Synchrony Financial (NYSE:SYF) today announced first quarter
2018 net earnings of $640 million, or $0.83 per diluted share.
Highlights included:
- Net interest income increased 7% from
the first quarter of 2017 to $3.8 billion
- Loan receivables grew $5 billion, or
6%, from the first quarter of 2017 to $78 billion
- Purchase volume increased 3% from the
first quarter of 2017 to $30 billion
- Deposits grew $5 billion, or 10%, from
the first quarter of 2017 to $57 billion
- Added new partnerships: Crate and
Barrel, jtv, and Mahindra
- Renewed relationships: Nationwide
Marketing Group, Briggs & Stratton, and American Signature
Furniture
- Expanded CareCredit network: American
Veterinary Medical Association, American Med Spa Association, and
Spa Industry Association
- Quarterly common stock dividend payment
of $0.15 per share and repurchased $410 million of Synchrony
Financial common stock
“We started the year with solid results as we continued to drive
organic growth, while also winning exciting new partnerships.
Furthermore, we closed several key renewals during the quarter and
made investments to help augment our capabilities. Innovative value
propositions, compelling promotional offers, and robust data,
analytics and digital capabilities, remain a hallmark of our
business, and continue to drive value for our partners and
cardholders,” said Margaret Keane, President and Chief Executive
Officer of Synchrony Financial. “Returning capital to shareholders
remains a key priority, and we are pleased to continue to return
significant capital to shareholders through our dividend and share
repurchase program, while also deploying capital through organic
growth and program acquisitions.”
Business and Financial Highlights for
the First Quarter of 2018
All comparisons below are for the first quarter of 2018 compared
to the first quarter of 2017, unless otherwise noted.
Earnings
- Net interest income increased $255
million, or 7%, to $3.8 billion, primarily driven by strong loan
receivables growth. Net interest income after retailer share
arrangements increased 8%.
- Provision for loan losses increased $56
million, or 4% to $1.4 billion primarily driven by credit
normalization and growth.
- Other income was down $18 million to
$75 million, primarily due to higher loyalty program expense,
partially offset by higher interchange revenue.
- Other expense increased $80 million, or
9% to $988 million, primarily driven by growth and marketing.
- Provision for income taxes was down
27%, primarily due to tax reform.
- Net earnings totaled $640 million
compared to $499 million in the first quarter of 2017.
Balance Sheet
- Period-end loan receivables growth was
6%, primarily driven by purchase volume growth of 3% and average
active account growth of 2%.
- Deposits grew to $57 billion, up $5
billion, or 10%, and comprised 73% of funding compared to 72% last
year.
- The Company’s balance sheet remained
strong with total liquidity (liquid assets and undrawn credit
facilities) of $25 billion, or 26% of total assets.
- The estimated fully phased-in Common
Equity Tier 1 ratio under Basel III was 16.8%.
Key Financial Metrics
- Return on assets was 2.7% and return on
equity was 18.2%.
- Net interest margin was 16.05%.
- Efficiency ratio was 30.9%.
Credit Quality
- Loans 30+ days past due as a percentage
of total period-end loan receivables were 4.52% compared to 4.25%
last year.
- Net charge-offs as a percentage of
total average loan receivables were 6.14% compared to 5.33% last
year.
- The allowance for loan losses as a
percentage of total period-end loan receivables was 7.37% compared
to 6.37% last year.
Sales Platforms
- Retail Card period-end loan receivables
grew 5% reflecting broad-based growth across partner programs.
Interest and fees on loans increased 7%, primarily driven by the
loan receivables growth. Purchase volume and average active account
growth was 2%.
- Payment Solutions period-end loan
receivables grew 8%, led by home furnishing and automotive.
Interest and fees on loans increased 9%, primarily driven by the
loan receivables growth. Purchase volume growth was 7%, adjusted to
exclude the impact from the hhgregg bankruptcy, and average active
account growth was 5%.
- CareCredit period-end loan receivables
grew 8%, led by dental and veterinary. Interest and fees on loans
increased 8%, primarily driven by the loan receivables growth.
Purchase volume grew 8% and average active account growth was
7%.
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 the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2017, as filed
February 22, 2018, and the Company’s forthcoming Quarterly Report
on Form 10-Q for the quarter ended March 31, 2018. 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 20, 2018, 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 12018#, and can be accessed beginning
approximately two hours after the event through May 4, 2018.
About Synchrony
Financial
Synchrony Financial (NYSE:SYF) is a premier consumer financial
services company delivering customized financing programs across
key industries including retail, health, auto, travel and home,
along with award-winning consumer banking products. With more than
$130 billion in sales financed and 74.5 million active accounts,
Synchrony Financial brings deep industry expertise, actionable data
insights, innovative solutions and differentiated digital
experiences to improve the success of every business we serve and
the quality of each life we touch. More information can be found
at www.synchronyfinancial.com and through
Twitter: @Synchrony.
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 grow our deposits in the future; our ability to
securitize our loan receivables, occurrence of an early
amortization of our securitization facilities, loss of the right to
service or subservice our securitized loan receivables, and lower
payment rates on our securitized loan receivables; 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 acquisitions and 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/or
interpretations, 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, 2017, as filed on
February 22, 2018. You should not consider any list of such factors
to be an exhaustive statement of all 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 financial measures that have
been adjusted to exclude the effects from the Tax Act, 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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2018
2017
2017
2017
2017
1Q'18 vs. 1Q'17
EARNINGS
Net interest income $ 3,842 $ 3,916 $ 3,876 $ 3,637 $
3,587 $ 255 7.1 % Retailer share arrangements (720 )
(779 ) (805 ) (669 ) (684 ) (36 )
5.3 %
Net interest income, after retailer share
arrangements 3,122 3,137 3,071 2,968 2,903 219 7.5 % Provision
for loan losses 1,362 1,354
1,310 1,326 1,306 56
4.3 %
Net interest income, after retailer share
arrangements and provision for loan losses 1,760 1,783 1,761
1,642 1,597 163 10.2 % Other income 75 62 76 57 93 (18 ) (19.4 )%
Other expense 988 970 958
911 908 80 8.8 %
Earnings before provision for income taxes 847 875 879 788
782 65 8.3 % Provision for income taxes 207
490 324 292 283
(76 ) (26.9 )%
Net earnings $ 640 $ 385
$ 555 $ 496 $ 499 $ 141
28.3 %
Net earnings attributable to common stockholders $
640 $ 385 $ 555 $ 496 $ 499 $
141 28.3 %
Adjusted net earnings(1) $ 640 $
545 $ 555 $ 496 $ 499 $ 141
28.3 %
COMMON SHARE
STATISTICS
Basic EPS $ 0.84 $ 0.49 $ 0.70 $ 0.62 $ 0.61 $ 0.23 37.7 % Diluted
EPS $ 0.83 $ 0.49 $ 0.70 $ 0.61 $ 0.61 $ 0.22 36.1 % Adjusted
diluted EPS(1) $ 0.83 $ 0.70 $ 0.70 $ 0.61 $ 0.61 $ 0.22 36.1 %
Dividend declared per share $ 0.15 $ 0.15 $ 0.15 $ 0.13 $ 0.13 $
0.02 15.4 % Common stock price $ 33.53 $ 38.61 $ 31.05 $ 29.82 $
34.30 $ (0.77 ) (2.2 )% Book value per share $ 18.88 $ 18.47 $
18.40 $ 18.02 $ 17.71 $ 1.17 6.6 % Tangible common equity per
share(2) $ 16.55 $ 16.22 $ 16.15 $ 15.79 $ 15.47 $ 1.08 7.0 %
Beginning common shares outstanding 770.5 782.6 795.3 810.8
817.4 (46.9 ) (5.7 )% Issuance of common shares - - - - - - - %
Stock-based compensation 0.2 0.1 0.1 0.2 - 0.2 NM Shares
repurchased (10.4 ) (12.2 ) (12.8 )
(15.7 ) (6.6 ) (3.8 ) 57.6 % Ending common
shares outstanding 760.3 770.5 782.6 795.3 810.8 (50.5 ) (6.2 )%
Weighted average common shares outstanding 763.7 778.7 787.3
804.0 813.1 (49.4 ) (6.1 )% Weighted average common shares
outstanding (fully diluted) 770.3 784.0 790.9 807.4 817.1 (46.8 )
(5.7 )% (1) Adjusted net earnings and Adjusted diluted EPS
are non-GAAP measures. These measures represent the corresponding
GAAP measure, adjusted to exclude the effects to Provision for
income taxes in the quarter ended December 31, 2017, resulting from
the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The effects
primarily relate to additional tax expense arising from the
remeasurement of our net deferred tax asset to reflect the
reduction in the U.S. corporate tax rate from 35% to 21%. For a
corresponding reconciliation to a GAAP financial measure, see
Reconciliation of Non-GAAP Measures and Calculations of Regulatory
Measures. (2) 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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2018
2017
2017
2017
2017
1Q'18 vs. 1Q'17
PERFORMANCE
METRICS
Return on assets(1) 2.7 % 1.6 % 2.4 % 2.2 % 2.3 % 0.4 %
Return on equity(2) 18.2 % 10.5 % 15.3 % 13.8 % 14.1 % 4.1 % Return
on tangible common equity(3) 20.7 % 12.0 % 17.4 % 15.7 % 16.1 % 4.6
% Adjusted return on assets(4) 2.7 % 2.3 % 2.4 % 2.2 % 2.3 % 0.4 %
Adjusted return on equity(4) 18.2 % 14.9 % 15.3 % 13.8 % 14.1 % 4.1
% Adjusted return on tangible common equity(5) 20.7 % 17.0 % 17.4 %
15.7 % 16.1 % 4.6 % Net interest margin(6) 16.05 % 16.24 % 16.74 %
16.20 % 16.18 % (0.13 )% Efficiency ratio(7) 30.9 % 30.3 % 30.4 %
30.1 % 30.3 % 0.6 % Other expense as a % of average loan
receivables, including held for sale 5.07 % 4.91 % 4.99 % 4.93 %
4.97 % 0.10 % Effective income tax rate 24.4 % 56.0 % 36.9 % 37.1 %
36.2 % (11.8 )%
CREDIT QUALITY
METRICS
Net charge-offs as a % of average loan receivables, including held
for sale 6.14 % 5.78 % 4.95 % 5.42 % 5.33 % 0.81 % 30+ days past
due as a % of period-end loan receivables(8) 4.52 % 4.67 % 4.80 %
4.25 % 4.25 % 0.27 % 90+ days past due as a % of period-end loan
receivables(8) 2.28 % 2.28 % 2.22 % 1.90 % 2.06 % 0.22 % Net
charge-offs $ 1,198 $ 1,141 $ 950 $ 1,001 $ 974 $ 224 23.0 % Loan
receivables delinquent over 30 days(8) $ 3,521 $ 3,831 $ 3,694 $
3,208 $ 3,120 $ 401 12.9 % Loan receivables delinquent over 90
days(8) $ 1,776 $ 1,869 $ 1,707 $ 1,435 $ 1,508 $ 268 17.8 %
Allowance for loan losses (period-end) $ 5,738 $ 5,574 $ 5,361 $
5,001 $ 4,676 $ 1,062 22.7 % Allowance coverage ratio(9) 7.37 %
6.80 % 6.97 % 6.63 % 6.37 % 1.00 %
BUSINESS
METRICS
Purchase volume(10) $ 29,626 $ 36,565 $ 32,893 $ 33,476 $ 28,880 $
746 2.6 % Period-end loan receivables $ 77,853 $ 81,947 $ 76,928 $
75,458 $ 73,350 $ 4,503 6.1 % Credit cards $ 74,952 $ 79,026 $
73,946 $ 72,492 $ 70,587 $ 4,365 6.2 % Consumer installment loans $
1,590 $ 1,578 $ 1,561 $ 1,514 $ 1,411 $ 179 12.7 % Commercial
credit products $ 1,275 $ 1,303 $ 1,384 $ 1,386 $ 1,311 $ (36 )
(2.7 )% Other $ 36 $ 40 $ 37 $ 66 $ 41 $ (5 ) (12.2 )% Average loan
receivables, including held for sale $ 79,090 $ 78,369 $ 76,165 $
74,090 $ 74,132 $ 4,958 6.7 % Period-end active accounts (in
thousands)(11) 68,891 74,541 69,008 69,277 67,905 986 1.5 % Average
active accounts (in thousands)(11) 71,323 71,348 69,331 68,635
69,629 1,694 2.4 %
LIQUIDITY
Liquid assets Cash and equivalents $ 13,044 $ 11,602 $
13,915 $ 12,020 $ 11,392 $ 1,652 14.5 % Total liquid assets $
18,557 $ 15,087 $ 16,391 $ 15,274 $ 16,158 $ 2,399 14.8 %
Undrawn credit facilities Undrawn credit facilities $ 6,000
$ 6,000 $ 5,650 $ 6,650 $ 5,600 $ 400 7.1 %
Total liquid assets
and undrawn credit facilities $ 24,557 $ 21,087 $ 22,041 $
21,924 $ 21,758 $ 2,799 12.9 % Liquid assets % of total assets
19.42 % 15.75 % 17.71 % 16.76 % 18.14 % 1.28 % Liquid assets
including undrawn credit facilities % of total assets 25.70 % 22.01
% 23.82 % 24.06 % 24.43 % 1.27 % (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) Adjusted return on assets represents
Adjusted net earnings as a percentage of average total assets.
Adjusted return on equity represents Adjusted net earnings as a
percentage of average total equity. Adjusted net earnings is a
non-GAAP measure. For a corresponding reconciliation of Adjusted
net earnings to a GAAP financial measure, see Reconciliation of
Non-GAAP Measures and Calculations of Regulatory Measures. (5)
Adjusted return on tangible common equity represents Adjusted net
earnings as a percentage of average tangible common equity. Both
Adjusted net earnings and tangible common equity are non-GAAP
measures. For corresponding reconciliations to a GAAP financial
measure, see Reconciliation of Non-GAAP Measures and Calculations
of Regulatory Measures. (6) Net interest margin represents net
interest income divided by average interest-earning assets. (7)
Efficiency ratio represents (i) other expense, divided by (ii) net
interest income, after retailer share arrangements, plus other
income. (8) Based on customer statement-end balances extrapolated
to the respective period-end date. (9) Allowance coverage ratio
represents allowance for loan losses divided by total period-end
loan receivables. (10) 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.
(11) 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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2018
2017
2017
2017
2017
1Q'18 vs. 1Q'17 Interest income: Interest and
fees on loans $ 4,172 $ 4,233 $ 4,182 $ 3,927 $ 3,877 $ 295 7.6 %
Interest on investment securities 72 58
51 43 36 36
100.0 % Total interest income 4,244 4,291 4,233 3,970 3,913
331 8.5 %
Interest expense: Interest on deposits 249
233 219 202 194 55 28.4 % Interest on borrowings of consolidated
securitization entities 74 70 65 63 65 9 13.8 % Interest on
third-party debt 79 72 73
68 67 12 17.9 %
Total interest expense 402 375 357 333 326 76 23.3 %
Net interest income 3,842
3,916 3,876 3,637 3,587 255 7.1 % Retailer share
arrangements (720 ) (779 ) (805 ) (669
) (684 ) (36 ) 5.3 % Net interest income,
after retailer share arrangements 3,122 3,137 3,071 2,968 2,903 219
7.5 % Provision for loan losses 1,362
1,354 1,310 1,326 1,306
56 4.3 % Net interest income, after
retailer share arrangements and provision for loan losses 1,760
1,783 1,761 1,642 1,597 163 10.2 %
Other income:
Interchange revenue 158 179 164 165 145 13 9.0 % Debt cancellation
fees 66 69 67 68 68 (2 ) (2.9 )% Loyalty programs (155 ) (193 )
(168 ) (206 ) (137 ) (18 ) 13.1 % Other 6 7
13 30 17
(11 ) (64.7 )% Total other income 75 62
76 57 93
(18 ) (19.4 )%
Other expense: Employee
costs(1) 358 330 333 318 323 35 10.8 % Professional fees 166 159
161 158 151 15 9.9 % Marketing and business development 121 156 124
124 94 27 28.7 % Information processing 104 99 96 88 90 14 15.6 %
Other(1) 239 226 244
223 250 (11 ) (4.4 )%
Total other expense 988 970 958 911 908 80 8.8 %
Earnings before
provision for income taxes 847 875 879 788 782 65 8.3 %
Provision for income taxes 207 490
324 292 283 (76 )
(26.9 )%
Net earnings attributable to common
stockholders $ 640 $ 385 $ 555 $ 496
$ 499 $ 141 28.3 % (1) We have
reclassified certain amounts within Employee costs to Other for all
periods in 2017 to conform to the current period classifications.
SYNCHRONY FINANCIAL STATEMENTS OF FINANCIAL
POSITION (unaudited, $ in millions) Quarter
Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Mar 31, 2018 vs.
2018
2017
2017
2017
2017
Mar 31, 2017
Assets Cash and equivalents $ 13,044 $ 11,602 $
13,915 $ 12,020 $ 11,392 $ 1,652 14.5 % Debt securities 6,259 4,473
3,302 3,982 5,313 946 17.8 % Loan receivables: Unsecuritized loans
held for investment 52,469 55,526 53,997 52,550 50,398 2,071 4.1 %
Restricted loans of consolidated securitization entities
25,384 26,421 22,931
22,908 22,952 2,432 10.6
%
Total loan receivables
77,853 81,947 76,928 75,458 73,350 4,503 6.1 % Less: Allowance for
loan losses (5,738 ) (5,574 ) (5,361 )
(5,001 ) (4,676 ) (1,062 ) 22.7 % Loan
receivables, net 72,115 76,373 71,567 70,457 68,674 3,441 5.0 %
Goodwill 991 991 991 991 992 (1 ) (0.1 )% Intangible assets, net
780 749 772 787 826 (46 ) (5.6 )% Other assets 2,370
1,620 2,001 2,903
1,853 517 27.9 % Total assets $ 95,559
$ 95,808 $ 92,548 $ 91,140 $ 89,050
$ 6,509 7.3 %
Liabilities and
Equity - - - - Deposits: Interest-bearing deposit accounts $
56,285 $ 56,276 $ 54,232 $ 52,659 $ 51,359 $ 4,926 9.6 %
Non-interest-bearing deposit accounts 285 212
222 226 246
39 15.9 % Total deposits 56,570 56,488 54,454 52,885 51,605
4,965 9.6 % Borrowings: Borrowings of consolidated securitization
entities 12,214 12,497 11,891 12,204 12,433 (219 ) (1.8 )% Senior
unsecured notes 8,801 8,302
8,008 8,505 7,761 1,040
13.4 % Total borrowings 21,015 20,799 19,899 20,709
20,194 821 4.1 % Accrued expenses and other liabilities
3,618 4,287 3,793 3,214
2,888 730 25.3 % Total
liabilities 81,203 81,574 78,146 76,808 74,687 6,516 8.7 % Equity:
Common stock 1 1 1 1 1 - - % Additional paid-in capital 9,470 9,445
9,429 9,415 9,405 65 0.7 % Retained earnings 7,334 6,809 6,543
6,109 5,724 1,610 28.1 % Accumulated other comprehensive income:
(86 ) (64 ) (40 ) (49 ) (55 ) (31 ) 56.4 % Treasury Stock
(2,363 ) (1,957 ) (1,531 ) (1,144 )
(712 ) (1,651 ) NM Total equity 14,356
14,234 14,402 14,332
14,363 (7 ) (0.0 )% Total
liabilities and equity $ 95,559 $ 95,808 $ 92,548
$ 91,140 $ 89,050 $ 6,509 7.3 %
SYNCHRONY FINANCIAL AVERAGE BALANCES, NET INTEREST
INCOME AND NET INTEREST MARGIN (unaudited, $ in
millions) Quarter Ended Mar 31, 2018
Dec 31, 2017 Sep 30, 2017 Jun
30, 2017 Mar 31, 2017 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 $ 12,434 $
47
1.53 % $ 13,591 $
43
1.26 % $ 11,895 $
37
1.23 % $ 10,758 $
28
1.04 % $ 10,552 $
21
0.81 % Securities available for sale 5,584 25 1.82 % 3,725 15 1.60
% 3,792 14 1.46 % 5,195 15 1.16 % 5,213 15 1.17 %
Loan
receivables: Credit cards, including held for sale 76,181 4,099
21.82 % 75,389 4,161 21.90 % 73,172 4,111 22.29 % 71,206 3,858
21.73 % 71,365 3,811 21.66 % Consumer installment loans 1,572 36
9.29 % 1,568 36 9.11 % 1,543 35 9.00 % 1,461 34 9.33 % 1,389 32
9.34 % Commercial credit products 1,286 36 11.35 % 1,375 35 10.10 %
1,392 36 10.26 % 1,378 34 9.90 % 1,317 34 10.47 % Other 51
1 NM 37 1
NM 58 - - % 45
1 NM 61 - - %
Total loan receivables, including held for sale
79,090 4,172 21.39 % 78,369
4,233 21.43 % 76,165 4,182
21.78 % 74,090 3,927 21.26 %
74,132 3,877 21.21 %
Total
interest-earning assets 97,108 4,244
17.72 % 95,685 4,291 17.79 %
91,852 4,233 18.28 % 90,043
3,970 17.68 % 89,897
3,913 17.65 %
Non-interest-earning assets:
Cash and due from banks 1,197 1,037 877 829 802 Allowance for loan
losses (5,608 ) (5,443 ) (5,125 ) (4,781 ) (4,408 ) Other assets
3,010 3,219 3,517
3,303 3,177
Total non-interest-earning
assets (1,401 ) (1,187 ) (731 )
(649 ) (429 )
Total
assets $ 95,707 $ 94,498 $ 91,121 $ 89,394
$ 89,468
Liabilities
Interest-bearing liabilities: Interest-bearing deposit
accounts $ 56,356 $ 249 1.79 % $ 55,690 $ 233 1.66 % $ 53,294 $ 219
1.63 % $ 51,836 $ 202 1.56 % $ 51,829 $ 194 1.52 % Borrowings of
consolidated securitization entities 12,410 74 2.42 % 12,425 70
2.24 % 11,759 65 2.19 % 12,213 63 2.07 % 12,321 65 2.14 % Senior
unsecured notes 8,795 79 3.64 %
7,940 72 3.60 % 8,251 73
3.51 % 7,933 68 3.44 %
7,760 67 3.50 %
Total interest-bearing
liabilities 77,561 402 2.10 %
76,055 375 1.96 % 73,304
357 1.93 % 71,982 333
1.86 % 71,910 326 1.84 %
Non-interest-bearing liabilities Non-interest-bearing
deposit accounts 300 218 232 218 240 Other liabilities 3,570
3,716 3,154 2,752
2,995
Total non-interest-bearing liabilities
3,870 3,934 3,386
2,970 3,235
Total liabilities 81,431 79,989
76,690 74,952 75,145
Equity Total equity 14,276 14,509 14,431
14,442 14,323
Total
liabilities and equity $ 95,707 $ 94,498 $ 91,121
$ 89,394 $ 89,468
Net interest income $
3,842 $ 3,916 $ 3,876 $ 3,637 $ 3,587
Interest rate spread(1) 15.62 % 15.83 %
16.35 % 15.82 % 15.81 %
Net interest margin(2) 16.05
% 16.24 % 16.74 % 16.20 % 16.18 % (1) Interest rate spread
represents the difference between the yield on total
interest-earning assets and the rate on total interest-bearing
liabilities. (2) 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,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Mar 31, 2018 vs.
2018
2017
2017
2017
2017
Mar 31, 2017
BALANCE SHEET
STATISTICS
Total common equity $ 14,356 $ 14,234 $ 14,402 $ 14,332 $
14,363 ($7 ) (0.0 )% Total common equity as a % of total assets
15.02 % 14.86 % 15.56 % 15.73 % 16.13 % (1.11 )% Tangible
assets $ 93,788 $ 94,068 $ 90,785 $ 89,362 $ 87,232 $ 6,556 7.5 %
Tangible common equity(1) $ 12,585 $ 12,494 $ 12,639 $ 12,554 $
12,545 $ 40 0.3 % Tangible common equity as a % of tangible
assets(1) 13.42 % 13.28 % 13.92 % 14.05 % 14.38 % (0.96 )% Tangible
common equity per share(1) $ 16.55 $ 16.22 $ 16.15 $ 15.79 $ 15.47
$ 1.08 7.0 %
REGULATORY
CAPITAL RATIOS(2)
Basel III Fully
Phased-in(3)
Basel III Transition Total risk-based capital
ratio(4) 18.1 % 17.3 % 18.7 % 18.7 % 19.3 % Tier 1 risk-based
capital ratio(5) 16.8 % 16.0 % 17.3 % 17.4 % 18.0 % Tier 1 leverage
ratio(6) 13.7 % 13.8 % 14.6 % 14.8 % 14.8 % Common equity Tier 1
capital ratio 16.8 % 16.0 % 17.3 % 17.4 % 18.0 %
Basel III Fully Phased-in
Common equity Tier 1 capital ratio 16.8 % 15.8 % 17.2
% 17.2 % 17.7 % (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, 2018 are
preliminary and therefore subject to change. (3) Amounts presented
do not reflect certain modifications to the regulatory capital
rules proposed by the federal banking agencies in September 2017,
which among other things, may increase the risk weighting of
certain deferred tax assets from 100% to 250% if the proposed rule
becomes effective. (4) Total risk-based capital ratio is the ratio
of total risk-based capital divided by risk-weighted assets. (5)
Tier 1 risk-based capital ratio is the ratio of Tier 1 capital
divided by risk-weighted assets. (6) 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.
SYNCHRONY
FINANCIAL PLATFORM RESULTS (unaudited, $ in
millions) Quarter Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2018
2017
2017
2017
2017
1Q'18 vs. 1Q'17
RETAIL
CARD
Purchase volume(1)(2) $ 23,382 $ 29,839 $ 26,347 $ 27,101 $
22,952 $ 430 1.9 % Period-end loan receivables $ 52,531 $ 56,230 $
52,119 $ 51,437 $ 49,905 $ 2,626 5.3 % Average loan receivables,
including held for sale $ 53,673 $ 53,256 $ 51,817 $ 50,533 $
50,644 $ 3,029 6.0 % Average active accounts (in thousands)(2)(3)
55,927 56,113 54,471 54,058 55,049 878 1.6 % Interest and fees on
loans(2) $ 3,096 $ 3,133 $ 3,102 $ 2,900 $ 2,888 $ 208 7.2 % Other
income(2) $ 65 $ 49 $ 61 $ 25 $ 77 $ (12 ) (15.6 )% Retailer share
arrangements(2) $ (714 ) $ (771 ) $ (795 ) $ (657 ) $ (681 ) $ (33
) 4.8 %
PAYMENT
SOLUTIONS
Purchase volume(1) $ 3,823 $ 4,366 $ 4,178 $ 3,930 $ 3,686 $ 137
3.7 % Period-end loan receivables $ 16,513 $ 16,857 $ 16,153 $
15,595 $ 15,320 $ 1,193 7.8 % Average loan receivables $ 16,629 $
16,386 $ 15,848 $ 15,338 $ 15,424 $ 1,205 7.8 % Average active
accounts (in thousands)(3) 9,545 9,421 9,183 9,031 9,090 455 5.0 %
Interest and fees on loans $ 562 $ 574 $ 559 $ 533 $ 515 $ 47 9.1 %
Other income $ 2 $ 2 $ 2 $ 6 $ 4 $ (2 ) (50.0 )% Retailer share
arrangements $ (4 ) $ (5 ) $ (9 ) $ (9 ) $ (1 ) $ (3 ) NM
CARECREDIT
Purchase volume(1) $ 2,421 $ 2,360 $ 2,368 $ 2,445 $ 2,242 $ 179
8.0 % Period-end loan receivables $ 8,809 $ 8,860 $ 8,656 $ 8,426 $
8,125 $ 684 8.4 % Average loan receivables $ 8,788 $ 8,727 $ 8,500
$ 8,219 $ 8,064 $ 724 9.0 % Average active accounts (in
thousands)(3) 5,851 5,814 5,677 5,546 5,490 361 6.6 % Interest and
fees on loans $ 514 $ 526 $ 521 $ 494 $ 474 $ 40 8.4 % Other income
$ 8 $ 11 $ 13 $ 26 $ 12 $ (4 ) (33.3 )% Retailer share arrangements
$ (2 ) $ (3 ) $ (1 ) $ (3 ) $ (2 ) $ - - %
TOTAL
SYF
Purchase volume(1)(2) $ 29,626 $ 36,565 $ 32,893 $ 33,476 $ 28,880
$ 746 2.6 % Period-end loan receivables $ 77,853 $ 81,947 $ 76,928
$ 75,458 $ 73,350 $ 4,503 6.1 % Average loan receivables, including
held for sale $ 79,090 $ 78,369 $ 76,165 $ 74,090 $ 74,132 $ 4,958
6.7 % Average active accounts (in thousands)(2)(3) 71,323 71,348
69,331 68,635 69,629 1,694 2.4 % Interest and fees on loans(2) $
4,172 $ 4,233 $ 4,182 $ 3,927 $ 3,877 $ 295 7.6 % Other income(2) $
75 $ 62 $ 76 $ 57 $ 93 $ (18 ) (19.4 )% Retailer share
arrangements(2) $ (720 ) $ (779 ) $ (805 ) $ (669 ) $ (684 ) $ (36
) 5.3 % (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,
2018
2017
2017
2017
2017
COMMON EQUITY
MEASURES
GAAP Total common equity $ 14,356 $ 14,234 $ 14,402 $ 14,332 $
14,363 Less: Goodwill (991 ) (991 ) (991 ) (991 ) (992 ) Less:
Intangible assets, net (780 ) (749 ) (772 )
(787 ) (826 )
Tangible common equity $ 12,585
$ 12,494 $ 12,639 $ 12,554 $ 12,545 Adjustments for certain
deferred tax liabilities and certain items in accumulated
comprehensive income (loss) 278 254
344 337 340
Basel III
- Common equity Tier 1 (fully phased-in) $ 12,863 $
12,748 $ 12,983 $ 12,891 $ 12,885
Adjustment related to capital components during transition
142 142 146 154
Basel III - Common equity Tier 1 (transition) $ 12,890
$ 13,125 $ 13,037 $ 13,039
RISK-BASED
CAPITAL
Common equity Tier 1 $ 12,863 $ 12,890 $ 13,125 $ 13,037 $ 13,039
Add: Allowance for loan losses includible in risk-based capital
1,015 1,064 1,001
985 954
Risk-based capital $ 13,878
$ 13,954 $ 14,126 $ 14,022 $ 13,993
ASSET
MEASURES
Total average assets $ 95,707 $ 94,498 $ 91,121 $ 89,394 $ 89,468
Adjustments for:
Disallowed goodwill and other disallowed
intangible assets (net of related deferred tax liabilities) and
other
(1,560 ) (1,392 ) (1,304 ) (1,325 )
(1,358 )
Total assets for leverage purposes $ 94,147
$ 93,106 $ 89,817 $ 88,069 $ 88,110
Risk-weighted assets - Basel III (fully
phased-in) $ 76,509 $ 80,526 $ 75,614 $ 74,748 $ 72,596
Risk-weighted assets - Basel III (transition) $ 80,669 $
75,729 $ 74,792 $ 72,627
TANGIBLE COMMON
EQUITY PER SHARE
GAAP book value per share $ 18.88 $ 18.47 $ 18.40 $ 18.02 $ 17.71
Less: Goodwill (1.30 ) (1.29 ) (1.27 ) (1.25 ) (1.22 ) Less:
Intangible assets, net (1.03 ) (0.96 ) (0.98 )
(0.98 ) (1.02 ) Tangible common equity per share $
16.55 $ 16.22 $ 16.15 $ 15.79 $ 15.47
ADJUSTED NET
EARNINGS
GAAP net earnings $ 640 $ 385 $ 555 $ 496 $ 499 Adjustment for tax
law change(2) - 160 -
- - Adjusted net earnings $ 640 $ 545 $
555 $ 496 $ 499
ADJUSTED DILUTED
EPS
GAAP diluted EPS $ 0.83 $ 0.49 $ 0.70 $ 0.61 $ 0.61 Adjustment for
tax law change(2) - 0.21 -
- - Adjusted diluted EPS $ 0.83
$ 0.70 $ 0.70 $ 0.61 $ 0.61 (1) Regulatory measures at March
31, 2018 are presented on an estimated basis. (2) Adjustment to
exclude the effects to Provision for income taxes in the quarter
ended December 31, 2017, resulting from the Tax Act.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180420005079/en/
Synchrony FinancialInvestor RelationsGreg Ketron,
203-585-6291orMedia RelationsSue Bishop,
203-585-2802Susan.Bishopmangino@syf.com
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