Synchrony(US:SYF)2025-04-22 10:00Financial Summary This section presents a comprehensive overview of Synchrony Financial's Q1 2025 financial performance, detailing significant declines in net earnings and revenue, alongside changes in common share metrics Earnings Overview Synchrony Financial reported a significant decrease in net earnings and net revenue for Q1 2025 compared to Q1 2024, primarily driven by a substantial reduction in other income. Provision for credit losses also decreased | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :---------- | :--------- | | Net interest income | 4,464 | 4,405 | 59 | 1.3 % | | Retailer share arrangements | (895) | (764) | (131) | 17.1 % | | Other income | 149 | 1,157 | (1,008) | (87.1)% | | Net revenue | 3,718 | 4,798 | (1,080) | (22.5)% | | Provision for credit losses | 1,491 | 1,884 | (393) | (20.9)% | | Net earnings | 757 | 1,293 | (536) | (41.5)% | Common Share Statistics Diluted EPS saw a notable decline year-over-year, while book value and tangible book value per share increased. The company maintained its dividend per share and continued share repurchases | Metric | Mar 31, 2025 | Mar 31, 2024 | Change | Change (%) | | :--------------------------- | :----------- | :----------- | :----------- | :--------- | | Basic EPS | $1.91 | $3.17 | $(1.26) | (39.7)% | | Diluted EPS | $1.89 | $3.14 | $(1.25) | (39.8)% | | Dividend declared per share | $0.25 | $0.25 | — | — % | | Book value per share | $40.37 | $35.03 | $5.34 | 15.2 % | | Tangible book value per share| $34.79 | $30.36 | $4.43 | 14.6 % | | Shares repurchased (millions)| (9.8) | (7.5) | (2.3) | 30.7 % | Selected Metrics This section analyzes key performance, credit quality, business, and liquidity metrics, revealing declines in profitability and business volumes, alongside improved liquidity and mixed credit trends Performance Metrics Key performance indicators like Return on Assets and Return on Equity decreased significantly year-over-year, while Net Interest Margin slightly improved. The efficiency ratio worsened | Metric | Mar 31, 2025 | Mar 31, 2024 | Change (%) | | :------------------------------- | :----------- | :----------- | :--------- | | Return on assets | 2.5 % | 4.4 % | (1.9)% | | Return on equity | 18.4 % | 35.6 % | (17.2)% | | Return on tangible common equity | 22.4 % | 43.6 % | (21.2)% | | Net interest margin | 14.74 % | 14.55 % | 0.19 % | | Efficiency ratio | 33.4 % | 25.1 % | 8.3 % | Credit Quality Metrics Credit quality metrics showed a slight increase in net charge-offs as a percentage of average loan receivables, but a decrease in 30+ and 90+ days past due percentages. Allowance for credit losses remained relatively stable | Metric | Mar 31, 2025 | Mar 31, 2024 | Change (%) | | :-------------------------------------------------------- | :----------- | :----------- | :--------- | | Net charge-offs as a % of average loan receivables | 6.38 % | 6.31 % | 0.07 % | | 30+ days past due as a % of period-end loan receivables | 4.52 % | 4.74 % | (0.22)% | | 90+ days past due as a % of period-end loan receivables | 2.29 % | 2.42 % | (0.13)% | | Allowance for credit losses (period-end) ($M) | 10,828 | 10,905 | (0.7)% | Business Metrics Purchase volume and period-end loan receivables experienced a slight decline year-over-year, as did the number of average active accounts | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :---------------------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 40,720 | 42,387 | (1,667) | (3.9)% | | Period-end loan receivables | 99,608 | 101,733 | (2,125) | (2.1)% | | Average loan receivables, including held for sale | 101,021 | 100,957 | 64 | 0.1 % | | Period-end active accounts (in thousands) | 67,787 | 70,754 | (2,967) | (4.2)% | Liquidity The company's liquidity position improved, with increases in cash and equivalents and total liquid assets, leading to a higher percentage of liquid assets relative to total assets | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :---------------------------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Cash and equivalents | 21,629 | 20,021 | 1,608 | 8.0 % | | Total liquid assets | 23,817 | 21,929 | 1,888 | 8.6 % | | Liquid assets % of total assets | 19.52 % | 18.10 % | | 1.42 % | Statements of Earnings This section details the components of the statement of earnings, highlighting a slight increase in net interest income offset by a substantial decrease in other income, leading to a significant decline in net earnings Interest Income and Expense Net interest income increased slightly year-over-year, driven by a modest rise in interest and fees on loans and a decrease in total interest expense, particularly from deposits | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Interest and fees on loans | 5,312 | 5,293 | 19 | 0.4 % | | Total interest income | 5,550 | 5,568 | (18) | (0.3)% | | Interest on deposits | 882 | 954 | (72) | (7.5)% | | Total interest expense | 1,086 | 1,163 | (77) | (6.6)% | | Net interest income | 4,464 | 4,405 | 59 | 1.3 % | Other Income and Expense Total other income saw a drastic reduction, primarily due to a significant decrease in the 'Other' category, which was largely offset by a slight increase in total other expense | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Interchange revenue | 238 | 241 | (3) | (1.2)% | | Protection product revenue | 147 | 141 | 6 | 4.3 % | | Other (within Total other income) | 75 | 1,094 | (1,019) | (93.1)% | | Total other income | 149 | 1,157 | (1,008) | (87.1)% | | Total other expense | 1,243 | 1,206 | 37 | 3.1 % | Net Earnings Net earnings and net earnings available to common stockholders both declined significantly year-over-year, reflecting the changes in revenue and expenses | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Earnings before provision for income taxes | 984 | 1,708 | (724) | (42.4)% | | Provision for income taxes | 227 | 415 | (188) | (45.3)% | | Net earnings | 757 | 1,293 | (536) | (41.5)% | | Net earnings available to common stockholders | 736 | 1,282 | (546) | (42.6)% | Statements of Financial Position This section outlines the company's financial position, showing a slight increase in total assets driven by cash, a stable liability base, and growth in total equity primarily from retained earnings Assets Total assets increased slightly, driven by higher cash and equivalents, while total loan receivables decreased. Goodwill also saw an increase | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Cash and equivalents | 21,629 | 20,021 | 1,608 | 8.0 % | | Total loan receivables | 99,608 | 101,733 | (2,125) | (2.1)% | | Loan receivables, net | 88,780 | 90,828 | (2,048) | (2.3)% | | Goodwill | 1,274 | 1,073 | 201 | 18.7 % | | Total assets | 122,026 | 121,173 | 853 | 0.7 % | Liabilities and Equity Total liabilities remained stable, with a slight decrease in deposits and a rise in borrowings. Total equity increased, primarily due to higher retained earnings | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Total deposits | 83,435 | 83,554 | (119) | (0.1)% | | Total borrowings | 17,009 | 16,133 | 876 | 5.4 % | | Total liabilities | 105,445 | 105,891 | (446) | (0.4)% | | Retained earnings | 22,209 | 19,790 | 2,419 | 12.2 % | | Total equity | 16,581 | 15,282 | 1,299 | 8.5 % | Average Balances, Net Interest Income and Net Interest Margin This section examines average balances of interest-earning assets and interest-bearing liabilities, demonstrating an increase in net interest income and an expansion of the net interest margin Interest-Earning Assets Average interest-earning assets increased slightly, with loan receivables remaining stable. The overall yield on interest-earning assets saw a minor decrease | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :---------------------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Average Interest-earning cash and equivalents | 18,539 | 17,405 | 1,134 | 6.5 % | | Total loan receivables, including held for sale | 101,021 | 100,957 | 64 | 0.1 % | | Total interest-earning assets | 122,791 | 121,794 | 997 | 0.8 % | | Yield on Total interest-earning assets | 18.33 % | 18.39 % | | (0.06)% | Interest-Bearing Liabilities Average interest-bearing liabilities slightly decreased, and the average rate on these liabilities also declined, contributing to improved net interest income | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Average Interest-bearing deposit accounts | 82,370 | 82,598 | (228) | (0.3)% | | Total interest-bearing liabilities | 98,411 | 98,611 | (200) | (0.2)% | | Rate on Total interest-bearing liabilities | 4.48 % | 4.74 % | | (0.26)% | Net Interest Income and Margin Net interest income increased, and the net interest margin expanded year-over-year, reflecting favorable movements in interest-earning assets and interest-bearing liabilities | Metric | Mar 31, 2025 | Mar 31, 2024 | Change (%) | | :----------------- | :----------- | :----------- | :--------- | | Net interest income| $4,464 | $4,405 | 1.3 % | | Net interest margin| 14.74 % | 14.55 % | 0.19 % | Balance Sheet Statistics This section presents key balance sheet statistics, including growth in common and tangible equity, and improved regulatory capital ratios, indicating a stronger capital position Common Equity and Tangible Equity Both total common equity and tangible common equity, along with tangible book value per share, showed healthy year-over-year growth | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :------------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Total common equity | 15,359 | 14,060 | 1,299 | 9.2 % | | Tangible common equity | 13,238 | 12,187 | 1,051 | 8.6 % | | Tangible book value per share | $34.79 | $30.36 | $4.43 | 14.6 % | Regulatory Capital Ratios The company's regulatory capital ratios, including Total risk-based, Tier 1 risk-based, Tier 1 leverage, and Common equity Tier 1, all improved year-over-year, indicating a stronger capital position | Metric | Mar 31, 2025 | Mar 31, 2024 | | :---------------------------- | :----------- | :----------- | | Total risk-based capital ratio| 16.5 % | 15.8 % | | Tier 1 risk-based capital ratio| 14.4 % | 13.8 % | | Tier 1 leverage ratio | 12.4 % | 12.0 % | | Common equity Tier 1 capital ratio| 13.2 % | 12.6 % | - Regulatory capital ratios at March 31, 2025, are preliminary and subject to change14 - Capital ratios for 2025 reflect 100% of the phase-in of CECL effects, compared to 75% in 202415 Platform Results This section provides a detailed breakdown of performance across various business platforms, revealing mixed trends in purchase volume and loan receivables, with a notable overall decline in other income Home & Auto The Home & Auto platform experienced declines in both purchase volume and period-end loan receivables, while interest and fees on loans saw a modest increase | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 9,567 | 10,512 | (945) | (9.0)% | | Period-end loan receivables | 30,460 | 32,615 | (2,155) | (6.6)% | | Interest and fees on loans | 1,413 | 1,382 | 31 | 2.2 % | Digital The Digital platform showed a slight decrease in purchase volume but maintained stable period-end loan receivables. Interest and fees on loans saw a minor decline | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 12,479 | 12,628 | (149) | (1.2)% | | Period-end loan receivables | 27,765 | 27,734 | 31 | 0.1 % | | Interest and fees on loans | 1,544 | 1,567 | (23) | (1.5)% | Diversified & Value The Diversified & Value platform experienced a decrease in purchase volume and a slight reduction in period-end loan receivables, alongside a decline in interest and fees on loans | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 13,732 | 14,023 | (291) | (2.1)% | | Period-end loan receivables | 19,436 | 19,559 | (123) | (0.6)% | | Interest and fees on loans | 1,178 | 1,214 | (36) | (3.0)% | Health & Wellness The Health & Wellness platform saw a decrease in purchase volume but an increase in period-end loan receivables and interest and fees on loans, indicating growth in its loan portfolio | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 3,774 | 3,980 | (206) | (5.2)% | | Period-end loan receivables | 15,193 | 15,065 | 128 | 0.8 % | | Interest and fees on loans | 914 | 869 | 45 | 5.2 % | Lifestyle The Lifestyle platform experienced a decrease in purchase volume but a slight increase in period-end loan receivables and interest and fees on loans | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 1,168 | 1,244 | (76) | (6.1)% | | Period-end loan receivables | 6,636 | 6,604 | 32 | 0.5 % | | Interest and fees on loans | 261 | 255 | 6 | 2.4 % | Total SYF Overall, Synchrony Financial saw a decrease in total purchase volume and period-end loan receivables, while total interest and fees on loans remained relatively stable. Total other income significantly declined | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------- | :--------- | | Purchase volume | 40,720 | 42,387 | (1,667) | (3.9)% | | Period-end loan receivables | 99,608 | 101,733 | (2,125) | (2.1)% | | Interest and fees on loans | 5,312 | 5,293 | 19 | 0.4 % | | Other income | 149 | 1,157 | (1,008) | (87.1)% | Corp, Other The 'Corp, Other' category showed a significant decrease in other income, likely reflecting the impact of the Pets Best gain on sale from the prior year | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | Change ($M) | Change (%) | | :----------- | :---------------- | :---------------- | :---------- | :--------- | | Other income | (2) | 1,061 | (1,063) | (100.2)% | Reconciliation of Non-GAAP Measures and Calculations of Regulatory Measures This section reconciles GAAP to non-GAAP measures and details calculations for regulatory capital and asset metrics, highlighting the company's capital structure and compliance Common Equity and Regulatory Capital Measures The reconciliation shows an increase in tangible common equity and all key regulatory capital components year-over-year, reflecting a stronger capital base | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | | :-------------------------- | :---------------- | :---------------- | | GAAP Total equity | 16,581 | 15,282 | | Tangible common equity | 13,238 | 12,187 | | Common equity Tier 1 | 13,446 | 12,985 | | Tier 1 capital | 14,668 | 14,207 | | Total Risk-based capital | 16,798 | 16,347 | Asset Measures Total average assets for leverage purposes increased, while risk-weighted assets decreased year-over-year | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | | :------------------------------ | :---------------- | :---------------- | | Total average assets | 120,493 | 119,034 | | Total assets for leverage purposes | 118,598 | 117,976 | | Risk-weighted assets | 101,625 | 103,242 | CECL Fully Phased-in Capital Measures CECL fully phased-in Tier 1 capital and risk-weighted assets show an improved capital position, with the full phase-in of CECL effects in 2025 | Metric | Mar 31, 2025 ($M) | Mar 31, 2024 ($M) | | :---------------------------------------- | :---------------- | :---------------- | | Tier 1 capital (CECL fully phased-in) | 14,668 | 13,634 | | Risk-weighted assets (CECL fully phased-in) | 101,625 | 102,952 | - Capital ratios for 2025 reflect 100% of the phase-in of CECL effects, compared to 75% in 202420 Tangible Book Value Per Share Reconciliation Tangible book value per share increased significantly year-over-year, reflecting growth in common equity adjusted for goodwill and intangible assets | Metric | Mar 31, 2025 | Mar 31, 2024 | | :-------------------------- | :----------- | :----------- | | Book value per share | $40.37 | $35.03 | | Tangible book value per share| $34.79 | $30.36 | Adjusted Financial Measures (Non-GAAP) This section presents adjusted financial measures for Q1 2024, excluding the Pets Best gain on sale, to provide a clearer view of core operational performance Adjusted Financial Measures (Excluding Pets Best Gain on Sale) This section provides adjusted financial measures for Q1 2024, excluding the one-time gain on sale of Pets Best. These adjustments significantly reduce reported net earnings, EPS, and return metrics, while increasing the efficiency ratio, providing a clearer view of core operational performance | Metric | March 31, 2024 (Reported) | Pets Best gain on sale impact | March 31, 2024 (Adjusted) | | :-------------------------------------- | :------------------------ | :---------------------------- | :------------------------ | | Net earnings | $1,293 | $(802) | $491 | | Diluted earnings per share | $3.14 | $(1.96) | $1.18 | | Return on assets | 4.4 % | (2.7)% | 1.7 % | | Return on equity | 35.6 % | (21.8)% | 13.8 % | | Return on tangible common equity | 43.6 % | (26.8)% | 16.8 % | | Efficiency ratio | 25.1 % | 7.2 % | 32.3 % |