Synchrony Financial · NYSE:SYF
Synchrony Financial — Q4 2019 Earnings Presentation
17 slides from Synchrony Financial's earnings presentation, Jan 24, 2020
Slide 1: 4Q'19 Financial Results
Exhibit 99.3 4Q'19 Financial Results January 24, 2020
Slide 2: Disclaimers: Cautionary Statement Regarding Forward-Looking Statements
Disclaimers Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For additional informatio
Slide 3: 4Q'19 Highlights
4Q’19 Highlights Financial Highlights Business Highlights • $731 million Net earnings, $1.15 diluted EPS • Added new partnerships ‒ Reduction in the reserve related to the Walmart consumer portfolio sale completed in October was $38 million, or $28 million after-tax; EPS benefit of $0.05 • Solid Cor
Slide 4: Platform Results
Platform Results(a) (b) (b) Retail Card Payment Solutions CareCredit Loan receivables, $ in billions Loan receivables, $ in billions Loan receivables, $ in billions (12)% +4% +8% $63.8 $20.5 $10.3 $56.4 $19.8 $9.5 Core(c) $54.3 $56.4 +4% $19.1 $20.5 +7% 4Q'18 4Q'19 V% 4Q'18 4Q'19 V% 4Q'18 4Q'19 V% P
Slide 5: Financial Results Summary
Financial Results Summary earnings statement 4Q'19 Highlights B/(W) • $731 million Net earnings, $1.15 diluted EPS $ in millions, except per share statistics 4Q'19 4Q'18 $ % • Net interest income down 7% driven by the Total interest income $4,585 $4,876 $(291) (6)% Walmart sale Total interest expens
Slide 6: Growth Metrics
Growth Metrics Purchase volume (0)% Loan receivables (6)% $ in billions $ in billions $40.3 $40.2 $93.1 $87.2 Core (a) $37.3 $39.9 +7% Core (a) $82.9 $87.2 +5% 4Q'18 4Q'19 4Q'18 4Q'19 Average active accounts (5)% Interest and fees on loans (6)% in millions $ in millions 77.4 $4,774 73.7 $4,492 Core
Slide 7: Net Interest Income
Net Interest Income Net interest income $ in millions, % of average interest-earning assets 4Q'19 Highlights (7)% • Net interest income decreased 7% compared to prior year driven by the Walmart sale $4,333 − Interest and fees on loans down 6% driven by $4,029 the Walmart sale • Net interest margin d
Slide 8: Asset Quality Metrics
Asset Quality Metrics 30+ days past due Net charge-offs $ in millions, % of period-end loan receivables $ in millions, % of average loan receivables including held for sale $4,430 $4,021 $1,344 $1,331 $3,831 $3,957 $3,874 $3,625 $3,723 $1,198 $1,248 $1,221 $3,521 $1,141 $1,159 $3,293 $1,087 $1,109 4
Slide 9: Other Expense
Other Expense Other expense $ in millions 0% 4Q'19 Highlights $1,078 $1,079 • Other expense remained flat • Efficiency ratio increased 4.4pts to 34.8%, driven primarily by the impact of the Walmart sale and increased RSA, and included a restructuring charge of $21 million 4Q'18 4Q'19 V$ V% Employee
Slide 10: Funding, Capital and Liquidity
Funding, Capital and Liquidity Funding sources Capital ratios $ in billions Common equity Tier 1 % - Basel III fully phased-in $88.0 V$ $85.0 14.0% 14.1% $9.6 $9.5 $(0.1) Unsecured $14.4 $10.4 $(4.0) Securitization 4Q'18 4Q'19 Deposits $64.0 $65.1 +$1.1 Liquidity(a) $ in billions $23.4 $19.2 4Q'18 4
Slide 11: 2019 Performance
2019 Performance 2019 Outlook 2019 Actual In-line with expectations with (a) solid Core growth across each Core Loan Receivables Growth 5% - 7% 5% platform Net Interest Margin 15.75% - 16.00% 15.78% In-line with expectations Improved program and credit RSAs/Average Receivables 4.0% - 4.2% 4.4% perfo
Slide 12: Estimated CECL Adoption Impact
Estimated CECL Adoption Impact $ in billions Impact to consolidated balance sheet Adoption Impact Estimated • Adoption of CECL was effective on CECL January 1, 2020 – no impact to 2019 12/31/19 Impact 1/1/20 Allowance for loan losses $(5.6) $(3.0) $(8.6) − Initial adjustment recorded through retaine
Slide 13: 2020 Outlook
2020 Outlook 2020 Outlook 2020 Impact of With CECL (GAAP) CECL Expect growth to accelerate in Loan Receivables Growth 5% - 7% No impact 2H20 as new programs launch Walmart conversion impact— Net Interest Margin 15.25% - 15.50% No impact excess liquidity (~$3B) and higher Walmart loan yield No change
Slide 14: Focus on Long-Term Value Creation While Diversifying for the Future
Focus on Long-Term Value Creation While Diversifying for the Future Grow core partnerships and continue to add new programs at attractive returns Strategic Purpose: Ensure continued growth of our core business at appropriate risk-adjusted returns • Drive growth for our partners and continue to stren
Slide 15: Engage with us.
|! synchrony FINANCIAL Engage with us.
Slide 16: Appendix
Appendix |" synchrony 16 FINANCIAL Ne
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation (a) The following table sets forth the components of our Growth Metrics for the periods indicated below. At December 31, Total Retail Card Payment Solutions 2018 2019 2018 2019 2018 2019 Loan receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .