Synchrony Financial · NYSE:SYF
Synchrony Financial — Q4 2016 Earnings Presentation
17 slides from Synchrony Financial's earnings presentation, Jan 20, 2017
Slide 1: 4Q'16 Financial Results
4Q'16 Financial Results January 20, 2017 Exhibit 99.3
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
2 Cautionary Statement Regarding Forward-Looking Statements The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For additional information, see the
Slide 3: 4Q'16 Highlights
3 4Q'16 Highlights Financial highlights • $576 million Net earnings, $0.70 diluted EPS • Purchase volume +9%, Loan receivables +12%, Net interest income +13% • Net charge-offs at 4.62% compared to 4.23% in the prior year 30+ delinquency at 4.32% compared to 4.06% in the prior year • Expenses +6% .
Slide 4: Growth Metrics
4 Growth Metrics 4Q'15 4Q'16 4Q'15 4Q'16 4Q'15 4Q'16 4Q'15 4Q'16 +9% Purchase volume $ in billions Loan receivables $ in billions Average active accounts in millions Interest and fees on loans $ in millions $32.5 $35.4 $68.3 $76.3 $3,919 $3,494 68.7 64.9 +6% +12% +12%
Slide 5: Platform Results
5 Platform Results Retail Card Loan receivables, $ in billions $47.5 $52.6 4Q'15 4Q'16 Strong receivable growth across partner programs Interest and fees on loans up 12% driven by receivable growth Payment Solutions Loan receivables, $ in billions $13.5 $15.6 4Q'15 4Q'16 Broad receivable growt
Slide 6: Financial Results Summary
6 Financial Results Summary earnings statement Fourth quarter 2016 highlights $ in millions, except ratios Total interest income $3,947 $3,509 $438 12% Total interest expense 319 301 (18) (6)% Net interest income (NII) 3,628 3,208 420 13% Retailer share arrangements (RSA) (811) (734) (77) (10)% NII,
Slide 7: Net Interest Income
7 Net Interest Income Fourth quarter 2016 highlights • Net interest income increased 13% compared to prior year driven by growth in receivables Interest and fees on loans increased 12% compared to prior year driven by average loan receivable growth • Net interest margin up 49bps. Loan receivable
Slide 8: Asset Quality Metrics
8 Asset Quality Metrics Net charge-offs $ in millions, % of average loan receivables including held for sale $663 $668 $693 $633 $697 4.32% 4.53% 4.63% 4.02% 4.23% Allowance for loan losses $ in millions, % of period-end loan receivables 5.28% $3,236 5.59% $3,255 5.38% $3,302 5.31% $3,371 5.12% $3,4
Slide 9: Other Expense
9 Other expense $ in millions Other Expense Employee costs $285 $315 $30 11% Professional fees 165 164 (1) (1)% Marketing/BD 128 130 2 2% Information processing 83 88 5 6% Other 209 221 12 6% Other expense $870 $918 $48 6% Efficiency 34.0% 31.6% (2.4)pts. $870 (a) “Other Expense” divided by sum of “
Slide 10: Funding, Capital and Liquidity
10 Funding, Capital and Liquidity (b) Liquid assets $14.8 $13.6 Undrawn credit facilities 6.1 6.7 Total liquidity $20.9 $20.3 Basel III (fully phased-in) 15.9% 17.0% Liquidity % of total assets, $ in billions 4Q'16 22.5% 24.9% 4Q'15 Capital ratios Common equity Tier 1 % - Basel III transitional 4Q’1
Slide 11: 2016 Performance vs Outlook
11 Loan Receivables Growth 7% - 9% 12% Strong organic growth driven by value propositions and strategic investments Net Interest Margin ~ 15.5% 16.0% Higher receivable yield and favorable earning asset mix Net Charge-off Rate 4.3% - 4.5% 4.5% Normalization off recent lows Efficiency Ratio < 34.0% 31
Slide 12: 2017 Outlook
12 Loan Receivables Growth 7% - 9% Net Interest Margin 15.75% - 16.00% Net Charge-off Rate 4.75% - 5.00% Efficiency Ratio ~ 32.0% ROA 2.5% + 2017 Outlook 2017 Outlook
Slide 13: Strategic Priorities
13 Strategic Priorities Grow our business through our three sales platforms Position business for long-term growth Operate with a strong balance sheet and financial profile Leverage strong capital position Expand robust data, analytics and digital capabilities • Grow existing retailer penetration •
Slide 14: Synchrony Financial - Engage with us
s{! synchrony FINANCIAL Engage with us.
Slide 15: Appendix
15 Appendix
Slide 16: Non-GAAP Reconciliation
16 Non-GAAP Reconciliation We present certain capital ratios. Our Basel III Tier 1 common ratio, calculated on a fully phased-in basis, is a preliminary estimate reflecting management’s interpretation of the final Basel III capital rules adopted in July 2013 by the Federal Reserve Board, which have
Slide 17: Non-GAAP Reconciliation
17 Non-GAAP Reconciliation The following table sets forth a reconciliation of each component of our capital ratios to the comparable GAAP component at December 31, 2016. COMMON EQUITY MEASURES GAAP Total common equity ..................................................................................