Ally Financial is in the middle of the most consequential refocusing of its post-bailout existence, and the second-quarter 2026 print on July 23, 2026 showed the strategy starting to compound. Net income attributable to common shareholders of $367 million translated to GAAP earnings per share of $1.18, up roughly 14% year over year, and adjusted earnings per share of $1.21, up about 22%, both comfortably ahead of where the equity has historically traded. The big-ticket operational change is the formal exit from non-core consumer banking: Ally closed the sale of its credit card business on April 1, 2025 and is now running the consumer mortgage book off, leaving the company as a focused three-segment institution built around Dealer Financial Services, Corporate Finance, and a digital deposit franchise.
The thesis is straightforward. As Ally shrinks out of low-return consumer products and pours capital into auto lending, commercial lending, and insurance, both the return on common equity and the return on tangible common equity are migrating higher. Return on common equity printed 11.0% in the quarter versus 10.7% a year ago, and core return on tangible common equity reached 11.8%, up roughly 80 basis points year over year. Management is signaling a 2026 net interest margin ex other-than-temporary-impairment-debt (OTID) target of 3.60% to 3.70% and full-year average earning asset growth of 3% to 5%, both of which would extend the operating-leverage story that drove the second-quarter results.
The single load-bearing risk is the auto credit cycle. The retail auto originated yield of 9.09% is the highest in years, and 47% of the quarter's origination volume was in the highest credit quality tier, but the company is also still guiding full-year retail auto net charge-offs to 1.8% to 2.0%, and a sharp deterioration in used-vehicle values or in subprime borrower performance would compress the spread between yields and losses that is currently the engine of the franchise. The falsifiable clock is the third-quarter 2026 earnings print in mid-October, which is the first data point that will test whether the 3.63% net interest margin ex OTID and the 157 basis-point retail auto net charge-off rate are durable trends or seasonal artifacts.