Synchrony Financial 2026 Conference Summary Company Overview - **Company**: Synchrony Financial (NYSE: SYF) - **Date of Conference**: February 10, 2026 Key Points Industry Insights - The consumer finance sector is experiencing a K-shaped recovery, with stability observed in non-prime consumers while the middle-income segment faces pressure due to wage growth and affordability issues [7][8][9] - The high-end consumers are showing signs of reduced spending, while the non-prime consumers are adapting well to economic pressures [8][11] Consumer Behavior - Non-prime consumers are demonstrating resilience by taking multiple jobs and engaging in the gig economy, while middle-income consumers are struggling with disposable income [11] - Average tax refunds are expected to increase by approximately $1,000, benefiting higher-income consumers more than moderate-income consumers [13][14] - Purchase volume is anticipated to rise among moderate-income consumers, while higher-income consumers may focus on debt repayment or savings [14][15] Financial Performance - Synchrony Financial's loan receivables are projected to grow in the mid-single digits, with a slight decline of 50 basis points year-over-year noted in recent data [39][41] - Delinquencies are performing better than seasonal expectations, with early-stage delinquencies down 7 basis points compared to historical averages [42][72] - The company is experiencing a sub-5% loss rate, indicating strong credit quality [42] Strategic Initiatives - Synchrony is focusing on expanding its health and wellness product offerings, which are expected to drive significant growth [61] - Investments in technology and customer experience are prioritized to enhance operational efficiency and consumer engagement [62][63] - The launch of the OnePay Walmart program is highlighted as a significant success, with a richer value proposition compared to previous offerings [29][32] Economic Outlook - The macroeconomic environment is perceived as more stable, with manageable inflation and unemployment rates [44][45] - Net interest income (NII) is expected to grow in 2026, although specific guidance on growth rates was not provided [46][49] - The company is positioned to return capital to shareholders, with a focus on prudent buybacks and maintaining a strong capital position [81][82] Investment and Growth Strategy - Synchrony plans to invest in technology and strategic partnerships to drive long-term growth, with a focus on maintaining low customer acquisition costs [86] - The company aims for double-digit EPS growth by 2027, supported by ongoing investments in its portfolio and technology [86] Credit Quality and Risk Management - Credit metrics are stable, with no significant deterioration expected, and the company is managing credit risk effectively compared to industry peers [72][73] - Reserve releases in 2026 are anticipated to be influenced by growth rates, with a focus on maintaining confidence in credit quality [73] Conclusion - Synchrony Financial is navigating a complex consumer finance landscape with a focus on strategic growth, technological investment, and maintaining credit quality. The company is optimistic about its future performance, aiming for sustainable growth and shareholder value enhancement.

Financial Data and Key Metrics Changes - Synchrony reported net earnings of $751 million, or $2.04 per diluted share, including a 14-cent restructuring charge related to a voluntary employee early retirement program, with a return on average assets of 2.5% and a return on tangible common equity of 21.8% [4][18] - For the full year, net earnings reached $3.6 billion, or $9.28 per diluted share, with a return on average assets of 3.0% and a return on tangible common equity of 25.8% [19] - The efficiency ratio for the fourth quarter was 36.9%, approximately 360 basis points higher than the previous year, primarily due to higher overall expenses and the impact of higher RSAs on net revenue [23] Business Line Data and Key Metrics Changes - Purchase volume reached $49 billion in the fourth quarter, a record and a 3% year-over-year increase, with digital platform purchase volume increasing by 6% [4][19] - Dual and co-branded cards accounted for 50% of total purchase volume, increasing by 16% year-over-year, driven by product upgrades and higher spend [6] - Purchase volume in health and wellness grew by 4%, while home and auto purchase volume decreased by 2% [5][6] Market Data and Key Metrics Changes - The company added or renewed over 25 partners in the fourth quarter, including significant partnerships with Bob's Discount Furniture and Polaris, enhancing its market presence [8][9] - Synchrony now partners with over 50 merchant and practice management platforms, expanding its reach in health and wellness and home and auto markets [11] Company Strategy and Development Direction - Synchrony is focused on diversifying its programs, products, and markets while enhancing customer experiences through strategic partnerships and technological investments [10][16] - The company aims to grow its portfolio in a prudent, risk-adjusted manner, with expectations of mid-single-digit ending receivables growth in 2026 [29][30] - Investments in AI, cloud technology, and health and wellness are prioritized to drive productivity and growth [77] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about consumer resilience and spending patterns, indicating a constructive macro environment [41] - The company anticipates that net charge-off rates will align with long-term targets of 5.5%-6% and expects continued growth in net interest income [30][31] - Management highlighted the importance of maintaining competitive pricing and availability of credit for consumers, especially in light of potential regulatory changes [48][49] Other Important Information - Synchrony returned $1.1 billion to shareholders in the fourth quarter, consisting of $952 million in share repurchases and $106 million in dividends [27] - The company reported a decrease in total liquid assets by 3% to $16.6 billion, representing 13.9% of total assets [26] Q&A Session Summary Question: Can you discuss the mid-single digit growth guide for receivables growth? - Management noted that consumer spending has been resilient, with co-brand purchase volume growing significantly, particularly due to the Walmart partnership [40][42] Question: What are your views on the 10% APR caps? - Management expressed concerns that such caps would limit credit availability for lower-income consumers and negatively impact merchants reliant on credit programs [48][49] Question: Can you unpack the credit guide and expected losses? - Management indicated that while there is a strong foundation entering 2026, new portfolios like Walmart may introduce upward bias in losses [60][61] Question: What net interest margin is embedded within the guidance? - Management expects net interest income and margin to increase, driven by PPPCs and lower funding costs, but acknowledges potential headwinds from changing interest rates [62][64] Question: How are PPPCs tracking relative to expectations? - Management reported that PPPCs are slightly ahead of expectations, with continued benefits anticipated from APR changes [71][73] Question: What investments are being made for growth? - Significant investments are being made in reserves, marketing, and technology, particularly in AI and cloud initiatives, to support growth [75][77]

Financial Data and Key Metrics Changes - Synchrony reported net earnings of $751 million, or $2.04 per diluted share, including a restructuring charge of $0.14 related to a voluntary employee early retirement program [4][18] - The return on average assets was 2.5%, and the return on tangible common equity was 21.8% for the fourth quarter [4][18] - For the full year, net earnings reached $3.6 billion, or $9.28 per diluted share, with a return on average assets of 3.0% and a return on tangible common equity of 25.8% [19] Business Line Data and Key Metrics Changes - Purchase volume across the Digital platform increased by 6%, while Diversified and Value purchase volume grew by 4% due to partner expansion [4][5] - Health & Wellness purchase volume also grew by 4%, driven by pet and audiology sectors, while Lifestyle platform purchase volume increased by 3% [5][6] - Home & Auto purchase volume decreased by 2%, reflecting selective spending in home improvement [6] Market Data and Key Metrics Changes - Synchrony added over 20 million new accounts and engaged nearly 70 million existing customers, generating over $182 billion in sales for partners in 2025 [8] - The company added or renewed more than 25 partners in the fourth quarter, including significant partnerships with Bob's Discount Furniture and Polaris [8][9] - Approximately 97% of total interest and fees from top 25 partners are renewed through 2028, indicating strong partner trust [9] Company Strategy and Development Direction - Synchrony aims to enhance the value and utility of financing solutions, broaden reach, and deliver powerful experiences for customers and partners [7][10] - The company is diversifying programs and products, entering partnerships with over 50 merchant and practice management platforms [10][11] - Investments in AI and cloud technology are expected to drive productivity and growth [77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in consumer resilience and spending patterns, indicating a constructive macro environment [41] - The company anticipates mid-single-digit growth in ending receivables for 2026, driven by active accounts and purchase volume growth [29] - The net charge-off rate is expected to align with the long-term target of 5.5%-6% [30] Other Important Information - Synchrony returned $1.1 billion to shareholders in the fourth quarter, including $952 million in share repurchases [27] - The company’s efficiency ratio for the fourth quarter was 36.9%, impacted by higher expenses and restructuring charges [23] - The allowance for credit losses as a percentage of loan receivables was 10.06%, reflecting a decrease from previous quarters [25] Q&A Session Summary Question: Growth guide for receivables - Management noted that the mid-single-digit growth guide is supported by strong consumer spending and the successful launch of the Walmart program, which is the fastest-growing program [40][42] Question: Impact of 10% APR caps - Management expressed concerns that APR caps would limit credit availability for lower-income consumers and negatively impact merchants relying on credit programs [48][49] Question: Credit guide and losses - Management indicated that while losses may increase slightly, strong delinquency performance provides a solid foundation entering 2026 [58][59] Question: Net interest margin guidance - Management expects net interest income and margin to improve, driven by PPPCs and lower funding costs, but acknowledges potential headwinds from the interest rate environment [62][64] Question: PPPC tracking and future expectations - Management reported that PPPCs are performing slightly ahead of expectations, with continued benefits anticipated [71][73] Question: Investments related to growth - Management highlighted significant investments in reserves, marketing, and technology, particularly in AI and cloud initiatives, to support growth [75][77]

Financial Data and Key Metrics Changes - The company reported net earnings of $751 million, or $2.04 per diluted share, which included a restructuring charge of $0.14 related to a voluntary employee early retirement program [5][19] - The return on average assets was 2.5%, and the return on tangible common equity was 21.8% [5][19] - For the full year, net earnings reached $3.6 billion, or $9.28 per diluted share, with a return on average assets of 3.0% and a return on tangible common equity of 25.8% [20] Business Line Data and Key Metrics Changes - Purchase volume reached $49 billion in Q4, a record for the quarter, reflecting a 3% year-over-year increase [5][20] - Digital platform purchase volume increased by 6%, driven by higher spend per account [5] - Purchase volume in health and wellness grew by 4%, while lifestyle platform purchase volume increased by 3% [6] - Dual and co-branded cards accounted for 50% of total purchase volume, increasing by 16% year-over-year [6] Market Data and Key Metrics Changes - The company added or renewed over 25 partners in Q4, including significant partnerships with Bob's Discount Furniture and Polaris [9][10] - The company now partners with over 50 merchant and practice management platforms, enhancing access to financing solutions [12] Company Strategy and Development Direction - The company aims to enhance the value and utility of its financing solutions, broaden its reach, and deliver powerful experiences for customers and partners [8] - Investments in AI and cloud technology are prioritized to drive productivity and growth [76] - The company is focused on diversifying its programs and products while maintaining strong relationships with partners [11][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the consumer's resilience and spending patterns, indicating a constructive macro environment [40] - The company expects mid-single-digit growth in ending receivables for 2026, driven by new partnerships and improved consumer confidence [30][31] - The net charge-off rate is anticipated to align with the long-term target of 5.5%-6% [31] Other Important Information - The efficiency ratio for Q4 was 36.9%, impacted by higher overall expenses and restructuring charges [25] - The company returned $1.1 billion to shareholders in Q4, including $952 million in share repurchases [29] Q&A Session Summary Question: Can you discuss the mid-single digit growth guide for receivables growth? - Management noted that consumer spending has been resilient, with purchase volume showing a positive trajectory and co-brand volume growth accelerating, particularly with Walmart [40][41] Question: What are your views on the 10% APR caps? - Management expressed concerns that APR caps would limit credit availability for lower-income consumers and negatively impact merchants who rely on credit programs [48][49] Question: Can you unpack the credit guide and expected losses? - Management indicated that while there is a strong foundation entering 2026, new portfolios like Walmart may introduce early losses, impacting the overall credit guide [59] Question: What net interest margin is embedded within the guidance? - Management expects net interest income to increase, with a bias for margin improvement, despite potential headwinds from the interest rate environment [61][62] Question: How are the PPPCs tracking relative to expectations? - Management reported that PPPCs are slightly ahead of expectations, with benefits from elevated payment rates [71][72] Question: What investments are being made for growth? - Significant investments are being made in reserves for asset growth, marketing, and technology, particularly in AI and cloud initiatives [76][78]

Financial Data and Key Metrics Changes - Synchrony Financial reported net earnings of $967 million or $2.5 per diluted share, with a return on average assets of 3.2% and a return on tangible common equity of 28.3% [8][22][29] - Net revenue decreased by 2% to $3.6 billion, while net interest income increased by 3% to $4.5 billion [19][22] - The efficiency ratio was 34.1%, approximately 240 basis points higher than the previous year [22] Business Line Data and Key Metrics Changes - Purchase volume decreased by 2% year-over-year to $46 billion, with dual and co-branded cards accounting for 45% of that volume, reflecting a 5% increase compared to last year [10][18] - Ending loan receivables decreased by 2% to $100 billion, influenced by lower purchase volume and a higher payment rate of 16.3% [18][19] - Average transaction values improved, declining only 50 basis points compared to last year, a significant improvement from previous quarters [11] Market Data and Key Metrics Changes - The 30-plus delinquency rate decreased to 4.18%, down 29 basis points from the prior year, while the net charge-off rate was 5.7%, a decrease of 72 basis points [23][24] - Total liquid assets increased by 9% to $21.8 billion, representing 18.1% of total assets [25] Company Strategy and Development Direction - Synchrony is focused on evolving its product offerings and enhancing customer experience, with new partnerships and product launches expected to drive growth [12][15] - The company aims to leverage its diversified portfolio and strong credit performance to navigate the uncertain macroeconomic environment [9][15] - The renewal of partnerships with major retailers like Walmart and Amazon is expected to enhance growth opportunities [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about consumer spending and credit performance, noting that credit actions taken previously have strengthened the portfolio's delinquency and net charge-off performance [41][42] - The outlook for 2025 includes expectations for flat ending loan receivables and a loss rate between 5.6% and 5.8%, aligning with long-term underwriting targets [27][29] - Management highlighted the importance of monitoring economic conditions and potential tariff impacts on future performance [65][66] Other Important Information - Synchrony returned $614 million to shareholders, consisting of $500 million in share repurchases and $114 million in dividends [26] - The company has a strong capital position, with a CET1 ratio of 13.6% and plans to continue returning capital to shareholders [25][72] Q&A Session Summary Question: What encouraging signs are being seen in the portfolio? - Management noted that consumer spending remains strong, with co-brand growth up 5% year-over-year, indicating positive trends in retail and discretionary spending [41][42] Question: Can you elaborate on the minor modifications to the PPPC? - Management clarified that any changes are partner-specific and not part of a broader rollback plan, with minimal revenue impact expected [44][46] Question: What drives the expected increase in net interest margin in the second half? - The increase is attributed to a rise in average loan receivables and the impact of product pricing and policy changes [54][56] Question: How does the company view loan growth and credit standards? - Management indicated that while credit standards have been loosened slightly, it will take time for these changes to reflect in growth metrics [65][66] Question: What is the outlook for capital management and potential acquisitions? - The company remains committed to returning capital to shareholders while also exploring selective M&A opportunities [72][76] Question: How are new products with existing customers expected to contribute to growth? - Management highlighted the multi-product strategy with major partners like Amazon, which is expected to enhance growth over time [84][86]

Financial Data and Key Metrics Changes - The company reported net earnings of $967 million or $2.5 per diluted share, with a return on average assets of 3.2% and a return on tangible common equity of 28.3% [6][19][23] - Net revenue decreased by 2% to $3.6 billion, while net interest income increased by 3% to $4.5 billion [16][19] - The efficiency ratio was 34.1%, approximately 240 basis points higher than the previous year [19] Business Line Data and Key Metrics Changes - Purchase volume decreased by 2% year over year to $46 billion, with dual and co-branded cards accounting for 45% of that volume, reflecting a 5% increase compared to last year [7][15] - Ending loan receivables decreased by 2% to $100 billion due to lower purchase volume and a higher payment rate, which increased by approximately 30 basis points to 16.3% [15][16] - The company saw a 1% year-over-year increase in other income, driven by program performance [18] Market Data and Key Metrics Changes - The 30-plus delinquency rate was 4.18%, a decrease of 29 basis points from the previous year, while the net charge-off rate was 5.7%, down 72 basis points [20][21] - Total liquid assets increased by 9% to $21.8 billion, representing 18.1% of total assets [22] Company Strategy and Development Direction - The company is focused on evolving its product offerings and enhancing customer experience, with new partnerships and product launches expected to drive growth [10][13] - The partnership with Walmart and the renewal with Amazon are expected to enhance the company's market position and drive future growth [11][14] - The company aims to maintain a strong credit position while selectively loosening credit standards to drive growth [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about consumer spending and credit performance, noting encouraging signs in the portfolio [36][38] - The company expects ending loan receivables to remain flat compared to last year, with a loss rate projected between 5.6% and 5.8% [24][25] - The outlook for net interest margin is expected to increase to an average of 15.6% in the second half of 2025 [26] Other Important Information - The company returned $614 million to shareholders, consisting of $500 million in share repurchases and $114 million in dividends [23] - The CET1 ratio increased to 13.6%, indicating a strong capital position [22] Q&A Session Summary Question: What encouraging signs are being seen in the portfolio? - Management noted that consumer spending remains strong, with co-branded growth up 5% compared to the prior year, indicating positive trends in retail and discretionary spending [36][37] Question: Can you elaborate on the modifications to the PPPC? - Management stated that any potential rollbacks will occur on a partner-by-partner basis, with minor modifications expected to have a limited impact on net revenue [40][41] Question: What drives the expected increase in net interest margin in the second half? - The increase is attributed to a rise in average loan receivables as a percentage of interest-earning assets and the impact of PPPC on loan yield [48][49] Question: How does the company view loan growth and credit standards? - Management indicated that while loan growth may slow, there is optimism for growth opportunities as credit standards are selectively loosened [58][59] Question: What is the outlook for capital management and potential acquisitions? - The company is committed to returning capital to shareholders and is actively looking for attractive opportunities, including potential acquisitions [66][70]