Synchrony Financial · NYSE:SYF
Synchrony Financial — Q1 2020 Earnings Presentation
19 slides from Synchrony Financial's earnings presentation, Apr 21, 2020
Slide 1: 1Q'20 Financial Results
1Q’20 Financial Results April 21, 2020
Slide 2: Disclaimers
Disclaimers Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For additional informatio
Slide 3: 1Q'20 Highlights
1Q’20 Highlights Financial Highlights COVID-19 Response We have taken action to ensure the health and safety of our • $286 million Net earnings, $0.45 diluted EPS employees, and stabilized our operations while mitigating the ‒ Increase in provision for credit losses for the quarter uncertainty and f
Slide 4: COVID-19 Impact on Sales
COVID-19 Impact on Sales (a) (b,c) Purchase Volume Growth World Sales by Category % in YoY Growth Rates % in YoY Growth Rates 13% 14% 11% 10% Grocery Stores 35% Non Grocery Food 12% 22% January February March 1-17 Drug Stores 9% 16% Discount Stores 11% (26)% 16% March (b) Restaurants 16% 18-31 World
Slide 5: Focus on Higher Quality Asset Base
Focus on Higher Quality Asset Base Stronger Portfolio Disciplined Underwriting Improving Purchase Volume Mix (a) (a) Consumer FICO FICO, consumer accounts opened Consumer FICO since beginning of 2010 2008 1Q'20 1Q'16 1Q'20 36% 37% 65% 61% 33% 721+ 45% 28% 19% 20% 18% 661-720 36% 26% 23% 9% 11% 10% 6
Slide 6: Historical Net Charge-Offs, Risk-Adjusted Yield, and RSAs
(a) Historical Net Charge-Offs, Risk-Adjusted Yield, and RSAs Net Charge-Off Ratio Delivered Strong Risk-Adjusted Returns; 12.00% RSAs Act as Countercyclical Buffer SYF 10.00% • Net charge-off performance was generally Bank Card Average consistent with general purpose card issuers Net Charge-off Rat
Slide 7: Financial Results
Financial Results Summary earnings statement 1Q’20 Highlights B/(W) $ in millions, except per share statistics • $286 million Net earnings, $0.45 diluted EPS 1Q’20 1Q’19 $ % Total interest income $4,407 $4,786 $(379) (8)% • Net interest income down 8% driven by the Walmart sale Total interest expens
Slide 8: Growth Metrics
Growth Metrics Purchase volume (1)% Loan receivables +3% $ in billions $ in billions $32.5 $32.0 $80.4 $82.5 Core (a) $30.4 $32.0 +6% Core (a) $79.0 $82.5 +4% 1Q'19 1Q'20 1Q'19 1Q'20 Dual Card / Dual Card / Co-Brand(b) $11.4 $12.3 +8% (b) $18.7 $19.9 +6% Co-Brand Average active accounts (7)% Interes
Slide 9: Platform Results
(a) Platform Results Retail Card Payment Solutions CareCredit Loan receivables, $ in billions Loan receivables, $ in billions Loan receivables, $ in billions +2% +3% +7% $51.5 $52.4 $19.4 $20.0 $10.1 $9.5 Core (b) $50.8 $52.4 +3% $18.7 $20.0 +7% 1Q'19 1Q'20 V% 1Q'19 1Q'20 V% 1Q'19 1Q'20 V% Purchase
Slide 10: Net Interest Income
Net Interest Income Net interest income $ in millions, % of average interest-earning assets 1Q’20 Highlights (8)% • Net interest income decreased 8% compared to prior year driven by the Walmart sale $4,226 $3,890 − Interest and fees on loans decreased 7% compared to prior year driven by the Walmart
Slide 11: Asset Quality Metrics
Asset Quality Metrics 30+ days past due Net charge-offs $ in millions, % of period-end loan receivables $ in millions, % of average loan receivables including held for sale $4,430 $4,021 $3,957 $1,344 $1,331 $3,874 $1,248 $3,521 $3,625 $3,723 $3,500 $1,198 $1,159 $1,221 $3,293 $1,087 $1,109 $1,125 4
Slide 12: Other Expense
Other Expense Other expense $ in millions (4)% 1Q’20 Highlights $1,043 $1,002 • Other expense down 4% • Efficiency ratio increased 1.7pts to 32.7% – Other expense was negatively impacted by operational losses and certain expenditures related to our response to COVID-19 – Excluding these impacts, eff
Slide 13: Funding, Capital and Liquidity
Funding, Capital and Liquidity Funding sources Capital ratios (b) $ in billions CET1 Capital Ratio $86.0 $81.9 V$ Unsecured $9.8 14.5% 14.3% $8.0 $(1.8) Securitization $12.1 $9.3 $(2.8) 1Q’19 1Q’20 Transition Deposits $64.1 $64.6 +$0.5 Tier 1 Capital Ratio 14.5% 15.2% 1Q'19 1Q'20 Variance 1Q’19 1Q’2
Slide 14: 1Q'20 Wrap Up
1Q’20 Wrap Up • Net earnings of $286 million … $0.45 diluted earnings per share • Increase in provision for credit losses for the quarter included impact from CECL implementation of $101 million, or $76 million after-tax, which equates to an EPS reduction of $0.13 • Significant actions taken in resp
Slide 15: Engage with us.
|! synchrony FINANCIAL Engage with us.
Slide 16: Appendix
Appendix a) Net Charge-Off Ratio bank card average peers include: AXP U.S. Card Services prior to 2014 and AXP U.S. Consumer Services starting in 2014, BAC U.S. Credit Card, C Citi-Branded Cards North America, COF Domestic Card, DFS Credit Card, JPM Credit Card, and WFC Consumer Credit Card. SYF – t
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation (a) The following table sets forth the components of our Growth Metrics and impact from CECL for the periods indicated below. At March 31, Total Retail Card Payment Solutions 2019 2020 2019 2020 2019 2020 Loan receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 18: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) 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 . . . . . . . . . . . . . . .
Slide 19: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) (a) The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. At March 31, Total 2019 2020 Tier 1 capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .