Synchrony Financial · NYSE:SYF
Synchrony Financial — Debt Investor Presentation (February 2015)
29 slides from Synchrony Financial's debt investor presentation, Feb 6, 2015
Slide 1: Fixed Income Investor Review 4th Quarter 2014
Fixed Income Investor Review 4th Quarter 2014 Exhibit 99.1
Slide 2: Disclaimers: Cautionary Statement Regarding Forward-Looking Statements
2 Disclaimers Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial and are intended to be viewed as part of that presentation. No representation is made that the information in these slides is complete. This presentation con
Slide 3: Experienced Management Team
3 Experienced Management Team Brian D. Doubles Chief Financial Officer, Synchrony Financial CFO since January 2009 Global FP&A leader, GE Consumer Finance CEO & CFO, GE’s WMC mortgage business Various other leadership roles at GE Margaret M. Keane President & CEO, Synchrony Financial CEO s
Slide 4: Experienced Board Members
4 Experienced Board Members Independent board members Jeffrey Naylor Audit Committee Chair Experience: 25+ years retail and consumer goods Current position: Founder & Managing Director of Topaz Consulting, LLC Previous experience: SEVP, Chief Administrative Officer and CFO, TJX Companies, Inc.
Slide 5: Synchrony Financial Overview
5 (a) Source: Nilson (April 2014) Synchrony Financial Overview Strong Value Proposition for Partners and Consumers 2 Deep partner integration enables customized loyalty products, across channels Advanced data analytics and targeted marketing capabilities Dedicated team members support partners
Slide 6: Partner-Centric Business with Leading Sales Platforms
6 Partner-Centric Business with Leading Sales Platforms Payment Solutions Retail Card CareCredit Private label credit cards, dual cards & small business credit products for large retailers Promotional financing for major consumer purchases, offering private label credit cards & installment loans Pro
Slide 7: Long-Standing and Diverse Partner Base
7 Long-Standing and Diverse Partner Base Length of relationship Last renewal 36 years 2014 21 years 2014 18 years 2014 16 years 2014 15 years 2013 15 years 2013 9 years 2013 7 years 2012 3 years 2011 2 years 2012 Partner profile
Slide 8: Our Market and Position
8 $20 $30 $40 $50 Our Market and Position Credit card receivables Nilson, % of 2008 market 80% 85% 90% 95% 100% 105% Private Label Credit Cards are back to pre- crisis levels at $100 billion General Purpose Credit Cards are down 15% from peak at $730 billion 2008 2009 2010 2011 2012 2013 Synchrony P
Slide 9: Differentiated Value Proposition for Our Partners & Customers
Differentiated Value Proposition for Our Partners & Customers
Slide 10: Providing Value for Partners & Customers
10 Customer benefits Providing Value for Partners & Customers • Increased sales • Strengthened customer loyalty • Enhanced marketing • Additional economic benefits • Instant access to credit • Attractive discounts, promotional terms & loyalty rewards • Ability to obtain separate financing for major
Slide 11: Partner Value Proposition
11 Partner Value Proposition We deliver significant savings and earnings to our partners No interchange fees for in-store purchases Retailer share arrangements enhance engagement Interchange savings Retailer share arrangements Margin on additional sales $2.6B ++ ++ $2.6B+ 2014 Economic benefits
Slide 12: Attracting New Partners
12 Attracting New Partners Added 5 new retail partners since the start of 2011 Retail Card Increased partners by over 5,000 since the start of 2011 Payment Solutions Increased provider locations by over 41,000 since the start of 2011 CareCredit • Experience • Partnership with on-site dedicated teams
Slide 13: Availability of credit differentiates partners & helps customers
13 Availability of credit differentiates partners & helps customers Significant acquisition & lifecycle benefits vs General Purpose Convenient credit & acquisition offer is a compelling proposition 61.7 million average active cardholders enjoying our card benefits Millions approved every year Reward
Slide 14: Leveraging Data to Differentiate Our Value Proposition
14 Leveraging Data to Differentiate Our Value Proposition Transactions on our closed loop network vs. general purpose Customer Merchant Acquirer Network Issuer General Purpose Card PLCC Card Date Merch. Channel Brand Cat./SKU $ 1/2/15 Belk In- Store DKNY Women’s shoes 468XUTY $83.44 1/9/15 Belk Mobi
Slide 15: Mobile Payment Strategy
15 Mobile Payment Strategy Offer options to our cardholders Support our retailers’ mobile payments strategies Continue to provide compelling value proposition to our customers Enable EMV cards Develop cross-channel tokenization strategy for private label & Dual Card Pilot private label n
Slide 16: Financial Performance
Financial Performance
Slide 17: Financial Update
17 Financial Update Net earnings $ in millions 2013 2014 Strong, stable earnings Loan receivables $ in billions 7% growth Net charge-offs % of average loan receivables 4.69% 4.32% Platform revenue $ in millions $9,422 $10,126 7% growth Stable losses $1,979 $2,109 $57.3 $61.3 4Q’13 4Q’14 4Q’13 4Q’14
Slide 18: Funding Profile
18 Funding Profile Deposits GE Capital Loan Securitized Debt Unsecured Debt 4Q’14 Long-term target 6% 56% 24% 1% 15%-20% 60%-70% 15% -20% 13% Bank Loan Diverse funding sources % of liabilities excluding non-debt liabilities Fueled by strong deposit growth $ in billions 3Q’13 1Q’14 4Q’13 $22.2 $25.7
Slide 19: Peer Comparison 4Q'14
19 Peer Comparison 4Q’14 (a) Consists of net interest income plus noninterest income and includes RSAs for SYF (b) Segment data for AXP-U.S Card Services and COF-Domestic Credit Card. Other data-total company level (c) Calculated as credit card yield - net charge-off rate on credit cards. SYF-total
Slide 20: Summary
20 Summary Growth supported by online bank with strong deposit growth Solid fundamentals with strong returns Attractive growth opportunities, particularly to further leverage data analytics, loyalty, mobile and e-capabilities Private Label Credit Card leader well-positioned to capitalize on deep par
Slide 21: Master Trust
Master Trust
Slide 22: Master Note Trust Changes
22 Master Note Trust Changes Sponsor / originator Credit enhancement Synchrony Financial and subsidiaries Synchrony Bank continues as… Trust sponsor Receivables originator Synchrony Bank Wholly owned subsidiary of Synchrony Financial • S&P (BBB-) • Fitch (BBB-) Synchrony Financial and su
Slide 23: Trust Stratification Highlights
23 Trust Stratification Highlights • +70% prime concentration • Lower balances and credit lines compared to general purpose credit cards • Highly seasoned accounts … +90% accounts over 3 years (peak losses 18-30 months after origination) Portfolio features Retailer composition FICO distribution (a)
Slide 24: SYNCT Historical Performance
24 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% SYNCT Historical Performance 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% Gross trust yield Dec’14 26.7% Principal payment rate Dec’14 12.9% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Principal charge-offs Dec’14 6.
Slide 25: Appendix
Appendix
Slide 26: Summary of Recent SYF Financial Information
26 Summary of Recent SYF Financial Information 1Q'14 2Q'14 YTD'14 VPY% Growth metrics Loan receivables 54,285 54,873 61,286 7% Purchase volume 21,086 25,978 103,149 10% Statement of earnings Interest income 2,933 2,926 12,242 8% Interest expense 190 206 922 24% Net interest income 2,743 2,720 11,320
Slide 27: Non-GAAP Reconciliations
27 Non-GAAP Reconciliations In order to assess and internally report the revenue performance of our three sales platforms, we use measures we refer to as “platform revenue” and “platform revenue excluding retailer share arrangements.” Platform revenue is the sum of three line items in our Condensed
Slide 28: Non-GAAP Reconciliation: Common Equity and Asset Measures
28 Non-GAAP Reconciliation COMMON EQUITY MEASURES GAAP Total common equity……………………………………………………….………. Less: Goodwill……………………………………………………………………. Less: Intangible assets, net………………………………………………………….. Tangible common equity…………………………………………………………………….. Adjustments for certain other intangible assets, defe
Slide 29: Non-GAAP Reconciliation: Platform Revenue
29 Non-GAAP Reconciliation ($ in millions) Interest and fees on loans……………………………………. Other income……………..………………………………….. Platform revenue excluding retailer share arrangements…. Retailer share arrangements………………………………….. Platform revenue…………………………………………..…. $ 10,300 484 $ 10,784 (1,984) $ 8,800 2012
Synchrony Financial — Debt Investor Presentation (February 2015) on 6ix