Announcing its Q4 2007 results, the lending arm of General Motors said it had lost $724 million across all areas of the business, with ResCap posting a loss of $921 million – bringing its 2007 losses up to $4.3 billion.
The losses stemmed from defaults on mortgage loans, with one in 10 GMAC borrowers in the US currently in arrears, poor performance on its securitisations and a slowdown in the US market.
GMAC chief financial officer, Robert Hull, said: “We’re committed to supporting ResCap to the extent it doesn’t hurt our other businesses. We still think ResCap is an integral part of our strategy.”
Speaking to Bloomberg, Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, admitted that the results were worse than analysts had expected but the business remained ‘solid’ with a ‘good reputation’.
However, the lender has promised a strategic review of its ResCap operations which will see ‘aggressive actions’ to halt its profit slide.
Selling off parts of the business had not been ruled out. But Julie Gaskin, corporate relations manager at GMAC-RFC, emphasised the difference between the UK and US arm.
In a statement, she said: “GMAC and ResCap continue to investigate strategic alternatives. We have no further comment.”
