Synchrony Financial · NYSE:SYF
Synchrony Financial — Q2 2019 Earnings Presentation
17 slides from Synchrony Financial's earnings presentation, Aug 7, 2019
Slide 1: 2Q 2019 Investor Supplement
Exhibit 99.1 2Q 2019 Investor Supplement August 7, 2019
Slide 2: Disclaimers: Cautionary Statement Regarding Forward-Looking Statements
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 RetailRetail Card Card Payment Solutions CareCredit Private Label Dual CardTM Co-Brand Private Label Network Cards Private Label Dual CardTM Retailer only Accepted at Accepted at Retailer and Broad network Accepted at Accepted at acceptance network
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 June 30, 2019 Mas
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) 11.4% 8.6% 8.5% 6.7% 1.7% 3.6% 3.8% 3.9% 4.7% 4.7% 2.0% (1.4)% Mass Electronics(b) Healthcare Apparel/Dept. Home Furniture 2018 Market Size ($ in billions) $567 $351 $263 $198 $250 $101 2013-2018 Market Growth Rate 2013-2018 Synchrony Financial Purc
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% 35% 35% 721+ 40% 36% 36% 36% 37% 40% 661-720 28% 36% 37% 38% 38% 38% 38% 661-720 39% 36% 601-660 20% 20% 20% 19% 20% 19% 18% 17% 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 $23.7 Undrawn Credit Facilities $7.0 Liquid $16.7 Deposits 75% 70%-75% assets 2Q19 • 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 160% 140% 134% 125% 120% 97% 100% 80% 63% 97% 117% 66% 60% 75% 40% 43% 49% 20% 28% 20% 22% 17% 17% 0% 2016 SYF Capital Plan (a) 2017 SYF Capital Plan(b) 2018 SYF Capital Plan(c) 2019 SYF Capital Plan (d) Peer Capital Plan Average (e) Dividends Buybacks
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)%