For Ally Financial, the Key to Future Success Is Credit
One of the top priorities when evaluating any bank stock is having good clarity on credit. Loan losses are one of the leading causes behind bank failures and can also lead to hefty losses if not monitored correctly, which in turn can destroy shareholder equity.
While certainly not the only concern among investors when it comes to the digital consumer bank Ally Financial (NYSE: ALLY), which specializes in auto lending, it has weighed heavily on shares as investors wonder how the bank's retail auto portfolio will hold up in a tougher economy.
Used vehicle prices are on the decline, and there is significant uncertainty surrounding the consumer. How Ally manages credit is ultimately going to determine how the stock performs.
Source Fool.com
