for the full year 2016 was $2.16, up from $2.00 in 2015.

The S&P Capital IQ consensus normalized EPS estimate for 2016 was $2.10.