Synchrony Financial · NYSE:SYF
Synchrony Financial — Presentation (June 2015)
14 slides from Synchrony Financial's investor presentation, Jun 26, 2015
Slide 1: 2015 DFAST Annual Stress Test Disclosure for Synchrony Bank
Exhibit 99.1 2015 DFAST Annual Stress Test Disclosure For Synchrony Bank, a Wholly-Owned Subsidiary of Synchrony Financial June 26, 2015
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: Overview
Overview • The 2015 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 Tota
Slide 4: Supervisory Severely Adverse Description
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 Ad
Slide 5: Risk Coverage
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 • Allowance for Loan
Slide 6: Stress Test Methodology: Overview
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 mod
Slide 7: Stress Test Methodology: PPNR
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 loan receivable balances, interest and fees on loans, and RSAs. • RSAs are generally structured
Slide 8: Stress Test Methodology: Provision for Loan Losses
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 the ALLL. • Net charge-offs are a function of gross charge-offs net of recoveries. • Gross charge-offs of loans are estimated using proprietary
Slide 9: Stress Test Methodology: Risk-Weighted Assets
Stress Test Methodology: Risk-Weighted Assets • Under the Supervisory Severely Adverse Scenario, the Bank estimates that business volume would grow, albeit at a much slower rate than under a base case set of economic conditions as consumers reduce spending under a severe macroeconomic environment. •
Slide 10: Supervisory Severely Adverse Scenario Results
Supervisory Severely Adverse Scenario Results Actual 3Q 2014 and hypothetical stressed capital ratios and RWAs 1 from 4Q 2014 through 4Q 2016 under the Supervisory Severely Adverse Scenario Stressed Capital Ratios Actual 3Q 2014 Ending 4Q 2016 Minimum Tier 1 Common Ratio (%) 2 15.7% 16.4% 14.6% Comm
Slide 11: Supervisory Severely Adverse Scenario Results
Supervisory Severely Adverse Scenario Results Nine-quarter cumulative profit and loss metrics under the Supervisory Severely Adverse Scenario (4Q 2014 – 4Q 2016) % of Average $ in Billions Assets 1 Pre-Provision Net Revenue 2 $10.5 21.7% Less Provision for Loan Losses $8.8 Realized (Gains)/Losses on
Slide 12: Supervisory Severely Adverse Scenario Results
Supervisory Severely Adverse Scenario Results Nine-quarter cumulative loan losses by type of loans under the Supervisory Severely Adverse Scenario (4Q 2014 – 4Q 2016) Portfolio Loss $ in Billions Rates 1 Loan Losses $7.8 19.7% Credit Cards 2 $7.5 19.8% Commercial and Industrial3 $0.3 25.5% Other Con
Slide 13: Scenario Drivers of Pro Forma Capital Ratios
Supervisory Severely Adverse Scenario Drivers of Pro Forma Capital Ratios Tier 1 Risk-Based Capital Ratio 1 Total Risk-Based Capital Ratio 2 1 “Other” includes changes in goodwill, intangibles, and accumulated OCI. 2 “Other” includes changes in goodwill, intangibles, accumulated OCI, and eligible AL
Slide 14: Engage with us.
synchrony FINANCIAL