Ally offered to extend leases mid-March and defer payments for consumers impacted by the virus. The lender also pledged $3 million in direct financial aid to local communities and organizations.
“The sudden and severe nature of the shutdown has affected the world and our nation in a manner that has arguably never been replicated on a scale of this magnitude. … Significant action across public and private sectors should continue on a size and scale that has never been seen in history,” CEO Jeffrey Brown said on a call with investors. “We still do not know how long it will take to return to a state of normalcy.”
Ally said 25 percent of its auto-loan customers have asked for payment deferrals, and the vast majority have never been delinquent before.
Of the 1.1 million borrowers who requested forbearance, more than three-quarters have never asked for a deferral before and 70 percent have never had a late payment with Ally, CFO Jennifer LaClair told analysts during a conference call.
“We believe participation in this program will lower loss content,” LaClair said. “We will be able to track leading indicators of default and intervene early.”
Ally was among U.S. banks that rolled out forbearance programs to try to stem loan losses as much of the country remains under shelter-in-place orders for the coronavirus pandemic. The firm said it’s increasing its servicing staff capacity to prepare for when the payment deferrals end.
The lender’s liquidity position is significantly stronger during this economic slowdown than during the 2008 financial crisis, LaClair said.
Ally’s cash reserves of $3.2 billion, up from $1.3 billion year over year, is the “highest loss absorption capacity in the history of our company” for credit losses, she said.
