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| 8-K - 8-K - Ally Financial Inc. | morganstanleyfinancialscon.htm |
1
Ally Financial Inc.
Morgan Stanley Financials Conference
June 14, 2017
2
Forward-Looking Statements and Additional Information
This presentation and related communications contain forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts—such as our statements
about targets and expectations for various financial and operating metrics. Forward-looking statements often use words such as “believe,” “expect,”
“anticipate,” “intend,” “pursue,” “seek,” “continue,” “estimate,” “project,” “outlook,” “forecast,” “potential,” “target,” “objective,” “trend,” “plan,” “goal,”
“initiative,” “priorities,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.”
Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking
statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our
control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies,
plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the
factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in our
Annual Report on Form 10-K for the year ended December 31, 2016, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form
8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (collectively, our “SEC filings”).
Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any
forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as
required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we
may make in any subsequent SEC filings.
This presentation and related communications should be read in conjunction with our Annual Report on Form 10-K for the year ended December
31, 2016, and other SEC filings. Financial and other information for any period after December 31, 2016, is preliminary and is based on internal or
external information available to us at the time of this presentation. This presentation and related communications contain specifically identified
non-GAAP financial measures, which supplement the results that are reported according to generally accepted accounting principles (“GAAP”).
These non-GAAP financial measures may be useful to investors but should not be viewed in isolation from, or as a substitute for, GAAP results.
Differences between non-GAAP financial measures and comparable GAAP financial measures are reconciled in the presentation.
Our use of the term “loans” describes all of the products associated with our direct and indirect lending activities. The specific products include
loans, retail installment sales contracts, lines of credit, leases, and other financing products. The term “lend” or “originate” refers to our direct
origination of loans or our purchase or acquisition of loans.
3
Net Financing Revenue (excluding OID)(1) Growth Simulation
(1) Represents a non-GAAP financial measure. Excludes OID. See page 9 for details.
Deposit
Growth
2016 Medium-term Target
Auto
Portfolio
Optimization
Product
Expansion
+ Corporate
Finance and
Mortgage growth
+ Wealth
management
$4
billion
Path to $5 billion +/- Net Financing Revenue(1)
$5 +/-
billion
+ Higher Loan
Yields and
Balances
− Lease decline
+ Reduce
unsecured
funding footprint
+ Reduce secured
funding footprint
+ Securities
portfolio/excess
liquidity
4
Asset Mix
($ billions)
1Q 2017(1)
Medium-term Expectations Average
Balance
Average
Yield
Retail Auto Loan $66 5.7% • Estimated originated yield(3) YTD ’17 of 6.3%
Commercial Auto $38 3.2% • Asset yields expected to rise with benchmarks
Auto Lease $11 5.7% • Expect normalized balance of approximately $7-8 billion
Mortgage $11 3.5% • Capital efficient asset growth
Corporate Finance $3 6.5% • Expect normalized balance of approximately $6-7 billion
Total Loans & Leases $129 4.8%
Securities $20 2.5% • Capital efficient - expect growth with deposit funding
Cash & Other $3 1.5% • Fairly flat
Total Earning Assets $153 4.4%
Asset growth from capital efficient assets while auto assets relatively flat
(1) Average balances as of 3/31/2017; yields represent 1Q 2017 average
(2) Note: numbers may not foot due to rounding
(3) Estimated originated yield is a forward-looking non-GAAP financial measure determined by calculating the estimated average annualized yield for loans originated during the period.
5
Deposits
41%
Secured
28%
Unsecured
27%
FHLB /
Other
5%
Deposits
57%
Secured
19%
Unsecured
15%
FHLB /
Other
9%
Secured
Unsecured
FHLB /
Other
Deposits
~70 - 75%Liability Mix
($ billions)
1Q 2017(1)
Medium-term Expectations Average
Balance
Average
Yield
Deposits $82 1.1% • Expect growth of $12+ billion per year (total deposits)
Secured Debt $28 1.9% • Less reliance as deposits become primary funding
Unsecured Debt $21 5.1% • Scheduled maturities replaced with deposit funding
FHLB/Other(2) $13 1.2% • Fungible use for mortgage growth opportunities
Total Funding Sources(3) $144 1.9%
Mix continues to shift towards deposits as the primary funding source
2013 1Q 2017 Medium-term Target
Note: Funding profiles based on average daily balances
(1) Average balances as of 3/31/2017; yields represent 1Q 2017 average
(2) Includes Demand Notes, FHLB, and Repurchase Agreements
(3) Represents a non-GAAP financial measure. Excludes OID. See page 9 for calculation methodology and details.
6
Principal Amount
Outstanding(2)
Maturity Date Coupon ($ billions) 1.25% 2.00%
1/30/2017 2.750 $1.00 $0.02 $0.01
2/15/2017 5.500 $1.50 $0.09 $0.07
9/29/2017 3.250 $0.30 $0.01 $0.01
12/1/2017 6.250 $1.00 $0.07 $0.06
12/15/2017 2.500 $0.46 $0.01 $0.00
2/13/2018 3.250 $0.60 $0.02 $0.01
5/21/2018 3.600 $1.00 $0.03 $0.02
9/10/2018 4.750 $0.75 $0.04 $0.03
11/5/2018 3.250 $0.75 $0.02 $0.01
12/31/2018 8.000 $0.48 $0.05 $0.04
1/27/2019 3.500 $0.75 $0.03 $0.02
11/18/2019 3.750 $0.80 $0.03 $0.02
3/15/2020 8.000 $0.97 $0.11 $0.10
3/30/2020 4.125 $0.75 $0.04 $0.03
9/15/2020 7.500 $0.46 $0.05 $0.04
4/15/2021 4.250 $0.60 $0.03 $0.02
2/13/2022 4.125 $0.65 $0.03 $0.02
5/19/2022 4.625 $0.40 $0.02 $0.02
9/30/2024 5.125 $0.70 $0.05 $0.04
3/30/2025 4.625 $0.50 $0.03 $0.02
11/20/2025 5.750 $1.05 $0.08 $0.07
11/1/2031 8.000 $0.49 $0.06 $0.05
11/1/2031 8.000 $2.00 $0.23 $0.21
Illustrative EPS Savings
@ Refi. Cost of:(3)
Unsecured Maturities
Significant benefit as unsecured debt maturities are replaced with low-cost deposits
Ally Unsecured Debt Securities(1)
Between
$0.45 - $0.60
annual EPS benefit
timing of full benefit subject to
bank leverage ratio normalization
Long runway for
continued liability
optimization
~$12 billion
in maturities
(‘17 – ’20)
(1) Excludes retail notes, demand notes, trust preferred securities and unsecured credit facility.
(2) Reflects notional value of outstanding bond. Excludes OID and capitalized transaction costs.
(3) Illustrative EPS savings assumes 35% tax rate.
7
Secured Debt Footprint
Secured funding poised to become more efficient over time as assets move to bank
($ billions)
1Q 2017
Average
Balance
Average
Yield
Secured Facilities
Bank $3 1.8%
Parent $12 1.9%
Securitization Platforms
AFIN (parent)(1) $6 2.2%
AMOT (bank)(2) $5 1.6%
AART (bank)(3) $2 1.4%
Total Secured Funding $28 1.9%
Average balances and yields represents 1Q 2017 average
Note: does not include FHLB funding and ~$125 million of lease securitizations
(1) AFIN – Ally Financial Inc. (Parent) non-prime retail auto loan asset backed
securitization program
(2) AMOT – Ally Bank dealer floorplan asset backed securitization program
(3) AART – Ally Bank prime retail auto loan asset backed securitization program
Expect significant reduction in
parent funding needs over the
medium-term
Fixed vs. Variable Secured Debt
($ billions)
Note: total balance sheet secured debt, includes FHLB funding
45% 53%
55%
47%
$44.1
$33.5
$0
$10
$20
$30
$40
$50
2014 1Q 2017
Fixed Rate Variable Rate
8
Ally - Deposit Pricing Path v. Fed Funds Target
Based on May 31st, 2017 Forward Curve
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
Deposit Re-pricing
Modeling pass-through rate to steepen over time
Betas have been muted through FOMC tightening actions to date, but are expected to steadily increase over time
Ally’s deposit growth expected to outpace balance sheet growth over next several years as funding mix is optimized
A
lly
Dep
o
s
it
P
ri
c
in
g
(
ill
u
s
tr
at
iv
e
)
Fed Funds Target
Longer-term
Deposit Beta
70-75%
Through
Medium-term
Deposit Beta
30-50%
Ally’s interest rate risk models use dynamic assumptions driven by a number of factors, including the overall level of interest rates and the spread between short-term and long-term interest rates to project
changes in Ally’s retail deposit offered rates. Please see the 10-Q for more details.
9
Notes on non-GAAP and other financial measures
Supplemental
Net Financing Revenue (ex. OID) is a non-GAAP financial that adjusts non-cash expense bond exchange original issue discount (OID).
Total Funding Sources (ex. OID) is a non-GAAP financial that adjusts bond exchange original issue discount (OID). Reflects average balances.
Net Financing Revenue (ex. OID) Total Funding Sources (ex. OID)
$ in millions FY 2016 $ in b illions 1Q 2017
GAAP Net Financing Revenue 3,907$ GAAP Total Funding Sources 143$
Original Issue Discount ("OID") 57 Original Issue Discount ("OID") 1
Net Financing Revenue (ex. OID) 3,964$ Total Funding Sources (ex. OID) 144$