Ally Financial has reported 2012 fourth-quarter core pre-tax profit of $19m, compared to a loss of $172m in Q4 2011, including a 30.18% year-on-year rise in automotive finance profit.

However, the figure was down from the core pre-tax income of $341m reported for Q3 2012, a drop Ally attributed to original issue discount amortisation expenses and charges incurred for the company’s repositioning.

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Without $94m pension expenses, a $148m charge for the repayment of Federal Home Loan Bank debt and $46m in legal and other expenses, pre-tax profit would have stood at $308m, according to the company.

Ally spent much of 2012 offering its international automotive, banking and insurance operations up for tender, following the filing for bankruptcy by its Residential Capital mortgage arm.

Many of its automotive operations, including those in the UK under GMAC UK, are set to be reabsorbed in mid-2013 by GM Financial, the captive finance arm of General Motors, who originally sold its automotive finance operations to Ally.

‘Core auto services’

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Ally’s automotive finance business made $371m in the final three months of 2012, up from $337m in the previous quarter and $285m over the same period in 2011. This contributed to a $1.39bn profit for Ally Financial automotive finance, up from $1.33bn in 2011.

Ally reported net income of $1.24bn for the whole 2012, compared to a $157m loss in 2011. However there was a pre-tax loss of $419m in 2012, compared to $11m pre-tax profit the preceding year.

Michael Carpenter, Ally chief executive officer, said: "A number of strategic actions were taken that will reshape and strengthen the company going forward. Agreements were reached to sell the international operations at a substantial premium, and steps were taken to further address the legacy mortgage risks.

"In addition, our core auto services and direct banking platforms made substantial progress amid competitive markets."

peter.johnstone@timetric.com