Ally Financial Inc (ALLY.N) 2Q26 Preview – Three Core Drivers to Mid-Teens Returns On Track

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Ally Financial Inc (ALLY.N) 2Q26 Preview – Three Core Drivers to Mid-Teens Returns On Track

Ally Financial Inc (ALLY.N)

22 June 2026 Citi Research

Ally Financial Inc

Company description

Headquartered in Detroit, Michigan, Ally Financial (ALLY) offers a range of consumer and commercial financial services,

including banking, auto lending, securities brokerage, mortgage, corporate finance, and insurance products and services, with

their largest segment being auto lending where they typically play at the intersection of used and prime. ALLY is organized as a

bank holding company, with Ally Bank the depository subsidiary. As of December 31, 2025, ALLY had assets of $196 billion.

Investment strategy

We rate the shares of ALLY Buy (1). We expect recent positive trends in NII and credit to continue, setting up meaningful

improvement towards mid-teens ROTCE, achievable by 2027 through continued NIM expansion near ~4% and auto credit

losses of sub-2%. We see ALLY as one of the best positioned names in this rate environment, benefitting from fixed-rate

repricing on short-duration assets and a ~65% cumulative down-rate beta, and while we recognize there are risks to credit in a

hard-landing scenario, the shift towards higher credit quality over recent years should drive loss improvement in a benign credit

scenario. Currently trading at the largest discount on our implied cost of equity metric and with market sentiment still mixed on

the name, we like the risk/return opportunity and see now as an attractive entry point.

Valuation

Our $58 target price for ALLY is derived from our discounted residual income model, which values an enterprise based on its

discounted excess returns over its cost of equity. Our residual income model incorporates our 3-year forward earnings