Ally Financial Earnings: Net Interest Margins Recover From Their First-Quarter Low

No-moat-rated Ally Financial reported decent second-quarter earnings as the firm recovered from a weak first quarter, although it still faces headwinds from higher net charge-offs and net interest margin compression. Adjusted earnings per share increased from $0.96 last year and jumped from $0.45 last quarter to $0.97. That said, the company did benefit from a $37 million tax benefit during the quarter, driven by a high volume of tax credits on electric vehicle leases. Ally passes these tax credits to its customers in the form of lower lease rates, meaning, these tax credits have an accelerated positive impact on its bottom line that is then fully offset by a long-term headwind to NIMs.