Synchrony Financial · NYSE:SYF
Synchrony Financial — Q4 2023 Earnings Presentation
19 slides from Synchrony Financial's earnings presentation, Jan 23, 2024
Slide 1: 4Q'23 Financial Results
4Q'23 FINANCIAL RESULTS January 23, 2024
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: 2023 Year in Review
2023 Year in Review GROW & DIVERSIFY DELIVER GENERATE WIN NEW PROGRAMS, BEST-IN-CLASS STRONG FINANCIAL PARTNERS PRODUCTS & CUSTOMER RESULTS MARKETS EXPERIENCES 25+ 90% $2.2 NEW PARTNER GROWTH IN ACCOUNTS billion DEALS PROVISIONED FOR DIGITAL NET EARNINGS WALLET Synchrony Pay Later 2.0% ROA ~23 milli
Slide 4: Delivering Consistent Returns Over Time
Delivering Consistent Returns Over Time Credit COVID-19 12% Normalization CARD Act Pandemic Took Effect 10% RAR* 8% GFC 6% NCOs/ALR (b) 4% RSA/ALR (b) 2% -% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Prime & Super Prime/EOP(a)(b) 63% 72% 72% 74% 74% 72% 78% 73% RSA /
Slide 5: 4Q'23 Financial Highlights
4Q'23 Financial Highlights SUMMARY FINANCIAL METRICS CAPITAL $1.03 15.10% 12.2% DILUTED EPS NET INTEREST MARGIN CET1 compared to $1.26 compared to 15.58% liquid assets of $16.8 billion, 14.3% of total assets $103.0 billion 5.58% $81.2 billion LOAN RECEIVABLES NET CHARGE-OFFS DEPOSITS compared to $92
Slide 6: 4Q'23 Business Highlights
4Q'23 Business Highlights BUSINESS EXPANSION GROWTH METRICS CONSUMER PERFORMANCE Purchase volume New accounts(c) $ billions 3% (3)% Dual Card / $19.3 $21.0 9% Co-Brand (a) (d) Loan receivables Purchase volume per account $ billions 11% (2)% Dual Card / $22.4 $27.3 22% Co-Brand(a) Average active acco
Slide 7: Financial Results
Financial Results Summary earnings statement 4Q'23 Highlights B/(W) $440 million Net earnings, $1.03 diluted EPS $ in millions, except per share statistics 4Q'23 4Q'22 $ % • Net interest income up 9% Total interest income $5,549 $4,708 $841 18% – Interest and fees on loans up 16% driven primarily by
Slide 8: 4Q'23 Platform Results
(a) 4Q'23 Platform Results Loan receivables $ in billions Home & Digital Diversified & Health & Lifestyle Auto Value Wellness 7% 13% 11% 19% 13% 4Q'22 4Q'23 V% 4Q'22 4Q'23 V% 4Q'22 4Q'23 V% 4Q'22 4Q'23 V% 4Q'22 4Q'23 V% Purchase $11.9 $11.4 (4)% $14.8 $15.5 5% $1.5 $1.6 3% $16.3 $17.0 4% $3.5 $3.9 1
Slide 9: Net Interest Income
Net Interest Income 4Q'23 Highlights Net Interest Income 9% $ in millions • Net interest income increased 9% % of average interest-earning assets – Interest and fees on loans up 16% driven primarily by growth in average loan receivables, higher benchmark rates and lower payment rate – Interest expen
Slide 10: 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 (a) 90+ days past due Allowance for credit losses $ in millions, % of period-end loan receivables $ in millions, % of period-en
Slide 11: Other Expense
Other Expense Other Expense $ in millions 14% 4Q'23 Highlights • Total Other expense up 14% – Increase primarily driven by growth related items, restructuring and other notable expenses totaling $73 million (see appendix for details) and higher operational losses – Employee cost increase primarily a
Slide 12: Funding, Capital and Liquidity
Funding, Capital and Liquidity (c) Funding sources CET1% Walk $ in billions % 9% 4Q'22 CET1% 13.3% Unsecured 7% Net Income 2.4% Securitization Risk Weighted Asset changes (1.5)% Common & Preferred dividends (0.5)% 84% Deposits Share repurchases (1.2)% CECL transition provisions (0.6)% Adoption of AS
Slide 13: 2023 Results vs. Outlook
2023 Results vs. Outlook Full Year 2023 Key Driver 2023 2023 Drivers Outlook Actual • Pace of payment rate moderation increased but remains well above pre- Loan receivables growth 8 – 10% 11% pandemic levels • Continued strong purchase volume growth Net interest 15.00 – margin 15.15% • Lower interes
Slide 14: 2024 Outlook
2024 Outlook Baseline Macroeconomic Assumptions (excludes effects of qualitative overlays) Additional Assumptions U/E Rate GDP Growth Fed Funds Deposit Betas • Pets Best sale & Ally Lending purchase (YE’24) (FY’24) (YE’24) (FY’24) close in 1Q’24 • Given uncertainty surrounding potential 4.0% 1.7% 4.
Slide 15: Footnotes
Footnotes All amounts and metrics included in this presentation are as of, or for the three months ended, December 31, 2023, unless otherwise stated. Delivering Consistent Returns Over Time a. Classification of Prime & Super Prime refers to VantageScore credit scores of 651 or higher for 2019-2023 a
Slide 16: Synchrony - Changing What's Possible
»/" synchrony CHANGING WHAT’S POSSIBLE
Slide 17: Notable Other Expense Items
Notable Other Expense Items The following table sets forth notable items incurred during the quarter included in Total Other expense $ in millions Quarter ended December 31, 2023 Restructuring costs: Voluntary employee early retirement program $43 Site Strategy $9 FDIC Special Assessment $9 Preparat
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation* The following table sets forth the components of our Tier 1 Capital + Reserves ratio for the periods indicated below. $ in millions At December 31 Total 2022 2023 Tier 1 Capital $ 13,026 $ 13,334 Less: CECL transition adjustment (1,719) (1,146) Tier 1 capital (CECL fully pha
Slide 19: 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 Year Ended December 31, 2009 Net charge-offs as a % of average loan receivables, including held for sale: GAAP 11.26 % Securitization adjus