News (AP) - Ally Financial posts 2Q profit, expects 2011 IPO

By Dan Strumpf AP Auto Writer NEW YORK (AP) -- Ally Financial Inc. on Tuesday said it expects to hold an initial public offering next year after posting a second-quarter profit of $565 million, driven by improvements in its home mortgage business and more demand for auto loans. The results compare with a loss of $3.9 billion in the second quarter last year, said the consumer lender, which is 56 percent owned by the U.S. government. "I think the IPO is very clearly within our sights," CEO Michael Carpenter said. "I see it as a 2011 event." Ally, formerly called GMAC Financial Services, reported a profit at its mortgage operations following a staggering loss of $1.34 billion last year. Its automotive financing and insurance lines posted higher income. Net revenue rose by 67 percent to $2.1 billion. "Ally made substantial progress in the second quarter with all operating segments posting a profit," Carpenter said. "Ally is a fundamentally stronger organization today than it was a year ago, and we are proud of our central role in the recovery of the U.S. auto industry." Ally, which is based in Detroit, is the main lender for customers and dealers at General Motors Co. and Chrysler Group LLC. The company changed its name earlier this year and has been working to overhaul its business after the government spent $16.3 billion to bail out the lender. Ally's operations are seen by the government as vital to General Motors and Chrysler -- both of which have also received billions in government aid. Like GM and Chrysler, Ally hopes to repay its government loans and become independent again through an initial public offering. The company said it made $10.7 billion in new auto financing originations in the second quarter, up from $6.1 billion last year. The improvement in Ally's mortgage business was driven by gains on the sale of so-called legacy assets, or soured loans that the company made during the housing boom. Its mortgage business has weighed on Ally's results over the last year because of mortgages that went bad after the housing market collapsed, but results in the business have been improving in recent quarters. A key part of Ally's strategy to diversify its business has been its online banking service, Ally Bank. The company has been enticing depositors through higher interest rates and a quirky marketing campaign that bills online banks as more straightforward than brick-and-mortar banks. Deposits at Ally Bank rose to $34.3 billion from $32 billion during the second quarter. Published: Thu, Aug 5, 2010

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