Synchrony Financial · NYSE:SYF
Synchrony Financial — Presentation (June 2018)
15 slides from Synchrony Financial's investor presentation, Jun 27, 2018
Slide 1: 2018 DFAST Annual Stress Test Disclosure
Exhibit 99.1 2018 DFAST Annual Stress Test Disclosure For Synchrony Financial, a Savings and Loan Holding Company June 27, 2018
Slide 2: Disclaimers
Disclaimers Cautionary Statement Regarding Forward-Looking Statements This presentation contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe
Slide 3: Overview
Overview • The 2018 Annual Stress Test Disclosure presents the results of the annual stress tests conducted by Synchrony Financial (“Synchrony”) and Synchrony Bank (the “Bank”), a wholly-owned subsidiary of Synchrony, in accordance with the Dodd-Frank Act Company-Run Stress Test requirements. • The
Slide 4: Description of Supervisory Severely Adverse scenario
Supervisory Severely Adverse Scenario Description • The Supervisory Severely Adverse scenario is not a forecast, but rather a hypothetical sequence of events designed to assess the strength of banking organizations and their resilience to a severely adverse economic environment. • The Supervisory Se
Slide 5: Risk Coverage
Risk Coverage Synchrony intends to capture its material risk exposures through its stress testing policies, procedures, and processes. The types of material risk exposures encompassed in this hypothetical exercise include the following: Risks Description Primary Components • Provision for Loan Losse
Slide 6: Stress Test Methodology: Overview
Stress Test Methodology: Overview • Synchrony considers a broad range of potential stresses to its balance sheet, capital levels, PPNR, and provision for loan losses. • Synchrony uses both qualitative and quantitative methods to translate risk measures, including proprietary econometric forecasting
Slide 7: Stress Test Methodology: PPNR
Stress Test Methodology: PPNR • Interest income is estimated across Synchrony’s lending products, using proprietary econometric forecasting models. These models and other forecasting methodologies estimate the loan receivable balances, interest and fees on loans, investment security balances, intere
Slide 8: Stress Test Methodology: Provision for Loan Losses
Stress Test Methodology: Provision for Loan Losses • Provision for loan losses is forecasted in two key components: Net Charge-offs of Loans and changes in Allowance for Loan Losses (ALLL). • Net charge-offs are a function of gross charge-offs net of reversals and recoveries. • Gross charge-offs of
Slide 9: Stress Test Methodology: Risk-Weighted Assets
Stress Test Methodology: Risk-Weighted Assets • Under the Supervisory Severely Adverse scenario, Synchrony estimates that business volume would decrease as management credit actions take effect and consumers reduce spending under a severe macroeconomic environment. • In this scenario, RWAs experienc
Slide 10: Results: Stressed Capital Ratios and RWAs
Supervisory Severely Adverse Scenario Results Actual 4Q 2017 and hypothetical stressed capital ratios and RWAs under the Supervisory Severely Adverse scenario (1Q 2018 – 1Q 2020)1 Synchrony Financial Synchrony Bank Stressed Capital Ratios Stressed Capital Ratios Actual 4Q Ending 1Q Actual 4Q Ending
Slide 11: Results: Nine-quarter Cumulative Profit and Loss Metrics
Supervisory Severely Adverse Scenario Results Nine-quarter cumulative profit and loss metrics under the Supervisory Severely Adverse scenario (1Q 2018 – 1Q 2020)1 Synchrony Financial Synchrony Bank % of % of % of Average % of Average $ in Average Assets2 $ in Average Assets2 Billions Assets2 Annuali
Slide 12: Results: Nine-quarter Cumulative Loan Losses by Loan Type
Supervisory Severely Adverse Scenario Results Nine-quarter cumulative loan losses by type of loans under the Supervisory Severely Adverse scenario (1Q 2018 – 1Q 2020)1 Synchrony Financial Synchrony Bank Portfolio Portfolio $ in Billions Loss Rates2 $ in Billions Loss Rates2 Loan Losses $16.5 21.4% $
Slide 13: Synchrony Financial - Drivers of Changes to Capital Ratios
Synchrony Financial - Supervisory Severely Adverse Scenario Drivers of Changes to Capital Ratios Common Equity Tier 1 Capital Ratio1 +17.6% (16.6%) (1.6%) (0.1%) +1.4% 16.0% 16.7% SYF PPNR Credit Capital Actions Other RWAs SPV Severe 4Q'17 1Q'20 Total Risk-Based Capital Ratio1 +17.6% (16.6%) (1.6%)
Slide 14: Synchrony Bank - Drivers of Changes to Capital Ratios
Synchrony Bank - Supervisory Severely Adverse Scenario Drivers of Changes to Capital Ratios Common Equity Tier 1 Capital Ratio1 2 Total Risk-Based Capital Ratio1 1 Capital Ratios and RWAs are inclusive of the PayPal Credit Portfolio acquisition in 2018 and are calculated based on the Basel III Stand
Slide 15: Engage with us
|! synchrony FINANCIAL Engage with us.