Synchrony Financial · NYSE:SYF
Synchrony Financial — Debt Investor Presentation (May 2015)
31 slides from Synchrony Financial's debt investor presentation, May 6, 2015
Slide 1: Fixed Income Investor Review 1st Quarter 2015
Fixed Income Investor Review 1st Quarter 2015 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: The Nilson Report (April 2015 Issue #1062) 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 m
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 17 years 2014 15 years 2013 15 years 2013 9 years 2013 7 years 2015 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 The Nilson Report, % of 2008 market 80% 85% 90% 95% 100% 105% Private Label Credit Cards are above pre- crisis levels at $108 billion General Purpose Credit Cards are down 11% from peak at $765 billion 2008 2009 2010 2011 2012 2013 Sy
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 Retail Card Payment Solutions CareCredit • Experience • Partnership with on-site dedicated teams for large partners • Long history of improving sales • Customer loyalty & retention Recent wins • Differentiated capabilities: Marketing and analytics Mobile and online D
Slide 13: Availability of credit differentiates partners & helps customers
13 Availability of credit differentiates partners & helps customers Significant acquisition & lifecycle benefits vs General Purpose 61.6 million average active cardholders enjoying our card benefits Rewards tailored to each customer Making purchases & procedures obtainable Customer Value Proposition
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 $ 4/2/15 Belk In- Store DKNY Women’s shoes 468XUTY $83.44 4/9/15 Belk Mobi
Slide 15: Digital, Loyalty and Analytics Capabilities
15 Digital, Loyalty and Analytics Capabilities LOYALTY ANALYTICS MOBILE • Digital wallets: Apple Pay Samsung Pay CurrentC • Mobile services: Application Servicing Rewards Payment • Digital cards • GPShopper investment Proprietary Closed-Loop Network • Enables valuable data capture • Integrat
Slide 16: Financial Performance
Financial Performance
Slide 17: Financial Update
17 Financial Update Net earnings $ in millions 1Q’14 1Q’15 Strong, stable earnings Loan receivables $ in billions 7% growth Net charge-offs % of average loan receivables 4.86% 4.53% Platform revenue $ in millions $2,449 $2,581 5% growth Stable losses $558 $552 $54.3 $58.2 1Q’14 1Q’15 1Q’14 1Q’15 1Q’
Slide 18: Significant % of Revenue Under Long-Term Contracts
18 2014 Platform revenue 26% 74% 200,000 next largest programs Majority auto-renew No ongoing program exceeds 0.1% Significant % of Revenue Under Long-Term Contracts $10,126 Largest 40 programs Typically under long-term exclusive contracts (a) (a) Platform revenue is the sum of “interest and f
Slide 19: Credit Quality Overview
19 Credit Quality Overview Synchrony controls underwriting and credit line decisions Over 70% of assets at FICO greater than 660 Stronger portfolio U.S. consumer FICO Delinquency performance 30+ days delinquencies 4.22% 4.09% 3.79% 1Q’15 1Q’14 1Q’13 (a) (a) Prior to 3Q’12 a proprietary scoring m
Slide 20: Funding Profile
20 Funding Profile Deposits Securitized Debt Unsecured Debt 1Q’15 Long-term target 8% 59% 24% 15%-20% 60%-70% 15% -20% 9% Bank Loan Diverse funding sources % of liabilities excluding non-debt liabilities Fueled by strong deposit growth $ in billions 1Q’14 4Q’13 $25.7 $27.4 2Q’14 $30.5 3Q’14 $32.7 4Q
Slide 21: Peer Comparison 1Q'15
21 Peer Comparison 1Q’15 (a) Segment data for AXP-U.S Card Services and COF-Domestic Credit Card. Other data-total company level (b) Calculated as credit card yield - net charge-off rate on credit cards. SYF-total company (c) CET1 ratios are on an estimated, fully phased-in basis 32.2% 40.2% 49.9% 6
Slide 22: Summary
22 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 23: Synchrony Credit Card Master Note Trust (SYNCT)
Synchrony Credit Card Master Note Trust (SYNCT)
Slide 24: Master Note Trust Changes
24 Master Note Trust Changes Sponsor / originator Credit enhancement Servicer Synchrony Bank continues as… Trust sponsor Receivables originator Synchrony Bank Wholly owned subsidiary of Synchrony Financial • S&P (BBB-) • Fitch (BBB-) Synchrony Financial and subsidiaries to continue perfo
Slide 25: Trust Stratification Highlights
25 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 26: SYNCT Historical Performance
26 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 Mar’15 26.5% Principal payment rate Mar’15 12.3% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Principal charge-offs Mar’15 6.
Slide 27: Appendix
Appendix
Slide 28: Financial Results Summary
28 Financial Results Summary earnings statement First quarter 2015 highlights $ in millions, except ratios Total interest income $3,150 $2,933 $217 7% Total interest expense 275 190 (85) (45)% Net interest income (NII) 2,875 2,743 132 5% Retailer share arrangements (RSA) (660) (594) (66) (11)% NII,
Slide 29: Non-GAAP Reconciliations
29 Non-GAAP Reconciliations In order to assess and internally report the revenue performance of our three sales platforms, we use measures we refer to as “platform revenue” and “platform revenue excluding retailer share arrangements.” Platform revenue is the sum of three line items in our Condensed
Slide 30: Non-GAAP Reconciliation
30 Non-GAAP Reconciliation The following table sets forth each component of our platform revenue for periods indicated below. ($ in millions) 2015 2014 2014 Platform Revenue Total: Interest and fees on loans . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 31: Common Equity Measures
31 COMMON EQUITY MEASURES GAAP Total common equity…………………………………………………..……. Less: Goodwill…………………………………………………………..……. Less: Intangible assets, net……………………………………………..…….. Tangible common equity……………………………………………………..…… Adjustments for certain other intangible assets, deferred tax liabilities and certai
Synchrony Financial — Debt Investor Presentation (May 2015) on 6ix