Synchrony Financial · NYSE:SYF
Synchrony Financial — Investor Day (September 2021)
184 slides from Synchrony Financial's investor day presentation, Sep 9, 2021
Slide 1: Synchrony Investor Day 2021
il’ synchrony Investor Day 2021
Slide 2: Welcome
oe sa6e eeceseer & WELCOME ee i. WE Investor Day EE
Slide 3: Cautionary Statement Regarding Forward-Looking Statements
3 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 4: Brian Doubles, President & Chief Executive Officer
4 Brian Doubles President & Chief Executive Officer
Slide 5: We Have Built a Differentiated Business
5 1932 We Have Built a Differentiated Business 2014 $933B purchase volume $78B loan receivables 65MM+ active accounts 29 U.S. patents Company founded 2021+ IPO, listed on NYSE Built on 89 years of experience and innovation, powered by bold moves in the past seven years. Since IPO1
Slide 6: 130+ new partners since IPO
6 130+ new partners 160+ existing partnership expansions 4 acquisitions Since IPO
Slide 7: Receivables, purchase volume and net interest income growth
7 EOP RECEIVABLESPURCHASE VOLUME NET INTEREST INCOME $71B $139B 2010 2020 2.0X $45B $82B 2010 2020 1.8X $8B $14B 2010 2020 1.9X
Slide 8: Risk-Adjusted Yield versus peers
8 -Adjusted Returns 10.1% 14.9% 16.7% 16.9% 16.9% 17.0% 16.8% 16.1% 15.5% 15.5% 15.3% 9.9% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Direct Peers RISK-ADJUSTED YIELD (RAY) Peers 10-Year Historical Average RAY of 15.6% 1
Slide 9: Delivering Value for All Stakeholders
9 Delivering Value for All Stakeholders, ADDITIONALLY, SYNCHRONY: One of the Board of Directors of any company in the Fortune 200 on the 2019 Fortune list of Best Places to Work for Diversity Ranked #5 of our 16,500 employees are members of one or more of our eight Diversity Networks More than 10,00
Slide 10: Established Ourselves as a Leading Franchise
10 $11.5B+ Capital Returns Dividends, Share Buybacks #37 Top 100 Best Companies to Work For $78.4B Receivables Largest U.S. provider of private label credit cards 65MM+ Average Active Accounts Partner Locations 448K+ WHILE BUILDING AN INNOVATIVE TECH CULTURE ~200 Agile Build Teams 29 U.S. Patents ~$
Slide 11: Leading financial ecosystem connecting partners and customers
11 Synchrony enables commerce by delivering the leading financial ecosystem that connects our partners and our customers through world-class technology, products, and capabilities
Slide 12: Significant Opportunity in the Markets We Serve
12 Significant Opportunity in the Markets We Serve $5T Relevant Market
Slide 13: Platforms are Aligned to Power Growth
13 Digital Sample partners Platforms are Aligned to Power Growth Growth Tech Ops Credit Health & Wellness Home & Auto LifestyleDiversified & Value POWERED BY OUR SCALABLE FUNCTIONS:
Slide 14: Partners and Customers at the Forefront of Every Product
14 Partners and Customers are at the Forefront of Every Product & Service We Offer Customer Choice Purchasing Power Frictionless, Digital CX Value Prop Experience & Trust Seamless Customer Journey APPLY USE SERVICEENGAGE Multi-product Suite Digital Bank BNPL/Installments Growth Adjacencies PLCC DUAL
Slide 15: PayPal Partner Testimonial
PayPal Partner Testimonial DAN SCHULMAN | President and CEO synchrony
Slide 16: Leading Financial Ecosystem of Products & Capabilities
16 TECHNOLOGY ANALYTICS DATA PRODUCTS Align with Partner and Customer Choice CUSTOMER EXPERIENCE Leading Financial Ecosystem of Products & Capabilities
Slide 17: Enabling Partner and Customer Choice
17 Enabling Partner and Customer Choice CUSTOMER DATA & INSIGHTS ALIGN TO BEST PRODUCT & VALUE PROPOSITION OPTIMIZED PRODUCT OFFERING Brand Affinity Ticket Size Credit History Transaction Intent SetPay/BNPL Co- Promotional Offers Right Product, Right Time, Right Purchase
Slide 18: Proprietary Products, Strategic Investments and Acquisitions
18 Seamless Customer Experiences through Our Proprietary Products, Strategic Investments and Acquisitions AGILE INVESTMENT TECH INVESTMENTCLOUDINNOVATION STATION PROPRIETARY PRODUCTS & CAPABILITIES BUILD developer SyPI Attribute Data Share Synchrony Enterprise Data Lake ENGAGE 100 API ENDPOINTS Sync
Slide 19: Our Strategy: Driving Value for Our Stakeholders
19 WE DELIVEROUR STRATEGY DRIVING VALUE FOR OUR STAKEHOLDERS Solidifying Our Position as a Leading Financial Ecosystem Sustainable Growth Attractive Risk-Adjusted Returns Diversify our Programs, Products & Markets Grow & Win New Partners Deliver Best-in-Class Customer Experiences STRONG FOUNDATION B
Slide 20: Platform CEOs and Executive Team
20 Beto Casellas Health & Wellness CEO Curtis Howse Home & Auto CEO Tom Quindlen Diversified & Value and Lifestyle CEO Bart Schaller Digital CEO Michael Bopp Chief Growth Officer Carol Juel Chief Technology & Operating Officer Brian Doubles President & CEO Henry Greig Chief Credit & Capital Manageme
Slide 21: Agenda
21 Agenda Addressable Market Growth Org Data & Products Customer Lifetime Value Financial Update Sustainable Growth Capital Generation Efficient Operations Partner Integration Tech Ops Customer Experience Financial Ecosystem More Data Credit On Demand Deeper Insights Platform at a Glance Platforms W
Slide 22: Mike Bopp, Chief Growth Officer
22 Mike Bopp EVP & Chief Growth Officer
Slide 23: Synchrony is Well-Positioned for Growth
23 INSIGHTS Leverage unique access to data to drive program performance PRODUCT OPTIMIZATION Comprehensive offering to provide best solution to customer EXPERIENCE Exceptional customer experience with a digital first lensSCALE Largest Cardholder Base Vast Partner Network Synchrony is Well-Positioned
Slide 24: Significant Customer Scale
24 Significant Customer Scale #2 65MM+ Average Active Accounts1 #1 60MM Cardholders1 Among top U.S. consumer credit card issuers
Slide 25: Opportunity to Gain Market Share
25 Synchrony $139B Partner $110B SYF Cardholders Partner $360B Non-SYF Cardholders Non-partner $460B SYF Cardholders DRIVE NEW CUSTOMER ACQUISITIONS DRIVE OUT OF PARTNER SPEND DRIVE CREDIT TENDER SHIFT CREDIT SALES INVESTMENT STRATEGIES Deep and Broad Opportunity to Gain Market Share
Slide 26: Customer Scale Activated Through Partner Marketplaces
26 Customer Scale is Activated Through Our Partner Marketplaces MYSYNCHRONY CARECREDIT 180MM 118K 1MM visits partner locations 100MM 250K 18MM visits provider locations provider viewsreferrals
Slide 27: Leveraging Our Network Effect to Drive Sales
27 2Q '17 2Q '21 REPEAT SALES IN SYNCHRONY NETWORKS1 43% 52% 1.6x 1.9x 2.0x BNPL PLCC CareCredit PLCC H&A PLCC AVERAGE MONTHLY SALES PER ACTIVE VS. BNPL2 1.5x HOME & Auto PLCC Leveraging Our Network Effect to Drive Sales to Our Partners CareCredit PLCC Other SYF PLCC
Slide 28: Privileged Access to Data Enables Mass Personalization
28 Synchrony First-Party Data Synchrony Partner Data • 65MM+ Average Active Accounts • 235MM+ Transactions per Month • Synchrony Servicing Contacts Across Channels • 7K+ Annual Campaigns Top 10 Partners Share Data 448K Partner Locations Total Spend, Frequency Basket, SKU Level Data 7 TRILLION+ DATA
Slide 29: Data-Sharing Ecosystem Drives Growth
29 CREDIT LINE OPTIMIZATION Average Credit Line Assignment +20 to 30% Post-Data Share Pre-Data Share PURCHASE VOLUME INCREASE Average Month 1 Sales/New Account Post-Data Share Pre-Data Share +15 to 20% Data-Sharing Ecosystem Drives Growth and Expands Access Across Our Partner Network Improved credit
Slide 30: Data Analytics Drive Product Optimization
30 Data Analytics Drive Product Optimization and Higher Growth Predicted Risk-Adjusted Return High Medium Low 760+ 720-760 700-719 680-699 Acquisition 2 PREDICT Profitability Leveraging Proprietary Models Lifecycle 1 IDENTIFY Credit Eligible Customers for Upgrade 3 UPGRADE Based on Incremental Retur
Slide 31: Journey to Drive Lifetime Value
31 -12 -9 -6 -3 0 3 6 9 12 15 18 21 RISK-ADJUSTED RETURN1 per account/per month UPGRADED CONTROL SYF Top 6 Issuers LIFETIME VALUE1 ~1.6X CONTROL UPGRADED Journey to Drive Lifetime Value 98% increase in sales increase in balances 78% Post-Upgrade (Move from PLCC to Dual Card) Delta Driven By:
Slide 32: Comprehensive Product Set Powered by Scalable Tech
32 QR CODE INSTALLMENTS & BNPL GIFTNOW HEALTH SYSTEMS PET INSURANCE Revolving PAYMENT INTEGRATIONS SECURED Installments Growth Adjacencies POSCLIENT WALLET 3RD-PARTY WALLET APIS PLCC DUAL CARD CO-BRAND SECURED NETWORK SYNCHRONY MC COMMON PLATFORMS Comprehensive Product Set Powered by Scalable Tech B
Slide 33: Comprehensive Product Coverage
33 Comprehensive Product Coverage INDUSTRY PRODUCT LANDSCAPE1 PRODUCTS
Slide 34: Deeper Dive: Synchrony BNPL and Installment Products
34 • APRs start at 0% • Single transaction or multiple purchases • No additional credit inquiries • Lifecycle marketing and promotions • In store, online and mobile BNPL/Installment on Revolving Account Offering terms 3 to 180 months In Market Deeper Dive: Synchrony BNPL and Installment Products1 Am
Slide 35: Deeper Dive: Synchrony BNPL and Installment Products
35 BNPL/Installment on Revolving Account Offering terms 3 to 180 months In Market • APRs Start at 0% • Single transaction or multiple purchases • No additional credit inquiries • Life-cycle marketing and promotions • In-store, Online and Mobile In Market Installment Offering terms 3 to 84 months • M
Slide 36: Product Suite Drives More Accounts and Revenue vs. BNPL
36 1/4 COST TO PARTNERACCOUNT ACQUISITIONS AVERAGE ANNUAL REVENUE PER ACCOUNT 6x 4x SYNCHRONY PRODUCT SUITE SYNCHRONY PRODUCT SUITE SYNCHRONY SHORT-TERM INSTALLMENTS Product Suite Drives More Accounts and Revenue at a Lower Cost to Partners than BNPL1 BNPL PROVIDERS BNPL PROVIDERS BNPL PROVIDERS
Slide 37: Solution Suite Powers Optimized Customer Outcomes
37Note: Illustrative customer product journey • Pay-over-time flexibility • Closed-end, one time loan PLCC • Revolving credit line • Partner rewards • Pay-over-time options • Brand affinity DUAL CARD • Maximize full product spectrum • Provide consumer choice • Align to customer needs and creditworth
Slide 38: The Power of Choice
38 The Power of Choice Experience Driven Built to Evolve Seamlessly Connecting Our Partners to Customers and Products Higher Conversion | More Sales | Loyal, Engaged Consumers | Less Effort for Partners | More Tools and Resources to Drive Growth | Financing Options to Meet Every Consumer Need
Slide 39: Delivering an Exceptional Customer Experience
39 O N LIN E QR CodePOS Direct to Device Prequalification In Cart Barcode Contactless Card Digital/Client Wallets Alerts/Native IN S T O R E Delivering an Exceptional Customer Experience
Slide 40: Key takeaways: scale, data and product
40 Unmatched customer scale and vast partner base Privileged access to data and investments in data ecosystem Comprehensive product offering and exceptional experience, optimized for each customer
Slide 41: Carol Juel, Chief Technology & Operating Officer
41 Carol Juel Chief Technology & Operating Officer
Slide 42: Dynamic, scalable technology a key differentiator
42 Dynamic, scalable technology a key differentiator that empowers success
Slide 43: Our Investments Power Innovation
43 Our Investments Power Innovation Products & Capabilities Foundational IPO & Transformation Pre-IPO 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 APIsCloud Artificial IntelligenceData Lake Data Centers & Infrastructure Cyber Data Centers & Infrastructure Cyber Digital & Native Data Centers & I
Slide 44: Reaching partners, providing options, translating data
44 Reaching more partners Providing more options to customers Translating data into action
Slide 45: Venmo Partner Vignette
»|' synchrony Venmo Partner Vignette 45
Slide 46: Flexible Technology Powers Partner Integration
46 Digital & Native Data Centers & Infrastructure CyberAPIsCloud P WERED BY Partner Technology Investment Home Improvement Contractor Auto Shop Powersports Dealer Veterinary Clinic Health Systems Physical Retail eTailer Flexible Technology Powers Partner Integration, Regardless of Size or Tech Sophi
Slide 47: CareCredit Integration
CareCredit Integration »|' synchrony
Slide 48: Providing Ultimate Optionality
48 Providing Ultimate Optionality P WERED BY Digital & Native Data Centers & Infrastructure Cyber APIs Cloud Partner Touch PointsSynchrony Touch Points Store Direct-to-Device Partner Web Platforms Email Virtual Agent Synchrony Native App Store POS Partner Native App (SyPI) Text Online Mobile PLCC DU
Slide 49: Lowe's Partner Vignette
synchrony Customer Account Lookup Triggered by customer’s text and powered by innovative authentication APIs. Lowe’s Partner Vignette
Slide 50: Partner and Synchrony Touch Points
50 Partner Touch PointsSynchrony Touch Points Store Direct-to-Device Partner Web Platforms Email Virtual Agent Synchrony Native App Store POS Partner Native App (SyPI) Text Online Mobile Revolving BNPL/Installments Commercial PLCC DUAL CARD CO-BRAND INSTALLMENTS & LEASING INSTALLMENTS & BNPL SECURED
Slide 51: Robust Data Powers Unique Insights
51 Advanced Cyber Artificial Intelligence Data LakeAPIsCloud P WERED BY OUR DATA IS UNIQUE • Our 60MM+ cardholders give us privileged insight into ~20% of U.S. adults • Partners provide rich customer data through robust integrations • Able to dynamically add third-party data sources POWERFUL ABILITY
Slide 52: Synchrony PRISM
Synchrony PRISM )[" synchrony
Slide 53: Technology takeaways
53 Reaching more partners, no matter where they are on their technology journey. Providing more options to customers, from products to touchpoints. Translating data to swift action and delivering insight to maximum point of impact.
Slide 54: Henry Greig, Chief Credit & Capital Management Officer
54 Henry Greig EVP Chief Credit & Capital Management Officer
Slide 55: Synchrony Credit Strategy
55 Synchrony Credit Strategy
Slide 56: Delivering Consistent Loss Performance Over Time
56 Delivering Consistent Loss Performance Over Time • Underwrite to a Risk Adjusted Margin at a Client/Partner level • performance • New PRISM underwriting tools are used to deliver more growth at similar loss rates • Optimal performance aggregates to a 5.5%-6% net loss rate in a post-pandemic stead
Slide 57: Synchrony PRISM
il! synchrony Synchrony PRISM
Slide 58: Revolutionizing credit underwriting with PRISM
58 Revolutionizing credit underwriting with a customer-centric approach to streamline customer experiences, proactively reward customers with higher lines, protect customers and drive sales for our partners. Streamlined Customer Experiences Credit Lines That Meet Customer Needs Continuous Learning.
Slide 59: PRISM Empowers a Better Customer Experience
59 Brings all data to the point of decision Provides a holistic view of the customer PRISM Empowers a Better Customer Experience Synthesizing data to meet customer & business needs MORE DATA DEEPER INSIGHTS ON DEMAND
Slide 60: Harnessing Years of Customer Data and Client Relationships
60 Harnessing Years of Customer Data and Client Relationships PERSONAL PROFILES Core Bureau Trended Data • Payment/Delinquency History • Inquiries/Time on File • Revolving Balances/Lines Synchrony Data • 100MM+1 customers and billions of transactions • Multiple accounts and touchpoints Client Specif
Slide 61: Innovative Technology Enables Data to be Leveraged
61 Innovative Technology Enables Data to be Leveraged for Millions of Customers Across Multiple Channels Event Based Platform Fraud Detection Platform Trigger Change Infrastructure Dynamic Decision Flow Bring all data to the point of decision Ability to make the right decision for the customer Captu
Slide 62: Distilling Massive Data Down to Critical Customer Behavior
62 Distilling Massive Amounts of Data Down to Critical Customer Behavior ALERTS PLATFORM • Customized alerts • Detect anomalous behavior and trends Ability to implement new strategies faster SPECIFIC PROPRIETARY SCORES Leveraging our unique data assets FRAUD ANALYTIC SOLUTIONS • Leverage data from m
Slide 63: Underwriting Evolution Increased Approval Rates by ~15%
63 Underwriting Evolution Has Increased Approval Rates by ~15%1 for a Similar Level of Risk BEFORE NOW Client & additional data Multiple dimensions of data Proprietary and alternative data Multibureau Proprietary data B u re a u
Slide 64: Centralized Authentication Process
64 Centralized Authentication Process Authentication Authentication Authentication SHARED AUTHENTICATION ~$1B OF MORE SALES1 ~$15MM OF LESS FRAUD2 ~$15MM OF LOWER COSTS2 NOWBEFORE
Slide 65: Holistic Customer Management Yields Incremental Sales
65 Holistic Customer Management Yields Incremental Sales with Lower Risk Account Decision Account Decision Account Decision 30% Greater Sales1 50% Lower Fraud2 NOW Decision BEFORE
Slide 66: Underwriting is Tailored to the Product and Customer
66 P ro d u c ts & C a p a b il it ie s Credit Wor thiness (R isk) SuperprimeSubprime BNPL / Installment Secured Card Dual Card Private Label Credit Spectrum Underwriting is Tailored to the Product and the Customer
Slide 67: PRISM powers better outcomes for partners and customers
67 Utilizing a customer-centric approach to underwriting to create a more dynamic and holistic view of our customer Leveraging a broad spectrum of data to yield powerful, proprietary insights and enable greater predictive precision PRISM powers better outcomes for our partners & customers enabling g
Slide 68: Beto Casellas, CEO Health & Wellness
68 Beto Casellas EVP & CEO Health & Wellness
Slide 69: Health & Wellness Platform
69 Health & Wellness Platform provides comprehensive healthcare financing and payment solutions, through a network of providers and partners, for those seeking health and wellness care for themselves, their families and their pets.
Slide 70: Leading Healthcare and Pet Care Financing Provider
70 Purchase volume $10.0 Billion EOP loan receivables $9.6 Billion Interest and fees $2.3 Billion Avg. active accounts 6.0 Million Results as of FY2020 Leading Healthcare and Pet Care Financing Provider with Scale and Expertise
Slide 71: Proven History of Strength and Experience
71 Proven History of Strength and Experience 1987 1998 2004 2010 2017 Dental Ophthalmology Cosmetic Optometry Retail Pharmacies 2019 Pets Best Acquisition 2021 Walgreens Cobranded Mastercard 1994 2001 2009 2016 2018 2019 2021 Veterinary Audiology Ambulatory Surgical Centers Expanded into additional
Slide 72: Flexible Financing Solutions Support Leading Brands
72 Products Healthcare Pet Wellness Flexible Financing Solutions Support Leading Brands Partners
Slide 73: Expansive Network Powers Growth for Providers
73 Expansive Network Powers Growth for Providers ~250,000 PROVIDER LOCATIONS 75%+ penetration in the Dentistry, Vet and Ophthalmology markets1 >45 NUMBER OF SPECIALTIES expanded into 33 new specialties since 2014 11+ million OPEN ACCOUNTS ~60% REPEAT SALES2 Network Effect >80% CROSS PROVIDER2 as com
Slide 74: Core Differentiators are Hard to Replicate
74 ROBUST NATIONAL PROVIDER NETWORK • Hundreds of new locations added each month • 1.5MM+ hits/month on provider locator, serves as a new patient pipeline1 EASE OF USE • Dedicated account management and servicing • Convenient mobile app • 98% of cardholders say CareCredit meets or exceeds their expe
Slide 75: Innovative Solutions Simplify Applications and Payments
75 Custom Link sheet explains the benefits, how it works and step-by-step instructions to create links for the practice The Little Curby Pocket Pal is a pocket-size guide for quick reference. QR sticker on back for quick access. Curbside Digital Guide for the consumer and a simple prequalification a
Slide 76: Delivering Tangible Value to Partners
76 Delivering Tangible Value to Partners1 of providers cite patients move forward as a key benefit of providers in indicate increased practice revenue since accepting CareCredit of providers cite as a key benefit Increase patient access to the care they want and need Realize more revenue per encount
Slide 77: Delivering Seamless Patient Financial Experiences
77 Delivering Seamless Patient Financial Experiences ~47%1 Prepare for care with flexible financing options the care you need Fit care into a monthly budget and reuse for future healthcare needs 77 NPS1 Discovery Pre-Care Point-of-Care Post-Care of cardholders say they would have scope if CareCredit
Slide 78: Market Overview and Growth Opportunities
78 ~$405B Health OOP Expenditures ~$100B Pet Expenditures ~$200B Wellness Expenditures Market Overview Enhance product offerings to grow core medical and wellness Access health systems and practice management systems More points of access to healthcare services Core Growth Expansion Continue to unlo
Slide 79: Walgreens Partner Testimonial
Walgreens Partner Testimonial synchrony
Slide 80: Strategic Acquisition: Pet Insurance
80 Strategic Acquisition Accelerated Entry into the Growing, Attractive Pet Insurance Industry >400,000 PETS IN FORCE up over 200% since acquisition of Pets Best 66% FY 2020 GROSS PREMIUMS compared to the market at 28%1 Opportunity is great and we are positioned well Feb-19 2Q19 3Q19 4Q19 1Q20 2Q20
Slide 81: CareCredit Partner Testimonial
CareCredit Partner Testimonial »|' synchrony
Slide 82: Health & Wellness takeaways
82 A leader in healthcare and pet care financing with well-regarded brands Broad distribution, significant scale and expertise power compelling outcomes Considerable opportunities for core growth and expansion through adjacencies
Slide 83: Curtis Howse, CEO Home & Auto
83 Curtis Howse EVP & CEO, Home & Auto
Slide 84: Home & Auto Platform
84 Home & Auto Platform works with partners to offer flexible financing options to customers, whether they want to realize their dreams or need value and utility to stay on the go
Slide 85: Well-Positioned With Ample Market Penetration Opportunity
85 Purchase volume $39.8 Billion EOP Loan receivables $26.5 Billion Interest and fees $4.5 Billion Avg Active Accounts 18.3 Million Results as of FY2020 ~120,000 Home & Auto Merchants/Locations Well-Positioned With Ample Market Penetration Opportunity
Slide 86: Deep Domain Expertise Drives Value
86 Expertise across range of partners and merchants Data & Analytics drive loyalty, repeat sales & cross shop Seamless dealer / merchant onboarding Value For Partners Value For Customers In business since 1930s $20B Promotional Financing3 ~60% Repeat Sales1 New Merchant Sign-up2 <30 mins Deep Domain
Slide 87: Marketplace drives business to partners
87 MARKETPLACE +1 million referrals to Home & Auto partner sites in 2020 CREDIT APPLICATIONS +240k apps originated SCALE OF USERS +180 million visits marketplace drives business to partners
Slide 88: Significant Growth Opportunities
88 ~$1.9T Home & Auto ~$0.6T Home ~$1.3T Auto Market Overview Continue to increase Partner engagement and drive into network Broaden Home & Auto network acceptance Drive repeat purchase and cross shop behavior Core Growth Networks Adjacencies Leverage data & analytics to drive increased penetration
Slide 89: Home Vertical is Well-Diversified
89 Furnishing & Decor Home Improvement Appliances & Electronics Mattress & Bedding Strong partnerships across leading brands in home industry 30+ years AVERAGE LENGTH OF RELATIONSHIP WITH TOP 20 PARTNERS $35 Billion CREDIT SALES2 ~60% OF SALES ARE REPEAT PURCHASES1 Home Vertical is Well-Diversified
Slide 90: Home Vertical is Deep and Positioned to Win
90 • ~2/3rds of home improvement projects are DIY1 • Financing products empower customers to choose what is best Home Improvement Do It Yourself (DIY) + Do It For Me (DIFM) Home Vertical is Deep and Positioned to Win PARTNERS Furniture, Décor & Appliances • Our partners continue to grow and open new
Slide 91: Home Vertical is Deep and Positioned to Win
91 +50K Independent Merchants & Contractors1 Enrolled Across the U.S. in 2020 ~8,000 Strong Shift to Digital in the Do It For Me space as partners custom dealer application links enhancing customer privacy and overall experience +500bps Approval rate lift on D2D applications3 +60% Increase in Mobile
Slide 92: Frictionless Customer Experiences Drive Volume
92 P L E A S E V I E W I N S L I D E S H O W P R E S E N T A T I O N M O D E . Frictionless Customer Experiences Drive Volume Benefits: 1. Dealers send a secure email link to customers on their device or generate a QR code for customers to scan 2. Customers complete the application securely and priv
Slide 93: Home Network
93 HOME NETWORK 5MM accounts with $26B in available credit1 ~$1,800 Average cross shop ticket1 ~400K Participating Locations2 Home Vertical is Deep and Positioned to Win
Slide 94: Leading Provider of Auto Care Financing
94 Leading provider in the auto industry Significant presence in all major segments of the auto industry Leading Provider of Auto Care Financing 14 years AVERAGE LENGTH OF RELATIONSHIP WITH TOP 5 PARTNERS $5 Billion CREDIT SALES2 ~80% OF SALES ARE REPEAT PURCHASES1
Slide 95: Synchrony Car Care: A Powerful Industry Network
95 SPECIAL FINANCING ON ALL PURCHASES $199 OR MORE3 6 months CONTRACTUAL PARTNERSHIPS2 5MM+ ACCOUNTS WITH ~$10 BILLION IN AVAILABLE CREDIT2 1,000,000+ ACCEPTANCE LOCATIONS1 Synchrony Car Care Partner Locations Enabled through Synchrony processing and settlement 50,000+ locations1 Additional Auto-rel
Slide 96: Power of the Network
96 Power of the Network P L E A S E V I E W I N S L I D E S H O W P R E S E N T A T I O N M O D E .
Slide 97: Home & Auto takeaways
97 Well-positioned to capitalize on market growth by leveraging our deep domain expertise Investing to win with partners and customers through a seamless and frictionless experience Utilizing data, products and capabilities to adapt to a changing world
Slide 98: Tom Quindlen, CEO Diversified & Value and Lifestyle
98 Tom Quindlen EVP & CEO Diversified & Value and Lifestyle
Slide 99: Diversified & Value Platform
99 Diversified & Value Platform helps large retail partners deliver everyday value to consumers shopping for daily needs or important life moments, whether shopping in store or digitally
Slide 100: Reaching Millions of Customers and Generating Significant Volume
100 Purchase volume $38.0 Billion EOP Loan receivables $15.8 Billion Interest and fees $3.5 Billion Avg. Active Accounts 18.0 Million Results as of FY2020 Reaching Millions of Customers and Generating Significant Volume
Slide 101: Partners are Scaled, Omnichannel Leaders
101 10 years 21 years 15 years 16 years ~$100B total retailer sales across ~5,000 locations and Digital properties1 Synchrony products drive 55 million transactions per month with ~25% digital sales2 Partners are Scaled, Omnichannel Leaders that Drive Frequent Purchases from Loyal Customers 27 years
Slide 102: Producing Compelling Outcomes for Partners & Customers
102 Deeper consumer loyalty, engagement Greater customer spend, lifetime value Economic alignment on profitable growth Value For Partners Value For Customers Rewards, savings for everyday needs Flexible buying options Frictionless, cross-channel experiences 9 yrs. avg. tenure/ acct.1 57% of D&V cons
Slide 103: A Leader in a Large Market with Room to Grow
103 A Leader in a Large Market with Room to Grow Large partners drive majority of volume with approx. half on credit today1 Expected stable growth post-Covid, category outperformers In-Brand Sales Grow with partners + expand penetration World Sales Supplement in-partner sales with strong value props
Slide 104: Partner-Centric Strategy Powering Growth
104 Every 1% gain in partner sales penetration drives an incremental ~$1.5B in credit sales1 PARTNER ALIGNMENT Credit + loyalty + economics STRONG VALUE PROPS Top of wallet value, rewards DIGITAL EXPERIENCE Digital shopping integration IN-STORE EXPERIENCE Frictionless in-person shopping Partner-Cent
Slide 105: Partner-Centric Strategy: Partner Alignment
105 PARTNER ALIGNMENT Credit + loyalty + economics Dedicated, integrated client teams, coordinated campaigns Partner-Centric Strategy Powering Growth
Slide 106: Partner-Centric Strategy: Strong Value Props
106 Strong in-store rewards + Strong in-world rewards PARTNER ALIGNMENT Credit + loyalty + economics STRONG VALUE PROPS Top of wallet value, rewards Partner-Centric Strategy Powering Growth
Slide 107: Partner-Centric Strategy: In-Store Experience
107 Digital in-store application with in-store mobile devices PARTNER ALIGNMENT Credit + loyalty + economics STRONG VALUE PROPS Top of wallet value, rewards IN-STORE EXPERIENCE Frictionless in-person shopping Partner-Centric Strategy Powering Growth
Slide 108: Partner-Centric Strategy: Digital Experience
108 Apply seamlessly from your device online or in store PARTNER ALIGNMENT Credit + loyalty + economics STRONG VALUE PROPS Top of wallet value, rewards DIGITAL EXPERIENCE Digital shopping integration IN-STORE EXPERIENCE Frictionless in-person shopping Partner-Centric Strategy Powering Growth
Slide 109: Partner-Centric Strategy Powering Growth
109 Every 1% gain in partner sales penetration drives an incremental ~$1.5B in credit sales1 PARTNER ALIGNMENT Credit + loyalty + economics STRONG VALUE PROPS Top of wallet value, rewards DIGITAL EXPERIENCE Digital shopping integration IN-STORE EXPERIENCE Frictionless in-person shopping Partner-Cent
Slide 110: Creating Digital Experiences that Drive Loyalty
110 Use card in store Use card in world Use certificates faster TJX Digital Certificates driving greater in-store engagement Get rewarded faster Accessible through TJX app, email and TJX website More return trips to TJX stores Time to rewards earn / redemption Consumer choice in how she redeems cert
Slide 111: TJX CEO Testimonial
111 TJX is the leading off-price apparel and home fashions retailer in the U.S. and worldwide, and I am happy to say that Synchrony has been a trusted partner of ours since Recently, we have worked with Synchrony to further enhance our TJX Rewards loyalty program and delivery of our digital rewards
Slide 112: Delivering Frictionless In-Person Shopping Experiences
112 Better shopping, payment, rewards experience Credit + channel growth alignment More efficient club trips investment in Scan & Go experience + Synchrony SyPI Drive Scan & Go usage Delivering Frictionless In-Person Shopping Experiences Digital integration Partner & Consumer ValueCoordinated market
Slide 113: Diversified & Value takeaways
113 A market leader in scaled retail, with opportunity to enhance penetration Delivering everyday value and loyal customers, driving greater spend at our partners Powering top of wallet products and customer experiences to fuel organic growth and partner wins
Slide 114: Tom Quindlen, CEO Diversified & Value and Lifestyle
114 Tom Quindlen EVP & CEO Diversified & Value and Lifestyle
Slide 115: Lifestyle Platform
115 Our Lifestyle Platform partners with a diverse set of merchants to extend the passion for their brands and products to the customer, offering seamless financing while building a relationship grounded in special experiences across multiple generations.
Slide 116: Strong Foundation, Positioned for Growth
116 Avg. active accounts 2.6 Million Purchase volume $4.9 Billion EOP loan receivables $5.1 Billion Interest and fees $0.7 Billion Results as of FY2020 Strong Foundation, Positioned for Growth
Slide 117: Broad Partner Spectrum Across a Diverse Set of Industries
117 Specialty Retail Music Outdoor special occasions Everyday lifestyle, Up to ~6 purchases in brand per year per active account Other Average original installment loan size of ~$14K, and up to $100K Luxury ~20K Independent Merchants Distribution Network1 Broad Partner Spectrum Across a Diverse Set
Slide 118: Powering Scalable Solutions for Partners and Customers
118 30-minute dealer onboarding process1 Self-service tech tools Integrating with major e-commerce platforms Data & Analytics enables Personalization for partners & dealer base Multi-channel engagement for a comprehensive path to purchase Seamless Integration and best in-class Merchant Service and S
Slide 119: Serving a Large and Fragmented Market
119 Large, highly fragmented verticals No single retailer accounts for >4% of sales Serving a Large and Fragmented Market ~$400B Relevant to Synchrony Significant portion of sales run on credit Up to ~75% of industry sales are financed in select verticals2 ~$5B1 Synchrony Sales SYNCHRONY LEADS WITH
Slide 120: Significant Growth Opportunities
120 Market Overview >20 national retailers with $1B+ in revenues2 Within Existing Base Win New Partners Expand Dealer Network 1 incremental application per month per dealer/store generates ~$150MM1 in Sales Volume ~20K existing Partner Dealers >2K locations added annually3 Significant Growth Opportu
Slide 121: Leveraging Differentiators to Solidify Leadership Position
121 Leveraging Differentiators to Solidify Leadership Position Manufacturer/OEM Across Dealers Speed Flexibility Multi-product Multi-channel Dealer Sales Conversion Consumer Access to Passions
Slide 122: Dealer Value Proposition
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Slide 123: Lifestyle takeaways
123 Deep expertise in national specialty retail, serving iconic retailers Leveraging powerful network effect enabled by broad reach across manufacturers and dealers Cutting-edge customer experiences with multi-channel, multi-product optionality
Slide 124: Bart Schaller, CEO Digital
124 Bart Schaller EVP & CEO Digital
Slide 125: Digital Platform
125 Digital Platform enables our digital-first partners to deepen consumer engagement by embedding payment solutions, leading value and rewards, and personalized offers within seamless experiences and extending digital relationships into in-person commerce
Slide 126: Highly Engaged Customers, Partnerships That Span Decades
126 $35.9 Billion $20.4 Billion $3.8 Billion 16.6 Million Results as of FY2020 Purchase volume EOP loan receivables Interest and fees Avg. active accounts 16 years Avg. PayPal, eBay, QVC, Amazon Long-standing partners 52 purchases 1 Avg. per active account per year Highly engaged customers Highly En
Slide 127: Diverse Range of Leading Digital Commerce Brands and Channels
127 Diverse Range of Leading Digital Commerce Brands, Products, and Channels DIVERSE PARTNERS MULTIPLE CHANNELS INTEGRATED PRODUCTS Payments Marketplaces Digital-first Brands & Merchants Mobile/Native App Web Live/On-air Voice/Telesales In person/ Point-of-Sale Embedded Payments Cross-shop Enabled P
Slide 128: Clear Path to Expand Growth
128 $650B Total Partner Opportunity ~20% E-comm CAGR 2017-201 Market Overview Expanded product and offer choice Partner Growth Product Expansion Clear Path to Expand Growth In-Person Spend retail, travel, dining, etc. Equal Pay & Installments Fixed & 0% Promotions Embedded PLCC Leading digital brand
Slide 129: Seamlessly Integrating Personalized, Intuitive Experiences
129 Seamlessly Integrating and Delivering Personalized, Intuitive Experiences Engage Apply Use Service Intuitive application and provisioning Personalized engagement and activation Dynamic rewards, effortless payments, consumer control Partner-native servicing
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Slide 146: Seamlessly Integrating Personalized, Intuitive Experiences
146 Seamlessly Integrating and Delivering Personalized, Intuitive Experiences Engage Apply Use Service Intuitive application and provisioning Personalized engagement and activation Dynamic rewards, effortless payments, consumer control Partner-native servicing Embedded within digital partner environ
Slide 147: Deeper Integration & Constantly Evolving User Experiences
147 Deeper Integration & Constantly Evolving User Experiences Alexa Skill Mobile Servicing App Expanded Products & Offers to Meet Customer Needs Cart-Based Promotional Financing New Channels (e.g. Amazon Pay) Prime 5% Prime Card Prime Bonus2007 20210% APR Equal Pay Integrated Checkout & Redemption E
Slide 148: Positioned for the Future
148 2010 $170B e-comm sales1 <35% smartphone ownership2 Today $930B+ e-comm sales3 25 connected devices/household4 2030 $2T+ e-comm sales5 -Positioned for the Future
Slide 149: Digital takeaways
149 Developing seamless and intuitive integrations within complex digital partner environments Leveraging data to deliver real-time, personalized offers, experiences and decisions Innovating and collaborating with partners to meet evolving customer and business needs
Slide 150: Brian Wenzel, Chief Financial Officer
150 Brian Wenzel Sr. EVP & Chief Financial Officer
Slide 151: Differentiated Business Model Enables Sustainable Growth
151 • Model requires lower marketing for new account origination • Cost structure built on historically lower average balances • Platform & partner diversity • Multi-Product strategy • Compelling value propositions • Highly engaged customers & strong value propositions enables favorable terms • Unde
Slide 152: Strength in Customer Relationships Powers Our Foundation
152 Strength in Customer Relationships and Powers Our Strong Foundation Power of Partner Model 65+ MillionActive Accounts 448,000+Partner Locations ~2 Billion (FY 2019) Transactions 55%Digital Applications Average New Accounts per year1 ~25 Million Average Length of Credit Card Relationship2 10+ Yea
Slide 153: Receivables, purchase volume and net interest income growth
153 EOP RECEIVABLESPURCHASE VOLUME NET INTEREST INCOME $71B $139B 2010 2020 2.0X $45B $82B 2010 2020 1.8X $8B $14B 2010 2020 1.9X
Slide 154: Growth versus direct peers
154 $61B $87B 2014 2019 $11B $17B 2014 2019 $103B $149B 2014 2019 +8% CAGR +4% CAGR Synchrony Direct Peers +7% CAGR +5% CAGR Synchrony Direct Peers +8% CAGR +8% CAGR Synchrony Direct Peers -Pandemic) EOP ReceivablesPurchase Volume Net Interest Income
Slide 155: Partner Model Powers Low-Cost Acquisition
155 ~$350+ Lifetime Value of an Account3 Co-Brand2Synchrony1 Industry2 >2X >4X • Acquiring a highly engaged customer • Powering greater utilization and value through our multi-product strategy & compelling value propositions • Yields 15-20x lifetime value per account >~$18$aX$ >2x >4x Cost To Acquir
Slide 156: Yield, charge-offs and risk-adjusted yield versus peers
156 13.2% 13.3% 21.1% Broader Peers Direct Peers Synchrony Interest & Fee Yield 3.7% 3.4% 5.6% Net Charge-Offs All comparisons based on FY2019 Broader Peers Direct Peers Synchrony 9.5% 9.9% 15.5% Risk-Adjusted Yield (RAY) Broader Peers Direct Peers Synchrony -Adjusted Margins >560 bps
Slide 157: Delivering Consistent Loss Performance Over Time
157 • Underwrite to a Risk- Adjusted Margin at the Partner/Channel Level • performance • Enhanced data and PRISM underwriting tools should deliver increased growth at similar loss profile Delivering Consistent Loss Performance Over Time 159% 44% 205% 33% 0% 40% 80% 120% 160% 200% 240% 1 SYF COF DFS
Slide 158: Effectively Managing Our Portfolio Through the Pandemic
158 • Refined underwriting as we entered pandemic • Offered payment deferrals to standard payment plans • Monitoring longer term • Began adjustments to underwriting starting in late Effectively Managing Our Portfolio Through the Pandemic1 8% 8% 7% 6% 6% 5% 4% 20% 21% 19% 18% 17% 18% 16% 72% 71% 74%
Slide 159: Retailer Share Agreements Align Growth & Profitability
159 Retailer Share Agreements (RSAs) Designed to Align Growth & Profitability ~75% ~25% RSA Payout Types Sharing Arrangements Volume Total RSA is a factor of Growth and Financial Performance Primary Sharing Arrangements ensure profitability focus Secondary Volume drives our focus on growth General R
Slide 160: Retailer Share Agreement Variations
160 Retailer Share Agreement Variations 100% 50%50% 1.5% 2.5% Total Program Return Synchrony Share of Return Retailer Share of Return 2.75% 1.25% 4.0% Total Program Return Allocation 100% 25% 75% 2.0% 2.0% Total Program Return 2.50% 1.50% 4.0% Lo w e r T h re s h o ld s H ig h e r T h re s h o ld s
Slide 161: Program Return Examples
161 100% 50%50% 1.5% 2.5% Total Program Return SYF Share of Return Retailer Share of Return 2.75% 1.25% 4.0% Total Program Return Allocation 100% 25% 75% 2.0% 2.0% Total Program Return 2.50% 1.50% 4.0% Lo w e r T h re s h o ld s H ig h e r T h re s h o ld s Program Return SYF: 69% of Program Return
Slide 162: Industry Leading Efficiency Ratio
162 33.5% 31.9% 51.7% 53.0% 1 22015 2019 Direct PeersSYF Industry Leading Efficiency Ratio Our Core Differentiators and Diligent Focus Power Our Efficiency Drive Core Productivity Initiatives Heritage of Operating Low Avg. Bal. Accts Efficient Marketing Spend Fund Strategic Investments Expense Manag
Slide 163: Operate with a Very Strong Balance Sheet
163 19% 7% 8% 4% 20% 20% 20% 16% 61% 73% 72% 80% 20082 High 2019320142 Medium Low 15% 14% 16% 5% 13% 12%20% 27% 2014 2020 Tier 1 Capital Reserves for Credit Losses High Loss Absorption Capacity1 Credit Quality 3 28% Operate with a Very Strong Balance Sheet 1) d b - -Weighted Assets are adjusted to r
Slide 164: Funding Model and Capital Position Provide a Competitive Advantage
164 72% 77% 81% 17% 12% 10% 11% 11% 9% 20192016 Deposits Unsecured Secured CET1 Capital Journey1 1.8% 2.6% 1.4% Cost of Funds2 18.0% 2019 14.1% 17.8% Funding Profile Returned >$11.5 billion of capital to shareholders since IPO Funding Model and Capital Position Provide a Competitive Advantage (390)
Slide 165: Deep Customer Relationships and Ability to Meet Funding Needs
165 $37.4 $42.4 $49.1 $54.0 $51.8 $50.0 94% 94% 94% 94% 90% 94% 70% 75% 80% 85% 90% 95% 100% -$5.0 $5.0 $15.0 $25.0 $35.0 $45.0 $55.0 2016 2017 2018 2019 2020 2Q'21YTD Balance Customer Retention $61K Average Balance Per Account >40% Customers Have a Credit Product $50B Direct Deposit balances ~5 YEA
Slide 166: Executing a Disciplined Capital Allocation Strategy
166 Executing a Disciplined Capital Allocation Strategy Maintain and expand partner, merchant and provider relationships Strategic investments to deliver best-in-class customer experience Deliver consistent dividends over time and through economic cycles Dividends of ~$2.5 billion Organic Growth Div
Slide 167: Long-Term Financial Framework
167 Sustainable Receivable Growth Operate Efficiently Resilient Risk- Adjusted Margin Retailer Share Agreements Differentiated Business Model 7 10% NIM ~16% NCO ~5.5 - 6.0% ~4.0 4.5% ~32 33% Long-Term Financial Framework Should Deliver Double-Digit EPS Growth in a Capital Targets ~11.0% CET1 Return
Slide 168: Outlook: growth, net interest margin, net charge-offs, RSAs
168 • Improvement in operating performance is partially offset by higher RSA •Mid-teens Purchase volume growth •Continued elevated payment rate •Modest improvement • Improved ALR %, yield increase and lower NCOs•Continued strength in credit performance and delinquencies • Further decline in NCOs Con
Slide 169: Financial takeaways
169 Diversification & multi-product strategy delivers sustainable growth Portfolio has resilient risk-adjusted yields driven by compelling value propositions RSA aligns mutual interests around growth and financial performance Business model delivers high returns and significant capital generation
Slide 170: Brian Doubles, President & Chief Executive Officer
170 Brian Doubles President & Chief Executive Officer
Slide 171: Closing takeaways
171 Diversified business with deep reach gives us tremendous addressable market opportunity Combination of our multi-product suite and innovative digital capabilities enables us to engage and serve more partners and more customers empowering them with greater choice Well-positioned to generate susta
Slide 172: Life. Powered by Synchrony.
172 Synchrony enables commerce by delivering the leading financial ecosystem that connects our partners and our customers through world-class technology, products, and capabilities Life. Powered by Synchrony.
Slide 173: End Notes: Key Terms
173 End Notes KEY TERMS Capital One Financial Corporation Credit Card Business, Domestic Card; Discover Financial Services Credit Card; and American Express Company Global Consumer Services Group, U.S. except for references to Net Interest Income and Efficiency Ratio, where Discover data represents
Slide 174: End Notes: Powerful Financial Ecosystem
174 End Notes POWERFUL FINANCIAL ECOSYSTEM We Have Built a Differentiated Business and a Strong Track Record of Success 1) Total purchase volume and patents for period 3Q 2014 through to 2Q 2021; Loans Receivable and Active Accounts as of 2Q 2021. At Attractive Risk-Adjusted Returns 1) Direct peer i
Slide 175: End Notes: Data & Products Powering Growth
175 End Notes DATA & PRODUCTS POWERING GROWTH Significant Customer Scale sis Leveraging Our Network Effect to Drive Sales to Our Partners 1) Synchrony networks are: CareCredit (Health & Wellness Platform); HOME (Home and Auto Platform); and Car Care (Home and Auto Platform). d on 2021 monthly sales
Slide 176: End Notes: Technology
176 End Notes TECHNOLOGY: POWERING THE FUTURE No end notes for this section
Slide 177: End Notes: The Power of PRISM
177 End Notes THE POWER OF PRISM Delivering Consistent Loss Performance Over Time 1) Peer delinquency information represents applicable U.S. Credit Card business units, sourced from company public filings. Harnessing Years of Customer Data and Client Relationships 1) Include active and inactive acco
Slide 178: End Notes: Health & Wellness Platform
178 End Notes HEALTH & WELLNESS PLATFORM Expansive Network Powers Growth for Providers 1) As of July 2021, based on provider locations and Health & Wellness industry research. 2) As of quarter ending June 30, 2021; excludes Dual Card/Co-Brand, installment and commercial portfolios Core Differentiato
Slide 179: End Notes: Home & Auto Platform
179 End Notes HOME & AUTO PLATFORM Deep Domain Expertise Drives Value 1) For the quarter ended June 30, 2021; excludes Dual Card/Co-Brand, installment and commercial portfolios 2) Time between dealer accepting terms and being approved 3) For the year ended December 31, 2020 Home Vertical is Well-Div
Slide 180: End Notes: Diversified & Value Platform
180 End Notes DIVERSIFIED & VALUE PLATFORM Partners are Scaled, Omnichannel Leaders that Drive Frequent Purchases from Loyal Customers 1) US data, per latest available public filings 2) Digital sales percentage for six months ended December 31, 2020 Producing Compelling Outcomes for Our Partners & C
Slide 181: End Notes: Lifestyle Platform
181 End Notes LIFESTYLE PLATFORM Broad Partner Spectrum Across a Diverse Set of Industries 1) As of June 2021 Powering Scalable Solutions for Our Partners and Customers 1) Time between dealer accepting terms and being approved Serving a Large and Fragmented Market 1) For the year ended December 31,
Slide 182: End Notes: Digital Platform
182 End Notes DIGITAL PLATFORM Highly Engaged Customers, Partnerships That Span Decades 1) Based on annualized 2021 data Clear Path to Expand Growth 1) Source: U.S. Census 2) Source: public filings and company websites Digital Commerce Will Continue to Grow 1) U.S. Census Adj. Retail Sales 2) Among
Slide 183: End Notes: Powerful Financial Performance
183 End Notes POWERFUL FINANCIAL PERFORMANCE and Powers Our Strong Foundation 1) Based on average new accounts per year from 2014-2020 2) Based on average life of account for total open accounts as of July 2021 Partner Model Powers Low- 1) Based on Synchrony internal analysis, representative of larg
Slide 184: Non-GAAP Reconciliation
Non-GAAP Reconciliation The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. 2014 2020 2021 Tier 1 Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,277 $13,