Ally Bank stock plunges after admitting auto loan customers are in financial distress.

[Zeiram]

Ally Bank stock plunges 17.62% in one day after admitting auto loan customers are in financial distress.

---

In July and August, delinquencies and net charge-offs - that is, debts unlikely to be recovered - rose about 20 and 10 basis points, respectively, in Ally's retail auto business compared with its expectations, Chief Financial Officer Russell Hutchinson told investors at a financial conference in New York.

"Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture."

Hutchinson warned that Ally will see some underperformance given the number of struggling borrowers, especially in the 61-plus-day delinquency bucket, and added that he expects reserves to move up.

[SouthJamaica]

---

@Zeiram wrote:

Ally Bank stock plunges 17.62% in one day after admitting auto loan customers are in financial distress.

---

In July and August, delinquencies and net charge-offs - that is, debts unlikely to be recovered - rose about 20 and 10 basis points, respectively, in Ally's retail auto business compared with its expectations, Chief Financial Officer Russell Hutchinson told investors at a financial conference in New York.

"Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture."

Hutchinson warned that Ally will see some underperformance given the number of struggling borrowers, especially in the 61-plus-day delinquency bucket, and added that he expects reserves to move up.

---

I wouldn't use the word "admitting". That implies that they were saying something else, but are now admitting that they were wrong.

I think the right word would be "disclosing".  Their stock prices fell because their disclosures showed a high incidence of stress in their auto loan portfolio.

[Zeiram]

The problem was they were sort of downplaying this by saying they enhanced their underwriting years ago, but now whatever they've done is still leaving them with more customers walking away from their car payments.

Car loans going bad is not what you want to see. If people are willing to lose the car or just don't have any money and can't pay it, it means that the economy is likely worse than we've been hearing. They specifically blame inflation and job loss.

Bank stocks are not having a good week in general.