Ally Financial's Margin Is About to Get a Tailwind as High-Cost Deposits Roll Off. Is the Digital Bank a Buy?

Ally Financial is positioned for margin expansion as $18 billion in high-yield CDs mature in 2026 and can be replaced with lower-rate funding. The digital bank reported strong Q1 results with 8% net financing revenue growth, 24% expense reduction, and improved net interest margin of 3.5%. Trading at just 11x earnings and 8x forward earnings, Ally appears undervalued with tailwinds from auto loan originations and credit quality improvements.