Synchrony Financial · NYSE:SYF
Synchrony Financial — Investor Presentation (June 2019)
55 slides from Synchrony Financial's investor presentation, Jun 20, 2019
Slide 1: Investor Supplement With Sales Platform Presentations
Exhibit 99.1 Investor Supplement With Sales Platform Presentations June 20, 2019
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: Synchrony Financial Overview
Synchrony Financial Overview Leading Consumer Finance Business • A leading Private Label Credit Card (PLCC) provider in US • A leader in financing for major consumer purchases and healthcare services • Long-standing and diverse partner base Strong Value Proposition for Partners & Consumers • Advance
Slide 4: Partner-Centric Business with Leading Sales Platforms
Partner-Centric Business with Leading Sales Platforms Retail Card Payment Solutions CareCredit Leading provider of private Leading provider of promotional Leading provider of label credit cards; also financing for major consumer promotional financing to provides Dual Cards, general purchases, offeri
Slide 5: Customized Credit Products and Growing Online Bank
Customized Credit Products and Growing Online Bank Payment Retail Card Solutions CareCredit Private Label Dual CardTM Co-Brand Private Label Private Label Dual CardTM Retailer only Accepted at Accepted at Retailer and private Accepted at Accepted at acceptance network locations network locations net
Slide 6: Long-Standing and Diverse Partnerships
Long-Standing and Diverse Partnerships Average Relationship Length with Ongoing Retail Card Partners is 22 Years Diversified Retail Card Partners Retail Card Interest and Fees on Loans by Retail Market(a) Legend includes a sample of partners, with length of relationship in years at March 31, 2019 Ma
Slide 7: Diversified Across Sales Platforms
Diversified Across Sales Platforms Payment Solutions Retail Markets CareCredit Specialties Interest and Fees on Loans(a)(b) Interest and Fees on Loans(a) 4% 3% 2% 6% 5% 7% 10% 8% 42% 61% 12% 19% 21% Home Furnishings/Flooring Dental Automotive Veterinary Electronics/Appliances Cosmetic & Dermatology
Slide 8: Deep Integration Drives 2-3x Market Growth Rate
Deep Integration Drives 2-3x Market Growth Rate(a) 10.2% 11.9% 9.0% 6.5% 8.5% 3.0% 3.3% 4.1% 5.9% 4.2% 1.3% (1.0)% Mass Electronics(b) Healthcare Apparel/Dept. Home Furniture 2017 Market Size ($ in billions) $551 $339 $259 $202 $247 $109 2012-2017 Market Growth Rate 2012-2017 Synchrony Financial Pur
Slide 9: Focus on Higher Quality Asset Base
Focus on Higher Quality Asset Base Disciplined Underwriting Stronger Portfolio (a) FICO, consumer accounts opened since Consumer FICO beginning of 2010 721+ 33% 34% 34% 34% 34% 34% 35% 721+ 40% 38% 661-720 28% 36% 37% 38% 38% 38% 38% 36% 661-720 39% 601-660 20% 21% 21% 20% 20% 20% 19% 18% 601-660 20
Slide 10: Historical Net Charge-Offs & Risk-Adjusted Yield
Historical Net Charge-Offs & Risk-Adjusted Yield (a,c) Delivered Strong Net Charge-Off Ratio Risk-Adjusted Returns 12.00% SYF • Net charge-off performance was 10.00% Bank Card Average generally consistent with general 8.00% purpose card issuers during the off Ratio - financial crisis 6.00% 4.00% • R
Slide 11: Retailer Share Arrangements (RSA)
Retailer Share Arrangements (RSA) Shared Components Illustrative Examples Operating Program SYF Share of Return Total Program Return Environment Return Retailer Share of Return Allocation 4.0% Program Revenue • Interest Income 2.5% 50% 50% • Fee Income 1.25% • Interchange Fees 2.75% Normal 100% Prog
Slide 12: RSA Provides a Countercyclical Buffer
RSA Provides a Countercyclical Buffer 12.00% 10.67% 10.00% 9.28% 8.00% 5.80% 5.63% 6.00% 5.37% 5.63% 5.63% 4.93% 4.68% 4.57% 4.51% 4.36% 4.43% 4.43% 4.00% 4.53% 4.51% 4.44% 4.17% 4.23% 3.88% 3.72% 3.24% 2.00% 2.27% 1.60% 0.00% (a) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 RSA/Average Receiva
Slide 13: Diverse Funding Sources and Strong Liquidity
Diverse Funding Sources and Strong Liquidity Diverse Funding Sources Strong Liquidity Profile $ in billions $23.4 Undrawn Credit Facilities $6.0 Liquid $17.4 Deposits 75% 70%-75% assets 1Q19 • Diverse and stable funding Securitized Debt 14% 15%-20% sources • Fast-growing direct deposit Unsecured Deb
Slide 14: Capital Deployment
Capital Deployment Capital Payout Distribution 140% 125% 120% 105% 97% 100% 80% 97% 63% 75% 60% 75% 40% 43% 20% 28% 30% 20% 22% 0% (a) (b) (c) (d) 2016 SYF Capital Plan 2017 SYF Capital Plan 2018 SYF Capital Plan Peer Capital Plan Average Dividends Buybacks • Improved capital payout distribution, wi
Slide 15: Strategic Priorities
Strategic Priorities Grow our business through our three sales platforms • Grow existing partner penetration • Continue to innovate and provide robust cardholder value propositions • Add new partners and programs with attractive risk and return profiles Invest in ‘Next Generation’ data analytics, AI
Slide 16: Appendix
Appendix
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation The following table sets forth a reconciliation between GAAP results and non-GAAP managed-basis results for 2009. Twelve months ended December 31, 2009 Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.26% Securitization adjustments (0.59)%
Slide 18: Retail Card
Retail Card {synchrony FINANCIAL
Slide 19: Retail Card Product Offerings
Retail Card Product Offerings Partners • Private Label Credit Cards • 24 National and Regional Retailers3 • Dual Cards™ • Average Length of Partnership = 22 Years3 • General Purpose Co-Branded Credit Cards • RSA Provides Program Alignment • Small- and Medium-Sized Business Credit Products • Substant
Slide 20: Long-Standing and Diverse Partnerships
Long-Standing and Diverse Partnerships 97% of Retail Card Ongoing Partner Interest and Fees on Loans Under Contract Until 2022 and Beyond1 Diversified Retail Card Partners Retail Card Interest and Fees on Loans by Retail Market2 Legend includes a sample of partners, with length of relationship in ye
Slide 21: Retail Card Strategic Advantages
Retail Card Strategic Advantages ✓ Co-location with partners drives deeply embedded relationships … allows us to implement targeted marketing and loyalty campaigns in real time ✓ Fully integrated into our partners in-store, online and mobile channels allows us to be aligned with their growth strateg
Slide 22: Our Relationship Structure
Our Relationship Structure SENIOR EXECUTIVE GUIDANCE MANAGEMENT COMMITTEE Sets strategic direction, operational oversight, CLIENT TEAM SUPPORT RESOURCES program changes and decisions. 250+ Person PROGRAM MANAGEMENT General Manager Analytics Hub Overall program and relationship management through mon
Slide 23: Customer Centric Product Strategy
Customer Centric Product Strategy Synchrony has a full suite of products that can be configured for our customers. PLCC G-COMMERCE • Cross-shop expansion • Incremental sales • Credit promotions • Risk-free gifting • Secured card upgrade • Instant gifting • No shipping deadlines DUAL CARD/CO-BRAND CR
Slide 24: Expanding Our Digital and Strategic Capabilities
Expanding Our Digital and Strategic Capabilities Delivering an Optimal Customer Experience Innovation Partner Accelerators Mobile Agile Partner Native Data Integration Lake FinTech & Speed-To- Ventures Scalable Innovation Market API Cloud 4 30+ 500+ Innovation 700+ MM Benchmarking and Stations 5X 10
Slide 25: Digital Expertise
Digital Expertise DIGITAL APPLY DIGITAL SERVICING SYNCHRONY PLUG - IN • Branded and configurable to retailer • Retailer-branded servicing web- • Fully secure and easy to • Adaptive/responsive user based portal hosted by Synchrony configure framework that is experience and optimized for device type i
Slide 26: Synchrony Enterprise Analytics
Synchrony Enterprise Analytics – More data, better organized and activated, and centered around the customer experience Create a single view Organize and activate With the customer journey of the customer through Synchrony’s at the heart of every decision Enterprise Data Lake client Synchrony data d
Slide 27: Value of Data Integration
Value of Data Integration CREDIT LINE OPTIMIZATION FRAUD REDUCTION Average CL Assignment Average 6 Month Fraud Rate by High Engagement Customers Level of Customer Engagement Improved credit line Advanced customer assignments for our -70–90% segmentation leads +20–30% partners’ best to a reduction of
Slide 28: Activating Customers Throughout Their Journey
Activating Customers Throughout Their Journey ENGAGE APPLY USE SERVICE Contextualized, Seamless Personalized Capture non- Dynamic relevant onboarding benefits (e.g., time card wallet credit lines acquisition offers and convenience share in and out Alexa and as a currency) of store Google Home Integr
Slide 29: Engage with us.
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Slide 30: Payment Solutions
Payment Solutions {synchrony FINANCIAL
Slide 31: Payment Solutions Product Offerings
Payment Solutions Product Offerings Partners • Private Label Credit Cards • National and Regional Retailers • Dual Cards™ • Local Merchants • Installment Loans • Manufacturers • Network Cards for Home and Auto • Buying Groups • Substantially All Credit is Promotional • Industry Associations Financin
Slide 32: Diversified Partnerships
Diversified Partnerships Average Relationship Length of Top 10 Partners is 12 Years1 Payment Solutions Retail Markets Interest and Fees on Loans2 Home Furnishings/Flooring 4% 6% Automotive 7% Electronics/Appliances 8% 42% Home Specialty 12% Power Other Retail 21% Jewelry & Other Luxury 1. As of Marc
Slide 33: Payment Solutions Strategic Advantages
Payment Solutions Strategic Advantages • Significant presence across big-ticket retailers in multiple industries Broad & deep partner • Built over decades through commitment, dedication and consistent investment network • Dedicated sales and merchant management teams organized to optimize small to m
Slide 34: Partner Management
Partner Management SUPPORT TEAM Relationship Management & Sales Synchrony Support Resources A consultative General Manager and Relationship Client Development Manager with extensive experience 250+ Person Analytics Center • General Manager of Excellence • Relationship Marketing Manager Marketing & D
Slide 35: Synchrony Car Care
Synchrony Car Care Synchrony Car Care Locations 32,000+ locations including: 6.7 million cardholders Service Repair & Parts Tire & Wheel Dealerships 6 months Special Financing for all purchases Additional Auto-Related Retailers of $199 or more.* 200,000+ including: 500,000+ including: Accepted at ga
Slide 36: Synchrony HOME
Synchrony HOME Launched January 2019: ~ 5 million cardholders. Cardholders may use card at 1 million+ locations. 18,000+ Synchrony HOME locations originate cards for the program. Electronics Flooring Home Service & Home Decor Care Furnishings 7
Slide 37: Expanding Our Digital and Strategic Capabilities
Expanding Our Digital and Strategic Capabilities Delivering an Optimal Customer Experience Innovation Partner Accelerators Mobile Agile Partner Native Data Integration Lake FinTech & Speed-To- Ventures Scalable Innovation Market API Cloud 4 30+ 500+ Innovation 700+ MM Benchmarking and Stations 5X 10
Slide 38: Big Ticket Path to Purchase
Big Ticket Path to Purchase Back IN- STORE 21% research 80% on mobile while Start Research SOCIAL MEDIA in-store ONLINE & REVIEWS 39% Consult with 81% friends/family Purchase 24% Check IN-STORE online reviews 26% 68% Research Research FINANCING Synchrony’s 2017 Major IN-STORE OPTIONS Purchase Study
Slide 39: Payment Solutions Strategy
Payment Solutions Strategy Strengthen the Invest in Pursue new CORE and unlock ADJACENCIES opportunities to existing potential to re-orient our TRANSFORM the business business Expand Network – Launched Synchrony HOME Enhanced POS Technologies – Accelerate brand, converted & reissued ~5MM accounts, a
Slide 40: Engage with us.
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Slide 41: CareCredit
CareCredit {synchrony FINANCIAL
Slide 42: CareCredit Product Offerings
CareCredit Product Offerings Partners • CareCredit Private Label Credit Card • CareCredit Network • CareCredit Dual Card™ ‒ Individual or Small Groups of • Promotional Financing: Health, Veterinary and Independent Healthcare Providers Personal Care Procedures, Services or ‒ National Retail Locations
Slide 43: Expansive Network
Expansive Network CareCredit Specialties Interest and Fees on Loans1 2% 3% Dental 5% Veterinary 10% Cosmetic & Dermatology 61% Vision 19% Audiology Other Markets 1. Year ended December 31, 2018. 3
Slide 44: Nation's Leading Healthcare Financing Partner
Nation’s Leading Healthcare Financing Partner Of CareCredit cardholders 94% say they are highly satisfied* Net Promoter Score nearly + + double the industry average 6M 220K $10B * 75 for financial services average active locations in the Purchase accounts1 acceptance network2 Volume1 * CareCredit, “
Slide 45: The CareCredit Solution
The CareCredit Solution A Win-Win for Providers and Patients • Guaranteed payment in two business days • Non-recourse for providers • Save time on billing and collections • Patients/pet parents can pay over time and not delay care or treatment • Promotional financing for patients Private Label Dual
Slide 46: How CareCredit Works
How CareCredit Works Standard Account Terms 4 Simple Steps < $200 Standard Account Terms Providers enroll and become a part of CareCredit card acceptance network Promotional Financing Options No Interest If Paid In Full Within 6, 12, > $200 18 or 24 months Patients apply at provider locations, on th
Slide 47: CareCredit Digital Solutions
CareCredit Digital Solutions CareCredit Consumer Digital Business Accelerators carecredit.com for CareCredit Direct prospects and cardholders in-practice applications Quick and easy payment On-the-go via Pay My Provider mobile app Provider Digital Solutions Provider Center for in Batch Quickscreen f
Slide 48: CareCredit: Strategic Advantages
CareCredit: Strategic Advantages • Robust national provider network. Over 220K locations, with continued steady growth Provider Network • Web-based provider locator averages 1M+ hits per month—considered a key source of new patients by providers • Dedicated healthcare cardholder and provider service
Slide 49: The Challenge for Healthcare Consumers
The Challenge for Healthcare Consumers Patients are paying more out-of-pocket 2016 out-of-pocket healthcare $350B spending1 40% of Americans couldn’t $400 afford an unplanned expense of $4002 average deductible for individual, employer- $1,573 sponsored coverage—up more than 114% since 20083 Need fo
Slide 50: The Challenge for Healthcare Providers
The Challenge for Healthcare Providers Providers are working harder to collect of providers say their top 64% concern is the time it takes to collect payment1 report it takes more than one 73% month to collect2 don't know how much in Demand for diverse tech- 26% patient collections they enabled Reve
Slide 51: Total Addressable Market
Total Addressable Market Total Addressable Market “Core” medical • Over $3.3 trillion in payments flows Total Patient market through the U.S. healthcare system1 Out-of-Pocket = $350B Specialties • 2017 Total Addressable ‘Core’ medical $13B (Current “core” market is $115 billion out-of-pocket med. ma
Slide 52: CareCredit: Competitive Landscape
CareCredit: Competitive Landscape Payment Distribution Healthcare Credit Competitive Landscape Health Cards 1 1 4% Dental Significant scale $9.5B Cash/Credit 36% 60% Insurance 1 2 Health Cards Insurance Vet 6%2% Significant penetration rates across specialties2 Dental Vet Cosmetic Audiology Vision 9
Slide 53: CareCredit Strong Loan Receivables Growth
CareCredit Strong Loan Receivables Growth $s in billions 8% CAGR $9.5 $8.9 3% $8.1 $7.3 $6.9 $6.5 $5.9 2012 2013 2014 2015 2016 2017 2018 2018 Purchase Volume = $10.2B Growth Drivers: 1. Network expansion – adding new healthcare specialties and more providers to our network 2. Utility expansion – ad
Slide 54: Building for Future Growth
Building for Future Growth 2019 Strategic Pillars 1. Organic & New Business • Core and Healthcare Specialty markets expansion • Continuous upgrades to Dual Card, build “HealthPlus” • Introduce new value props to address customer need 2. Health Systems • Become a comprehensive healthcare solution • E
Slide 55: Engage with us.
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