Synchrony Financial · NYSE:SYF
Synchrony Financial — BancAnalysts Association of Boston Conference 2016
28 slides from Synchrony Financial's conference presentation, Nov 3, 2016
Slide 1: BancAnalysts Association of Boston Conference
BancAnalysts Association of Boston Conference November 3, 2016 Exhibit 99.1
Slide 2: Forward-looking statements
2 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 harbor” created by those sections. Forward-looking statements may be
Slide 3: Business Overview
Business Overview
Slide 4: Partner-Centric Business with Leading Sales Platforms
4 Partner-Centric Business with Leading Sales Platforms (a) For period 4Q15 through 3Q16, $ in millions. (b) $ in billions, as of September 30, 2016. $10,583 $48.0 $1,891 $14.8 $1,783 $7.8 Payment Solutions Retail Card CareCredit Interest and Fees on Loans(a) Loan Receivables(b) Private label credit
Slide 5: Customized Products
5 Customized Products Credit Products Retailer only acceptance Accepted at network locations Deposit Products Retailer and private network acceptance Accepted at provider network locations Private Label Dual CardTM Affinity to retailer, provides customized benefits & features Big-ticket focus, offer
Slide 6: Long-Standing Partnerships
6 Long-Standing Partnerships (a) Existing partners as of September 30, 2016 and also reflects the launch of Google Store program on October 4, 2016. (b) Excludes certain credit card portfolios that were sold, have not been renewed, or expire in 2016 which represent 1% of our total Retail Card intere
Slide 7: Expansive Opportunity
7 Expansive Opportunity (a) (a) Source: Nilson. U.S. Credit Card Receivables $48 $52 $57 $61 $68 2011 2012 2013 2014 2015 $ in billions • Majority of growth is organic • Targeted marketing programs, digital capabilities, and value propositions helped drive organic growth Strong Receivables Growth $8
Slide 8: Deep Integration Drives 2-3x Market Growth Rate
8 1.6% 2.3% 3.1% 0.2% 6.7% 3.8% 11.6% 2.5% 8.2% 5.6% 9.8% 11.2% Mass Electronics Healthcare Apparel/Dept. Home Furniture $542 $283 $232 $213 $219 $83 2012-2015 Market Growth Rate 2012-2015 Synchrony Financial Purchase Volume Growth Rate 2015 Market Size ($ in billions) • Over 80 years of retail heri
Slide 9: Strong Online Sales Growth and Innovative Digital Capabilities
9 (a) Retail Card consumer excluding oil and gas clients, growth rates over same quarter of the prior year. Strong Online Sales Growth Innovative Digital Capabilities Online Sales Growth Rate(a) • Significant experience with online retailers • Online sales growth outpacing U.S. average Online Sales
Slide 10: Fast-Growing Online Bank
10 $9.2 $11.0 $13.0 $15.7 $18.3 $19.7 $21.3 $24.4 $27.6 $29.7 $32.5 $34.1 $36.2 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Competitive rates and superior service afforded by low cost structure of online bank Opportunity to further leverage synergies with cardholder base E
Slide 11: Robust Data and Analytics Capabilities
Robust Data and Analytics Capabilities
Slide 12: Proprietary Closed-Loop Network Advantages
12 Proprietary Closed-Loop Network Advantages Customer Merchant Acquirer Network Issuer General Purpose Card and Co-Branded Cards Synchrony Financial Closed Loop Network for PLCC and Dual CardTM Citi Capital One Chase Date Merch. Channel Brand Cat./SKU $ 10/2/16 Department Store Partner In- Store DK
Slide 13: Evolution of Analytics at Synchrony Financial
13 Prior After Launch Analytics at Synchrony Financial • Generic Offers • Mass Marketing • Portfolio Level Analytics SKU/Category Level Coverage Evolution of Analytics <50% Present and Future Past >70% 2014 2016 • Provides the ability to analyze significantly more data than general purpose credit ca
Slide 14: Using Data and Analytics to Develop Effective Value Propositions
14 Using Data and Analytics to Develop Effective Value Propositions • Joint team from Partner A and Synchrony generated multiple new value proposition ideas for Dual CardTM • Analytics played a key role in providing facts to substantiate new ideas and established foundational insights on: - Customer
Slide 15: Data Analytics Driving Actionable Insights
15 Channel Contribution Data Analytics Driving Actionable Insights • Understand performance and opportunity by region • Optimize field sales investment to maximize sales • Sales and profitability trends by: - Product category - Region - Customer segment - Coupon issuance, redemption • Ability to ide
Slide 16: Performance & Strategic Priorities
Performance & Strategic Priorities
Slide 17: 2016 Accomplishments
17 • Added several new partners, renewed existing relationships, and launched new programs • Online sales increased 26% year-over-year outpacing U.S. online sales growth(d) • Announced initial capital plan of $0.13 quarterly dividend and $952MM in share repurchases 2016 Accomplishments Financial Hig
Slide 18: Performance relative to peers
18 (a) Segment data for AXP-U.S Consumer Services and COF-Domestic Card. Other data-total company level. (b) SYF yield calculated as loan receivable yield less net charge-off rate. AXP yield calculated as total card member loan yield less net charge-off rate on card member loans (ex-HFS). Other peer
Slide 19: Focus on Higher Quality Asset Base
19 1 % 22 % 38 % 39% 19% 15% 12% 9% 8% 8% 7% 7% 20% 19% 19% 20% 20% 20% 20% 20% 28% 30% 31% 35% 37% 37% 37% 38% 33% 36% 38% 36% 35% 35% 36% 35% • Synchrony Financial controls underwriting and credit line decisions • Focus on stronger underwriting has led to higher quality portfolio - 73% of loan rec
Slide 20: Net Charge-Off Ratio and Risk-Adjusted Yield
20 Net Charge-Off Ratio Risk-Adjusted Yield (a) Peers include: AXP US Card Services, BAC US Credit Card, C Citi- Branded Cards North America, COF Domestic Card, DFS Credit Card, JPM Credit Card, and WFC Consumer Credit Card. SYF – total company level. (b) Peers include: AXP US Card Services, BAC US
Slide 21: Retailer Share Arrangements
21 100% 50% 50% 1.5% 2.5% Total Program Return Shared Components Illustrative Examples Program Revenue • Interest Income • Fee Income • Interchange Fees Program Expenses • Interest Expense • Provision for Loan Losses • Loyalty Expense • Operating Expenses SYF Share of Return Retailer Share of Return
Slide 22: Diverse Funding Sources and Strong Liquidity
22 Diverse Funding Sources and Strong Liquidity Deposits Securitized Debt Unsecured Debt 3Q16 Long-term target 11% 71% 18% 15%-20% 60%-70% 15%-20% Diverse Funding Sources % of liabilities excluding non-debt liabilities Strong Liquidity Profile $ in billions $23.5 Liquid assets Undrawn Credit Facilit
Slide 23: Strong Position Relative to Peers
23 Strong Position Relative to Peers Strong Capital Profile Peers include AXP, DFS, and COF. (a) CET1 ratios are on an estimated, fully phased-in basis. See non-GAAP reconciliation in appendix. (b) Subject to board and regulatory approval. Sources: Company filings and SNL. 2.7% 2.6% SYF Peer Average
Slide 24: Capital Deployment
24 Growth Buybacks Dividends Capital Deployment (a) Data as of 2Q16, capturing the last twelve months of capital returns relative to earnings. (b) Allocation for growth is calculated by applying 2Q15 CET1 Ratios (fully phased-in basis) to loan receivables growth over the past twelve months. (c) SYF
Slide 25: Strategic Priorities
25 Strategic Priorities Grow our business through our three sales platforms Position business for long-term growth Operate with a strong balance sheet and financial profile Leverage strong capital position Expand robust data, analytics and digital capabilities • Grow existing retailer penetration •
Slide 26: Appendix
Appendix
Slide 27: Non-GAAP Reconciliation
27 Non-GAAP Reconciliation The following table sets forth a reconciliation of each component of our capital ratios to the comparable GAAP component at September 30, 2016. COMMON EQUITY MEASURES GAAP Total common equity .................................................................................
Slide 28: Non-GAAP Reconciliation
28 Non-GAAP Reconciliation The following table sets forth a reconciliation between GAAP results and non-GAAP managed-basis results for 2009. Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.3% Securitization adjustments (0.6)% Managed-basis 10.7% Interest and fees
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