Synchrony Financial : Earnings Release Q1'25

Published: 2025-04-22 05:57:10 ET SYF

For Immediate Release

Synchrony Financial (NYSE: SYF)

April 22, 2025

First Quarter 2025 Results and Key Metrics

STAMFORD, Conn - Synchrony Financial (NYSE: SYF) today announced first quarter 2025 net earnings of $757 million, or $1.89 per diluted share, compared to $1.3 billion, or $3.14 per diluted share in the first quarter 2024. Excluding the $802 million post-tax impact of the Pets Best gain on sale in the prior year, first quarter 2024 adjusted net earnings were $491 million, or $1.18 per diluted share.***

The Company also announced that its Board of Directors approved a new capital plan that included an incremental share repurchase authorization of $2.5 billion through June 30, 2026, and increased the quarterly cash dividend by 20% to $0.30 per share of common stock beginning in the second quarter 2025.

CEO Commentary

"Synchrony delivered a strong first quarter 2025 performance, which reflected the inherent resilience of our diversified portfolio of products and spend categories and our differentiated approach to serving our customers and partners," said Brian Doubles, Synchrony's President and Chief Executive Officer.

"During the quarter, Synchrony continued to leverage our core strengths - our proprietary data, our sophisticated credit underwriting, our diversified product suite and distribution channels, and our strong execution - to empower our approximately 70 million customers with prudent financial flexibility and enduring value, while also delivering loyalty and sales to the many partners, providers and small businesses that form the foundation of our economy.

"As Synchrony continues to drive innovation, expand access to flexible financing, and deliver compelling results for all those we serve, we remain focused on building upon our leadership position and driving significant long- term value for our stakeholders."

2.5% 13.2% $697M $99.6B

Return on Assets

CET1 Ratio

Capital Returned

Loan Receivables

Key Operating and Financial Metrics*

CFO Commentary

"Synchrony's first quarter performance continues to demonstrate the strength of our differentiated business model, which is built to deliver resilient risk-adjusted returns through evolving market conditions," said Brian Wenzel, Synchrony's Executive Vice President and Chief Financial Officer.

"While the ongoing effects of our previous credit actions continued to impact purchase volume, active accounts and loan receivables growth, our net charge-off results outperformed historical seasonality. The RSA maintained alignment with our partners' program performance and we remained disciplined in our efforts to drive efficiency across our business.

"As we look to the remainder of 2025 and beyond, Synchrony remains well-positioned to navigate the evolving economic landscape while also driving progress toward our long-term financial targets."

Business Highlights

Financial Highlights

Credit Quality

Sales Platform Highlights

Balance Sheet, Liquidity, & Capital

* All comparisons are for the first quarter of 2025 compared to the first quarter of 2024, unless otherwise noted.

Corresponding Financial Tables and Information

Investors should review the foregoing summary and discussion of Synchrony Financial's earnings and financial condition in conjunction with the financial results presentation, financial supplement and information that follow, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed February 7, 2025, and the Company's forthcoming Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025. The detailed financial tables and other information are also available on the Investor Relations page of the Company's website at www.investors.synchrony.com. This information is also furnished in a Current Report on Form 8-K filed with the SEC today.

Conference Call and Webcast

On Tuesday, April 22, 2025, at 8:00 a.m. Eastern Time, Brian Doubles, President and Chief Executive Officer, and Brian Wenzel Sr., 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.synchrony.com, under Events and Presentations. A replay will also be available on the website.

About Synchrony Financial

Synchrony (NYSE: SYF) is a leading consumer financing company at the heart of American commerce and opportunity. From health to home, auto to retail, our Synchrony products have been serving the needs of people and businesses for nearly 100 years. We provide responsible access to credit and banking products to support healthier financial lives for tens of millions of people, enabling them to access the things that matter to them. Additionally, through our innovative products and experiences, we support the growth and operations of some of the country's most respected brands, as well as more than 400,000 small and midsize businesses and health and wellness providers that Americans rely on. Synchrony is proud to be ranked as the country's #2 Best Company to Work For® by Fortune magazine and Great Place to Work®.

For more information, visit www.synchrony.com

Investor Relations

Media Relations

Kathryn Miller

Tyler Allen

(203) 585-6291

(551) 370-2902

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," "aim," "focus," "confident," "trajectory" 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, including factors impacting consumer confidence and economic growth in the United States, such as inflation, interest rates, tariffs (including retaliatory tariffs) and an economic downturn or recession, and whether industry trends we have identified develop as anticipated; the impact of changes in the U.S. presidential administration and Congress on fiscal, monetary and regulatory policy; retaining existing partners and attracting new partners, concentration of our revenue in a small number of partners, and promotion and support of our products by our partners; cyber-attacks or other security incidents or breaches; disruptions in the operations of our and our outsourced partners' computer systems and data centers; the financial performance of our partners; product, pricing and policy changes related to the Consumer Financial Protection Bureau's (the "CFPB") final rule on credit card late fees, which was vacated in April 2025; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to the CECL accounting guidance; higher borrowing costs and adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to grow our deposits in the future; damage to our reputation; our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables; changes in market interest rates; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, and our ability to manage our credit risk; 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 and susceptibility to market fluctuations and legislative regulatory developments; our ability to successfully develop and commercialize new or enhanced products and services; our ability to realize the value of acquisitions, dispositions and strategic investments; reductions in interchange fees; fraudulent activity; failure of third parties to provide various services that are important to our operations; 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, regulatory actions and compliance issues; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations; 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 other legislative and regulatory developments and the impact of the CFPB's regulation of our business, including new requirements and constraints that the Company and the Bank are or will become subject to as a result of having $100 billion or more in total assets; 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 the 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.

Cautionary Statement Regarding Forward-Looking Statements (Continued)

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 Relating to our Business" and "Risk Factors Relating to Regulation" in the Company's most recent Annual Report on Form 10-K. You should not consider any list of such factors to be an exhaustive statement of all 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 "tangible book value per share," along with measures provided "on an adjusted basis," 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

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

1Q'25 vs. 1Q'24

2025

2024

EARNINGS

Net interest income

4,464

4,592

4,609

4,405

1.3 %

Retailer share arrangements

(895)

(919)

(914)

(810)

(764)

(131)

17.1 %

Other income

149

128

119

117

1,157

(1,008)

(87.1)%

Net revenue

3,718

3,801

3,814

3,712

4,798

(1,080)

(22.5)%

Provision for credit losses

1,491

1,561

1,597

1,691

1,884

(393)

(20.9)%

Other expense

1,243

1,267

1,189

1,177

1,206

3.1 %

Earnings before provision for income taxes

984

973

1,028

844

1,708

(724)

(42.4)%

Provision for income taxes

227

199

239

201

415

(188)

(45.3)%

Net earnings

757

774

789

643

1,293

(536)

(41.5)%

Net earnings available to common stockholders

736

753

768

624

1,282

(546)

(42.6)%

COMMON SHARE STATISTICS

Basic EPS

1.91

1.93

1.96

1.56

3.17

(1.26)

(39.7)%

Diluted EPS

1.89

1.91

1.94

1.55

3.14

(1.25)

(39.8)%

Dividend declared per share

0.25

- %

Common stock price

52.94

65.00

49.88

47.19

43.12

9.82

22.8 %

Book value per share

40.37

39.55

37.92

36.24

35.03

5.34

15.2 %

Tangible book value per share(1)

34.79

34.07

32.68

31.05

30.36

4.43

14.6 %

Beginning common shares outstanding

388.3

389.2

395.1

401.4

406.9

(18.6)

(4.6)%

Issuance of common shares

Stock-based compensation

2.0

0.6

0.7

0.6

2.0

- %

Shares repurchased

(9.8)

(1.5)

(6.6)

(6.9)

(7.5)

(2.3)

30.7 %

Ending common shares outstanding

380.5

388.3

389.2

395.1

401.4

(20.9)

(5.2)%

Weighted average common shares outstanding

385.2

389.3

392.3

399.3

404.7

(19.5)

(4.8)%

Weighted average common shares outstanding (fully diluted)

389.4

394.8

396.5

402.6

408.2

(18.8)

(4.6)%

SYNCHRONY FINANCIAL

SELECTED METRICS

(unaudited, $ in millions)

Quarter Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

1Q'25 vs. 1Q'24

PERFORMANCE METRICS

2025

2024

Return on assets(1)

2.5 %

2.6 %

2.2 %

4.4 %

(1.9)%

Return on equity(2)

18.4 %

18.9 %

19.8 %

16.7 %

35.6 %

(17.2)%

Return on tangible common equity(3)

22.4 %

23.0 %

24.3 %

20.2 %

43.6 %

(21.2)%

Net interest margin(4)

14.74 %

15.01 %

15.04 %

14.46 %

14.55 %

0.19 %

Net revenue as a % of average loan receivables, including held for sale

14.93 %

14.76 %

14.87 %

14.71 %

19.11 %

(4.18)%

Efficiency ratio(5)

33.4 %

33.3 %

31.2 %

31.7 %

25.1 %

8.3 %

Other expense as a % of average loan receivables, including held for sale

4.99 %

4.92 %

4.64 %

4.66 %

4.80 %

0.19 %

Effective income tax rate

23.1 %

20.5 %

23.2 %

23.8 %

24.3 %

(1.2)%

CREDIT QUALITY METRICS

Net charge-offs as a % of average loan receivables, including held for sale

6.38 %

6.45 %

6.06 %

6.42 %

6.31 %

0.07 %

30+ days past due as a % of period-end loan receivables(6)

4.52 %

4.70 %

4.78 %

4.47 %

4.74 %

(0.22)%

90+ days past due as a % of period-end loan receivables(6)

2.29 %

2.40 %

2.33 %

2.19 %

2.42 %

(0.13)%

Net charge-offs

1,588

1,661

1,553

1,621

1,585

0.2 %

Loan receivables delinquent over 30 days(6)

4,505

4,925

4,883

4,574

4,820

(315)

(6.5)%

Loan receivables delinquent over 90 days(6)

2,285

2,512

2,382

2,244

2,459

(174)

(7.1)%

Allowance for credit losses (period-end)

10,828

10,929

11,029

10,982

10,905

(77)

(0.7)%

Allowance coverage ratio(7)

10.87 %

10.44 %

10.79 %

10.74 %

10.72 %

0.15 %

BUSINESS METRICS

Purchase volume(8)

40,720

47,955

44,985

46,846

42,387

(1,667)

(3.9)%

Period-end loan receivables

99,608

104,721

102,193

102,284

101,733

(2,125)

(2.1)%

Credit cards

91,909

96,818

94,008

94,091

93,736

(1,827)

(1.9)%

Consumer installment loans

5,736

5,971

6,125

6,072

5,957

(221)

(3.7)%

Commercial credit products

1,859

1,826

1,936

2,003

1,912

(53)

(2.8)%

Other

104

106

124

118

128

(24)

(18.8)%

Average loan receivables, including held for sale

101,021

102,476

102,009

101,478

100,957

0.1 %

Period-end active accounts (in thousands)(9)

67,787

71,532

69,965

70,991

70,754

(2,967)

(4.2)%

Average active accounts (in thousands)(9)

69,315

70,299

70,424

70,974

71,667

(2,352)

(3.3)%

LIQUIDITY

Liquid assets

Cash and equivalents

21,629

14,711

17,934

18,632

20,021

1,608

8.0 %

Total liquid assets

23,817

17,159

19,704

20,051

21,929

1,888

8.6 %

Undrawn credit facilities

2,625

2,700

2,950

(325)

(11.0)%

Total liquid assets and undrawn credit facilities(10)

26,442

19,784

22,404

23,001

24,879

1,563

6.3 %

Liquid assets % of total assets

19.52 %

14.36 %

16.53 %

16.64 %

18.10 %

1.42 %

Liquid assets including undrawn credit facilities % of total assets

21.67 %

16.56 %

18.79 %

19.09 %

20.53 %

1.14 %

SYNCHRONY FINANCIAL

STATEMENTS OF EARNINGS

(unaudited, $ in millions)

Quarter Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

1Q'25 vs. 1Q'24

2025

2024

Interest income:

Interest and fees on loans

5,312

5,480

5,522

5,301

5,293

0.4 %

Interest on cash and debt securities

238

230

263

281

275

(37)

(13.5)%

Total interest income

5,550

5,710

5,785

5,582

5,568

(18)

(0.3)%

Interest expense:

Interest on deposits

882

917

968

967

954

(72)

(7.5)%

Interest on borrowings of consolidated securitization entities

104

108

110

105

(1)

(1.0)%

Interest on senior unsecured notes

100

104

(4)

(3.8)%

Total interest expense

1,086

1,118

1,176

1,177

1,163

(77)

(6.6)%

Net interest income

4,464

4,592

4,609

4,405

1.3 %

Retailer share arrangements

(895)

(919)

(914)

(810)

(764)

(131)

17.1 %

Provision for credit losses

1,491

1,561

1,597

1,691

1,884

(393)

(20.9)%

Net interest income, after retailer share arrangements and provision for credit losses

2,078

2,112

2,098

1,904

1,757

321

18.3 %

Other income:

Interchange revenue

238

266

256

263

241

(3)

(1.2)%

Protection product revenue

147

151

145

125

141

4.3 %

Loyalty programs

(311)

(371)

(346)

(319)

(2.5)%

Other

1,094

(1,019)

(93.1)%

Total other income

149

128

119

117

1,157

(1,008)

(87.1)%

Other expense:

Employee costs

506

478

464

434

496

2.0 %

Professional fees

217

249

231

236

220

(3)

(1.4)%

Marketing and business development

116

147

123

129

125

(9)

(7.2)%

Information processing

219

207

203

207

186

17.7 %

Other

185

186

168

171

179

3.4 %

Total other expense

1,243

1,267

1,189

1,177

1,206

3.1 %

Earnings before provision for income taxes

984

973

1,028

844

1,708

(724)

(42.4)%

Provision for income taxes

227

199

239

201

415

(188)

(45.3)%

Net earnings

757

774

789

643

1,293

(536)

(41.5)%

Net earnings available to common stockholders

736

753

768

624

1,282

(546)

(42.6)%

Disclaimer

Synchrony Financial published this content on April 22, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 22, 2025 at 09:56 UTC.