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Ally Financial (NYSE:ALLY) stock dropped ~18% on Tuesday, the biggest intraday decline since March 2020, after CFO Russ Hutchinson flagged worsening credit conditions among the auto lender’s borrowers.
Borrowers have exhibited financial fragility over the course of 2024, Hutchinson said at a Barclays conference, with the August jobs report further highlighting these strains.
“Over the course of the quarter, our credit challenges have intensified,” he noted. “Our borrower is struggling with high inflation and cost of living and now, more recently, a weakening employment picture.”
Recall in mid-July when the company boosted its expectations for losses from bad debt in 2024.
Hutchinson said that Ally (ALLY) will review its loan loss reserves and raise them if necessary to address potential defaults. He added that auto loan delinquencies and net charge-offs both came in higher than forecast for July and August.
The company’s focus going forward will be on capital and expenses, he noted, though its guidance will remain unchanged for now.
