Ally Bank 2011 Annual Report Download - page 47

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
Other income increased 9% for the year ended December 31, 2011, compared to 2010, primarily due to higher earnings from the China joint venture in
2011 driven by an increase in originations.
The provision for loan losses was $65 million for the year ended December 31, 2011, compared to $54 million in 2010. The increase is primarily due
to an increase in specific commercial loan reserves during the first quarter of 2011, partially offset by favorable loss performance on the consumer portfolio
in Europe.
Total noninterest expense decreased $9 million for the year ended December 31, 2011, compared to 2010. The decrease was primarily due to lower
other operating expenses resulting from a continued focus on streamlining operations. This decrease was offset primarily by unfavorable movements in
foreign−currency exchange rates and an increase in headcount due to growth in certain countries, such as Brazil.
2010 Compared to 2009
Our International Automotive Finance operations earned income from continuing operations before income tax expense of $205 million during the
year ended December 31, 2010, compared to a loss from continuing operations before income tax expense of $102 million during the year ended
December 31, 2009. Results for 2010 were favorably impacted by lower provision for loan losses and lower restructuring charges on wind−down
operations.
Total financing revenue and other interest income decreased 16% for the year ended December 31, 2010, compared to 2009, primarily due to
decreases in consumer and commercial asset levels as the result of adverse business conditions in Europe and the runoff of wind−down portfolios.
Interest expense decreased 21% for the year ended December 31, 2010, compared to 2009, primarily due to reductions in borrowing levels consistent
with a lower asset base.
Depreciation expense on operating lease assets decreased 44% for the year ended December 31, 2010, compared to 2009, primarily due to the
continued runoff of the full−service leasing portfolio.
Net gain on automotive loans was $21 million for the year ended December 31, 2010, compared to a net loss of $76 million for the year ended
December 31, 2009. The losses for the year ended December 31, 2009, were due primarily to lower−of−cost or market adjustments on certain loans
held−for−sale in certain wind−down operations. The gains for the year ended December 31, 2010, were primarily due to the partial release of lower−of−cost
or market adjustments on loans held−for−sale in wind−down operations due to improved market values.
The provision for loan losses was $54 million for the year ended December 31, 2010, compared to $230 million in 2009. The decrease was primarily
due to improved loss performance on the consumer portfolio reflecting higher origination quality in 2009 and 2010 and the improving financial position of
our dealer customers in Europe.
Noninterest expense decreased 9% for the year ended December 31, 2010, compared to 2009. The decrease was primarily due to lower compensation
and benefits expense primarily related to lower employee headcount resulting from restructuring activities, unfavorable foreign−currency movements during
the year ended December 31, 2009, and lower IT and professional service costs due to continued focus on cost reduction.
44