Ally sells credit card business, aims to exit mortgage

Ally Financial has sold its credit card business to credit card service provider CardWorks and its subsidiary, Merrick Bank , for an undisclosed amount as part of the bank’s restructuring. “I believe our path to deliver mid-term returns is through the power of focus,” Chief Executive Michael Rhodes said during the $182 billion bank’s fourth-quarter earnings call today. “Similarly, we are ceasing new mortgage loan originations on Jan. 31 and expect remaining balances to run off over time.” As of Dec. 31, Ally's credit card portfolio accounted for $2.3 billion in credit card receivables with 1.3 million active cardholders, Ally said today in a release. "We are pivoting to a more focused approach that allocates capital to our core businesses where we have a competitive advantage,” Rhodes said. “It prioritizes efficiency and expense discipline and prudently manages risk.” THE BIG PICTURE : Exiting the mortgage and credit card business segments is part of Ally’s larger restructuring plan to “simplify and streamline our structure, prioritize our core businesses and drive improved returns,” Rhodes said. The Detroit-based digital bank sold its point-of-sale operations to payments company Synchrony in January 2024 to focus on its core offerings like auto loans, Bank Automation News reported at the time. Other major FIs like Citi and Goldman Sachs are also restructuring, leaving non-core business lines to focus on streamlined operations and drive growth. Citi sold its wealth business in China to HSBC in October 2023 while Goldman has been winding down its retail banking businesses for nearly two years and sold its General Motors credit card to Barclays last October, according to previous BAN reporting. BY THE NUMBERS : In Q4, Ally reported: Total noninterest expense of $1.3 billion, down 3.9% year over year; An efficiency ratio of 67.1% compared with 68.2% in Q4 2023; and Net revenue of $2 billion, flat YoY. OF NOTE : As part of its restructuring, Ally reduced its headcount to save costs, Rhodes said on the call. The digital bank didn’t break out its headcount numbers in its earnings report. “We announced a workforce reduction. ... This action is expected to contribute more than $60 million in annual life savings, drive positive operating leverage and align the cost structure with our new streamline footprint,” Rhodes said. Register here for Bank Automation Summit 2025, taking place March 3-4 in Nashville, Tenn. View the full event agenda here.

Ally sells credit card business, aims to exit mortgage

Digital bank reported noninterest expense of $1.3B, down 3.9% YoY

Transactions: Ally sells $2.3B credit card business to CardWorks

52% of execs say they plan to use agents

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Ally sells credit card business, aims to exit mortgage

Digital bank reported noninterest expense of $1.3B, down 3.9% YoY

Transactions: Ally sells $2.3B credit card business to CardWorks

52% of execs say they plan to use agents

Related Posts

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