Ally Financial’s (ALLY – Free Report) ratings have been upgraded by Moody’s Investors Service. This is the second time that ratings have been raised. Earlier in February, the company’s ratings had been upgraded.
Ally Financial’s issuer rating witnessed a progress to Ba1 from Ba2. Also, its senior unsecured medium term note program and senior unsecured regular bond/debenture rating have been raised to Ba1 from Ba2.
Further, the rating agency affirmed the company’s short-term ratings. Also, Ally Financial’s ratings outlook have been left unchanged at stable.
Why the Ratings Upgrade
Per Moody’s, Ally Financial continues to witness improvement in its funding profile, driven by stable performance in the auto loan portfolio and steady deposit growth. As of Sep 30, 2019, the company’s total deposits have risen 18% year over year. This rapid increase in deposits reflect the company’s “growing franchise, which has allowed the bank to transform to a primarily bank-funded model.”
Ally Financial’s ratio of market funds as a percentage of tangible banking assets as of Sep 30, 2019 fell significantly from the 2018-end level. Moreover, Ally Financial has been able to grow its used auto loan portfolio to 53% of retail auto originations for the same time period.
Though growth in used auto portfolio had resulted in a rise in credit costs from 2015 through 2017, the same has been gradually stabilizing since then. This is mainly backed by…