Press Release

April 28, 2017, 4:54 PM EDT

Synchrony Financial Reports First Quarter Net Earnings of $499 Million or $0.61 Per Diluted Share

Dateline:
Stamford, Conn.
 
Public Company Information:
NYSE: SYF
 
STAMFORD, Conn.--(BUSINESS WIRE)--Synchrony Financial (NYSE: SYF) today announced first quarter 2017 net earnings of $499 million, or $0.61 per diluted share. Highlights for the quarter included:
  • Net interest income increased 12% from the first quarter of 2016 to $3.6 billion
  • Loan receivables grew $8 billion, or 11%, from the first quarter of 2016 to $73 billion
  • Purchase volume increased 7% from the first quarter of 2016
  • Strong deposit growth continued, up $7 billion, or 15%, over the first quarter of 2016
  • Renewed key relationships: Belk, QVC, and Midas
  • Launched Cathay Pacific program and Synchrony Car CareTM credit card
  • Acquired Citi Health Card portfolio and GPShopper
  • Quarterly common stock dividend payment of $0.13 per share and repurchased $238 million of Synchrony Financial common stock

“We continued to execute our business strategies which helped us generate strong organic growth in each of our sales platforms. We are augmenting organic growth with the launch of new programs and the expansion of our network, while remaining focused on the application and development of digital innovations and analytics capabilities. Furthermore, we continued strong growth in our direct deposit platform, which supports our operating objectives,” said Margaret Keane, President and Chief Executive Officer of Synchrony Financial. “We have maintained solid returns and a strong balance sheet as we continue to focus on growth and returning capital to shareholders.”

Business and Financial Highlights for the First Quarter of 2017

All comparisons below are for the first quarter of 2017 compared to the first quarter of 2016, unless otherwise noted.

Earnings

  • Net interest income increased $378 million, or 12%, to $3.6 billion, primarily driven by strong loan receivables growth. Net interest income after retailer share arrangements increased 14%.
  • Provision for loan losses increased $403 million to $1,306 million due primarily to higher loan loss reserve build and loan receivables growth.
  • Other income was up $1 million to $93 million.
  • Other expense increased $108 million to $908 million, primarily driven by business growth.
  • Net earnings totaled $499 million compared to $582 million in the first quarter of 2016.

Balance Sheet

  • Period-end loan receivables growth remained strong at 11%, primarily driven by purchase volume growth of 7% and average active account growth of 5%.
  • Deposits grew to $52 billion, up $7 billion, or 15%, and comprised 72% of funding compared to 69% last year.
  • The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $22 billion, or 24% of total assets.
  • The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 18.0% and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 17.7%.

Key Financial Metrics

  • Return on assets was 2.3% and return on equity was 14.1%.
  • Net interest margin increased 34 basis points to 16.18%.
  • Efficiency ratio was 30.3%, compared to 30.4% in the first quarter of 2016, driven by positive operating leverage arising from strong revenue growth that exceeded expense growth.

Credit Quality

  • Loans 30+ days past due as a percentage of total period-end loan receivables were 4.25% compared to 3.85% last year.
  • Net charge-offs as a percentage of total average loan receivables were 5.33% compared to 4.74% last year.
  • The allowance for loan losses as a percentage of total period-end loan receivables was 6.37% compared to 5.50% last year.

Sales Platforms

  • Retail Card interest and fees on loans increased 10%, driven primarily by purchase volume growth of 7% and period-end loan receivables growth of 11%. Average active account growth was 4%. Loan receivables growth was broad-based across partner programs.
  • Payment Solutions interest and fees on loans increased 13%, driven primarily by purchase volume growth of 9% and period-end loan receivables growth of 14%. Average active account growth was 12%. Loan receivables growth was led by the home furnishings and automotive.
  • CareCredit interest and fees on loans increased 11%, driven primarily by purchase volume growth of 10% and period-end loan receivables growth of 11%. Average active account growth was 9%. Loan receivables growth was led by the dental and veterinary specialties.

Corresponding Financial Tables and Information

No representation is made that the information in this news release is complete. Investors are encouraged to review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the detailed financial tables and information that follow and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed February 23, 2017, and the Company’s forthcoming Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. The detailed financial tables and other information are also available on the Investor Relations page of the Company’s website at www.investors.synchronyfinancial.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

Conference Call and Webcast Information

On Friday, April 28, 2017, at 8:30 a.m. Eastern Time, Margaret Keane, President and Chief Executive Officer, and Brian Doubles, Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations page on the Synchrony Financial corporate website, www.investors.synchronyfinancial.com, under Events and Presentations. A replay will be available on the website or by dialing (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international), passcode 12017#, and can be accessed beginning approximately two hours after the event through May 12, 2017.

About Synchrony Financial

Synchrony Financial (NYSE: SYF) is one of the nation’s premier consumer financial services companies. Our roots in consumer finance trace back to 1932, and today we are the largest provider of private label credit cards in the United States based on purchase volume and receivables.* We provide a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers to help generate growth for our partners and offer financial flexibility to our customers. Through our partners’ over 365,000 locations across the United States and Canada, and their websites and mobile applications, we offer our customers a variety of credit products to finance the purchase of goods and services. Synchrony Financial offers private label and co-branded Dual Card™ credit cards, promotional financing and installment lending, loyalty programs and FDIC-insured savings products through Synchrony Bank. More information can be found at www.synchronyfinancial.com, facebook.com/SynchronyFinancial,www.linkedin.com/company/synchrony-financial and twitter.com/SYFNews.

*Source: The Nilson Report (May 2016, Issue # 1087) - based on 2015 data.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “targets,” “outlook,” “estimates,” “will,” “should,” “may” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners, concentration of our revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; cyber-attacks or other security breaches; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to securitize our loans, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loans, and lower payment rates on our securitized loans; our ability to grow our deposits in the future; changes in market interest rates and the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk, the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; our ability to offset increases in our costs in retailer share arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; disruptions in the operations of our computer systems and data centers; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to protect our intellectual property; litigation and regulatory actions; damage to our reputation; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and state sales tax rules and regulations; a material indemnification obligation to GE under the tax sharing and separation agreement with GE if we cause the split-off from GE or certain preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the impact of the Consumer Financial Protection Bureau’s regulation of our business; impact of capital adequacy rules and liquidity requirements; restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit Synchrony Bank’s ability to pay dividends to us; regulations relating to privacy, information security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this news release and in our public filings, including under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed on February 23, 2017. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

Non-GAAP Measures

The information provided herein includes measures we refer to as “tangible common equity” and certain capital ratios, which are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please see the detailed financial tables and information that follow. For a statement regarding the usefulness of these measures to investors, please see the Company’s Current Report on Form 8-K filed with the SEC today.

 

SYNCHRONY FINANCIAL

FINANCIAL SUMMARY

(unaudited, in millions, except per share statistics)

 

Quarter Ended

1Q'17 vs. 1Q'16

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

EARNINGS

 

 

 

 

 

 

 

Net interest income

$3,587

$3,628

$3,481

$3,212

$3,209

$378

11.80%

Retailer share arrangements

-684

-811

-757

-664

-670

-14

2.10%

Net interest income, after retailer share arrangements

2,903

2,817

2,724

2,548

2,539

364

14.30%

Provision for loan losses

1,306

1,076

986

1,021

903

403

44.60%

Net interest income, after retailer share arrangements and provision for loan losses

1,597

1,741

1,738

1,527

1,636

-39

-2.40%

Other income

93

85

84

83

92

1

1.10%

Other expense

908

918

859

839

800

108

13.50%

Earnings before provision for income taxes

782

908

963

771

928

-146

-15.70%

Provision for income taxes

283

332

359

282

346

-63

-18.20%

Net earnings

$499

$576

$604

$489

$582

($83)

-14.30%

Net earnings attributable to common stockholders

$499

$576

$604

$489

$582

($83)

-14.30%

COMMON SHARE STATISTICS

 

 

 

 

 

 

 

Basic EPS

$0.61

$0.70

$0.73

$0.59

$0.70

($0.09)

-12.90%

Diluted EPS

$0.61

$0.70

$0.73

$0.58

$0.70

($0.09)

-12.90%

Dividend declared per share

$0.13

$0.13

$0.13

-

-

$0.13

NM

Common stock price

$34.30

$36.27

$28.00

$25.28

$28.66

$5.64

19.70%

Book value per share

$17.71

$17.37

$16.94

$16.45

$15.84

$1.87

11.80%

Tangible common equity per share(1)

$15.47

$15.34

$14.90

$14.46

$13.86

$1.61

11.60%

Beginning common shares outstanding

817.4

825.5

833.9

833.8

833.8

-16.4

-2.00%

Issuance of common shares

-

-

-

-

-

-

- %

Stock-based compensation

-

-

0.1

0.1

-

-

- %

Shares repurchased

-6.6

-8.1

-8.5

-

-

-6.6

NM

Ending common shares outstanding

810.8

817.4

825.5

833.9

833.8

-23

-2.80%

Weighted average common shares outstanding

813.1

820.5

828.4

833.9

833.8

-20.7

-2.50%

Weighted average common shares outstanding (fully diluted)

817.1

823.8

830.6

836.2

835.5

-18.4

-2.20%

(1) Tangible Common Equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.

SYNCHRONY FINANCIAL

SELECTED METRICS

(unaudited, $ in millions, except account data)

 

Quarter Ended

1Q'17 vs. 1Q'16

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

PERFORMANCE METRICS

 

 

 

 

 

 

 

Return on assets(1)

2.30%

2.60%

2.80%

2.40%

2.80%

 

-0.50%

Return on equity(2)

14.10%

16.20%

17.30%

14.50%

18.10%

 

-4.00%

Return on tangible common equity(3)

16.10%

18.40%

19.60%

16.50%

20.70%

 

-4.60%

Net interest margin(4)

16.18%

16.26%

16.34%

15.94%

15.84%

 

0.34%

Efficiency ratio(5)

30.30%

31.60%

30.60%

31.90%

30.40%

 

-0.10%

Other expense as a % of average loan receivables, including held for sale

4.97%

5.04%

4.93%

5.07%

4.86%

 

0.11%

Effective income tax rate

36.20%

36.60%

37.30%

36.60%

37.30%

 

-1.10%

CREDIT QUALITY METRICS

 

 

 

 

 

 

 

Net charge-offs as a % of average loan receivables, including held for sale

5.33%

4.65%

4.39%

4.51%

4.74%

 

0.59%

30+ days past due as a % of period-end loan receivables(6)

4.25%

4.32%

4.26%

3.79%

3.85%

 

0.40%

90+ days past due as a % of period-end loan receivables(6)

2.06%

2.03%

1.89%

1.67%

1.84%

 

0.22%

Net charge-offs

$974

$847

$765

$747

$780

$194

24.90%

Loan receivables delinquent over 30 days(6)

$3,120

$3,295

$3,008

$2,585

$2,538

$582

22.90%

Loan receivables delinquent over 90 days(6)

$1,508

$1,546

$1,334

$1,143

$1,212

$296

24.40%

Allowance for loan losses (period-end)

$4,676

$4,344

$4,115

$3,894

$3,620

$1,056

29.20%

Allowance coverage ratio(7)

6.37%

5.69%

5.82%

5.70%

5.50%

 

0.87%

BUSINESS METRICS

 

 

 

 

 

 

 

Purchase volume(8)

$28,880

$35,369

$31,615

$31,507

$26,977

$1,903

7.10%

Period-end loan receivables

$73,350

$76,337

$70,644

$68,282

$65,849

$7,501

11.40%

Credit cards

$70,587

$73,580

$67,858

$65,511

$63,309

$7,278

11.50%

Consumer installment loans

$1,411

$1,384

$1,361

$1,293

$1,184

$227

19.20%

Commercial credit products

$1,311

$1,333

$1,385

$1,389

$1,318

($7)

-0.50%

Other

$41

$40

$40

$89

$38

$3

7.90%

Average loan receivables, including held for sale

$74,132

$72,476

$69,316

$66,561

$66,194

$7,938

12.00%

Period-end active accounts (in thousands)(9)

67,905

71,890

66,781

66,491

64,689

3,216

5.00%

Average active accounts (in thousands)(9)

69,629

68,701

66,639

65,531

66,134

3,495

5.30%

LIQUIDITY

 

 

 

 

 

 

 

Liquid assets

 

 

 

 

 

 

 

Cash and equivalents

$11,392

$9,321

$13,588

$11,787

$12,500

($1,108)

-8.90%

Total liquid assets

$16,158

$13,612

$16,362

$13,956

$14,915

$1,243

8.30%

Undrawn credit facilities

 

 

 

 

 

 

 

Undrawn credit facilities

$5,600

$6,700

$7,150

$7,025

$7,325

($1,725)

-23.50%

Total liquid assets and undrawn credit facilities

$21,758

$20,312

$23,512

$20,981

$22,240

($482)

-2.20%

Liquid assets % of total assets

18.14%

15.09%

18.77%

16.94%

18.27%

 

-0.13%

Liquid assets including undrawn credit facilities % of total assets

24.43%

22.52%

26.98%

25.47%

27.24%

 

-2.81%

(1) Return on assets represents net earnings as a percentage of average total assets.

(2) Return on equity represents net earnings as a percentage of average total equity.

(3) Return on tangible common equity represents net earnings as a percentage of average tangible common equity. Tangible common equity ("TCE") is a non-GAAP measure. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.

(4) Net interest margin represents net interest income divided by average interest-earning assets.

(5) Efficiency ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income.

(6) Based on customer statement-end balances extrapolated to the respective period-end date.

(7) Allowance coverage ratio represents allowance for loan losses divided by total period-end loan receivables.

(8) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.

(9) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.

SYNCHRONY FINANCIAL

STATEMENTS OF EARNINGS

(unaudited, $ in millions)

 

Quarter Ended

1Q'17 vs. 1Q'16

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

Interest income:

 

 

 

 

 

 

 

Interest and fees on loans

$3,877

$3,919

$3,771

$3,494

$3,498

$379

10.80%

Interest on investment securities

36

28

25

21

22

14

63.60%

Total interest income

3,913

3,947

3,796

3,515

3,520

393

11.20%

Interest expense:

 

 

 

 

 

 

 

Interest on deposits

194

188

188

179

172

22

12.80%

Interest on borrowings of consolidated securitization entities

65

64

63

59

58

7

12.10%

Interest on third-party debt

67

67

64

65

81

-14

-17.30%

Total interest expense

326

319

315

303

311

15

4.80%

Net interest income

3,587

3,628

3,481

3,212

3,209

378

11.80%

Retailer share arrangements

-684

-811

-757

-664

-670

-14

2.10%

Net interest income, after retailer share arrangements

2,903

2,817

2,724

2,548

2,539

364

14.30%

Provision for loan losses

1,306

1,076

986

1,021

903

403

44.60%

Net interest income, after retailer share arrangements and provision for loan losses

1,597

1,741

1,738

1,527

1,636

-39

-2.40%

Other income:

 

 

 

 

 

 

 

Interchange revenue

145

167

154

151

130

15

11.50%

Debt cancellation fees

68

68

67

63

64

4

6.30%

Loyalty programs

-137

-157

-145

-135

-110

-27

24.50%

Other

17

7

8

4

8

9

112.50%

Total other income

93

85

84

83

92

1

1.10%

Other expense:

 

 

 

 

 

 

 

Employee costs

325

315

311

301

280

45

16.10%

Professional fees

151

164

174

154

146

5

3.40%

Marketing and business development

94

130

92

107

94

-

- %

Information processing

90

88

87

81

82

8

9.80%

Other

248

221

195

196

198

50

25.30%

Total other expense

908

918

859

839

800

108

13.50%

Earnings before provision for income taxes

782

908

963

771

928

-146

-15.70%

Provision for income taxes

283

332

359

282

346

-63

-18.20%

Net earnings attributable to common stockholders

$499

$576

$604

$489

$582

($83)

-14.30%

SYNCHRONY FINANCIAL

STATEMENTS OF FINANCIAL POSITION

(unaudited, $ in millions)

 

Quarter Ended

Mar 31, 2017 vs. Mar 31, 2016

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

Assets

 

 

 

 

 

 

 

Cash and equivalents

$11,392

$9,321

$13,588

$11,787

$12,500

($1,108)

-8.90%

Investment securities

5,328

5,110

3,356

2,723

2,949

2,379

80.70%

Loan receivables:

 

 

 

 

 

 

 

Unsecuritized loans held for investment

50,398

52,332

47,517

44,854

41,730

8,668

20.80%

Restricted loans of consolidated securitization entities

22,952

24,005

23,127

23,428

24,119

-1,167

-4.80%

Total loan receivables

73,350

76,337

70,644

68,282

65,849

7,501

11.40%

Less: Allowance for loan losses

-4,676

-4,344

-4,115

-3,894

-3,620

-1,056

29.20%

Loan receivables, net

68,674

71,993

66,529

64,388

62,229

6,445

10.40%

Goodwill

992

949

949

949

949

43

4.50%

Intangible assets, net

826

712

733

704

702

124

17.70%

Other assets

1,838

2,122

2,004

1,833

2,327

-489

-21.00%

Total assets

$89,050

$90,207

$87,159

$82,384

$81,656

$7,394

9.10%

Liabilities and Equity

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Interest-bearing deposit accounts

$51,359

$51,896

$49,611

$46,220

$44,721

$6,638

14.80%

Non-interest-bearing deposit accounts

246

159

204

207

256

-10

-3.90%

Total deposits

51,605

52,055

49,815

46,427

44,977

6,628

14.70%

Borrowings:

 

 

 

 

 

 

 

Borrowings of consolidated securitization entities

12,433

12,388

12,411

12,236

12,423

10

0.10%

Bank term loan

-

-

-

-

1,494

-1,494

NM

Senior unsecured notes

7,761

7,759

7,756

7,059

6,559

1,202

18.30%

Total borrowings

20,194

20,147

20,167

19,295

20,476

-282

-1.40%

Accrued expenses and other liabilities

2,888

3,809

3,196

2,947

2,999

-111

-3.70%

Total liabilities

74,687

76,011

73,178

68,669

68,452

6,235

9.10%

Equity:

 

 

 

 

 

 

 

Common stock

1

1

1

1

1

-

- %

Additional paid-in capital

9,405

9,393

9,381

9,370

9,359

46

0.50%

Retained earnings

5,724

5,330

4,861

4,364

3,875

1,849

47.70%

Accumulated other comprehensive income:

-55

-53

-24

-20

-31

-24

77.40%

Treasury Stock

-712

-475

-238

-

-

-712

NM

Total equity

14,363

14,196

13,981

13,715

13,204

1,159

8.80%

Total liabilities and equity

$89,050

$90,207

$87,159

$82,384

$81,656

$7,394

9.10%

SYNCHRONY FINANCIAL

AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN

(unaudited, $ in millions)

 

Quarter Ended

 

31-Mar-17

31-Dec-16

30-Sep-16

30-Jun-16

31-Mar-16

 

 

Interest

Average

 

Interest

Average

 

Interest

Average

 

Interest

Average

 

Interest

Average

 

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

 

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning cash and equivalents

$10,552

$21

0.81%

$12,210

$17

0.55%

$12,480

$16

0.51%

$11,623

$14

0.48%

$12,291

$16

0.52%

Securities available for sale

5,213

15

1.17%

4,076

11

1.07%

2,960

9

1.21%

2,858

7

0.99%

2,977

6

0.81%

Loan receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit cards, including held for sale

71,365

3,811

21.66%

69,660

3,851

21.99%

66,519

3,705

22.16%

63,876

3,432

21.61%

63,688

3,436

21.70%

Consumer installment loans

1,389

32

9.34%

1,373

31

8.98%

1,333

31

9.25%

1,233

28

9.13%

1,154

27

9.41%

Commercial credit products

1,317

34

10.47%

1,386

36

10.33%

1,401

35

9.94%

1,388

33

9.56%

1,313

35

10.72%

Other

61

-

- %

57

1

NM

63

-

- %

64

1

NM

39

-

- %

Total loan receivables, including held for sale

74,132

3,877

21.21%

72,476

3,919

21.51%

69,316

3,771

21.64%

66,561

3,494

21.11%

66,194

3,498

21.25%

Total interest-earning assets

89,897

3,913

17.65%

88,762

3,947

17.69%

84,756

3,796

17.82%

81,042

3,515

17.44%

81,462

3,520

17.38%

Non-interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

802

 

 

739

 

 

862

 

 

895

 

 

1,367

 

 

Allowance for loan losses

-4,408

 

 

-4,228

 

 

-3,933

 

 

-3,732

 

 

-3,590

 

 

Other assets

3,177

 

 

3,479

 

 

3,189

 

 

3,208

 

 

3,271

 

 

Total non-interest-earning assets

-429

 

 

-10

 

 

118

 

 

371

 

 

1,048

 

 

Total assets

$89,468

 

 

$88,752

 

 

$84,874

 

 

$81,413

 

 

$82,510

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposit accounts

$51,829

$194

1.52%

$51,006

$188

1.47%

$47,895

$188

1.56%

$45,523

$179

1.58%

$44,304

$172

1.56%

Borrowings of consolidated securitization entities

12,321

65

2.14%

12,389

64

2.06%

12,254

63

2.05%

12,211

59

1.94%

12,860

58

1.81%

Bank term loan(1)

-

-

- %

-

-

- %

-

-

- %

65

7

NM

2,170

24

4.45%

Senior unsecured notes

7,760

67

3.50%

7,757

67

3.44%

7,448

64

3.42%

6,861

58

3.40%

6,557

57

3.50%

Total interest-bearing liabilities

71,910

326

1.84%

71,152

319

1.78%

67,597

315

1.85%

64,660

303

1.88%

65,891

311

1.90%

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposit accounts

240

 

 

176

 

 

204

 

 

208

 

 

235

 

 

Other liabilities

2,995

 

 

3,321

 

 

3,175

 

 

3,002

 

 

3,455

 

 

Total non-interest-bearing liabilities

3,235

 

 

3,497

 

 

3,379

 

 

3,210

 

 

3,690

 

 

Total liabilities

75,145

 

 

74,649

 

 

70,976

 

 

67,870

 

 

69,581

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

14,323

 

 

14,103

 

 

13,898

 

 

13,543

 

 

12,929

 

 

Total liabilities and equity

$89,468

 

 

$88,752

 

 

$84,874

 

 

$81,413

 

 

$82,510

 

 

Net interest income

 

$3,587

 

 

$3,628

 

 

$3,481

 

 

$3,212

 

 

$3,209

 

Interest rate spread(2)

 

 

15.81%

 

 

15.91%

 

 

15.97%

 

 

15.56%

 

 

15.48%

Net interest margin(3)

 

 

16.18%

 

 

16.26%

 

 

16.34%

 

 

15.94%

 

 

15.84%

(1) The effective interest rates for the Bank term loan for the quarters ended June 30, 2016, March 31, 2016 were 2.51% and 2.47% respectively. The Bank term loan effective rate excludes the impact of charges incurred in connection with prepayments of the loan.

(2) Interest rate spread represents the difference between the yield on total interest-earning assets and the rate on total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average interest-earning assets.

SYNCHRONY FINANCIAL

BALANCE SHEET STATISTICS

(unaudited, $ in millions, except per share statistics)

 

 

Quarter Ended

Mar 31, 2017 vs. Mar 31, 2016

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

BALANCE SHEET STATISTICS

 

 

 

 

 

 

 

Total common equity

$14,363

$14,196

$13,981

$13,715

$13,204

$1,159

8.80%

Total common equity as a % of total assets

16.13%

15.74%

16.04%

16.65%

16.17%

 

-0.04%

Tangible assets

$87,232

$88,546

$85,477

$80,731

$80,005

$7,227

9.00%

Tangible common equity(1)

$12,545

$12,535

$12,299

$12,062

$11,553

$992

8.60%

Tangible common equity as a % of tangible assets(1)

14.38%

14.16%

14.39%

14.94%

14.44%

 

-0.06%

Tangible common equity per share(1)

$15.47

$15.34

$14.90

$14.46

$13.86

$1.61

11.60%

REGULATORY CAPITAL RATIOS(2)

 

 

 

 

 

 

 

 

Basel III Transition

 

 

Total risk-based capital ratio(3)

19.30%

18.50%

19.50%

19.80%

19.40%

 

 

Tier 1 risk-based capital ratio(4)

18.00%

17.20%

18.20%

18.50%

18.10%

 

 

Tier 1 leverage ratio(5)

14.80%

15.00%

15.40%

15.70%

14.90%

 

 

Common equity Tier 1 capital ratio(6)

18.00%

17.20%

18.20%

18.50%

18.10%

 

 

 

Basel III Fully Phased-in

 

 

Common equity Tier 1 capital ratio(6)

17.70%

17.00%

17.90%

18.00%

17.50%

 

 

(1) Tangible common equity ("TCE") is a non-GAAP measure. We believe TCE is a more meaningful measure of the net asset value of the Company to investors. For corresponding reconciliation of TCE to a GAAP financial measure, see Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures.

(2) Regulatory capital metrics at March 31, 2017 are preliminary and therefore subject to change.

(3) Total risk-based capital ratio is the ratio of total risk-based capital divided by risk-weighted assets.

(4) Tier 1 risk-based capital ratio is the ratio of Tier 1 capital divided by risk-weighted assets.

(5) Tier 1 leverage ratio is the ratio of Tier 1 capital divided by total average assets, after certain adjustments. Tier 1 leverage ratios are based upon the use of daily averages for all periods presented.

(6) Common equity Tier 1 capital ratio is the ratio of common equity Tier 1 capital to total risk-weighted assets, each as calculated under Basel III rules. Common equity Tier 1 capital ratio (fully phased-in) is a preliminary estimate reflecting management’s interpretation of the final Basel III rules adopted in July 2013 by the Federal Reserve Board, which have not been fully implemented, and our estimate and interpretations are subject to, among other things, ongoing regulatory review and implementation guidance.

SYNCHRONY FINANCIAL

PLATFORM RESULTS

(unaudited, $ in millions)

 

Quarter Ended

1Q'17 vs. 1Q'16

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

RETAIL CARD

 

 

 

 

 

 

 

Purchase volume(1)(2)

$22,952

$28,996

$25,285

$25,411

$21,550

$1,402

6.50%

Period-end loan receivables

$49,905

$52,701

$48,010

$46,705

$45,113

$4,792

10.60%

Average loan receivables, including held for sale

$50,644

$49,476

$47,274

$45,593

$45,479

$5,165

11.40%

Average active accounts (in thousands)(2)(3)

55,049

54,489

52,959

52,314

52,969

2,080

3.90%

Interest and fees on loans(2)

$2,888

$2,909

$2,790

$2,585

$2,614

$274

10.50%

Other income(2)

$77

$70

$70

$69

$79

($2)

-2.50%

Retailer share arrangements(2)

($681)

($801)

($752)

($656)

($661)

($20)

3.00%

PAYMENT SOLUTIONS

 

 

 

 

 

 

 

Purchase volume(1)

$3,686

$4,194

$4,152

$3,903

$3,392

$294

8.70%

Period-end loan receivables

15,320

$15,567

$14,798

$13,997

$13,420

$1,900

14.20%

Average loan receivables

15,424

$15,076

$14,367

$13,554

$13,430

$1,994

14.80%

Average active accounts (in thousands)(3)

9,090

8,844

8,461

8,153

8,134

956

11.80%

Interest and fees on loans

$515

$523

$505

$467

$457

$58

12.70%

Other income

$4

$3

$3

$3

$4

$-

- %

Retailer share arrangements

($1)

($9)

($3)

($7)

($7)

$6

-85.70%

CARECREDIT

 

 

 

 

 

 

 

Purchase volume(1)

$2,242

$2,179

$2,178

$2,193

$2,035

$207

10.20%

Period-end loan receivables

$8,125

$8,069

$7,836

$7,580

$7,316

$809

11.10%

Average loan receivables

$8,064

$7,924

$7,675

$7,414

$7,285

$779

10.70%

Average active accounts (in thousands)(3)

5,490

5,368

5,219

5,064

5,031

459

9.10%

Interest and fees on loans

$474

$487

$476

$442

$427

$47

11.00%

Other income

$12

$12

$11

$11

$9

$3

33.30%

Retailer share arrangements

($2)

($1)

($2)

($1)

($2)

$-

- %

TOTAL SYF

 

 

 

 

 

 

 

Purchase volume(1)(2)

$28,880

$35,369

$31,615

$31,507

$26,977

$1,903

7.10%

Period-end loan receivables

$73,350

$76,337

$70,644

$68,282

$65,849

$7,501

11.40%

Average loan receivables, including held for sale

$74,132

$72,476

$69,316

$66,561

$66,194

$7,938

12.00%

Average active accounts (in thousands)(2)(3)

69,629

68,701

66,639

65,531

66,134

3,495

5.30%

Interest and fees on loans(2)

$3,877

$3,919

$3,771

$3,494

$3,498

$379

10.80%

Other income(2)

$93

$85

$84

$83

$92

$1

1.10%

Retailer share arrangements(2)

($684)

($811)

($757)

($664)

($670)

($14)

2.10%

(1) Purchase volume, or net credit sales, represents the aggregate amount of charges incurred on credit cards or other credit product accounts less returns during the period.

(2) Includes activity and balances associated with loan receivables held for sale.

(3) Active accounts represent credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the current month.

SYNCHRONY FINANCIAL

RECONCILIATION OF NON-GAAP MEASURES AND CALCULATIONS OF REGULATORY MEASURES(1)

(unaudited, $ in millions, except per share statistics)

 

Quarter Ended

 

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2017

2016

2016

2016

2016

COMMON EQUITY MEASURES

 

 

 

 

 

GAAP Total common equity

$14,363

$14,196

$13,981

$13,715

$13,204

Less: Goodwill

-992

-949

-949

-949

-949

Less: Intangible assets, net

-826

-712

-733

-704

-702

Tangible common equity

$12,545

$12,535

$12,299

$12,062

$11,553

Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss)

340

337

299

282

281

Basel III - Common equity Tier 1 (fully phased-in)

$12,885

$12,872

$12,598

$12,344

$11,834

Adjustment related to capital components during transition

154

263

273

266

265

Basel III - Common equity Tier 1 (transition)

$13,039

$13,135

$12,871

$12,610

$12,099

RISK-BASED CAPITAL

 

 

 

 

 

Common equity Tier 1

$13,039

$13,135

$12,871

$12,610

$12,099

Add: Allowance for loan losses includible in risk-based capital

954

994

923

890

869

Risk-based capital

$13,993

$14,129

$13,794

$13,500

$12,968

ASSET MEASURES

 

 

 

 

 

Total average assets(2)

$89,468

$88,752

$84,874

$81,413

$82,510

Adjustments for:

 

 

 

 

 

Disallowed goodwill, other disallowed intangible assets (net of related deferred tax liabilities) and other

-1,358

-1,059

-1,117

-1,113

-1,117

Total assets for leverage purposes

$88,110

$87,693

$83,757

$80,300

$81,393

Risk-weighted assets - Basel III (fully phased-in)(3)

$72,596

$75,941

$70,448

$68,462

$67,697

Risk-weighted assets - Basel III (transition)(3)

$72,627

$76,179

$70,660

$68,188

$66,689

TANGIBLE COMMON EQUITY PER SHARE

 

 

 

 

 

GAAP book value per share

$17.71

$17.37

$16.94

$16.45

$15.84

Less: Goodwill

-1.22

-1.16

-1.14

-1.14

-1.14

Less: Intangible assets, net

-1.02

-0.87

-0.9

-0.85

-0.84

Tangible common equity per share

$15.47

$15.34

$14.90

$14.46

$13.86

(1) Regulatory measures at March 31, 2017 are presented on an estimated basis.

(2) Total average assets are presented based upon the use of daily averages.

(3) Key differences between Basel III transitional rules and fully phased-in Basel III rules in the calculation of risk-weighted assets include, but not limited to, risk weighting of deferred tax assets and adjustments for certain intangible assets.
Contact:

Synchrony Financial
Investor Relations
Greg Ketron, 203-585-6291
or
Media Relations
Samuel Wang, 203-585-2933