Synchrony(US:SYF)2026-02-06 21:18Financial Performance - Net earnings increased 1.5% to $3.6 billion for the year ended December 31, 2025, compared to $3.5 billion in 2024[156]. - Net interest income rose by $455 million to $18.5 billion, primarily due to lower interest expense and a 0.5% increase in interest and fees on loans[159]. - Loan receivables decreased by 0.9% to $103.8 billion at December 31, 2025, reflecting higher payment rates and flat purchase volume[159]. - Over-30 day loan delinquencies decreased by 21 basis points to 4.49% at December 31, 2025, from 4.70% at December 31, 2024[159]. - Total deposits decreased by 1.1% to $81.1 billion at December 31, 2025, representing 84% of total funding sources[159]. - The net charge-off rate decreased by 66 basis points to 5.65% for the year ended December 31, 2025[162]. - The return on assets improved to 3.0% for the year ended December 31, 2025, compared to 2.9% in 2024[162]. - Total interest-earning assets increased to $121,158 million in 2025, with a net interest income of $18,466 million, reflecting a net interest margin of 15.24%[170]. - Credit card loan receivables reached $92,566 million in 2025, generating interest income of $20,683 million at an average yield of 22.34%[170]. - Total liabilities decreased to $102,380 million in 2025, while total equity increased to $16,858 million[170]. Customer Engagement and Digital Strategy - Approximately 60% of consumer revolving credit applications in 2025 were processed through a digital channel, highlighting the company's digital capabilities[28]. - The company continues to invest in digital assets to adapt to the evolving market environment and meet partner and customer needs[28]. - Loyalty programs were expanded in 2025 to include travel-related discounts, enhancing customer engagement and retention[86]. - Approximately 81% of customers primarily use direct channels (internet, mail, phone, and mobile) to manage their bank accounts, indicating a strong consumer preference for direct banking[112]. - The company has invested in servicing and digital platforms to enhance self-service features and improve user experience, including a PayPal-branded affinity deposit product[113]. Sales Platforms and Partnerships - The company operates through five sales platforms: Home & Auto, Digital, Diversified & Value, Health & Wellness, and Lifestyle[32]. - The Home & Auto sales platform accounted for $5.7 billion, or 26%, of total interest and fees on loans for the year ended December 31, 2025[34]. - Digital sales platform accounted for $6.4 billion, or 30%, of total interest and fees on loans for the year ended December 31, 2025[37]. - Diversified & Value sales platform contributed $4.7 billion, or 22%, of total interest and fees on loans for the year ended December 31, 2025[41]. - Health & Wellness sales platform represented $3.8 billion, or 17%, of total interest and fees on loans for the year ended December 31, 2025[44]. - Lifestyle sales platform accounted for $1.1 billion, or 5%, of total interest and fees on loans for the year ended December 31, 2025[49]. - A new partnership with OnePay was launched in September 2025, becoming the exclusive issuer of a credit card program at Walmart[42]. - The company maintains longstanding relationships with partners, including major retailers and digital platforms like Amazon and PayPal, enhancing customer loyalty and sales[28]. Operational Efficiency and Employee Engagement - The company’s operations are primarily within the United States, focusing on managing profitability and expenses across its single business segment[29]. - As of December 31, 2025, the company had over 20,000 full-time employees, with a workforce composition of 61% female and 38% male[133]. - In 2025, 91% of employees participated in the engagement survey, with 95% stating it is a great place to work[132]. - The company plans to increase the minimum wage to $22.50 per hour for all hourly employees in the United States effective March 1, 2026[134]. Financial Management and Risk - The credit risk management strategy is diversified across approximately 115 million open accounts as of December 31, 2025, with no significant individual exposures[117]. - The company utilizes proprietary credit tools, Synchrony PRISM, to gain insights into customer applications and creditworthiness[118]. - The company expects growth in loan receivables and interest and fees on loans in 2026, driven by new programs and improved customer spending behavior[172]. - Provision for credit losses decreased by $1.5 billion to $5.2 billion for the year ended December 31, 2025, primarily due to lower net charge-offs[193]. Capital and Investment - The company repurchased $2.9 billion of its outstanding common stock and declared cash dividends of $1.15 per common share, totaling $427 million[159]. - Capital levels included a Basel III common equity Tier 1 ratio of 12.6% at December 31, 2025, with $427 million in dividends declared and $2.9 billion in stock repurchases[178]. - The company plans to introduce new deposit products and enhancements, including transactional capabilities and additional digital servicing options, to attract new deposits and retain existing ones[114].