(Reuters) - Ally Financial Inc (>> Ally Financial Inc), the largest U.S. auto loan company, reported a 37 percent fall in quarterly profit as it adapts to lost leasing business from General Motors.

Net income fell to $268 million, or 47 cents per share, in the third quarter ended Sept. 30 from $423 million, or 74 cents per share, a year earlier. Last year's third-quarter numbers included $130 million in income from exiting a joint venture in China and a one-time tax benefit from the sale of mortgage servicing operations.

The company has been trying to boost its market share by financing cars made by Ford Motor Co (>> Ford Motor Company) and Nissan Motor Co Ltd (>> Nissan Motor Co Ltd) after General Motors Co (>> General Motors Company) replaced Ally as the exclusive lessor for Buick, GMC and Cadillac vehicles in February.

Ally saw slight deterioration in credit performance versus a year ago, a trend that has continued over several quarters.

Chief Financial Officer Christopher Halmy said the deterioration reflects a decision Ally made a few years ago to take on riskier loans, but that credit was performing as expected.

"We're seeing no real credit trends that are disturbing," Halmy said.

Excluding items, the company earned 51 cents per share, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S.

Total auto loans made by Ally were down 6 percent at $11.1 billion. Ally said the decline reflects its increased emphasis on loans for car purchases, as opposed to leases, and differences in how it accounts for those assets on its balance sheet.

Income from auto financing fell 16.4 percent to $347 million, while income from dealer financing decreased 18.5 percent to $387 million.

Ally made good progress reducing expenses and lowering funding costs, according to a report from Guggenheim Securities analyst Eric Wasserstrom.

Ally's shares were lower by more than 3 percent midday in New York.

(Reporting by Dan Freed in New York and Rachel Chitra in Bengaluru; Editing by Don Sebastian and Meredith Mazzilli)

By Rachel Chitra and Dan Freed