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Synchrony Financial (SYF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient results: Net earnings $774M and diluted EPS $1.91, supported by 3% NII growth, lower provision (reserve release of $100M vs prior-year build), higher other income from PPPC fees, and 4% lower other expense; offset by higher net charge-offs and increased RSA .
  • Versus Wall Street: S&P Global consensus data unavailable. Third‑party sources varied; EPS $1.91 vs MarketBeat $1.89 (beat) and SeekingAlpha $1.92 (slight miss); net revenue $3.801B vs SeekingAlpha $3.83B (slight miss). Note: non-SPGI estimates referenced due to SPGI unavailability .
  • 2025 framework introduced: Net revenue $15.2–$15.7B; net charge-offs 5.8–6.1%; RSA/ALR 3.60–3.85%; efficiency 31.5–32.5%; period-end receivables low single-digit growth, assuming stable macro and no CFPB late fee rule impact; PPPC included .
  • Stock reaction: Despite EPS near consensus, some outlets reported mixed revenue vs different “revenue” definitions; pre-market moved modestly lower, reflecting estimate dispersion and revenue metric confusion .
  • Catalyst: Improved delinquency formation, efficiency ratio improvement YoY, and strong capital (CET1 13.3%) underpin confidence in returning to long-term NCO target and potential reacceleration of growth later in 2025 as credit actions normalize .

What Went Well and What Went Wrong

What Went Well

  • Net earnings up 76% YoY to $774M, EPS $1.91; driven by reserve release ($100M), PPPC-related yield benefits, and operating efficiency (33.3% vs 36.0% YoY) .
  • Net revenue rose 4% YoY to $3.801B; NII up 3% on higher interest & fees and PPPC; other income up 80% from PPPC fees; RSA aligned with program performance .
  • Management highlighted strengthening delinquency trajectory from prior credit actions and confidence in returning to long-term NCO target; reiterated robust capital for growth and shareholder returns .

What Went Wrong

  • Net charge-offs increased to 6.45% (vs 5.58% LY) with continued normalization and industry credit pressure .
  • Purchase volume declined 3% YoY to $48.0B as customers remained selective and credit actions constrained origination; average active accounts down 2% .
  • Platform purchase volumes fell across categories (e.g., Home & Auto −6%, Digital −1%, Diversified & Value −2%, Health & Wellness −3%, Lifestyle −5%) reflecting selective spending and credit actions .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Net Revenue ($USD Billions)$3.712 $3.814 $3.801
Diluted EPS ($)$1.55 $1.94 $1.91
Net Interest Margin (%)14.46% 15.04% 15.01%
Efficiency Ratio (%)31.7% 31.2% 33.3%
Net Charge-Offs Rate (%)6.42% 6.06% 6.45%
Purchase Volume ($USD Billions)$46.846 $44.985 $47.955
Avg Active Accounts (000s)70,974 70,424 70,299

Year-over-Year (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024
Net Revenue ($USD Billions)$3.659 $3.801
Diluted EPS ($)$1.03 $1.91
Net Interest Margin (%)15.10% 15.01%
Efficiency Ratio (%)36.0% 33.3%
Net Charge-Offs Rate (%)5.58% 6.45%
Purchase Volume ($USD Billions)$49.339 $47.955
Average Active Accounts (000s)71,526 70,299

Segment Platform Breakdown (Q4)

PlatformPurchase Volume ($B) Q4'23Purchase Volume ($B) Q4'24Period-End Loan Rec ($B) Q4'23Period-End Loan Rec ($B) Q4'24Interest & Fees ($MM) Q4'23Interest & Fees ($MM) Q4'24
Home & Auto$11.421 $10.705 $31.969 $32.034 $1,403 $1,487
Digital$15.510 $15.317 $28.925 $29.347 $1,579 $1,582
Diversified & Value$16.987 $16.711 $20.666 $20.867 $1,204 $1,209
Health & Wellness$3.870 $3.742 $14.521 $15.436 $866 $935
Lifestyle$1.550 $1.480 $6.744 $6.914 $255 $268

Key KPIs

KPIQ2 2024Q3 2024Q4 2024
Period-End Loan Receivables ($B)$102.284 $102.193 $104.721
Deposits ($B)$83.100 $82.284 $82.062
CET1 Ratio (%)12.6% 13.1% 13.3%
30+ Delinquency Rate (%)4.47% 4.78% 4.70%
90+ Delinquency Rate (%)2.19% 2.33% 2.40%
Allowance Coverage Ratio (%)10.74% 10.79% 10.44%

vs Estimates (Non‑SPGI references; SPGI unavailable)

MetricActual Q4 2024Consensus (Source)Result
Diluted EPS ($)$1.91 $1.89 (MarketBeat) Beat by $0.02
Net Revenue ($B)$3.801 $3.83 (SeekingAlpha preview) Slight miss (~$0.03B)

Note: S&P Global/Capital IQ consensus data was unavailable; third-party sources are cited for context.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($B)FY 2025N/A$15.2–$15.7New
Net Charge-Offs (%)FY 2025N/A5.8–6.1New
RSA / Average Loan Receivables (%)FY 2025N/A3.60–3.85New
Efficiency Ratio (%)FY 2025N/A31.5–32.5New
Period-End Receivables GrowthFY 2025N/ALow single digitNew
FY 2024 EPSFY 2024$7.60–$7.80 (Q2 outlook) $8.45–$8.55 (Q3 update) Raised

Baseline assumptions: U/E 4.1% YE’25; GDP 2.2% FY’25; Fed Funds 4.25% YE’25; deposit betas ~60%; excludes late fee rule impact; PPPC included .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Late fee rule & PPPCFirst phase PPPC implemented; FY24 EPS $7.60–$7.80 assuming Oct 1 rule; monitoring behavior Removed late fee impact in 2024 outlook; PPPC in effect; FY24 EPS $8.45–$8.55 2025 outlook excludes late fee; PPPC included; neutrality point unchanged; varied estimate expectations PPPC building; rule timing uncertain
Credit actions & delinquencyActions constraining new accounts/purchase; delinquency formation improving Year-over-year growth in delinquency decelerating; NCO lower in 2H Entry rate favorability; better late-stage collections; confidence in returning to long-term NCO target Improving trajectory
Consumer spend/selectivityTrading down, lower big-ticket; frequency stable Selective spend; out-of-partner consistent; avg ticket down ~3% Holiday selective; big-ticket discretionary cautious; platform PV down 1–6% Stable/selective
Liquidity & deposits/betasLiquid assets +; deposit betas supportive; strong funding Liquidity 18.8% TA; deposits 84% funding Carry ~17% liquidity to prefund; deposit beta ~60% in 2025 Manage down with rate cuts
Partnerships & distributionVerizon expansion; Virgin Red launch; IME integration Renewals, additions (DICK’S, Gibson, Albertsons) Sam’s extension; JCPenney BNPL expansion; KnitWell dual cards Portfolio broadened
Digital wallets/Apple PayBuilding digital wallet penetration Ongoing investment; digital engagement stable Apple Pay integration for Synchrony Mastercard promos; rewards redemption planned Acceleration

Management Commentary

  • CEO: “Synchrony's fourth quarter performance demonstrated the power of our differentiated business model and our ability to execute… for approximately 70 million customers…” .
  • CFO: “Net revenue grew… driven by PPPC-related fees… efficiency ratio was 33.3%… we remain confident in our ability to return to our long-term net charge-off target.” .
  • Strategy: Renewed and extended long-standing partnerships (Sam’s Club; JCPenney with Pay Later) to deepen alignment and value; multi-product ecosystem supports lifetime value .
  • 2025 Outlook: Stable macro assumptions; PPPC impact included; RSA rising as program performance improves with declining NCO; efficiency focus remains .

Q&A Highlights

  • PPPC performance and neutrality: PPPC performing generally in line; stronger retention and interest yield; paper statement fees lighter due to e-bill adoption; neutrality point unchanged; trough timing depends on rule .
  • Capital returns cadence: Q4 buybacks lower due to anticipated market volatility; $600M authorization intended to be completed; capital remains a strength .
  • Credit actions reversal timing: Potential lift in 2H 2025 contingent on NCO trajectory, macro stability, and delinquency improvements; initial focus on dual card upgrades and line management in larger-balance platforms .
  • Allowance and reserve rate: Downward bias through 2025 if NCOs decline and macro clarity improves; Q4 reserve higher end due to denominator and conservatism .
  • Deposit betas: ~60% 2025 beta driven by timing of cuts and lag in digital repricing; CDs reprice largely in 1H .

Estimates Context

  • S&P Global/Capital IQ consensus estimates were unavailable for this recap. Third‑party sources indicated: EPS consensus $1.89–$1.92 and net revenue consensus ~$3.83B; actual EPS $1.91 and net revenue $3.801B. Variations reflect differing revenue definitions (company “net revenue” vs some outlets’ “total revenues”) .

Key Takeaways for Investors

  • Credit normalization remains the swing factor: delinquency formation is improving, but NCOs elevated; management expects trend toward long-term target, which underpins 2025 RSA improvement and margin durability .
  • PPPC execution is a core mitigant: building interest yield and fee mix while maintaining customer retention; provides a buffer against potential regulatory outcomes; watch consumer behavior and any partner-driven adjustments .
  • Operating leverage and efficiency: YoY efficiency ratio improvement and lower operational losses drove EPS acceleration; continued focus expected in 2025 .
  • Capital position supports optionality: CET1 13.3% and 84% deposit funding provide flexibility for buybacks and selective growth; cadence may vary with market conditions .
  • Demand reacceleration tied to credit posture and confidence: management may selectively ease credit later in 2025; near-term origination remains constrained, with outperformance more likely from health & wellness and larger-balance dual card upgrades .
  • Estimate dispersion calls for caution around “revenue” definitions; anchor to company net revenue for comparability and rely on management’s framework rather than headline beats/misses across conflicting metrics .
  • Near-term trading: watch for updates on late fee rule litigation, PPPC neutrality milestones, delinquency/charge-off cadence, and buyback execution; medium-term thesis hinges on PPPC yield, efficiency, RSA normalization, and disciplined growth .