[Management View]
Ally Financial's management emphasized strategic clarity and disciplined execution, contributing to improved financial performance in Q2 2025. Key metrics included adjusted EPS of $0.99 and core pre-tax income of $480 million. The company highlighted its focus on de-risking unsecured consumer credit, digital servicing enhancements, and robust customer engagement, reaching 3.4 million digital bank customers.

[Outlook]
Management remains confident in delivering a full-year NIM of 3.4% to 3.5% for 2025, despite certain non-recurring NIM expansion factors. The company plans to maintain flat deposit balances for the year and prioritize capital deployment between franchise growth and shareholder returns, including further CRT issuance and selective share repurchases.

[Financial Performance]
Ally reported a net interest margin excluding OID of 3.45%, up ten basis points QoQ. Retail auto consumer originations reached $11 billion, with a 9.82% origination yield. The retail auto net charge-off rate was 1.75%, and consolidated net charge-offs were 110 basis points. The CET1 ratio stood at 9.9%, with $66 billion in available liquidity.

[Q&A Highlights]
Question 1: What could lead to outperforming or underperforming NIM expectations in the second half, and what is the timeline for the 4% NIM target?
Answer: NIM expansion factors, such as securities repositioning and lease termination recovery, are now embedded and won't contribute further. Benefits from deposit repricing will continue but at a smaller pace. The base case assumes three rate cuts in the second half of 2025, with the 4% NIM target expected in the high threes post-card sale.

Question 2: With credit trends improving, is it time to lean more towards growth?
Answer: Management is encouraged by credit trajectory but remains disciplined and data-informed. Despite improvements, uncertainty persists, and any changes will be transparent.

Question 3: Should used car prices continue to help credit in the back half of the year?
Answer: Delinquencies have improved but remain elevated. Used car prices are strong, partly due to tariffs. Credit guidance considers delinquency, flow to loss, and used car prices.

Question 4: Is next year's stress test a gating factor for capital return?
Answer: The stress test is not a gating factor. The focus is on fully phased-in CET1 ratio and organic capital generation. Share repurchases remain a priority.

Question 5: What would it take to move the charge-off rate range down, and how does seasonality affect losses?
Answer: Continued improvement in delinquencies, strong flow to loss rates, and used car prices are needed. Seasonality is muted post-pandemic, with smaller NCO rate changes expected.

Question 6: What is the strategy on deposits amid seasonal declines and repricing?
Answer: The strategy is to manage for flat deposit balances, with pricing aligned with expectations. The shift towards more engaged customers is seen as positive for deposit stability.

Question 7: How do CRT transactions and securities repositioning impact capital management?
Answer: CRTs lower risk weighting and increase CET1, providing cost-effective capital. No further securities repositioning is planned in the near term.

Question 8: What are the limitations on asset growth, and how does competition affect origination yields?
Answer: Growth is aligned with strategy, focusing on retail auto and corporate finance. Competition is noted, but Ally's strong dealer relationships and focus on used and prime segments support growth.

[Sentiment Analysis]
Analysts and management maintained a cautiously optimistic tone, acknowledging improvements in credit performance while remaining mindful of macroeconomic uncertainties. Management expressed confidence in strategic execution and capital management.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|---------------------------------|---------|---------|------------|
| Adjusted EPS | $0.99 | N/A | N/A |
| Core Pre-Tax Income | $480M | N/A | N/A |
| Net Interest Margin (ex-OID) | 3.45% | 3.35% | +10 bps |
| Retail Auto Originations | $11B | N/A | N/A |
| Retail Auto NCO Rate | 1.75% | N/A | N/A |
| CET1 Ratio | 9.9% | N/A | N/A |

[Risks and Concerns]
Management noted elevated delinquency levels and potential unemployment increases as risks. The normalization of certain NIM expansion factors and tariff-related impacts on commercial floor plan balances were also highlighted.

[Final Takeaway]
Ally Financial's Q2 2025 results reflect strategic focus and disciplined execution, with improvements in credit performance and customer engagement. The company remains confident in its ability to deliver on NIM guidance and capital management priorities, despite macroeconomic uncertainties. Management's cautious optimism and focus on strategic growth and risk management position Ally well for future challenges and opportunities.