Synchrony Financial · NYSE:SYF
Synchrony Financial — Bank of America Merrill Lynch Banking & Financial Services Conference 2014
23 slides from Synchrony Financial's conference presentation, Nov 12, 2014
Slide 1: Bank of America Merrill Lynch Banking & Financial Services Conference
Bank of America Merrill Lynch Banking & Financial Services Conference November 12, 2014 Exhibit 99.1
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
2 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 contains certai
Slide 3: Synchrony Financial Overview
3 (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 4: Our Market and Position
4 $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 5: How We Go to Market: Sales Platforms
5 How We Go to Market: 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 Promotional financin
Slide 6: Long-Standing and Diverse Partner Base
6 $56.8 Billion Long-Standing and Diverse Partner Base 1-4 yrs 5-9 yrs 10-14 yrs 15+ yrs (a) 40 largest programs based on 2013 platform revenue, includes 5 partners that will not be renewed past their contractual expiration dates in 2014 and 2015 representing 3.3% of platform revenue for 2013 Long-t
Slide 7: Partner Value Proposition
7 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 $2.4B ++ ++ $2.4B+ 2013 Economic benefits (
Slide 8: Customer Value Proposition
8 Availability of credit differentiates partners & helps customers Significant acquisition & lifecycle benefits vs General Purpose Convenient credit & acquisition offer is a compelling proposition 60 million average active cardholders enjoying our card benefits Millions approved every year Rewards t
Slide 9: Leveraging Data to Differentiate Our Value Proposition
9 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 $ 1/2/14 Belk In- Store DKNY Women’s shoes 468XUTY $83.44 1/9/14 Belk Mobil
Slide 10: Mobile Payment Strategy
10 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 11: Significant Growth Opportunities
11 Significant Growth Opportunities “e” $1.2 (a) Source: Nilson (December 2013) Cash $1.7 Check $1.3 Debit / Prepaid $2.2 Credit $2.3 Synchrony comprises ~1% of U.S. $8.7 trillion spend Expansive market (a) Synchrony comprises ~6% of U.S. credit card receivables 2011 2012 2013 $807 $809 $834 Receiva
Slide 12: Track Record of Outpacing the Market
12 Track Record of Outpacing the Market $523 $245 $218 $206 $160 $97 2013 Market Size ($ in billions) Growth versus market 2013 data 1.0% 2.0% 3.3% 0.0% 4.1% 2.4% 7.3% 3.2% 10.2% 8.2% 10.0% 9.6% Mass Electronics Healthcare Apparel/Dept. Home Furniture Growth rates 2x to 3x market growth rates by o
Slide 13: Attracting New Partners
13 Attracting New Partners Added 4 new retail partners and $2.3B of receivables since 2011 Retail Card Increased partners by over 5,000 and $1.9B in receivables since 2011 Payment Solutions Increased providers by 33,000 since 2011 CareCredit • Experience • Partnership with on-site dedicated teams fo
Slide 14: Financial Update
14 Financial Update Net earnings $ in millions 3Q’13 YTD 3Q’14 YTD Strong, stable earnings Loan receivables $ in billions 7% growth Losses Net charge-off % 4.07% 4.05% Platform revenue $ in millions $6,922 $7,410 7% growth Stable losses $1,536 $1,578 $53.3 $56.8 3Q’13 3Q’14 3Q’13 3Q’14 3Q’13 YTD 3Q’
Slide 15: Significant % of Revenue Under Long-Term Contracts
15 2013 Platform revenue 24% 76% 200,000 next largest programs Majority auto-renew No program exceeds 0.2% Significant % of Revenue Under Long-Term Contracts $9,422 Largest 40 programs Typically under long-term exclusive contracts (a) (a) Platform revenue is the sum of “interest and fees on lo
Slide 16: Credit Quality Overview
16 Credit Quality Overview Synchrony controls underwriting and credit line decisions 99% of consumer accounts opened since 2010 above 600 FICO, 79% above 660 Over 70% of assets at 660+ FICO … FICO on average consumer accounts is 714 Stronger portfolio U.S. consumer FICO Stable credit 30+ days
Slide 17: Funding Profile
17 Funding Profile Deposits GE Capital Loan Securitized Debt Unsecured Debt 3Q’14 Long-term target 6% 54% 25% 2% 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 $25.7
Slide 18: Peer Comparison
18 Peer Comparison 3Q’14 (a) Consists of net interest income plus noninterest income and includes RSAs for SYF (b) Segment data for AXP-U.S Card Services and COF-Domestic Credit Card. Other data-total company level (c) “Banks” refers to large cap regional banks which include: BBT, FITB, HBAN, KEY, P
Slide 19: Summary
19 Summary Growth supported by online bank with strong deposit growth Solid fundamentals with strong returns Attractive growth opportunities, particularly to further leverage data analytics, loyalty, mobile and e-capabilities Private Label Credit Card leader well-positioned to capitalize on deep par
Slide 20: Synchrony Financial: Engage with us.
s{! synchrony FINANCIAL Engage with us.
Slide 21: Appendix, Non-GAAP Reconciliations
21 Appendix, Non-GAAP Reconciliations In order to assess and internally report the revenue performance of our three sales platforms, we use measures we refer to as “platform revenue” and “platform revenue excluding retailer share arrangements.” Platform revenue is the sum of three line items in our
Slide 22: Non-GAAP Reconciliation
22 Non-GAAP Reconciliation Equity to Tier 1 capital, Tier 1 common equity and Risk-based capital Total equity……………………………………………………………………………………......... Unrealized gains / losses on investment securities(a)………………………………………… Disallowed goodwill and other disallowed intangible assets(b)……………………………… Tier
Slide 23: Non-GAAP Reconciliation
23 Non-GAAP Reconciliation ($ in millions) Interest and fees on loans……………………………………. Other income……………..………………………………….. Platform revenue excluding retailer share arrangements…. Retailer share arrangements………………………………….. Platform revenue…………………………………………..…. $ 9,134 497 $ 9,631 (1,428) $ 8,203 2011 $