01—Abstract
Summary
Summary of the 8-K filed July 17, 2024. Cited figures are marked; the original filing is the authoritative source.
Synchrony Financial (NYSE: SYF) reported second quarter 2024 net earnings of $643 milliona, or $1.55 per diluted share, compared to $569 million, or $1.32 per diluted share in the second quarter of 2023.
Net interest income rose 7% to $4.4 billionb, and loan receivables grew 8% to $102.3 billion. Results were weighed down by higher net charge-offs, which were 6.42% of average loan receivables versus 4.75% a year earlier, and provision for credit losses rose $308 million to $1.7 billion. Net interest margin declined 48 basis points to 14.46%, and the efficiency ratio improved 380 basis points to 31.7%.
Other income increased $56 million to $117 millionc, primarily reflecting a $51 million gain on an exchange of Visa B-1 shares, partly offset by the Pets Best disposition. Other expense rose $8 million to $1.2 billion, driven by technology investments, preparatory expenses related to the Late Fee rule change, and servicing costs for newly acquired business. Delinquencies rose, with loans 30+ days past due at 4.47% versus 3.84% a year earlier, though management described trends as in line with seasonality.
Funding and capital remained solid. Deposits increased $7.3 billiond, or 10%, to $83.1 billion and made up 84% of funding. Total liquid assets and undrawn credit facilities were $23.0 billion, or 19.1% of total assets, and the estimated Common Equity Tier 1 ratio was 12.6%.
The company returned $400 million to shareholders, including $300 million of share repurchases, and had $1 billion of remaining repurchase authorization as of June 30, 2024. Management's 2024 full-year EPS outlook is $7.60 to $7.80, which factors in the late fee rule implementation date of October 1, 2024.
02—Key points
Key Highlights
- Q2 2024 net earnings of $643 million, or $1.55 per diluted share, up from $569 million, or $1.32 per diluted share, in Q2 2023
- Loan receivables of $102.3 billion, up 8%, while purchase volume decreased 1% to $46.8 billion
- Net charge-offs rose to 6.42% of average loan receivables from 4.75%, and provision for credit losses increased $308 million to $1.7 billion
- Net interest margin decreased 48 basis points to 14.46%; efficiency ratio improved 380 basis points to 31.7%
- Other income of $117 million included a $51 million gain on an exchange of Visa B-1 shares
- Deposits rose 10% to $83.1 billion, comprising 84% of funding; liquid assets and undrawn facilities totaled $23.0 billion
- Returned $400 million to shareholders, including $300 million of share repurchases; estimated CET1 ratio was 12.6%
03—Questions
Frequently Asked Questions
How did Synchrony's second quarter 2024 earnings compare with the prior year?
Net earnings increased to $643 million, or $1.55 per diluted share, from $569 million, or $1.32 per diluted share, in the second quarter of 2023. Net earnings were up 13%, supported by higher net interest income and other income, partly offset by higher provisions for credit losses.
What drove the increase in credit losses?
Provision for credit losses rose $308 million to $1.7 billion, driven by higher net charge-offs partially offset by a lower reserve build. Net charge-offs were 6.42% of average loan receivables compared with 4.75% a year earlier, and loans 30+ days past due were 4.47% versus 3.84%.
What one-time or notable items affected results?
Other income included a $51 million gain related to an exchange of Visa B-1 shares, and other expense included $23 million of preparatory expenses related to the Late Fee rule change. Other income also reflected the impact of the Pets Best disposition.
What is the company's outlook and capital position?
Management's FY24 EPS outlook is $7.60 to $7.80, which includes the late fee rule implementation date of October 1, 2024, and PPPC impacts primarily in 3Q'24 and 4Q'24. The estimated CET1 ratio was 12.6% at June 30, 2024, and the company had $1 billion of remaining share repurchase authorization.
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