Fitch Ratings affirmed Ally Financial Inc.'s long-term issuer default rating at BBB- and removed the Negative Rating Watch. The ratings outlook is negative.

In removing the Negative Rating Watch, the rating agency took into account the increase in Ally Financial's common equity Tier 1 ratio to 10.1% in the second quarter. Fitch believes this increase will provide "added cushion" to the increase in credit losses stemming from the rising unemployment caused by the COVID-19 pandemic, which is more likely to emerge in the fourth quarter of 2020 and in 2021.

Fitch commented that the delay in credit loss emergence is driven by the impact of government stimulus and widespread consumer loan forbearance and deferral programs. The rating agency believes a negative outlook is appropriate, in light of the high degree of macroeconomic uncertainty and the extended time frame over which downside risks are likely to play out.

Ally Financial's ratings continue to be supported by "a strong franchise, leading market position in the U.S. auto finance industry, solid track record in credit performance, diverse funding base, ample liquidity, adequate risk-adjusted capitalization and seasoned management team," according to the Fitch.

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