• New Accounts Added: 5 million in Q4 2024; 20 million for the full year 2024.
• Purchase Volume: $48 billion in Q4 2024; over $182 billion for the full year 2024.
• Ending Loan Receivables Growth: 2% increase to $105 billion.
• Net Earnings: $774 million in Q4 2024; $3.5 billion for the full year 2024.
• Earnings Per Share (EPS): $1.91 per diluted share in Q4 2024; $8.55 per diluted share for the full year 2024.
• Return on Average Assets: 2.6% in Q4 2024; 2.9% for the full year 2024.
• Return on Tangible Common Equity: 23% in Q4 2024; 27.5% for the full year 2024.
• Net Revenue: $3.8 billion in Q4 2024, a 4% increase year-over-year.
• Provision for Credit Losses: $1.6 billion in Q4 2024.
• Efficiency Ratio: 33.3% in Q4 2024, improved by 270 basis points year-over-year.
• 30+ Delinquency Rate: 4.70% at the end of Q4 2024.
• Net Charge-Off Rate: 6.45% in Q4 2024.
• Common Equity Tier 1 (CET1) Ratio: 13.3% at the end of Q4 2024.
• Capital Returned to Shareholders: $197 million in Q4 2024; $1.4 billion for the full year 2024.

• Warning! GuruFocus has detected 5 Warning Signs with BOM:543066.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Synchrony Financial (NYSE:SYF) added 5 million new accounts and generated $48 billion in purchase volume in Q4 2024.
• The company reported a strong return on tangible common equity of 23% for the fourth quarter.
• $Synchrony Financial(SYF-B)$ (NYSE:SYF) renewed and expanded partnerships with major brands like Sam's Club and JC Penney, enhancing its market presence.
• The acquisition of Ally Lending and the integration of Synchrony Pay Later are expected to bolster multi-product capabilities.
• The company maintained a strong capital position with a CET1 ratio of 13.3%, providing a solid foundation for future growth.

Negative Points

• Purchase volume growth was impacted by selective customer spending and credit actions, with some platforms experiencing a decline.
• The net charge-off rate increased to 6.45% in Q4 2024, above historical averages.
• The company faces uncertainty regarding potential regulatory changes, such as the late fee rule, which could impact financial outlooks.
• Synchrony Financial (NYSE:SYF) experienced a decrease in other expenses, but this was partially offset by costs related to acquisitions and technology investments.
• The company's liquidity ratio was slightly higher than anticipated, reflecting a conservative approach to prefunding future growth.

Q & A Highlights

Q: Can you provide more details on the net revenue guidance and the impact of rates and PPPCs? A: Brian Wenzel, CFO, explained that the net revenue guidance includes significant increases from PPPCs and growth in revolve rates. However, there are offsets from RSAs due to lower net charge-offs and a drop in late fee revenue. Net interest income (NII) growth will be more pronounced, excluding RSA impacts. The timing of rate cuts will influence funding costs, with PPPCs performing in line with expectations.

Q: Why was capital return lower this quarter, and what are the plans for future capital deployment? A: Brian Wenzel noted that the lower capital return was due to anticipated market volatility around the Presidential election. The company plans to complete the remaining $600 million share repurchase authorization and is not holding back capital for inorganic growth. The focus remains on maintaining a strong capital position.

Q: How is the PPPC impact expected to evolve, and what is the outlook for ROA if late fee regulation doesn't happen? A: Brian Wenzel stated that the full impact of PPPCs will continue to build through 2025, with further growth expected in finance charges and promotional fees. If late fee regulation doesn't occur, the PPPCs should incrementally increase ROA, although specific guidance on ROA was not provided.

Q: Can you discuss the deal environment and factors affecting loan growth and purchase volume? A: Brian Doubles, CEO, mentioned that the operating environment is favorable, with disciplined competition and a robust pipeline of opportunities. Credit actions have been taken to align with long-term targets, impacting purchase volume by design. The company remains focused on disciplined bidding and strong alignment with partners.

Q: What are the expectations for loan growth in 2025, and how will credit actions influence this? A: Brian Wenzel indicated that loan growth will be challenging in the first quarter due to difficult comparisons but should accelerate through the year. The base plan does not include lifting credit restrictions, but this could be considered later in the year if net charge-offs align with guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.