NEW YORK — Positively impacted by gains in net financing revenue, GMAC reported Thursday that, based on preliminary results, its global automotive services business posted pre-tax income from continuing operations of $309 million during the fourth quarter, a significant upswing from the pre-tax loss of $346 million a year ago.

GMAC noted in its earnings release that it now reports auto-related results as "global automotive services," which is a blend of its three international auto-centric businesses: North American automotive finance, international automotive finance and insurance.

Global automotive finance and insurance had been reported apart from each other, but GMAC noted that the "inclusion of insurance is consistent with GMAC's strategic focus on dealer-related insurance offerings."

Looking at the results of global automotive services in more detail, GMAC explained that, "continuing operations in the segment were affected by improved net financing revenue driven by strong remarketing gains, offset by losses in international operations related to certain wind-down costs and a loss provision expense related to the Nuvell subprime legacy portfolio."  

Officials noted that the Nuvell portfolio was roughly $4 billion as of the end of 2009, and they expect it to run off to approximately $2 billion by the end of this year.

Moving on, GMAC said the consumer financing originations — including the new joint venture in China — reached $8.2 billion during the fourth quarter, compared with $3.3 billion in the prior-year period.

Used originations were $1 billion, up from $600 million in the fourth quarter of 2008.

New originations reached $6.8 billion, compared with $2.3 billion in the year-ago period.

Meanwhile, new leases totaled roughly $400 million, static from the prior year.

For full-year 2009, consumer originations were $25.7 billion, down from $46.8 billion a year ago.

However, officials noted that quarterly consumer originations have been on an incline since the fourth quarter of 2008. They have doubled since the first quarter of last year (on a quarterly basis).

Next, GMAC looked at annualized credit losses for the global automotive services, which reached 3.57 percent of average managed retail contract assets during the fourth quarter, compared with 2.12 percent in the same period of 2008.

"Credit losses in the quarter reflect weak economic conditions, slightly higher loss severity and continued stress in the legacy subprime Nuvell portfolio," officials explained.

Meanwhile, delinquencies from continuing operations hit 3.48 percent, up from 3.31 percent in the prior-year period and 3.46 percent in the prior quarter.

"While the Nuvell subprime portfolio continues to have a negative impact on delinquency levels, overall delinquency trends in the auto portfolio have stabilized throughout the year," GMAC shared.

North American Automotive Finance

Continuing on, GMAC discussed the results from its North American automotive finance unit, which includes U.S. and Canadian results.

Pre-tax income from continuing operations during the fourth quarter hit $369 million, up from a loss of $405 million in the prior-year period.

"Results were driven by stronger net financing revenue due to improved remarketing gains, offset by loss provisions related to the Nuvell subprime legacy portfolio," executives pointed out.

Consumer financing originations were at $6.6 billion, a significant increase from $1.4 billion in the fourth quarter of 2008.

"GMAC remains focused on its core strength of providing automotive financing to GM and Chrysler dealers and customers," officials noted, adding that the company's U.S. wholesale penetration for GM dealer stock was 90.9 percent as of the end of 2009.

At the end of 2008, it was 85.2 percent.

Penetration on the retail side for GM was 30.3 percent, compared with 4.7 percent in the year-ago period "when the company had restricted its retail lending as a result of challenges in the credit and capital markets."

Additionally, GMAC said it continues to boost its "financing footprint" among Chrysler dealers and customers.

As most know, GMAC had wrapped up the formal underwriting process for 1,474 U.S. Chrysler dealers applying for standard wholesale credit lines. Ninety-four percent were approved.

The lender's U.S. wholesale penetration for Chrysler dealer stock was 77.3 percent at the end of 2009, a significant gain from 67.3 percent at the end of the third quarter.

GMAC originated $894 million in new Chrysler retail loans during the final quarter of the year, a $173 million increase from the previous quarter.

The lender's U.S. retail penetration for Chrysler was 25.5 percent, a strong upswing form 13.3 percent in the prior quarter.

Overall Results

Looking at GMAC's overall results, it had a net loss of $5 billion in the fourth quarter. In the same period the previous year, it had net income of $7.5 billion.

For full-year 2009, GMAC reported $10.3 billion in net losses, versus the $1.9 billion in net income in 2008.

Losses related to legacy assets in the mortgage operations significantly impacted both fourth-quarter and full-year results for 2009, while an $11.4 million after-tax gain from extinguishment of debt dealing with GMAC's bond exchanged strongly benefited the respective 2008 results.

In more detail, GMAC explained that the fourth-quarter 2009 results were pushed downward by:

—$3.3 billion of losses related to strategic mortgage actions.

—$573 million mortgage repurchase reserve expense.

—$308 million original issue discount amortization expense related to the December 2008 bond exchange.

—$262 million provision related to legacy Nuvell subprime assets.

—$122 million of mortgage servicing rights (MSR) valuation adjustments

—$118 million of losses in international automotive operations related to certain wind-down costs.

Combined, these items had pre-tax impact of $4.7 billion.

"GMAC has undergone significant transformation in 2009 and as a result, is better positioned to pursue business and market opportunities going forward," stated GMAC chief executive officer Michael Carpenter.

"Key steps during the year included: diversifying the profitable automotive finance business with the addition of Chrysler; launching the Ally Bank brand, which is a key part of our funding profile; strengthening our capital and liquidity positions; and implementing major restructuring actions to minimize risk related to the legacy mortgage business," he continued. "We are encouraged with the progress, and the recent upgrades of our credit ratings demonstrate that the steps we are taking are appropriate and making an impact."