Fri. Nov 15th, 2019

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SYF: Synchrony Financial (NYSE: SYF)

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Synchrony Financial (NYSE: SYF) recently declared 3rd-quarter 2k19 net earnings of $1.10B, or $1.600 for each diluted share; this includes a $326.00M pre-tax, $248.00M after-tax, or $0.380 for each diluted share benefit from a reduction in the reserve related to the sale of the Walmart consumer portfolio, which was accomplished in October. Highlights included*:

  • Loan receivables reduced 5.0 percent to $83.20B; apart from the Walmart portfolio from both durations, loan receivables grew 6.0 percent
  • Net interest income raised 4.0 percent to $4.40B
  • Purchase volume grew 5.0 percent to $38.40B, and average active accounts grew 2.0 percent to 76.70M
  • Deposits grew $3.70B, or 6.0 percent, to $66.00B
  • Accomplished the sale of the Walmart portfolio on October 11, 2k19
  • Expanded and extended key planned consumer credit relationship with PayPal: will become the exclusive issuer of a Venmo co-branded consumer credit card, which is expected to launch in the 2nd-half of 2020, and extended existing PayPal relationship
  • Renewed key Retail Card partnership: DICK’S Sporting Goods
  • Renewed key Payment Solutions partnerships: Polaris, La-Z-Boy and Conn’s HomePlus
  • Expanded CareCredit credit card network to include 8,500+ Walgreens® and Duane Reade® stores and Loyale™ Healthcare and signed a new partnership with St. Luke’s University Health Network
  • Paid quarterly common stock dividend of $0.220 for each share and repurchased $550.00M of Synchrony Financial common stock

All comparisons are for the 3rd-quarter of 2k19 contrast to the 3rd-quarter of 2k18, unless otherwise noted

Business and Financial Highlights for the 3rd-Quarter of 2k19

All comparisons are for the 3rd-quarter of 2k19 contrast to the 3rd-quarter of 2k18, unless otherwise noted.

Earnings

  • Net interest income raised $183.00M, or 4.0 percent, to $4.40B, mainly driven by loan receivables growth.
  • Retailer share arrangements raised $145.00M, or 17.00 percent, to $1.00B, mainly driven by improved program performance and growth in loan receivables.
  • Provision for loan losses reduced $432.00M, or 30.00 percent, to $1.00B, mostly driven by the $326.00M reserve reduction related to the Walmart portfolio.
  • Other income raised $22.00M, or 35.00 percent, to $85.00M.
  • Other cost raised $10.00M, or 1.0 percent, to $1.10B.
  • Net earnings totaled $1.10B contrast to $671.00M previous year.

Balance Sheet

  • Duration-end loan receivables reduced 5.0 percent; apart from the Walmart portfolio from both durations, duration-end loan receivables growth was 6.0 percent; purchase volume growth was 5.0 percent and average active accounts raised 2.0 percent.
  • Deposits grew to $66.00B, up to $3.70B, or 6.0 percent, and comprised 76.00 percent of funding.
  • The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $21.70B, or 20.50 percent of total assets.
  • The estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 14.50 percent, contrast to 14.20 percent, reflecting the Company’s strong capital generation capabilities while deploying capital through organic growth, program acquisitions, and continued execution of our capital plans.

Key Financial Metrics

  • Return on assets was 3.90 percent and return on equity was 28.30 percent.
  • Net interest margin was 16.290 percent.
  • The efficiency ratio was 30.80 percent.

Credit Quality

  • Loans 30+ days past due as a percentage of total duration-end loan receivables were 4.470 percent contrast to 4.590 percent previous year; apart from the PayPal Credit program and the Walmart portfolio, the rate was flat contrast to last year.
  • Net charge-offs as a percentage of total average loan receivables were 5.350 percent contrast to 4.970 percent previous year; apart from the PayPal Credit program and the Walmart portfolio, the rate reduced about 20 basis points contrast to last year.
  • The allowance for loan losses as a percentage of total duration-end loan receivables was 6.740 percent contrast to 7.110 percent previous year.

Sales Platforms

  • Retail Card duration-end loan receivables reduced 11.00 percent; apart from the Walmart portfolio from both durations, duration-end loan receivables growth was 5.0 percent and driven by digital partners; interest and fees on loans raised 6.0 percent, mainly driven by loan receivables growth. Purchase volume growth was 5.0 percent, and average active accounts raised 1.0 percent.
  • Payment Solutions’ duration-end loan receivables grew 7.0 percent, led by home furnishings and power products. Interest and fees on loans raised 6.0 percent, mainly driven by the loan receivables growth. Purchase volume growth was 5.0 percent and average active accounts raised 3.0 percent.
  • CareCredit duration-end loan receivables grew 8.0 percent, led by dental and veterinary. Interest and fees on loans raised 9.0 percent, mainly driven by the loan receivables growth. Purchase volume growth was 10.00 percent and average active accounts raised 4.0 percent.

 

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