Slide 1: 2016 DFAST Annual Stress Test Disclosure for Synchrony Bank
Exhibit 99.1 2016 DFAST Annual Stress Test Disclosure For Synchrony Bank, a Wholly-Owned Subsidiary of Synchrony Financial July 7, 2016
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
2 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 harbor” cr
Slide 3: Overview
3 Overview • The 2016 Annual Stress Test Disclosure presents the results of the annual stress tests conducted by Synchrony Bank (the “Bank”), a wholly-owned subsidiary of Synchrony Financial, in accordance with the Dodd-Frank Act Company-Run Stress Test requirements for Banking Organizations with To
Slide 4: Supervisory Severely Adverse Description
4 Supervisory Severely Adverse 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 Severely
Slide 5: Risk Coverage
5 Risk Coverage Synchrony Bank 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 th
Slide 6: Stress Test Methodology: Overview
6 Stress Test Methodology: Overview • The Bank considers a broad range of potential stresses to its balance sheet, capital levels, PPNR, and provision for loan losses. • The Bank uses both qualitative and quantitative methods to translate risk measures including proprietary econometric forecasting m
Slide 7: Stress Test Methodology: PPNR
7 Stress Test Methodology: PPNR • Interest income is estimated across the Bank’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, inter
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
Slide 9: Stress Test Methodology: Risk-Weighted Assets
9 Stress Test Methodology: Risk-Weighted Assets • Under the Supervisory Severely Adverse Scenario, the Bank estimates that business volume would decrease, compared to a base case set of economic conditions as management credit actions take effect and consumers reduce spending under a severe macroeco
Slide 10: Supervisory Severely Adverse Scenario Results
10 Supervisory Severely Adverse Scenario Results Actual 4Q 2015 and hypothetical stressed capital ratios and RWAs1 from 1Q 2016 through 1Q 2018 under the Supervisory Severely Adverse Scenario Stressed Capital Ratios Actual 4Q 2015 Ending 1Q 2018 Minimum Common Equity Tier 1 Capital Ratio (%)1 15.3%
Slide 11: Supervisory Severely Adverse Scenario Results: Cumulative Profit and Loss
11 Supervisory Severely Adverse Scenario Results Nine-quarter cumulative profit and loss metrics under the Supervisory Severely Adverse Scenario (1Q 2016 – 1Q 2018) $ in Billions % of Average Assets1 Pre-Provision Net Revenue2 $11.1 18.2% Less Provision for Loan Losses $10.4 Realized (Gains)/Losses
Slide 12: Supervisory Severely Adverse Scenario Results: Cumulative Loan Losses by Type
12 Supervisory Severely Adverse Scenario Results Nine-quarter cumulative loan losses by type of loans under the Supervisory Severely Adverse Scenario (1Q 2016 – 1Q 2018) 1 Portfolio loss rates calculated as the cumulative loan losses net of recoveries over nine quarters divided by average loan balan
Slide 13: Drivers of Pro Forma Capital Ratios
13 15.3% 15.7% CET1 Ratio at 4Q15 Pre-Provision Net Revenue Provisions for Loan Losses Capital Actions Change in RWAs Other CET1 Ratio at 1Q18 16.6% 17.0% Total RBC Ratio at 4Q15 Pre-Provision Net Revenue Provisions for Loan Losses Capital Actions Change in RWAs Other Total RBC Ratio at 1Q18 Supervi
Slide 14: Synchrony Financial – Engage with us
s{! synchrony FINANCIAL Engage with us.