By Katherine Hamilton

Ally Financial said Wednesday it will enact a layoff of less than 5% of its 11,000-employee workforce, as well as exit the mortgage-origination business, as the company is burdened by borrowers falling behind on debt.

The financial-services firm said it is also looking at strategic alternatives for its credit card business in the first quarter of 2025, spokesperson Peter Gilchrist said in a statement.

The moves are part of the Charlotte, N.C., company's effort to "right-size," Gilchrist said, adding that the layoffs are not specific to any one business or location.

In September, Chief Financial Officer Russ Hutchinson said its borrowers are struggling to keep up with loans because of the high cost of living.

The company's most recent third quarter showed some bottom-line recovery after a weak second quarter, while also reflecting a rise in its provision for credit losses, or money the lender doesn't expect to be paid back.

Also in the third quarter, Ally earned $27 million from its mortgage finance segment, up $1 million from a year prior.

Ally initially opened its doors in 1919 as GMAC, a division of General Motors, to help auto dealers with financing. It began offering mortgage products in the 1980s and purchased the Bank of New York's lending unit in the late 1990s.

In 2013, Ally left the mortgage business due to losses in its subsidiaries GMAC Mortgage and Residential Capital. It returned to the business two years later.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

January 08, 2025 11:07 ET (16:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.