DOW JONES NEWSWIRES
GMAC LLC's first-quarter loss widened as credit woes continued
to mount for the finance company and weak economic conditions hurt
results.
The company said it was seeing some improvement in its mortgage
business, and the beleaguered Residential Capital LLC unit posted a
narrower loss.
General Motors Corp. (GM), the focus of a federal bailout aimed
at keeping the auto maker a going concern, owns 49% of
cash-strapped GMAC. The lender got a $5 billion capital infusion
under the U.S. Treasury Department's Troubled Asset Relief Program
as it becamse a bank holding company.
Chief Executive Alvaro Molina said Tuesday that the soft economy
and weaker credit performance continued to pressure GMAC's
financial performance. He added the company saw several signs of
progress, including expanding retail auto lending and re-entering
the prime-jumbo-mortgage market.
GMAC posted a loss of $675 million, compared with a year-earlier
loss of $589 million. The results included $631 million in
debt-extinguishment gains.
Revenue decreased 8.8% to $2.2 billion.
Credit-loss provisions jumped 78% to $843 million but were down
37% from the fourth quarter.
GMAC's auto-finance unit profit slid 13% on weaker credit
performance.
The company's mortgage operations, which include Residential
Capital LLC along with the ResMor Trust Canadian mortgage
operation, posted a loss of $125 million, compared with a
year-earlier loss of $859 million. ResCap, one of the nation's
largest subprime-mortgage lenders, has been struggling to turn
around its fortunes as GMAC and its owners deliberate its future.
GMAC spent much of last year restructuring the unit.
The company said mortgage-loan origination volume has begun to
improve, though it was still down 29% from a year earlier.
Net charge-offs, or auto loans the company doesn't think of as
collectible, rose to 2.91% of managed retail assets from 1.57% in
North America and 1.08% from 0.74% at the international
operations.
The company last week said it would assume the title of lender
for new financing to Chrysler LLC dealers and consumers, but it
won't be inheriting Chrysler Financial's book of existing auto
loans and leases. The move could be a win-win for GMAC, because the
pact with Chrysler means GMAC won't be saddled with problems that
could arise in Chrysler Financial's existing portfolio, and the
deal helps GMAC satisfy its requirement as a bank holding company
to diversify its lending business away from GM.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com