Synchrony Financial · NYSE:SYF
Synchrony Financial — Q2 2022 Earnings Presentation
22 slides from Synchrony Financial's earnings presentation, Jul 18, 2022
Slide 1: 2Q'22 Financial Results
2Q'22 FINANCIAL RESULTS July 18, 2022
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: 2Q'22 Financial Highlights
2Q'22 Financial Highlights SUMMARY FINANCIAL METRICS CAPITAL $1.60 15.60% 15.2% DILUTED EPS NET INTEREST MARGIN CET1 compared to $2.12 compared to 13.78% liquid assets of $15.2 billion, 15.9% of total assets $82.7 billion 2.73% $64.7 billion LOAN RECEIVABLES NET CHARGE-OFFS DEPOSITS compared to $78.
Slide 4: 2Q'22 Business Highlights
2Q'22 Business Highlights BUSINESS EXPANSION GROWTH METRICS CONSUMER PERFORMANCE Purchase Volume New Accounts(c) $ billions 12% (6)% Core(a) $38.5 $44.6 16% Core(a) 5.8 5.9 3% Dual Card / Co-Brand(b) $13.0 $17.0 31% (d) Loan receivables Purchase Volume per Account $ billions 5% 8% Core(a) $74.0 $82.
Slide 5: Well-Positioned to Drive Sustainable Growth
Well-Positioned to Drive Sustainable Growth… BROAD REACH DIVERSIFIED EXPANSIVE PRODUCT SUITE DISTRIBUTION NETWORKS REVOLVING SYNCHRONY MARKETPLACES ~65MM Active Accounts • PLCC • Dual Card • Co-brand • Secured • Network • Synchrony Mastercard COMMERCIAL MySynchrony App • Business • Revolving credit
Slide 6: Driving Diversification and a Strong Balance Sheet
…while Driving Diversification and a Strong Balance Sheet… BALANCED DIVERSE SPEND CATEGORIES (b) CREDIT PORTFOLIO PURCHASE VOLUME BY PLATFORM OUT OF PARTNER SPEND 14% 28% Auto & 20% 23% 7% NON-DISCRETIONARY Gas T&E DIGITAL 32% Health & NON-PRIME DIVERSIFIED & Pet 35% VALUE 9% Home PRIME 10% Furnishi
Slide 7: Delivering Resilient Returns through Cycles
…and Delivering Resilient Returns through Cycles COVID-19 CARD Act Credit Pandemic Took Effect Normalization RAR(a) GFC RSA/ALR(c) NCOs/ALR(c) Prime & Super Prime/EOP(b)(c) 63% 72% 72% 74% 74% 72% 78% 77% RSA / Purchase Volume(c) 1.09% 1.83% 2.53% 2.41% 2.23% 2.58% 2.73% 2.54% LONG-TERM ~2.5+% ROA T
Slide 8: Financial Results
Financial Results Summary earnings statement 2Q'22 Highlights B/(W) • $804 million Net earnings, $1.60 diluted EPS $ in millions, except per share statistics 2Q'22 2Q'21 $ % Total interest income $4,074 $3,578 $496 14 % • Net interest income up 15% – Interest and fees on loans up 13% driven primaril
Slide 9: 2Q'22 Platform Results
(a) 2Q'22 Platform Results Loan receivables $ in billions Home & Digital Diversified & Health & Lifestyle Auto Value Wellness 9% 14% 12% 15% 8% 2Q'21 2Q'22 V% 2Q'21 2Q'22 V% 2Q'21 2Q'22 V% 2Q'21 2Q'22 V% 2Q'21 2Q'22 V% Purchase $11.5 $12.9 12% $10.9 $12.5 14% $11.6 $14.4 24% $3.0 $3.4 15% $1.4 $1.4
Slide 10: Net Interest Income
Net Interest Income Net Interest Income 15% 2Q'22 Highlights $ in millions % of average interest-earning assets • Net interest income increased 15% – Interest and fees on loans up 13% driven by growth in average loan receivables – Interest expense increase attributed to higher funding liabilities •
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 90+ days past due Allowance for credit losses $ in millions, % of period-end loan receivables $ in millions, % of period-end lo
Slide 12: Other Expense
Other Expense Other expense 2Q'22 Highlights $ in millions 14% • Total other expense up 14% – Increase driven by higher employee costs, marketing spend, information processing and other expense – Total other expense includes $62 million of costs related to additional marketing and site strategy acti
Slide 13: Funding, Capital and Liquidity
Funding, Capital and Liquidity (a) Funding sources Liquidity $ in billions $ in billions Unsecured V$ Securitization $0.0 $(1.3) Deposits $4.9 V% Deposits 81% 84% +3 pts. Liquid assets $16.3 $15.2 Undrawn credit facilities 4.9 3.7 Securitization 10% 8% (2) pts. Total liquidity $21.2 $18.9 Unsecured
Slide 14: 2022 Outlook
2022 Outlook (comments and trends in comparison to 2021, except where noted) Full Year 2022 Key Driver Previous Current Trends / Update Loan Receivables • Sustained strength in Purchase Volume Growth ~10% 10%+ • Underlying payment rate trends • Modestly lower in 2nd half driven by seasonal receivabl
Slide 15: 2Q'22 Key Business Themes
2Q'22 Key Business Themes Core business differentiators are driving strong & resilient financial results Diversified platforms, spend categories and customer base enhances the resiliency of our business Consumer remains strong, as reflected by broad-based spend, elevated payment rates and gradual cr
Slide 16: Footnotes
Footnotes All amounts and metrics included in this presentation are as of, or for the three months ended, June 30, 2022, unless otherwise stated. References in this presentation to “HFS” are to Loan receivables held for sale 2Q'22 Business Highlights (b) Dual Card / Co-Brand metrics shown above are
Slide 17: Synchrony - Changing What's Possible
»/" synchrony CHANGING WHAT’S POSSIBLE
Slide 18: Gain on Sale Re-Investment
Gain on Sale Re-Investment The following table sets forth the details of the gain on sale and reinvestment of the proceeds $ in millions, except per share statistics Q2’22 2H’22 Estimated Total Gain on Sale from conveyance of HFS portfolios $120 $- $120 Marketing / Growth Investments: RSA* 10 Other
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation The following table sets forth the components of our Core key metrics for the periods indicated below. At June 30, Total $ in millions 2021 2022 Loan receivables $78,374 $82,674 Less: Gap Loan receivables (3,839) (174) Less: BP Loan receivables (524) — Core Loan receivables $
Slide 20: Non-GAAP Reconciliation Continued
Non-GAAP Reconciliation Continued* The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. $ in millions At June 30, Total 2021 2022 Tier 1 Capital $14,671 $13,280 Less: CECL transition adjustment (2,376) (1,719) Tier 1 capital (CECL full
Slide 21: Non-GAAP Reconciliation Continued
Non-GAAP Reconciliation Continued The following table sets forth the components of our Tangible common equity and tangible common equity per share $ in millions At June 30, Total 2021 2022 GAAP Total Equity $14,197 $13,393 Less: Preferred Stock (734) (734) Less: Goodwill (1,105) (1,105) Less: Intang
Slide 22: 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 $ in millions Twelve months ended December 31, 2009 Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.26 % Securitizat