Attention Seeking Stock: Synchrony Financial (NYSE: SYF)

On Monday, Synchrony Financial (NYSE: SYF) started its trading session with the price $34.66 and closed at price of $35.06 by scoring 2.25%. Day range of the stock was $34.56 – $35.12. SYF stock traded with total volume of 6,178,612 shares while the average trading capacity remained 4529817 shares.  Earnings per share was $3.74.

Synchrony Financial (SYF) recently reported third quarter 2019 net earnings of $1.1B, or $1.60 per diluted share; this includes a $326M pre-tax, $248M after-tax, or $0.38 per diluted share benefit from a reduction in the reserve related to the sale of the Walmart consumer portfolio, which was completed in October. Highlights included*:

  • Loan receivables reduced 5% to $83.2B; not including the Walmart portfolio from both periods, loan receivables grew 6%
  • Net interest income increased 4% to $4.4B
  • Purchase volume grew 5% to $38.4B; and average active accounts grew 2% to 76.7M
  • Deposits grew $3.7B, or 6%, to $66.0B
  • Completed the sale of the Walmart portfolio on October 11, 2019
  • Expanded and extended key planned consumer credit relationship with PayPal: will become the exclusive issuer of a Venmo co-branded consumer credit card, which is predictable to launch in the second half of 2020, and extended existing PayPal relationship
  • Renewed key Retail Card joint venture: DICK’S Sporting Goods
  • Renewed key Payment Solutions joint ventures: Polaris, La-Z-Boy and Conn’s HomePlus
  • Expanded CareCredit credit card network to include 8,500+ Walgreens® and Duane Reade® stores and Loyale™ Healthcare and signed a new joint venture with St. Luke’s University Health Network
  • Paid quarterly ordinary stock dividend of $0.22 per share and repurchased $550M of Synchrony Financial ordinary stock

Business and Financial Highlights for the Third Quarter of 2019

All comparisons are for the third quarter of 2019 contrast to the third quarter of 2018, unless otherwise noted.

Earnings

  • Net interest income increased $183M, or 4%, to $4.4B, primarily driven by loan receivables growth.
  • Retailer share arrangements increased $145M, or 17%, to $1.0B, mainly driven by improved program performance and growth in loan receivables.
  • Provision for loan losses reduced $432M, or 30%, to $1.0B, largely driven by the $326M reserve reduction related to the Walmart portfolio.
  • Other income increased $22M, or 35%, to $85M.
  • Other expense increased $10M, or 1%, to $1.1B.
  • Net earnings totaled $1.1B contrast to $671M last year.

Balance Sheet

  • Period-end loan receivables reduced 5%; not including the Walmart portfolio from both periods, period-end loan receivables growth was 6%; purchase volume growth was 5% and average active accounts increased 2%.
  • Deposits grew to $66.0B, up $3.7B, or 6%, and comprised 76% of funding.
  • The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn credit facilities) of $21.7B, or 20.5% of total assets.
  • The estimated fully phased-in Ordinary Equity Tier 1 ratio under Basel III was 14.5%, contrast to 14.2%, reflecting the Company’s strong capital generation capabilities while deploying capital through organic growth, program acquisitions, and continued execution of our capital plans.

Key Financial Metrics

  • Return on assets was 3.9% and return on equity was 28.3%.
  • Net interest margin was 16.29%.
  • Efficiency ratio was 30.8%.

Credit Quality

  • Loans 30+ days past due as a percentage of total period-end loan receivables were 4.47% contrast to 4.59% last year; not including the PayPal Credit program and the Walmart portfolio, the rate was flat contrast to last year.
  • Net charge-offs as a percentage of total average loan receivables were 5.35% contrast to 4.97% last year; not including the PayPal Credit program and the Walmart portfolio, the rate reduced about 20 basis points contrast to last year.
  • The allowance for loan losses as a percentage of total period-end loan receivables was 6.74% contrast to 7.11% last year.

SYF stock price showed strong performance of 5.86% in last seven days, switched up 3.54% in last thirty days and it rose 18.29% in last one year. It has 683.60 million of outstanding shares and its shares float measured at 661.39.

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