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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Synchrony Financiall | NYSE:SYF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.66 | -1.50% | 43.48 | 44.24 | 42.58 | 44.00 | 7,808,396 | 00:39:21 |
Synchrony Financial (NYSE: SYF) today announced third quarter 2017 net earnings of $555 million, or $0.70 per diluted share. Highlights for the quarter included:
“Our focus on strong organic growth across our sales platforms has helped deliver another solid quarter. Renewing key relationships remains a priority—we recently renewed several programs in addition to launching two new ones. Compelling value propositions are integral to driving program growth and we are pleased to continue to launch innovative solutions that provide value to our partners and cardholders. Our deposit base comprises a significant portion of our funding and, as such, generating deposit growth through attractive rates and great customer service is a priority,” said Margaret Keane, President and Chief Executive Officer of Synchrony Financial. “We have maintained solid returns and a strong balance sheet and remain focused on returning capital to shareholders.”
Business and Financial Highlights for the Third Quarter of 2017
All comparisons below are for the third quarter of 2017 compared to the third quarter of 2016, unless otherwise noted.
Earnings
Balance Sheet
Key Financial Metrics
Credit Quality
Sales Platforms
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 September 30, 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, October 20, 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 32017#, and can be accessed beginning approximately two hours after the event through November 3, 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 credit cards, Dual Card™ and general purpose co-branded 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 (June 2017, Issue # 1112) - based on 2016 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 Nine Months Ended Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
3Q'17 vs. 3Q'16 Sep 30,2017
Sep 30,2016
YTD'17 vs. YTD'16EARNINGS
Net interest income $ 3,876 $ 3,637 $ 3,587 $ 3,628 $ 3,481 $ 395 11.3 % $ 11,100 $ 9,902 $ 1,198 12.1 % Retailer share arrangements (805 ) (669 ) (684 ) (811 ) (757 ) (48 ) 6.3 % (2,158 ) (2,091 ) (67 ) 3.2 % Net interest income, after retailer share arrangements 3,071 2,968 2,903 2,817 2,724 347 12.7 % 8,942 7,811 1,131 14.5 % Provision for loan losses 1,310 1,326 1,306 1,076 986 324 32.9 % 3,942 2,910 1,032 35.5 % Net interest income, after retailer share arrangements and provision for loan losses 1,761 1,642 1,597 1,741 1,738 23 1.3 % 5,000 4,901 99 2.0 % Other income 76 57 93 85 84 (8 ) (9.5 )% 226 259 (33 ) (12.7 )% Other expense 958 911 908 918 859 99 11.5 % 2,777 2,498 279 11.2 % Earnings before provision for income taxes 879 788 782 908 963 (84 ) (8.7 )% 2,449 2,662 (213 ) (8.0 )% Provision for income taxes 324 292 283 332 359 (35 ) (9.7 )% 899 987 (88 ) (8.9 )% Net earnings $ 555 $ 496 $ 499 $ 576 $ 604 $ (49 ) (8.1 )% $ 1,550 $ 1,675 $ (125 ) (7.5 )% Net earnings attributable to common stockholders $ 555 $ 496 $ 499 $ 576 $ 604 $ (49 ) (8.1 )% $ 1,550 $ 1,675 $ (125 ) (7.5 )%COMMON SHARE STATISTICS
Basic EPS $ 0.70 $ 0.62 $ 0.61 $ 0.70 $ 0.73 $ (0.03 ) (4.1 )% $ 1.93 $ 2.01 $ (0.08 ) (4.0 )% Diluted EPS $ 0.70 $ 0.61 $ 0.61 $ 0.70 $ 0.73 $ (0.03 ) (4.1 )% $ 1.93 $ 2.01 $ (0.08 ) (4.0 )% Dividend declared per share $ 0.15 $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.02 15.4 % $ 0.41 $ 0.13 $ 0.28 NM Common stock price $ 31.05 $ 29.82 $ 34.30 $ 36.27 $ 28.00 $ 3.05 10.9 % $ 31.05 $ 28.00 $ 3.05 10.9 % Book value per share $ 18.40 $ 18.02 $ 17.71 $ 17.37 $ 16.94 $ 1.46 8.6 % $ 18.40 $ 16.94 $ 1.46 8.6 % Tangible common equity per share(1) $ 16.15 $ 15.79 $ 15.47 $ 15.34 $ 14.90 $ 1.25 8.4 % $ 16.15 $ 14.90 $ 1.25 8.4 % Beginning common shares outstanding 795.3 810.8 817.4 825.5 833.9 (38.6 ) (4.6 )% 817.4 833.8 (16.4 ) (2.0 )% Issuance of common shares - - - - - - - % - - - - % Stock-based compensation 0.1 0.2 - - 0.1 - - % 0.3 0.2 0.1 50.0 % Shares repurchased (12.8 ) (15.7 ) (6.6 ) (8.1 ) (8.5 ) (4.3 ) 50.6 % (35.1 ) (8.5 ) (26.6 ) NM Ending common shares outstanding 782.6 795.3 810.8 817.4 825.5 (42.9 ) (5.2 )% 782.6 825.5 (42.9 ) (5.2 )% Weighted average common shares outstanding 787.3 804.0 813.1 820.5 828.4 (41.1 ) (5.0 )% 801.3 832.1 (30.8 ) (3.7 )% Weighted average common shares outstanding (fully diluted) 790.9 807.4 817.1 823.8 830.6 (39.7 ) (4.8 )% 805.0 834.1 (29.1 ) (3.5 )% (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 Nine Months Ended Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
3Q'17 vs. 3Q'16 Sep 30,2017
Sep 30,2016
YTD'17 vs. YTD'16PERFORMANCE METRICS
Return on assets(1) 2.4 % 2.2 % 2.3 % 2.6 % 2.8 % (0.4 )% 2.3 % 2.7 % (0.4 )% Return on equity(2) 15.3 % 13.8 % 14.1 % 16.2 % 17.3 % (2.0 )% 14.4 % 16.6 % (2.2 )% Return on tangible common equity(3) 17.4 % 15.7 % 16.1 % 18.4 % 19.6 % (2.2 )% 16.4 % 18.9 % (2.5 )% Net interest margin(4) 16.74 % 16.20 % 16.18 % 16.26 % 16.34 % 0.40 % 16.38 % 16.05 % 0.33 % Efficiency ratio(5) 30.4 % 30.1 % 30.3 % 31.6 % 30.6 % (0.2 )% 30.3 % 31.0 % (0.7 )% Other expense as a % of average loan receivables, including held for sale 4.99 % 4.93 % 4.97 % 5.04 % 4.93 % 0.06 % 4.96 % 4.95 % 0.01 % Effective income tax rate 36.9 % 37.1 % 36.2 % 36.6 % 37.3 % (0.4 )% 36.7 % 37.1 % (0.4 )%CREDIT QUALITY METRICS
Net charge-offs as a % of average loan receivables, including held for sale 4.95 % 5.42 % 5.33 % 4.65 % 4.39 % 0.56 % 5.23 % 4.54 % 0.69 % 30+ days past due as a % of period-end loan receivables(6) 4.80 % 4.25 % 4.25 % 4.32 % 4.26 % 0.54 % 4.80 % 4.26 % 0.54 % 90+ days past due as a % of period-end loan receivables(6) 2.22 % 1.90 % 2.06 % 2.03 % 1.89 % 0.33 % 2.22 % 1.89 % 0.33 % Net charge-offs $ 950 $ 1,001 $ 974 $ 847 $ 765 $ 185 24.2 % $ 2,925 $ 2,292 $ 633 27.6 % Loan receivables delinquent over 30 days(6) $ 3,694 $ 3,208 $ 3,120 $ 3,295 $ 3,008 $ 686 22.8 % $ 3,694 $ 3,008 $ 686 22.8 % Loan receivables delinquent over 90 days(6) $ 1,707 $ 1,435 $ 1,508 $ 1,546 $ 1,334 $ 373 28.0 % $ 1,707 $ 1,334 $ 373 28.0 % Allowance for loan losses (period-end) $ 5,361 $ 5,001 $ 4,676 $ 4,344 $ 4,115 $ 1,246 30.3 % $ 5,361 $ 4,115 $ 1,246 30.3 % Allowance coverage ratio(7) 6.97 % 6.63 % 6.37 % 5.69 % 5.82 % 1.15 % 6.97 % 5.82 % 1.15 %BUSINESS METRICS
Purchase volume(8) $ 32,893 $ 33,476 $ 28,880 $ 35,369 $ 31,615 $ 1,278 4.0 % $ 95,249 $ 90,099 $ 5,150 5.7 % Period-end loan receivables $ 76,928 $ 75,458 $ 73,350 $ 76,337 $ 70,644 $ 6,284 8.9 % $ 76,928 $ 70,644 $ 6,284 8.9 % Credit cards $ 73,946 $ 72,492 $ 70,587 $ 73,580 $ 67,858 $ 6,088 9.0 % $ 73,946 $ 67,858 $ 6,088 9.0 % Consumer installment loans $ 1,561 $ 1,514 $ 1,411 $ 1,384 $ 1,361 $ 200 14.7 % $ 1,561 $ 1,361 $ 200 14.7 % Commercial credit products $ 1,384 $ 1,386 $ 1,311 $ 1,333 $ 1,385 $ (1 ) (0.1 )% $ 1,384 $ 1,385 $ (1 ) (0.1 )% Other $ 37 $ 66 $ 41 $ 40 $ 40 $ (3 ) (7.5 )% $ 37 $ 40 $ (3 ) (7.5 )% Average loan receivables, including held for sale $ 76,165 $ 74,090 $ 74,132 $ 72,476 $ 69,316 $ 6,849 9.9 % $ 74,803 $ 67,364 $ 7,439 11.0 % Period-end active accounts (in thousands)(9) 69,008 69,277 67,905 71,890 66,781 2,227 3.3 % 69,008 66,781 2,227 3.3 % Average active accounts (in thousands)(9) 69,331 68,635 69,629 68,701 66,639 2,692 4.0 % 69,319 66,204 3,115 4.7 %LIQUIDITY
Liquid assets Cash and equivalents $ 13,915 $ 12,020 $ 11,392 $ 9,321 $ 13,588 $ 327 2.4 % $ 13,915 $ 13,588 $ 327 2.4 % Total liquid assets $ 16,391 $ 15,274 $ 16,158 $ 13,612 $ 16,362 $ 29 0.2 % $ 16,391 $ 16,362 $ 29 0.2 % Undrawn credit facilities Undrawn credit facilities $ 5,650 $ 6,650 $ 5,600 $ 6,700 $ 7,150 $ (1,500 ) (21.0 )% $ 5,650 $ 7,150 $ (1,500 ) (21.0 )% Total liquid assets and undrawn credit facilities $ 22,041 $ 21,924 $ 21,758 $ 20,312 $ 23,512 $ (1,471 ) (6.3 )% $ 22,041 $ 23,512 $ (1,471 ) (6.3 )% Liquid assets % of total assets 17.71 % 16.76 % 18.14 % 15.09 % 18.77 % (1.06 )% 17.71 % 18.77 % (1.06 )% Liquid assets including undrawn credit facilities % of total assets 23.82 % 24.06 % 24.43 % 22.52 % 26.98 % (3.16 )% 23.82 % 26.98 % (3.16 )% (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 Nine Months Ended Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
3Q'17 vs. 3Q'16 Sep 30,2017
Sep 30,2016
YTD'17 vs. YTD'16 Interest income: Interest and fees on loans $ 4,182 $ 3,927 $ 3,877 $ 3,919 $ 3,771 $ 411 10.9 % $ 11,986 $ 10,763 $ 1,223 11.4 % Interest on investment securities 51 43 36 28 25 26 104.0 % 130 68 62 91.2 % Total interest income 4,233 3,970 3,913 3,947 3,796 437 11.5 % 12,116 10,831 1,285 11.9 % Interest expense: Interest on deposits 219 202 194 188 188 31 16.5 % 615 539 76 14.1 % Interest on borrowings of consolidated securitization entities 65 63 65 64 63 2 3.2 % 193 180 13 7.2 % Interest on third-party debt 73 68 67 67 64 9 14.1 % 208 210 (2 ) (1.0 )% Total interest expense 357 333 326 319 315 42 13.3 % 1,016 929 87 9.4 % Net interest income 3,876 3,637 3,587 3,628 3,481 395 11.3 % 11,100 9,902 1,198 12.1 % Retailer share arrangements (805 ) (669 ) (684 ) (811 ) (757 ) (48 ) 6.3 % (2,158 ) (2,091 ) (67 ) 3.2 % Net interest income, after retailer share arrangements 3,071 2,968 2,903 2,817 2,724 347 12.7 % 8,942 7,811 1,131 14.5 % Provision for loan losses 1,310 1,326 1,306 1,076 986 324 32.9 % 3,942 2,910 1,032 35.5 % Net interest income, after retailer share arrangements and provision for loan losses 1,761 1,642 1,597 1,741 1,738 23 1.3 % 5,000 4,901 99 2.0 % Other income: Interchange revenue 164 165 145 167 154 10 6.5 % 474 435 39 9.0 % Debt cancellation fees 67 68 68 68 67 - - % 203 194 9 4.6 % Loyalty programs (168 ) (206 ) (137 ) (157 ) (145 ) (23 ) 15.9 % (511 ) (390 ) (121 ) 31.0 % Other 13 30 17 7 8 5 62.5 % 60 20 40 NM Total other income 76 57 93 85 84 (8 ) (9.5 )% 226 259 (33 ) (12.7 )% Other expense: Employee costs 335 321 325 315 311 24 7.7 % 981 892 89 10.0 % Professional fees 161 158 151 164 174 (13 ) (7.5 )% 470 474 (4 ) (0.8 )% Marketing and business development 124 124 94 130 92 32 34.8 % 342 293 49 16.7 % Information processing 96 88 90 88 87 9 10.3 % 274 250 24 9.6 % Other 242 220 248 221 195 47 24.1 % 710 589 121 20.5 % Total other expense 958 911 908 918 859 99 11.5 % 2,777 2,498 279 11.2 % Earnings before provision for income taxes 879 788 782 908 963 (84 ) (8.7 )% 2,449 2,662 (213 ) (8.0 )% Provision for income taxes 324 292 283 332 359 (35 ) (9.7 )% 899 987 (88 ) (8.9 )%Net earnings attributable to common shareholders
$ 555 $ 496 $ 499 $ 576 $ 604 $ (49 ) (8.1 )% $ 1,550 $ 1,675 $ (125 ) (7.5 )% SYNCHRONY FINANCIAL STATEMENTS OF FINANCIAL POSITION (unaudited, $ in millions) Quarter Ended Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
Sep 30, 2017 vs.Sep 30, 2016
Assets Cash and equivalents $ 13,915 $ 12,020 $ 11,392 $ 9,321 $ 13,588 $ 327 2.4 % Investment securities 3,317 3,997 5,328 5,110 3,356 (39 ) (1.2 )% Loan receivables: Unsecuritized loans held for investment 53,997 52,550 50,398 52,332 47,517 6,480 13.6 % Restricted loans of consolidated securitization entities 22,931 22,908 22,952 24,005 23,127 (196 ) (0.8 )% Total loan receivables 76,928 75,458 73,350 76,337 70,644 6,284 8.9 % Less: Allowance for loan losses (5,361 ) (5,001 ) (4,676 ) (4,344 ) (4,115 ) (1,246 ) 30.3 % Loan receivables, net 71,567 70,457 68,674 71,993 66,529 5,038 7.6 % Goodwill 991 991 992 949 949 42 4.4 % Intangible assets, net 772 787 826 712 733 39 5.3 % Other assets 1,986 2,888 1,838 2,122 2,004 (18 ) (0.9 )% Total assets $ 92,548 $ 91,140 $ 89,050 $ 90,207 $ 87,159 $ 5,389 6.2 % Liabilities and Equity Deposits: Interest-bearing deposit accounts $ 54,232 $ 52,659 $ 51,359 $ 51,896 $ 49,611 $ 4,621 9.3 % Non-interest-bearing deposit accounts 222 226 246 159 204 18 8.8 % Total deposits 54,454 52,885 51,605 52,055 49,815 4,639 9.3 % Borrowings: Borrowings of consolidated securitization entities 11,891 12,204 12,433 12,388 12,411 (520 ) (4.2 )% Bank term loan - - - - - - - % Senior unsecured notes 8,008 8,505 7,761 7,759 7,756 252 3.2 % Total borrowings 19,899 20,709 20,194 20,147 20,167 (268 ) (1.3 )% Accrued expenses and other liabilities 3,793 3,214 2,888 3,809 3,196 597 18.7 % Total liabilities 78,146 76,808 74,687 76,011 73,178 4,968 6.8 % Equity: Common stock 1 1 1 1 1 - - % Additional paid-in capital 9,429 9,415 9,405 9,393 9,381 48 0.5 % Retained earnings 6,543 6,109 5,724 5,330 4,861 1,682 34.6 % Accumulated other comprehensive income: (40 ) (49 ) (55 ) (53 ) (24 ) (16 ) 66.7 % Treasury Stock (1,531 ) (1,144 ) (712 ) (475 ) (238 ) (1,293 ) NM Total equity 14,402 14,332 14,363 14,196 13,981 421 3.0 % Total liabilities and equity $ 92,548 $ 91,140 $ 89,050 $ 90,207 $ 87,159 $ 5,389 6.2 % SYNCHRONY FINANCIAL AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN (unaudited, $ in millions) Quarter Ended Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 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 $ 11,895 $ 37 1.23 % $ 10,758 $ 28 1.04 % $ 10,552 $ 21 0.81 % $ 12,210 $ 17 0.55 % $ 12,480 $ 16 0.51 % Securities available for sale 3,792 14 1.46 % 5,195 15 1.16 % 5,213 15 1.17 % 4,076 11 1.07 % 2,960 9 1.21 % Loan receivables: Credit cards, including held for sale 73,172 4,111 22.29 % 71,206 3,858 21.73 % 71,365 3,811 21.66 % 69,660 3,851 21.99 % 66,519 3,705 22.16 % Consumer installment loans 1,543 35 9.00 % 1,461 34 9.33 % 1,389 32 9.34 % 1,373 31 8.98 % 1,333 31 9.25 % Commercial credit products 1,392 36 10.26 % 1,378 34 9.90 % 1,317 34 10.47 % 1,386 36 10.33 % 1,401 35 9.94 % Other 58 - - % 45 1 NM 61 - - % 57 1 NM 63 - - % Total loan receivables, including held for sale 76,165 4,182 21.78 % 74,090 3,927 21.26 % 74,132 3,877 21.21 % 72,476 3,919 21.51 % 69,316 3,771 21.64 % Total interest-earning assets 91,852 4,233 18.28 % 90,043 3,970 17.68 % 89,897 3,913 17.65 % 88,762 3,947 17.69 % 84,756 3,796 17.82 % Non-interest-earning assets: Cash and due from banks 877 829 802 739 862 Allowance for loan losses (5,125 ) (4,781 ) (4,408 ) (4,228 ) (3,933 ) Other assets 3,517 3,303 3,177 3,479 3,189 Total non-interest-earning assets (731 ) (649 ) (429 ) (10 ) 118 Total assets $ 91,121 $ 89,394 $ 89,468 $ 88,752 $ 84,874 Liabilities Interest-bearing liabilities: Interest-bearing deposit accounts $ 53,294 $ 219 1.63 % $ 51,836 $ 202 1.56 % $ 51,829 $ 194 1.52 % $ 51,006 $ 188 1.47 % $ 47,895 $ 188 1.56 % Borrowings of consolidated securitization entities 11,759 65 2.19 % 12,213 63 2.07 % 12,321 65 2.14 % 12,389 64 2.06 % 12,254 63 2.05 % Bank term loan - - - % - - - % - - - % - - - % - - - % Senior unsecured notes 8,251 73 3.51 % 7,933 68 3.44 % 7,760 67 3.50 % 7,757 67 3.44 % 7,448 64 3.42 % Total interest-bearing liabilities 73,304 357 1.93 % 71,982 333 1.86 % 71,910 326 1.84 % 71,152 319 1.78 % 67,597 315 1.85 % Non-interest-bearing liabilities Non-interest-bearing deposit accounts 232 218 240 176 204 Other liabilities 3,154 2,752 2,995 3,321 3,175 Total non-interest-bearing liabilities 3,386 2,970 3,235 3,497 3,379 Total liabilities 76,690 74,952 75,145 74,649 70,976 Equity Total equity 14,431 14,442 14,323 14,103 13,898 Total liabilities and equity $ 91,121 $ 89,394 $ 89,468 $ 88,752 $ 84,874 Net interest income $ 3,876 $ 3,637 $ 3,587 $ 3,628 $ 3,481 Interest rate spread(1) 16.35 % 15.82 % 15.81 % 15.91 % 15.97 % Net interest margin(2) 16.74 % 16.20 % 16.18 % 16.26 % 16.34 % (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 AVERAGE BALANCES, NET INTEREST INCOME AND NET INTEREST MARGIN (unaudited, $ in millions) Nine Months EndedSep 30, 2017
Nine Months EndedSep 30, 2016
Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Assets Interest-earning assets: Interest-earning cash and equivalents $ 11,073 $ 86 1.04 % $ 12,132 $ 46 0.51 % Securities available for sale 4,732 44 1.24 % 2,932 22 1.00 % Loan receivables: Credit cards, including held for sale 71,920 11,780 21.90 % 64,701 10,573 21.83 % Consumer installment loans 1,465 101 9.22 % 1,240 86 9.26 % Commercial credit products 1,363 104 10.20 % 1,367 103 10.06 % Other 55 1 2.43 % 56 1 2.39 % Total loan receivables, including held for sale 74,803 11,986 21.42 % 67,364 10,763 21.34 % Total interest-earning assets 90,608 12,116 17.88 % 82,428 10,831 17.55 % Non-interest-earning assets: Cash and due from banks 836 1,041 Allowance for loan losses (4,774 ) (3,752 ) Other assets 3,334 3,222 Total non-interest-earning assets (604 ) 511 Total assets $ 90,004 $ 82,939 Liabilities Interest-bearing liabilities: Interest-bearing deposit accounts $ 52,325 $ 615 1.57 % $ 45,915 $ 539 1.57 % Borrowings of consolidated securitization entities 12,096 193 2.13 % 12,441 180 1.93 % Bank term loan(1) - - - % 742 31 5.58 % Senior unsecured notes 7,983 208 3.48 % 6,957 179 3.44 % Total interest-bearing liabilities 72,404 1,016 1.88 % 66,055 929 1.88 % Non-interest-bearing liabilities Non-interest-bearing deposit accounts 230 215 Other liabilities 2,971 3,211 Total non-interest-bearing liabilities 3,201 3,426 Total liabilities 75,605 69,481 Equity Total equity 14,399 13,458 Total liabilities and equity $ 90,004 $ 82,939 Net interest income $ 11,100 $ 9,902 Interest rate spread(2) 16.00 % 15.67 % Net interest margin(3) 16.38 % 16.05 % (1) The effective interest rate for the Bank term loan for the 9 months ended September 30, 2016 was 2.48%. 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 Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
Sep 30, 2017 vs.Sep 30, 2016
BALANCE SHEET STATISTICS
Total common equity $ 14,402 $ 14,332 $ 14,363 $ 14,196 $ 13,981 $ 421 3.0 % Total common equity as a % of total assets 15.56 % 15.73 % 16.13 % 15.74 % 16.04 % (0.48 )% Tangible assets $ 90,785 $ 89,362 $ 87,232 $ 88,546 $ 85,477 $ 5,308 6.2 % Tangible common equity(1) $ 12,639 $ 12,554 $ 12,545 $ 12,535 $ 12,299 $ 340 2.8 % Tangible common equity as a % of tangible assets(1) 13.92 % 14.05 % 14.38 % 14.16 % 14.39 % (0.47 )% Tangible common equity per share(1) $ 16.15 $ 15.79 $ 15.47 $ 15.34 $ 14.90 $ 1.25 8.4 %REGULATORY CAPITAL RATIOS(2)
Basel III Transition Total risk-based capital ratio(3) 18.7 % 18.7 % 19.3 % 18.5 % 19.5 % Tier 1 risk-based capital ratio(4) 17.3 % 17.4 % 18.0 % 17.2 % 18.2 % Tier 1 leverage ratio(5) 14.6 % 14.8 % 14.8 % 15.0 % 15.4 % Common equity Tier 1 capital ratio(6) 17.3 % 17.4 % 18.0 % 17.2 % 18.2 % Basel III Fully Phased-in Common equity Tier 1 capital ratio(6) 17.2 % 17.2 % 17.7 % 17.0 % 17.9 % (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 September 30, 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 Nine Months Ended Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
3Q'17 vs. 3Q'16 Sep 30,2017
Sep 30,2016
YTD'17 vs. YTD'16RETAIL CARD
Purchase volume(1)(2) $ 26,347 $ 27,101 $ 22,952 $ 28,996 $ 25,285 $ 1,062 4.2 % $ 76,400 $ 72,246 $ 4,154 5.7 % Period-end loan receivables $ 52,119 $ 51,437 $ 49,905 $ 52,701 $ 48,010 $ 4,109 8.6 % $ 52,119 $ 48,010 $ 4,109 8.6 % Average loan receivables, including held for sale $ 51,817 $ 50,533 $ 50,644 $ 49,476 $ 47,274 $ 4,543 9.6 % $ 51,002 $ 46,119 $ 4,883 10.6 % Average active accounts (in thousands)(2)(3) 54,471 54,058 55,049 54,489 52,959 1,512 2.9 % 54,639 52,834 1,805 3.4 % Interest and fees on loans(2) $ 3,102 $ 2,900 $ 2,888 $ 2,909 $ 2,790 $ 312 11.2 % $ 8,890 $ 7,989 $ 901 11.3 % Other income(2) $ 61 $ 25 $ 77 $ 70 $ 70 $ (9 ) (12.9 )% $ 163 $ 218 $ (55 ) (25.2 )% Retailer share arrangements(2) $ (795 ) $ (657 ) $ (681 ) $ (801 ) $ (752 ) $ (43 ) 5.7 % $ (2,133 ) $ (2,069 ) $ (64 ) 3.1 %PAYMENT SOLUTIONS
Purchase volume(1) $ 4,178 $ 3,930 $ 3,686 $ 4,194 $ 4,152 $ 26 0.6 % $ 11,794 $ 11,447 $ 347 3.0 % Period-end loan receivables $ 16,153 $ 15,595 $ 15,320 $ 15,567 $ 14,798 $ 1,355 9.2 % $ 16,153 $ 14,798 $ 1,355 9.2 % Average loan receivables $ 15,848 $ 15,338 $ 15,424 $ 15,076 $ 14,367 $ 1,481 10.3 % $ 15,538 $ 13,786 $ 1,752 12.7 % Average active accounts (in thousands)(3) 9,183 9,031 9,090 8,844 8,461 722 8.5 % 9,108 8,261 847 10.3 % Interest and fees on loans $ 559 $ 533 $ 515 $ 523 $ 505 $ 54 10.7 % $ 1,607 $ 1,429 $ 178 12.5 % Other income $ 2 $ 6 $ 4 $ 3 $ 3 $ (1 ) (33.3 )% $ 12 $ 10 $ 2 20.0 % Retailer share arrangements $ (9 ) $ (9 ) $ (1 ) $ (9 ) $ (3 ) $ (6 ) NM $ (19 ) $ (17 ) $ (2 ) 11.8 %CARECREDIT
Purchase volume(1) $ 2,368 $ 2,445 $ 2,242 $ 2,179 $ 2,178 $ 190 8.7 % $ 7,055 $ 6,406 $ 649 10.1 % Period-end loan receivables $ 8,656 $ 8,426 $ 8,125 $ 8,069 $ 7,836 $ 820 10.5 % $ 8,656 $ 7,836 $ 820 10.5 % Average loan receivables $ 8,500 $ 8,219 $ 8,064 $ 7,924 $ 7,675 $ 825 10.7 % $ 8,263 $ 7,459 $ 804 10.8 % Average active accounts (in thousands)(3) 5,677 5,546 5,490 5,368 5,219 458 8.8 % 5,572 5,109 463 9.1 % Interest and fees on loans $ 521 $ 494 $ 474 $ 487 $ 476 $ 45 9.5 % $ 1,489 $ 1,345 $ 144 10.7 % Other income $ 13 $ 26 $ 12 $ 12 $ 11 $ 2 18.2 % $ 51 $ 31 $ 20 64.5 % Retailer share arrangements $ (1 ) $ (3 ) $ (2 ) $ (1 ) $ (2 ) $ 1 (50.0 )% $ (6 ) $ (5 ) $ (1 ) 20.0 %TOTAL SYF
Purchase volume(1)(2) $ 32,893 $ 33,476 $ 28,880 $ 35,369 $ 31,615 $ 1,278 4.0 % $ 95,249 $ 90,099 $ 5,150 5.7 % Period-end loan receivables $ 76,928 $ 75,458 $ 73,350 $ 76,337 $ 70,644 $ 6,284 8.9 % $ 76,928 $ 70,644 $ 6,284 8.9 % Average loan receivables, including held for sale $ 76,165 $ 74,090 $ 74,132 $ 72,476 $ 69,316 $ 6,849 9.9 % $ 74,803 $ 67,364 $ 7,439 11.0 % Average active accounts (in thousands)(2)(3) 69,331 68,635 69,629 68,701 66,639 2,692 4.0 % 69,319 66,204 3,115 4.7 % Interest and fees on loans(2) $ 4,182 $ 3,927 $ 3,877 $ 3,919 $ 3,771 $ 411 10.9 % $ 11,986 $ 10,763 $ 1,223 11.4 % Other income(2) $ 76 $ 57 $ 93 $ 85 $ 84 $ (8 ) (9.5 )% $ 226 $ 259 $ (33 ) (12.7 )% Retailer share arrangements(2) $ (805 ) $ (669 ) $ (684 ) $ (811 ) $ (757 ) $ (48 ) 6.3 % $ (2,158 ) $ (2,091 ) $ (67 ) 3.2 % (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 Sep 30,2017
Jun 30,2017
Mar 31,2017
Dec 31,2016
Sep 30,2016
COMMON EQUITY MEASURES
GAAP Total common equity $ 14,402 $ 14,332 $ 14,363 $ 14,196 $ 13,981 Less: Goodwill (991 ) (991 ) (992 ) (949 ) (949 ) Less: Intangible assets, net (772 ) (787 ) (826 ) (712 ) (733 ) Tangible common equity $ 12,639 $ 12,554 $ 12,545 $ 12,535 $ 12,299 Adjustments for certain deferred tax liabilities and certain items in accumulated comprehensive income (loss) 344 337 340 337 299 Basel III - Common equity Tier 1 (fully phased-in) $ 12,983 $ 12,891 $ 12,885 $ 12,872 $ 12,598 Adjustment related to capital components during transition 142 146 154 263 273 Basel III - Common equity Tier 1 (transition) $ 13,125 $ 13,037 $ 13,039 $ 13,135 $ 12,871RISK-BASED CAPITAL
Common equity Tier 1 $ 13,125 $ 13,037 $ 13,039 $ 13,135 $ 12,871 Add: Allowance for loan losses includible in risk-based capital 1,001 985 954 994 923 Risk-based capital $ 14,126 $ 14,022 $ 13,993 $ 14,129 $ 13,794ASSET MEASURES
Total average assets(2) $ 91,121 $ 89,394 $ 89,468 $ 88,752 $ 84,874 Adjustments for:Disallowed goodwill and other disallowed intangible assets (net of related deferred tax liabilities) and other
(1,304 ) (1,325 ) (1,358 ) (1,059 ) (1,117 ) Total assets for leverage purposes $ 89,817 $ 88,069 $ 88,110 $ 87,693 $ 83,757 Risk-weighted assets - Basel III (fully phased-in)(3) $ 75,614 $ 74,748 $ 72,596 $ 75,941 $ 70,448 Risk-weighted assets - Basel III (transition)(3) $ 75,729 $ 74,792 $ 72,627 $ 76,179 $ 70,660TANGIBLE COMMON EQUITY PER SHARE
GAAP book value per share $ 18.40 $ 18.02 $ 17.71 $ 17.37 $ 16.94 Less: Goodwill (1.27 ) (1.25 ) (1.22 ) (1.16 ) (1.14 ) Less: Intangible assets, net (0.98 ) (0.98 ) (1.02 ) (0.87 ) (0.90 ) Tangible common equity per share $ 16.15 $ 15.79 $ 15.47 $ 15.34 $ 14.90 (1) Regulatory measures at September 30, 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171020005107/en/
Synchrony FinancialInvestor Relations:Greg Ketron, 203-585-6291orMedia RelationsLisa Lanspery, 203-585-6143
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