- Ally Financial said Thursday it is leaving the credit card business and paying $190 million to buy Health Credit Services, a Charlotte, North Carolina-based company that offers unsecured loans to finance medical procedures. Ally CEO Jeffrey Brown said he wants to apply HCS's point-of-sale lending capabilities to other retail sectors.
- Ally’s credit card partnership with TD Bank wasn't meeting expectations, with a loan portfolio of less than $100 million.
Ally Chief Financial Officer Jennifer LaClair said the company intends to originate point-of-sale loans for Health Credit Services and hold them on its own balance sheet. Two banks and a credit union now originate loans for HCS.
LaClair pointed to rapid growth in point-of-sale lending to explain Ally's entering the space. "It's growing at 18 to 20-plus percent," she said during the company's earnings call Thursday. Brown said, "We've been interested in the unsecured space, and this was an ability to acquire a really nice platform at a relatively inexpensive price. And we'll seek to grow it from there."
Point-of-sale loan technology gives consumers quick approvals for the financing of specific purchases made on mobile phones.
Ally had launched its credit card in June 2016 to sell additional products to its auto loan customers. The card offered cash rewards between 1% and 2%. The partnership with TD Bank limited Ally's risk — TD took on the credit losses — but Ally also had less of an opportunity to earn money from the card.
Ally on Thursday reported quarterly net income of $582 million, including a $201 million tax benefit. Total net revenue rose 6% for the quarter, the bank reported. Ally’s assets total $180 billion, making it the nation’s 19th-largest bank.