Synchrony Sees Improving Credit Metrics, Digital Payments 65% of Total


Synchrony Financial posted third-quarter results Tuesday (Oct. 19) that showed improving credit metrics, a ramp-up in consumer spending and increased traction in digital channels.

In terms of the headline numbers, adjusted earnings of $1.67 per share topped the Street at $1.49 a share. The consolidated top line was $3.7 billion on an adjusted basis, a bit better than the Street at $3.6 billion.

The company said that its average active accounts was up 5% to 67.2 million, while new accounts surged by 17% to 6.2 million.

Total loans on the books came in at $79.8 billion, up 2% year on year.

With respect to credit quality, the company said that loans that are at least 30 days past due, as a percentage of total period end loan receivables, were 2.4%, compared to 2.7% last year. That tally represented $1.8 billion.

Net Charge-Offs  

Net charge-offs as a percentage of total average loan receivables were 2.18% compared to 4.42% last year, to a most recent reading of $432 million.

Supplemental materials released by the company showed that purchase volumes were up 16% in the period, to $41.9 billion. The spend per active account, according to supplemental release data, was up 30% year on year.

Within the loan book itself, the firm said home and auto purchase volume was up 10% to $26.7 billion in receivables; health and wellness were up 10% to $9.9 billion in receivables. Overall  digital purchase volumes were up 21%, representing $11 billion, as Synchrony noted a continued “shift in consumer behavior.” Digital payments, the company said, represented 65% of the total payments, as measured in the most recent quarter.

During the conference call with analysts, CEO Brian Doubles noted that future opportunities exist with the expanded strategic partnership with Fiserv “through which small businesses will now be able to access Synchrony products and services and accept private-label credit card payments via the Clover point-of-sale and business management platform from Fiserv. This will enable accelerated growth for small businesses, empowering merchants to attract more customers and generate more revenue by offering our customers greater flexibility and choice in how they make purchases.”

He also said Synchrony will explore additional opportunities to cross-sell Synchrony products to existing Clover merchants.

Read also: Synchrony, Fiserv Expand Partnership to Offer Merchants Synchrony’s Payments, Financing Options Via Clover

In reference to buy now, pay later (BNPL) activity, management noted that the company does about $15 billion in installment loans, both short and long term, across about 70,000 locations. Purchase volume over the closed end products has grown by about 46% annually, according to CFO Brian Wenzel.