(Reuters) – Ally Financial said on Tuesday it had sold $2.8 billion of low-yielding investment securities as part of a repositioning the consumer lender expects will help it modestly increase its interest income going forward.
U.S. banks have increasingly rejigged their bond portfolios in recent months, aiming to improve their profitability by reinvesting the proceeds in higher-yielding paper.
Ally said the balance sheet restructuring will result in a pre-tax loss of about $250 million in the first quarter of 2025. Proceeds of about $2.5 billion from the repositioning were reinvested into shorter-duration securities at current market rates.
The Detroit, Michigan-based bank expects the repositioning to reduce its CET1 ratio — a metric that gauges high-quality capital — by about 12 basis points.
U.S. regional lender KeyCorp last year sold $10 billion of low-rate securities to invest in higher-yielding paper.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Alan Barona)
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