Synchrony Financial · NYSE:SYF
Synchrony Financial — Q4 2018 Earnings Presentation
17 slides from Synchrony Financial's earnings presentation, Feb 4, 2019
Slide 1: 4Q 2018 Investor Supplement
Exhibit 99.1 4Q 2018 Investor Supplement February 4, 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 Private label credit cards, Promotional financing for Promotional financing to Dual Cards™, general major consumer consumers for health, purpose co-branded credit purchases, offering veterinary and persona
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 networkAccepted at network Retailer and private Accepted at Accepted at network acceptance locations locati
Slide 6: Long-Standing and Diverse Partnerships
Long-Standing and Diverse Partnerships Average Relationship Length with Ongoing Retail Card Partners is 20 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 December 31, 2018
Slide 7: Diversified Across Sales Platforms
Diversified Across Sales Platforms Payment Solutions Retail Markets CareCredit Specialties Interest and Fees on Loans(a) Interest and Fees on Loans(a) 2%3% 4% 5% 7% 8% 10% 9% 47% 61% 19% 11% 14% Home Furnishings/Flooring Dental Electronics/Appliances Veterinary Automotive Home Specialty Cosmetic & D
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% 5.9% 6.5% 8.5% 1.3% 3.0% 3.3% 4.1% 4.2% (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 Pu
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% 721+ 40% 36% 36% 36% 36% 35% 37% 37% 661-720 28% 35% 36% 37% 37% 38% 37% 37% 661-720 38% 601-660 20% 20% 20% 20% 20% 20% 18% 18% 601-660 21
Slide 10: Historical Net Charge-Offs & Risk-Adjusted Yield
Historical Net Charge-Offs & Risk-Adjusted Yield (a,c) Net Charge-Off Ratio Delivered Strong 12.00% Risk-Adjusted Returns 10.00% • Net charge-off performance was 8.00% generally consistent with general purpose card issuers during the 6.00% financial crisis SYF 4.00% Bank Card Average NetCharge-offRa
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 Normal 1.
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 Undrawn $19.2 Credit Facilities $4.4 Liquid $14.8 Deposits 73% 70%-75% assets 4Q18 • Diverse and stable funding sources Securitized Debt 16% 15%-20% • Fast-growing direct deposit platform to s
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% 2016 SYF Capital Plan(a) 2017 SYF Capital Plan(b) 2018 SYF Capital Plan (c) Peer Capital Plan Average (d) Dividends Buybacks • Improved capital payout distribution, with
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)%