In relation to each rating of a subsequently issued bond or note of the Please see the Rating Methodologiesįor ratings issued on a program, series, category/class ofĭebt or security this announcement provides certain regulatory disclosures The principal methodology used in these ratings was Banks Methodology Of CardWorks that would weaken capital or profitability could also be A decline in tangible common equity to risk weighted assetsīelow 9.0% or a mis-step associated with the integration Performance without a commensurate strengthening in profitability andĬapital. Or if growth in riskier credit quality assets negatively impacts asset Moody's views as an important component to the auto franchise, The ratings could be downgraded due to a significant decline in the depositīase, a decline in franchised dealer relationships, which Non-auto asset classes, as well as achieving higher absoluteĬapital levels would also be positive for the ratings. A continued prudentīusiness diversification increase, for example measured growth of On confidence-sensitive wholesale funding and brokered depositsĪnd profitability continues to improve, while demonstrating stressĬapital resiliency and stable asset quality. The ratings could be upgraded if the company continues to reduce its reliance Will remain broadly unchanged, over the next 12-18 months. Reflecting its expectation that the company's financial fundamentals Moody's has maintained its stable outlook on Ally Financial, TheĬompany shows an appropriate risk management framework commensurate with Have any particular concerns with Ally's governance. Our general assessment for the global banking sector. Which would require strong policy shifts in short periods to have a materialĪlly's exposure to social risks is moderate, consistent with The risks are somewhat mitigated by the short tenor of most of the transactions, Vehicles (on lease or floorplan) or the recovery value (on loan transactions). Any changes in regulationĬan affect the value of the vehicle and therefore the residual value of The most relevant environmental risks for these companiesĪrise from carbon/air pollution regulations. Overall, Moody's consider auto lenders to face moderate environmental Ratio target, despite the increase in asset risk. To maintain its 9.0% common equity tier 1 (CET1) capital Moody's also considers that Ally Financial has stated its intention Will increase Ally's low-to-mid 80 basis points annualĬharge-offs by around 35 to 40 basis points, at the closing However, at the same time, CardWorks' very high annualĬharge-offs evidence an increase in Ally's asset risk profile.Īdding CardWork's 12% to 14% annual charge-offs Of note, CardWorks did not have an annual loss ROA by 10 basis points, based on the firm's pro-formaįinancials. Greater than 5% return on assets (ROA) will likely increase Ally's While the CardWorks acquisitionĪccounting for $4.7 billion in total assets will only increaseĪlly's balance sheet by 3%, CardWorks' very high, Income to average assets of 0.96% for full year 2019, Profitability has improved over the last several years, with net In large part due to its low-risk, dealer floor plan receivables,Īlly's profitability lags its rated US regional bank peers. Noted that the acquisition adds a core consumer banking product to Ally'sĮxisting consumer auto finance, residential finance, deposit,Īnd securities-brokerage and investment-advisory offerings. Would be offset by a weakening in Ally's asset quality. Of Ally Financial's credit profile, taking into account thatīoth continued business diversification and improved profitability benefits, The ratings affirmation reflects Moody's overall unchanged assessment Recreational and marine loans, as well as is a top-15 US The company provides third-party credit card servicing, consumer Segment with average borrower FICO scores of 630. Under the terms of the agreement, Merrickīank, a wholly owned subsidiary of CardWorks, Inc.ĬardWorks is a top-20 US credit card issuer focused on the non-prime CardWorks is a privately held company with $4.7īillion in assets and $2.9 billion in deposits, asĪt 31 December 2019. Moody's affirmation of Ally Financial's ratings follows itsĪnnouncement that it had entered into a definitive agreement to acquireĬardWorks. (both domestic and foreign currency), Affirmed (P)NP Program (both domestic and foreign currency), Affirmed (P)Ba1 Backed Senior Unsecured Regular Bond/Debenture, Which the company expects to close in the third quarter of 2020. The firm's credit profile, following the announcement of theĪcquisition of CardWorks, Inc. The ratings affirmation reflects Moody's unchanged assessment of The Ba1 senior long-term unsecured rating of Ally Financial Inc.Īll other long-term ratings of Ally Financial and GMAC Capital New York, Febru- Moody's Investors Service ("Moody's") has affirmed
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