Synchrony Financial · NYSE:SYF
Synchrony Financial — Presentation (June 2017)
15 slides from Synchrony Financial's investor presentation, Jun 27, 2017
Slide 1: 2017 DFAST Annual Stress Test Disclosure
2017 DFAST Annual Stress Test Disclosure For Synchrony Financial, a Savings and Loan Holding Company June 27, 2017
Slide 2: Disclaimers
2 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 “saf
Slide 3: Overview
3 Overview • The 2017 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. • Th
Slide 4: Description
4 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
Slide 5: Risk Coverage
5 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 Credit Risk Loss that ar
Slide 6: Stress Test Methodology: Overview
6 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 forecastin
Slide 7: Stress Test Methodology: PPNR
7 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, inte
Slide 8: Stress Test Methodology: Provision for Loan Losses
8 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 o
Slide 9: Stress Test Methodology: Risk-Weighted Assets
9 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. • Lower payment rates and a cons
Slide 10: Results: Capital Ratios and RWAs
10 Supervisory Severely Adverse Scenario Results 1 Capital Ratios and RWAs are calculated under the Basel III standardized approach consistent with capital transition rules. 2 Tier 1 Leverage Ratio is calculated as Tier 1 Capital as a percentage of total average assets, after certain adjustments. Ac
Slide 11: Results: Nine-quarter cumulative profit and loss metrics
11 Supervisory Severely Adverse Scenario Results Nine-quarter cumulative profit and loss metrics under the Supervisory Severely Adverse scenario (1Q 2017 – 1Q 2019) 1 Average assets is the nine-quarter average of total assets. Percent of average assets is calculated as nine-quarter cumulative PPNR,
Slide 12: Results: Nine-quarter cumulative loan losses by type of loans
12 Supervisory Severely Adverse Scenario Results Nine-quarter cumulative loan losses by type of loans under the Supervisory Severely Adverse scenario (1Q 2017 – 1Q 2019) 1 Portfolio loss rates calculated as the cumulative loan losses net of recoveries over nine quarters divided by average loan balan
Slide 13: Synchrony Financial - Drivers of Changes to Capital Ratios
13 Synchrony Financial - Supervisory Severely Adverse Scenario Drivers of Changes to Capital Ratios Total Risk-Based Capital Ratio 1 “Other” includes changes in goodwill, intangibles, and accumulated OCI. 2 “Other” includes changes in goodwill, intangibles, accumulated OCI, and eligible ALLL. 13.7%
Slide 14: Synchrony Bank - Drivers of Changes to Capital Ratios
14 Synchrony Bank - Supervisory Severely Adverse Scenario Drivers of Changes to Capital Ratios Common Equity Tier 1 Capital Ratio Total Risk-Based Capital Ratio 1 “Other” includes changes in goodwill, intangibles, and accumulated OCI. 2 “Other” includes changes in goodwill, intangibles, accumulated
Slide 15: Engage with us
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