Synchrony Financial Q3 FY2024 earnings call

Key Messages - Brian Doubles: Reported strong third quarter results with net earnings of $789 million, added 4.7 million new accounts and $45 billion purchase volume. Added/renewed over 15 partners including Dick's Sporting Goods, Gibson, Albertsons. Launched pet health care reimbursement and other initiatives. - Brian Wenzel: Discussed financial results, ending loan receivables growth, net revenue, net interest income, provision for credit losses, funding (direct deposits grew ~$780M, broker deposits reduced $1.5B, issued $750M notes), capital ratios (CET1 13.1%, Tier 1 14.3%, total capital 16.4%), and share repurchases/dividends.

Ending loan receivables reached $102 billion in the third quarter, reflecting growth of 4% compared to last year. Net revenue grew 10% to $3.8 billion. Net interest income increased 6% to $4.6 billion. Dual and co-branded cards accounted for 43% of total purchase volume for the quarter.

Synchrony expects full-year 2024 diluted earnings per share between $8.45 and $8.55. Fourth quarter purchase volume to decline low single digits; ending loan receivables to grow low single digits; net interest income sequentially flat; other income consistent with third quarter; RSA to decrease; other expenses to increase sequentially; delinquencies to follow seasonality; second half 2024 net charge-off rate lower than first half; year-end 2024 reserve rate generally in-line with year-end 2023 rate.

Uncertainty regarding timing and outcome of late fee related litigation, potential changes in consumer behavior due to late fee rule change, and impact of broader industry changes.

Q: Ryan Nash asked about NII guide, including PPPCs and NIM bias.

A: Brian Wenzel responded on NII sequentially, NIM tailwinds from PPPCs, interest income/expense, and liquidity impact.

Q: Terry Ma asked about loan yield components of PPPCs.

A: Brian Wenzel said PPPCs benefit interest yield, actions in-line with expectations, customer attrition lower than expected.

Q: Don Fandetti asked about late-stage collections and collection difficulty.

A: Brian Wenzel discussed collection challenges, improvement in late-stage collections, and consumer payment behavior.

Q: Moshe Orenbuch asked about spending volume slowdown and macro outlook.

A: Brian Doubles and Wenzel talked about consumer spending stability, strong labor market, and normalized spend.

Q: Sanjay Sakhrani asked about reserve rate and CFPB late fee rules.

A: Brian Wenzel discussed reserve rate trend and late fee rule uncertainty.

Q: Mihir Bhatia asked about NIM and purchase volume.

A: Brian Wenzel explained NIM moving pieces and purchase volume stability.

Q: Mark DeVries asked about late fee litigation and reserve coverage.

A: Brian Wenzel talked about late fee litigation status and reserve coverage drivers.

Q: John Hecht asked about late fee litigation and health and wellness.

A: Brian Wenzel and Doubles discussed late fee litigation uncertainty and health and wellness segment performance.

Q: Jeff Adelson asked about loan growth and PPPCs.

A: Brian Wenzel responded on PPPC performance and loan growth outlook.

Q: Rick Shane asked about reserve rate.

A: Brian Wenzel explained reserve rate mechanics related to denominator and loss content.