Synchrony Financial (SYF) Bundle
A Brief History of Synchrony Financial
Company Overview
Synchrony Financial, a leading consumer financial services company, specializes in providing private label credit cards, promotional financing, and other consumer financing products. As of September 30, 2024, Synchrony reported total loan receivables of $102.2 billion, reflecting a 4.4% increase from $97.9 billion in the prior year. This growth was driven by lower customer payment rates and the acquisition of Ally Lending, despite a decrease in purchase volume.
Financial Performance
For the third quarter of 2024, Synchrony achieved net earnings of $789 million, up from $628 million in the same period of 2023. For the nine months ending September 30, 2024, net earnings totaled $2.7 billion, compared to $1.8 billion in 2023. The increase in earnings was primarily attributed to higher net interest income and a significant after-tax gain of $802 million from the sale of Pets Best.
Loan Portfolio Composition
| Loan Category | Amount ($ in millions) | % of Total Loan Receivables |
|---|---|---|
| Credit Cards | 94,008 | 92.0% |
| Consumer Installment Loans | 6,125 | 6.0% |
| Commercial Credit Products | 1,936 | 1.9% |
| Other | 124 | 0.1% |
| Total | 102,193 | 100% |
Key Financial Metrics
As of September 30, 2024, Synchrony reported net interest income of $4.6 billion for the quarter, an increase of 5.7% year-over-year, while total interest and fees on loans rose by 7.2% to $1.8 billion. The company's provision for credit losses was $1.6 billion, reflecting a 7.3% increase from the previous year, influenced by higher net charge-offs.
Charge-Offs and Delinquencies
Net charge-offs for the three months ended September 30, 2024, totaled $1.55 billion, representing a charge-off rate of 6.06%, compared to 4.60% in the same quarter of 2023. Over-30 day loan delinquencies increased to 4.78% at September 30, 2024, from 4.40% a year earlier.
Dividends and Share Repurchases
Synchrony declared cash dividends totaling $301 million during the first nine months of 2024, maintaining a quarterly dividend of $0.25 per share. Additionally, the company repurchased $900 million of its common stock during this period, with an incremental share repurchase program approved for up to $1.0 billion through June 2025.
Recent Acquisitions and Dispositions
In March 2024, Synchrony completed the acquisition of Ally Lending for $2.0 billion, which included loan receivables with an unpaid principal balance of $2.2 billion. Concurrently, the sale of Pets Best resulted in a gain of $1.1 billion, contributing significantly to the company's financial performance.
Market Position and Future Outlook
As of September 30, 2024, Synchrony’s total deposits were $82.3 billion, representing 84% of its total funding sources. The company is positioned well in the consumer finance market, with a robust loan receivables portfolio and continued focus on strategic acquisitions to enhance growth.
A Who Owns Synchrony Financial (SYF)
Ownership Structure
As of 2024, Synchrony Financial (SYF) has a diverse ownership structure comprising institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders and their respective ownership percentages:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.5% |
| Institutional Investor | BlackRock, Inc. | 7.2% |
| Mutual Fund | Fidelity Management & Research Company | 5.1% |
| Institutional Investor | State Street Corporation | 4.8% |
| Institutional Investor | Wellington Management Company LLP | 3.6% |
| Individual Shareholders | Various retail investors | 70.8% |
Recent Shareholder Changes
In 2024, Synchrony Financial experienced notable changes in its shareholder composition. The company repurchased approximately $900 million of its common stock during the nine months ended September 30, 2024, which reduced the total shares outstanding and may have influenced the percentage of ownership among existing shareholders.
Preferred Stock Ownership
Synchrony Financial has issued preferred shares that also contribute to its ownership structure. The details of the preferred stock as of September 30, 2024, are as follows:
| Series | Issuance Date | Total Shares Outstanding | Dividend Rate | Liquidation Preference |
|---|---|---|---|---|
| Series A | November 14, 2019 | 750,000 | 5.625% | $1,000 |
| Series B | February 23, 2024 | 500,000 | 8.25% | $1,000 |
Market Performance and Stock Trends
The stock performance of Synchrony Financial (SYF) has seen fluctuations in 2024, with a reported stock price of approximately $35.12 as of September 30, 2024. The company's market capitalization stands at approximately $13 billion.
Institutional Ownership Trends
Institutional ownership has remained stable, with significant institutions holding a combined total of approximately 29.2% of the company's stock. This trend indicates strong confidence from major investors in Synchrony Financial's long-term growth potential.
Conclusion of Ownership Analysis
As of 2024, Synchrony Financial's ownership landscape is characterized by a mix of institutional and individual investors, with a significant portion of shares held by retail investors. The company's strategic stock buybacks and the presence of large institutional shareholders reflect its robust market position and investor confidence.
Synchrony Financial (SYF) Mission Statement
Mission Overview
Synchrony Financial's mission is to provide a range of financial services and solutions that empower consumers and businesses to achieve their financial goals. The company focuses on fostering strong partnerships with retailers and other businesses to offer tailored financing solutions.
Core Values
- Customer Commitment: Delivering exceptional service and innovative financial products.
- Integrity: Upholding transparency and ethical practices in all interactions.
- Collaboration: Working together with partners to enhance customer experiences.
- Excellence: Striving for the highest standards in performance and efficiency.
Strategic Goals
Synchrony aims to enhance customer engagement through digital solutions and robust analytics, ensuring that it remains a leader in the consumer financing market.
Financial Performance Metrics as of September 30, 2024
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Earnings ($ millions) | 789 | 628 | 25.7 |
| Earnings per Share (EPS) - Basic ($) | 1.96 | 1.49 | 31.6 |
| Total Assets ($ millions) | 119,389 | 110,335 | 8.2 |
| Loan Receivables ($ millions) | 102,193 | 97,873 | 4.2 |
| Net Interest Income ($ millions) | 4,609 | 4,362 | 5.7 |
| Provision for Credit Losses ($ millions) | 1,597 | 1,488 | 7.3 |
| Charge-Off Rate (%) | 6.06 | 4.60 | 31.6 |
| Return on Equity (%) | 19.8 | 18.1 | 9.4 |
Partnerships and Market Position
Synchrony has established over 55 new partnerships in 2024, enhancing its presence in various sectors including healthcare, retail, and automotive. These partnerships are critical to support the company's mission of delivering customized financial solutions to consumers.
Digital Innovations
In 2024, Synchrony has increased its focus on digital solutions, integrating advanced analytics to better understand consumer behavior and preferences, thereby optimizing its product offerings.
Community Engagement
The company is committed to community engagement through various initiatives aimed at financial literacy and supporting local businesses, further aligning with its mission of empowerment.
How Synchrony Financial (SYF) Works
Company Overview
Synchrony Financial (SYF) operates as a consumer financial services company, offering a range of credit products across various sectors including retail, health, automotive, and home improvement. The company primarily provides private label credit cards, promotional financing, and installment loans.
Financial Performance
As of September 30, 2024, Synchrony Financial reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Earnings ($ millions) | 789 | 628 | 25.6 |
| Net Interest Income ($ millions) | 4,609 | 4,362 | 5.7 |
| Provision for Credit Losses ($ millions) | 1,597 | 1,488 | 7.3 |
| Net Charge-Offs ($ millions) | 1,553 | 1,116 | 39.1 |
| Total Assets ($ millions) | 119,389 | 110,335 | 8.6 |
| Total Equity ($ millions) | 15,815 | 13,758 | 14.9 |
Loan Portfolio
As of September 30, 2024, the company's loan receivables included:
| Loan Type | Amount ($ millions) | Percentage of Total Loans (%) |
|---|---|---|
| Credit Cards | 93,757 | 92.4 |
| Consumer Installment Loans | 5,644 | 5.6 |
| Commercial Credit Products | 1,957 | 1.9 |
Credit Losses and Allowance
The allowance for credit losses totaled $11.0 billion at September 30, 2024, reflecting an increase from $10.6 billion at December 31, 2023. The allowance represented 10.79% of total period-end loan receivables.
Funding Sources
Synchrony Financial's funding sources include:
| Funding Source | Amount ($ millions) | Percentage of Total Funding (%) |
|---|---|---|
| Deposits | 82,100 | 83.9 |
| Securitized Financings | 7,817 | 8.0 |
| Senior and Subordinated Unsecured Notes | 7,968 | 8.1 |
Market Activity and Partnerships
During the nine months ended September 30, 2024, Synchrony Financial expanded its partnership agreements with over 55 new collaborations, diversifying its portfolio across various sectors, including health, automotive, and digital sales.
Capital Structure and Ratios
As of September 30, 2024, the company's capital ratios were as follows:
| Capital Measure | Amount ($ millions) | Ratio (%) |
|---|---|---|
| Total Risk-Based Capital | 16,864 | 16.4 |
| Tier 1 Risk-Based Capital | 14,723 | 14.3 |
| Tier 1 Leverage | 14,723 | 12.5 |
Stockholder Returns
Synchrony Financial declared and paid cash dividends totaling $301 million during the nine months ended September 30, 2024, with a quarterly common stock dividend of $0.25 per share.
How Synchrony Financial (SYF) Makes Money
Revenue Streams
Synchrony Financial generates revenue primarily through:
- Net Interest Income: This includes interest and fees from loans, which amounted to $16.1 billion for the nine months ended September 30, 2024, up from $14.6 billion for the same period in 2023.
- Other Income: This category includes interchange revenue, protection product revenue, and fees from loyalty programs, totaling $1.4 billion for the nine months ended September 30, 2024.
Net Interest Income Breakdown
Net interest income for Synchrony Financial is derived from various products and services, mainly credit cards and consumer installment loans. The following table summarizes key figures:
| Category | Average Loan Receivables ($ in millions) | Interest Income ($ in millions) | Net Interest Margin (%) |
|---|---|---|---|
| Credit Cards | 93,785 | 15,345 | 21.86 |
| Consumer Installment Loans | 6,107 | 630 | 14.91 |
| Commercial Credit Products | 1,992 | 134 | 9.15 |
| Total | 101,484 | 16,116 | 21.21 |
Other Income Sources
Other income includes various fees and revenues from services provided:
| Type of Other Income | Q3 2024 ($ in millions) | Q3 2023 ($ in millions) |
|---|---|---|
| Interchange Revenue | 256 | 267 |
| Protection Product Revenue | 145 | 131 |
| Loyalty Programs | (346) | (358) |
| Other Income | 64 | 52 |
Provision for Credit Losses
The provision for credit losses has increased significantly due to higher net charge-offs, which reflects the credit quality of the loan portfolio:
| Period | Provision for Credit Losses ($ in millions) | Net Charge-Off Rate (%) |
|---|---|---|
| Q3 2024 | 1,597 | 6.06 |
| Q3 2023 | 1,488 | 4.60 |
Loan Receivables and Charge-Offs
As of September 30, 2024, loan receivables totaled $102.2 billion, reflecting a 4.4% increase from the previous year. The following table shows charge-off details:
| Category | Net Charge-Offs ($ in millions) | Charge-Off Rate (%) |
|---|---|---|
| Credit Cards | 4,392 | 6.26 |
| Consumer Installment Loans | 263 | 6.22 |
| Commercial Credit Products | 103 | 7.03 |
| Total | 4,759 | 6.26 |
Funding Sources and Costs
Synchrony Financial's funding strategy includes deposits, securitized financings, and senior notes:
| Funding Source | Average Balance ($ in millions) | Average Rate (%) |
|---|---|---|
| Deposits | 82,100 | 4.7 |
| Securitized Financings | 7,817 | 5.5 |
| Senior and Subordinated Unsecured Notes | 7,968 | 5.0 |
Net Earnings
Synchrony Financial reported net earnings of $789 million for Q3 2024, compared to $628 million in Q3 2023. The following table summarizes net earnings:
| Period | Net Earnings ($ in millions) |
|---|---|
| Q3 2024 | 789 |
| Q3 2023 | 628 |
Conclusion
As of 2024, Synchrony Financial's business model is heavily reliant on its credit products, interest income, and effective management of credit losses, while diversifying its revenue through various other income streams.
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Article updated on 8 Nov 2024
Resources:
- Synchrony Financial (SYF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Synchrony Financial (SYF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Synchrony Financial (SYF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.