Investors were not on the side of Ally Financial (ALLY 3.55%) Monday after the bank posted its first-quarter results.

For the quarter, Ally flipped to a loss on the bottom line, with an adjusted (non-GAAP) shortfall of $166 million, or $0.44 per share. In the same quarter of last year, the bank booked a profit of $325 million, or $0.80 per share. Meanwhile, net revenue for Q1 2020 came in at $1.41 billion, 12% below the year-ago result. 

On average, analysts tracking the bank stock had been estimating an adjusted net profit of $0.71 per share, and a top line of $1.60 billion.

A partially open bank vault.

Image source: Getty Images.

The downward shift in Ally's fortunes was due to a sharp increase in provisioning for loan losses. All told, the bank set aside $903 million for this purpose during the quarter, more than three times the amount in both the previous quarter and Q1 2019.

That was an entirely reasonable move given the current economic environment; with the country apparently headed toward a recession because of the SARS-CoV-2 coronavirus, loan defaults across the banking sector are expected to rise steeply in the coming months.

Ally Financial has taken other measures to cushion itself from the impact of that coronavirus-fueled economic dive. For instance, it announced last month that, similar to peer U.S. banks, it was suspending its stock buyback program. It is, however, maintaining its quarterly dividend for the moment.

Not surprisingly, Ally's shares fell Monday by 2.7%, a deeper slide than that of the S&P 500 index, which dropped 1.8% on the day.