Synchrony Financial (SYF)

Greg Ketron Director of Investor Relations
Margaret Keane President and Chief Executive Officer
Brian Doubles President
Brian Wenzel Chief Financial Officer
Sanjay Sakhrani KBW
Bill Carcache Nomura
Don Fandetti Wells Fargo
Betsy Graseck Morgan Stanley
Bill Ryan Compass Point
Rick Shane JPMorgan
Matthew O'Neill Autonomous Research
Dominick Gabriele Oppenheimer
Eric Wasserstrom UBS
Moshe Orenbuch Credit Suisse
Call transcript
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Welcome to the Synchrony Financial Third Quarter 2019 Earnings Conference Call. My name is Vanessa and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the to turn now will call Mr. over I Relations. Ketron, Director Investor of Greg Sir, you may begin.

Greg Ketron

morning welcome everyone earnings Good operator. Thanks, and Thanks joining conference to for us. call. quarterly our

a of accessed plan to This our section during today's Investor we website. press financial In release, The website by information address the covers are schedules, Relations addition we have synchronyfinancial.com. and our to presentation provided going topics to the presentation the press release, be detailed call. can that on available

Before These materially to factors SEC filings, comments the available differ we in our uncertainty remind you on today will could started, I differ list get wanted subject that and that might include statements risks results are We our forward-looking which website. to cause actual statements. actual and materially. our to are results

During in we measures to discussing non-GAAP the the financial will performance. call, refer company's

GAAP for You measures these can in to measures a materials reconciliation find call. financial our of today's

is webcast and teleconference transcripts responsible Financial website. earnings third The parties. Finally, for by located our edit authorized on only does nor the our of provided Synchrony not are guarantee accuracy not

Now to Margaret. call it's the over pleasure my to turn

Margaret Keane

an joining quarter Thanks everyone morning and by thanks our accomplishments of today. Greg. I’ll begin for providing on Slide Good overview third us X.

strong $X.XX reserve by to results related the We third of X.X portfolio, quarter. in the positively included the deliver this impacted continue billion to share quarter. Earnings Walmart results reduction or $X.XX a per in which consumer

Loan receivables were down X%.

X%. average the purchase increased was X%. interest X%, Net basis, accounts volume Core grew excluding and income X% a Walmart Portfolio on receivables loan However, up grew active

in and expectations. with in ratio of efficiency XX.X% Our our XX% down from line the year prior was was

we or of last deposits grew and deposits. come has X% quarter, much over through billion direct the During this growth year X.X

of new here funding customers. some important an will Brian remains to our attract detail help efforts we shortly. ongoing growth platform and for source and deposit direct retain deposits are making our investments Our existing

share our to extensions. pleased are renewals and recent We partnership

In credit Card sales we announced platform, strategic and consumer with the relationship our expansion our Retail PayPal. extension of

of credit Venmo’s co-branded new Synchrony’s and half for consumer We become data in card which experience combine analytics social and will mobile of and the launch shopping exclusive issuer user the experiences will design industry leading customers. will payment a second program XXXX. expertise The Venmo in Venmo’s create credit Venmo card, to technology personalized with

expertise partner extended continue which strategic our XX-year also in innovative This grow a relationship PayPal partnership our milestone We existing to business PayPal. in we with their through experiences. our is to with help technology and new leverage new digital our consumer

that Sporting of also and accessories. omnichannel our an We sports sporting leading assortment DICK'S goods renewed partnership equipment, apparel, retailer offers a with footwear Goods, extensive

accelerated management on customer financing Field with partnership on can DICK’s and score Mastercard experiences and their strategic intersection be for account instore agreement credit co-branded to programs. nearly digital of the Goods, including Building provide customers and promotions will used program a digital dsg.com branded Stream. Golf cards special rewards XXX card through and stores, This partnership, continue two-decade the plus and this and Galaxy strengthens rewards retail and DICK’s card These holders. across & Sporting credit

key utility and another Polaris, we our signing for with active and broader for Conn's. renewals. create renewals quarter acceptance cards priority. had to our In Solutions, Recently La-Z-Boy network a Payment Growing is

front network. successes our in have CareCredit many had on that We recent

Duane plus network Walgreens extend Card, XXX,XXX and including and of CareCredit’s Reade the X,XXX continue healthcare nationwide We to providers stores. accept that than retailers CareCredit more

they more end-to-end Card patient locations and This financial wellness their wherein Loyale consumers for CareCredit We will manager, also added payment use Loyale, health platform. provides the be offered patient can financial where needs. as on CareCredit a option engagement an

University Luke’s St. with partnership new a signed Network. also We Health

analytics, data new and proven. We are are technology, as programs ones also to to experiences existing success we seamless innovative all our and of fundamental winning of which customer focused have the on digital

digital continue to account We channel to our across in access they to invest cards, information their use. to ensure whatever have innovations choose core rewards, and holders

our penetration over sales penetration in Digital applications card consumers XX% Overall, digital third sales across year. quarter retail channel The all has growing. same of alone mobile of with of online the XX% growing been our happening are last quarter. was XX% the the

sheet, strategy and capital Our shareholders. attractive risk to while return strong a adjusted growth strong at capital to the drives allocation returns, maintaining ability balance

During a We of common quarter. it Synchrony Financial Overall, million was progress and dividends. the quarter, a million initiative. XXX on strategic repurchased made in strong we stock paid XXX

capabilities, to develop and win continue in in we We are to business. direct-to-consumer us investments which our making marketplace data helping digital our is and the

broad-based and continue new both maintain we via growth growing programs We our expand network. organically to and

team seamless conversion to of the and reshaping our that the working consumer excellent are of top we is and service as All would was the happening month, process this for maintain the the focus Earlier and transition. deliver executing portfolio program. thank and to I we successfully a Walmart completed throughout on ensuring like dynamics the a the customer future this sale hard experience. priority

largely the down portfolio. platform Before turn and the In Retail increased up was digital were our year active results reclassification X%. loans business, grew Walmart results strong offset were on over will accounts X% direct-to-consumer on but discuss I our by I by over Average in were were XX%, they highlight call progress to Card, Slide Brian excluding the Walmart and to which volume our purchase Interest last Loans up X%. the partners, driven fees our X. of X%. portfolio

the consumer credit of and through our card. are PayPal expand to the relationship happy addition Venmo with extend co-branded We

resulted relationship that with in power X%. growth particular Sporting also We of sales and brands. generated another DICK's broad Galaxy, delivered renew strong includes which & are the loan strength also based furnishings our happy Golf Solutions We Payment to their platform Goods, home across Stream growth receivables Field quarter. in and with

loan driven our Solutions to active Interest partnerships and average cards. card was X%, and key Synchrony up by care the Purchase The partnerships and continuing to also Synchrony volume drive growth. and quarter credit We X%, increased our X%. card Home through Payment this seasonal organically loans growth renewed increased accounts network. receivables primarily

by increased strong primarily another average and dental networks which was driven Purchase X% growth growth. was and card delivered helped approximately up results veterinary loan increased drive along the also further CareCredit XX% on and volume the now stands X%, initiatives with loans Receivables platform loans build receivables led volume higher fees solutions These Interest to has driving specialties. of reuse, oil at quarter. of as gas X%. other future purchase active XX% accounts for such growth. by excluding and and payment

reuse expand a rate expanded XX% base continue utility grew future the the to our network of drive extended quarter. CareCredit All to platforms. increased relationships, strong payment We card our third helping network, We growth. volume We cards for in sales strong continued solutions and and our to in and drove growth our of purchase providing across the utility.

that, turn over Brian Doubles. call With the to I’ll

Brian Doubles

and development strategic to Thanks, morning channel Margaret. of Slide leading bank to Synchrony Good on also become growing funding, center our branded through the provide competitive that attractive to today launching More objective our efforts a business innovative Among products services. will while and starting X. with of our is products an everyone. on digital and is new customer evolving products. lending capabilities drive partners top diversify My and specifically, source direct-to-consumer our comments our relationships deeper

introducing and synchrony two we’ve Synchrony the years been over Synchrony card While products home branded offerings. care consumer past through our

we on are the our been a recently also card. the I card. Synchrony focused platform on have progressing Today, both spend will We outlining branded minutes banking how and general-purpose general-purpose few

on First, our products. deposit

from building made the over have several progress banking consumer platform. years significant We in last our

profile. the an XX% have growing With our portion larger expanded than faster industry share U.S. deposits of currently market funding. banking the our we Deposits last consumer are deposits becoming of total of comprised several direct increasingly mix Our over years. and funding

to to accounts. less on The investments have new over us the years attract past we’ve rely made rate deposit enabled few

audiences, advertising, to been well the right enhancing experience. and as Our strategic digital investments right message have our enhancing the digital focused developing on our as content

well overall For and example, better side user a New App as year, our launched our earlier as this experience. interface redesigned with customer we marketing Native

see X, our of On you the results efforts. can Slide

Over grown growth XX% industry deposits of an year have we several rate the versus per years, X%. past

During our savings reduced that have time rates period, product we have and also been as the successfully less on shown reliant competition slide. below rate the on

acquisition sensitivity and We cost remain to our XX% costs. have years. also reduced focused rate three reduce last making the on We acquisition by investments in

look ahead, we products, in As plan invest we additional and capabilities, features. to

effectively. improve allow continue customer continue launch We service programs, only experience, to to will loyalty customer of also not will efficiently all and to grow and rewards differentiated us and drive better a which but also

the all the quick on the account with seamless features through way focused once self-servicing are process opening we Importantly, of is starting experience, all customer opened. a aspects account

have solid lending we a we foundation on that build which deposit confident have built the are from in the significant general-purpose objective cards. Similarly, made for with future side, platform. the our progress We to

to card recall, portion improved a a expand This general-purpose R formal Toys way utility the substantial market, which that successfully we was will Synchrony and you our cardholders. into cost-effective MasterCard, rebranded accounts As continuous also for Us providing a while qualified of was portfolio. for the

this activation highlights a We usage. Slide repeat for initial X had strong product. and results our rate

time, balances we fund per by account increased [indiscernible] are on as use also longer to have the we cards. we same the prop by XX% XX%. pay fact, In value RSA account the savings those sales and the no At and per

this an us a growth. credit to in Approaching and test card utilize to manner approach learn allowed general-purpose has iterative

to a incentives, features as and activation an We’re card and attractive cash value rate. At back launch, which data we spend with consumers. proposition, propositions offered well insights as value spend leveraging test customer card delivered X% strong general-purpose and

testing and currently APRs, of incentives. combinations are We promotional offers, different

and a future approach We features. very are product value propositions taking disciplined offerings, to

our to achieve risk we will Looking returns. believe we where ahead, target we attractive customer can marketing adjusted segments efforts

opportunity short-term been growth to approach results far. our the in While the we’re the our are disciplined nature excited achieve about we’ve expectations early given so modest able and of

we to the seek strong the we built. we direct-to-consumer offerings foundations in As diversify space, leverage our have will

a evaluating prospects about diverse this large in and and excited are we're opportunities space. our market We across very

call And with that, to I’ll Brian turn the over Wenzel.

Brian Wenzel

included or start good related on the the on This Slide presentation. morning everyone. of morning, earnings October. to per second portfolio This diluted reduction quarter reserve and Brian, of consumer reported I’ll the billion in the Walmart X we share. of $X.X $X.XX sales Thanks,

earlier, and $XXX provided of an benefit $XXX tax or As million million the quarter. the EPS $X.XX to Margaret after totaled noted reduction

full on of portfolio in areas our fourth conversion the quarter outlook generate as the details this X. is other how growth for We that number will I and a Now and some Slide provide noted sale strong complete, and year. factors program impact year-over-year on

were receivables loan portfolio, receivables up last Walmart loan receivables. the also in Interest X%. the and on growth up by Excluding driven X% were over fees year,

Overall, the we’re across the and growth X% last was growth. well Purchase increased as as this year. over accounts risk pleased adjusted growth average with X% active on generated we the business, volume returns

impact volume purchase active the growth was X%. the account and growth Excluding Walmart average of of program, X%,

XX% last million the by XX% losses related performance increase. reserve year. last quarter. of build RSA's average million Improved the The was a or mainly The the or as from reserve decreased portfolio. increased for from $XXX for reduction program Walmart percentage quarter. drove in RSA the was growth to the driven X.X% million $XXX core year, in and the provision loan $XXX receivables

advance XX% the in over and Other cost to enabled operating growth to by X% conversion. last improvement million, flat expenses the last XX.X% by quarter, Walmart leverage of driven expenses reflecting year, portfolio in sale Holding program offset for essentially efficiency us the an increased year from positive the quarter. was deliver that this savings ratio executed $XX partially

generate So, company strong the continued the quarter. in third overall, to results

benchmark by move our assets, primarily percent a basis to factors income of interest net X%, margin the compared net in last rates. lowering total driving income interest receivables. margin to liabilities mix growth were, XX manufacturers interest Net earning basis points a performance I’ll year's The points. higher margin of up an in net compared total trends. loan and lower The the increase receivables to down to to margin include XX.XX%, loan was due primarily year interest last XX X.XX%, margin of of cost was as our Slide cover interest-bearing and driven slightly to XX.XX%, XX

portfolio. from accounting in on the increase prior by program which the of yield PayPal impacts offset points the the year. impact loan the partially for purchase XX I to an These will in the to net more quarter, basis receivables the XX.XX%, were including related in Later interest of include impact call, the provide fourth the of insight sale Walmart margin direction credit

on credit Next, I’ll trends Slide key XX. our cover

delinquency for The X.XX% the delinquency X.XX%, of XX XX a specific year. start X. trends. compared rate year, with XX% delinquency plus was X.XX% terms plus to and quarter, I’ll last dynamics In was last versus rate

impact program, last and exclude you the and to year, rate basis stabilizing plus PayPal improved Walmart credit of flat the points, rate was If portfolio, delinquency trends. XX last continued the approximately delinquency the year, X XX reflecting credit compared plus the to

net to X.XX%, was on last basis points quarter. from X.XX% than offs. decline XX basis to Moving charge charge-off point rate last XX second somewhat our quarter and to Net X.XX% was year expectations and compared over lower the

was XXXX the continued partially impact related trends credit to improve, program. credit by in to this PayPal While accounting offset purchase the

loan allowance basis the than The the loan net points XX and X.XX% reduction Walmart of impact the the losses quarter rate of the approximately to as million, Excluding reserve reserve program credit excluding impact was year. third the portfolio, core the lower receivables charge-off the from was for and in last was related the a PayPal $XXX build Walmart in percent portfolio. the

reduction which higher October. million, $XXX was occurring $XXX The the portfolio Walmart of the million, timing portfolio of sale expected to was the in due the to earlier related than

As to in fourth in $XX a loan result, quarter million will loss the $XX in be range. remaining the million reserve reduction the

we continue core receivable be mainly for we core the $XXX in fourth loan in the will and third fourth this to driven growth X% stronger the believe We quarter. reserve range, the expect see growth. did into quarter million $XXX of Consistent bill with million outlook the by will quarter the provided,

growth digital network reflects and in the solutions. acceleration our in the space have and in CareCredit The the and we of opportunities home fast-growing and an and acceptance payment auto expansion networks

XXXX X.X% by the charge offs, to of sale of the will the purchase towards offs we accounting the October. increase related mainly impact by XXXX, range expect charge partially Walmart the for with impact compared net to the the the the in slight lower-end PayPal portfolio, credit Regarding be to net X.X% driven offset from portfolio

the Excluding rate to to similar of charge-off net for is and PayPal Walmart, XXXX. expected be effects XXXX the

is in which effective XXXX, implementation the the with consistent we CECL, regarding disclosed Finally, what believe of is quarter. impact we last initial

will we our impact CECL the earnings year's provide our quarter transition and guidance call during outlook We when 's incorporate adjustment January. estimated of fourth impacted next in

improvement. trends are credit summary, In showing stabilized and are

forward We expect show assuming economic continue as the to stability trends stable we conditions. move to

We risk to at opportunities for see continue good growth continued attractive adjusted returns.

program for savings the billion, $XX Moving was driven $X.X growth Walmart was sale to The quarter. Slide expenses the partially at cost offset advance and XX, increase Overall in of I’ll of by executed increase by million cover compared year. an X%, portfolio expenses or last or of conversion. came to in

XX% the us our to Holding in-line last from the leverage flat enable expenses improvement deliver basically year the with XX.X% efficiency expectations. ratio quarter this quarter, operating positive reflecting for to in

expect to conversion has eliminated XXXX. the expense portfolio, Walmart the be be the in of program been reflected of quarter fully the the with program cost completed. portion and fourth the rate associated sale run Walmart for the final Now, in We do

term senior Slide year. last our XX, we unsecured year we’ve $XXX last at X%, to our rate our issued issuance deposit to and program. funding, billion strong three-year the million The grown in This through with of demand. deposits Moving a $X.X fixed In of XX% or puts direct primarily has XX% deposits had X.XX% July, compared over debt. a

capital year. Basel plans significant execution level our fully compares amount fully acquisitions, of and continued a as This under over past The basis capital phased last XX.X% ended even to of in company's program strong the increased organic the quarter CETX the generation rules. the We liquidity. at growth, phased and capital in company reflecting to III deployed Turning XX.X% year through a the capital capabilities. on

share the which million During of board approximately execute billion $X.XX of the third third the capital $X $XXX stock of during we the June share quarter, the to a XXXX. of or plan, At stock We authorized repurchased XX.X shares we dividend on capacity common May. the $X.X XX, repurchase quarter, we of common quarter. per paid remaining through million end runs billion have continue in plan announced and

Total $XX last is assets. facilities to reflecting which strategy undrawn liquidity, deployment outlined the XX.X% over down our including credit that was our we growth. year, of total equated execute billion, continue from some of support XX% This to of the Overall, we liquidity on previously. to

sheet maintaining funding strong strong to very sources and with a balance capital diversified liquidity committed and are levels. We

dividends our growth of continue of repurchases. expect execution share through further in to We capital form and plan deploying capital the and

net I conclude, that conversion and now as Starting the from XX interest seasonally quarter the portfolio I the basis want margin, the to for years. lower with impact as the to the declining is forward quarter in view completed. the year, past fourth going as the been current sale fourth well program margin Before as third our and quarter, two fourth has the recap in Walmart the the points from much

addition will quarter, this to the the excess pronounced In the from decline seasonality, sale portfolio. liquidity Walmart be the more somewhat to due of

interest still trend fourth We the XX.X% net for XX% margin interest range expect towards the quarter. in XX.XX% the will the year. the We to margin expect net be for

quarter and there are the Focusing the RSA percent the several on RSA’s, impacting year. factors for fourth

the RSA's First, growth in impact will RSA’s. portfolio. is improved the performance program Also of sale Walmart impacting

the have RSA the the impact fact an of of the the the sale, percent upwards both as operated RSA on timing program well company will below an percentage. portfolio of Specifically, Walmart as average

X.X% full-year the it'll Considering fourth we be we had be and the X.X% slightly approximately percent factors, range X.X% expect will RSA all the above for to expected. quarter, these the for

credit. to Moving

by growth the reserve quarter core million driven the the in be $XXX range. to million will to build be and for expect $XXX largely fourth We

result reserve being As quarter will Walmart to a the October, sold and be loss reduction the $XX occur will the in the held loan $XX against remaining of fourth in portfolio million the portfolio this million in range. in

net offs. Regarding charge

October. net towards XXXX, range. credit impact mainly to to X.X% purchase XXXX partially from end The the We the is Walmart X.X% the accounting in offs be will net of compared expect by the portfolio, the driven XXXX impact increase lower for were of as to the PayPal by sale charge portfolio related in offset slight the charge-offs

net the Excluding the XXXX. and similar of to Walmart, effects to PayPal be expected rate charge-off is

to Turning expenses.

and to for expect around summary, efficiency the In be generate attractive positive leverage continues ratio returns. operating business We growth still adjusted generate to the with continue risk XX% XXXX. strong to

I’ll now the open Q&A. back Greg turn the call to to

Greg Ketron

That comments concludes our the quarter. on

the begin Q&A now session. will We

So many to as and to one please follow-up that accommodate of one yourself limit to we I’d you participants question. like can as possible, ask primary

have team will questions, you session. available the after please investor Operator, the Q&A start relations If be additional the call.


question first Thank [Operator Sanjay We our you, with Instructions] Sakhrani sir. from have KBW.

Sanjay Sakhrani

morning. Thanks, I question good guess, Wenzel. for Brian first

really obviously to yield, going obviously this mixed the despite indicated purchase quarter were some the all Just there fed the about portfolio with impacts we trend it’s done the potentially, changes? forward, and cuts these discuss relative just dynamics you I well could and know occurring rate rates, different

Brian Wenzel

Great. Good morning, Sanjay.

the – think lot net is XX%. margin interest you think our XX% it's book about about our When like more transactors of quarter, floating. you As of book a for

So, necessarily we’re rates. exposed interest not as to

We margin. about think the also

we the this that’s in. place that’s as again benefit not for purchased before bleed CIT the accounting PayPal portfolio last put positive to from as reoccurring year year, beginning in that we We the a have purchase well

Walmart than at bit of headwind So, as be forward. net a the we those margin that the a higher interest impacts will little interest move out the net portfolio margin positive book. there portfolio portfolio Obviously, over on because operated of to coming with are

assets been] matched fairly and don’t see the [again move well of So, environment lot liabilities a we as pressure forward. rate we from our are interest

Sanjay Sakhrani

there. Margaret And on I the MasterCard. Okay. guess and is I the second Doubles disclosures my for question Synchrony appreciate Brian

the forward going make was Just product. understood I sure want plan what with to that

success used and have until to consumers Going grow think be retailers been card bankruptcy for portfolio that primary they that balances that now, just been portfolio or we has you you. independently then transferring to it going of their forward, is when are product basically up or to expecting that for Thank the over? transitioning about card transitions as

Brian Doubles

we're say, but good Yes, sure Brian. in MasterCard Look, still the we activation, pleased we're seeing trends it’s good that early, performance This would on seeing have portfolio, I Sanjay. usage. with overall, is the that been

We’re accounts. seeing balances, a nice of good spend on retention the

X% card. strong you As proposition value know, very on we cash put a back the

are return. not the we’re Given value very still a and able offer prop earn we to RSA, an attractive paying attractive

pleased what seeing. we're with Look, we’re

look, the we’re In got terms They’ve of that. the portfolio. We’ve general-purpose you know a monitoring a the place. of evaluating usage, certainly team a experience, card broader great performance strategy, got lot are in on we

We also some account do started to new originations.

different think profitability into testing going this. on I to important to but is, that’s we’re returns note and we're around look thing segments, be the So, disciplined

So, we short-term. the have some modest growth expectations here in

Sanjay Sakhrani

Thank you.


you. Thank

next Our comes Bill question Nomura. Carcache with from

Bill Carcache

I question the good morning. on had a with PayPal. recent credit Hi, Venmo deal

digitally click for card, credit on one conclude So, PayPal be, Venmo modernization like be Venmo going that strategy reasonable merchants of of and platform? the pay like to that you enable to with know, the a to the credit would Venmo pay integrated accept button who with Venmo. also product already act to basically it will available won’t So, customers across the just checkout is it a button? Venmo for Is PayPal to but standalone Venmo accept credit been Venmo Venmo elements has checkout the

Margaret Keane

ability work their You do what expand the that's as for a we that Venmo tell I question they’re really customers. at how PayPal know, organization, probably but can customer choice is say with you I would about they and for looking team, that

solve that try great are look you with what describing exclusive terms going know, to would how we’re credit to what for use closely know, avenues Venmo the the we really experience the work out customer build as all to the that are want on we growth customer, and, expect across various try them digital in-app of credit them to out of understand experience, we’re the I for at So, card, channels. there really you have and to frictions capabilities,

as going both closely we PayPal to well So, them to as we’re with continue have as with we program work develop that Venmo. the them

Bill Carcache

us you the rewards of if demand credit what, Margaret, And any the card just you sense guys the internal side studies Got so I'm will the there prop are give the that like? you know, and and value the guys there kind it's there? confidence what alternatives done demand It are to there expect of reasonable a of just wondering like have just out for for thanks. a that will any product know, sense of it. include, you be be lot competing on you for that that product gives looking will for seems

Margaret Keane

you have million Venmo XX customers. first, Sure. they know, Well,

that’s growing. So, great its we and a think market target

has it a in know that, Venmo. great and particular Secondly, brand we love millennials really

rewards what going of And so, customers those looking be the at value that looking I we’re build for. out to think proposition, type as to are we that are look

back, include to could it wouldn’t say back. be but know, I you So, going cash cash only it’s

research of think live I into particular really is experiences a we live. with important particular And customers these deep all know, this the this that they of at how to segment then, really get really, and base. want choose element or other look piece we as customer of some really as to

the as going on And app. a at looking both using that well experience be have so, themselves as they to perspective, value the we’re from prop

Bill Carcache

you appreciate so That's much. it. I great. Thank


you. Thank

Wells from Fargo. with Our Don is Fandetti question next

Don Fandetti

morning. Good

look the expectation I the And question on is of talk wondering flattish sort normalization, what's if term. just growth build guide QX I on know, and sounds So, year-over-year on year-over-year. a the reserve ex-PayPal, factors? you you from is in are on one credit, up hood, going could you talk it credit those at if like know, then, about near fine, just your are little down two but was the can they bit about guess you the for losses delinquencies under going you in PayPal with general,

Brian Wenzel

Don. Thanks, great. Great,

again, we you but of look range. one and delinquencies. on low-end They’ve know, First all, when provide to you guidance charge-off of been to X.X forward-looking X.X information regard to guided provide we guidance, basis XXXX. to necessarily don't we’ve the portfolio, specific stable relative With PayPal, the throughout don’t at on net consistent

the move rate July. quarter below to second provided we as guidance improving that our clearly, quarter seen through in So, third credit is back trends, reserve which in quarter, in call the we've the we back stabilization via was

So, we performed. as environment, net the have our at don't on and at really collections the environment that measures charge-off look see look any we we’re we and the credit all pressure optimistic and consumer

and range, view to we of for net end credit again, low be stabilizing So, to be better the expect the X.X X.X at year charge-off to rate the to Don.

Don Fandetti

buy do buybacks, back our they feel you a you the light like you were they curious; versus then, bounced little can model, bit And a just but, know, kind of around. still was do you through heavier. you in Are would still open maybe QX potentially market? you tender? can just kind be And the like amount that? I would work a considering assume significant feel I Or of

Brian Wenzel

repurchase quarters the five know, had have know, that we a you relative you cadence planning go a as is obviously, Then Walmart, for to there laid they as we basic basic year, happens the that out. or kind repurchase over the know, at we that capital transaction. the to you four in. through move and we plan, had we plan the – capital Yes, certainty of look Obviously,

You have into to getting reserves record earnings. those

the quarters purchased for two billion know, first under the You $X.X approximately we’ve plan.

authorized the $X billion billion repurchase plan. remaining under $X.X have We

able confident that will to be plan. feel execute we that We

open of the If and history, back, million. year. past the our you twice, we go year We purchased first in last fourth quarter in were of both $XXX of quarter able execute to this market

best to the we certainly lots we $X.X feel to to next done on but that the three over we get do of options get we’ll continue So, outlined. we different feel to we quarters. we the execution execution and the evaluate on that, price, have Most billion plan execute confident can

Don Fandetti

you. Thank


And you. thank

next Morgan with Betsy Graseck Our from comes Stanley. question

Betsy Graseck

morning. good Hi,

Margaret Keane

morning. Good

Betsy Graseck

that dental out plans CareCredit. veterinary, on a lot back you couple you from of just and either and questions, more the of – as give I interest bit I area, in know, verticals financials if health coming dominance the you your there, so a just you’re sense that competition? against well some wanted as A you other how understand fintechies Thanks. pushing after Gentlemen see the field. know, to you continue a one called I know, of know little us but to, or,

Margaret Keane


to know, So, our year, since really of said of one beginning we’ve was grow the you strategies the the platform. CareCredit

wellness really we growth, and see continue we’re the and card, really we over So, strategy the to But dental that continue is this a business that's to know, at to you we’ll in to utility those. we card vet other we've of latest the areas. acceptance, our and what and But expand being the more look into year really the good health Walgreens’ as quarter. calling in the itself of core expanded look highlighted businesses two

One, what is from really pets]. [vets shifting we're calling to

a they and the bills. vet year really in the to ensure efficient looking function Pets at that card product leverage that consumers are settlement acquisition the So, Best getting insurance this side our really is going pay really their forward ways as a both of of process of to

where The this I is management really as when going in systems other credit option call, and can an integrate system into payment care system. after, part of that those we have

calling of network, health into those. example is, so hospital lastly network. Loyale really what one is And we’re then, expanding the So,

past think dentist So, out sold in describe gone office vet dentist office, office and by I by office. we've vet the we’ve

with payment integrate at verticals look to we used network. the in continue hospital can now be and think various working CareCredit to hospital are a card our where networks option as We

opportunity we out our And, growth know, are of been and capabilities you years, have this for our us. this it a and for know, we want great fintechs go. them, still we we’ve we you in what experience very is, XX in view So, and a over space. is see and confident at expertise think there, We’ve to where lot we’re while built


have Betsy, do anything you further?

Betsy Graseck

Yes. Oh!

ex-Wal-Mart, you for rate should is of just good run it that, we you give know, be be that. about of it’s bit should should that should outlook? just know is a XQ RSAs, there we it Could anything us just longer the Thanks obviously, take that? a a else seasonally separate you the what know, and run XQ much. for looking term? XXXX question; for rate On anticipate basically that in projecting, that. considering something outlook I'm should Or we us differs, you Sorry be how so the know, gave a little sense a sense you I that but

Brian Wenzel

Betsy. Great. Thanks,

for You in when we encompassing the think RSAs elements. other our year on provide know guidance all guidance we’ll call in about full the January

in operate As RSA up fourth at about we guidance a slightly we’ll January. that lower why into in you it, us Walmart, quarter but see the impact you will past think did Obviously, trends. average, the Walmart move XXXX, we percentage know, company as provide is which seasonal than versus that forward

Betsy Graseck

thanks. Okay,


thank you. And

Our have – question our we Point. with Compass next question Ryan next Bill from

Bill Ryan

in know looking directionally next think driven year, XXXX? just Also but, they pretty to know you your you renewals this year, it do called of have know, mentioned taking next going and given you’re thanks this economics providing any how much the for earlier going impact and Thank and not XXXX year? questions. expect is good impact you. you just directionally my contract same the kind the nominal I influence the but to and it Thank into you renewals, it, Walmart’s RSA, is you as a Or, it will at in know, be you structurally about to you of – guidance, relation morning

Brian Wenzel

Thanks, for the Yes. Bill, question.

you the when of the economic renewed store. is we as about RSA, kind the think set transactions, formula at So,

as forward. change we don't formulas move those So,

the to going margin, RSA drive Walmart So, the charge-offs we as the the be absent we move That’s what’s going as net forward forward. performance of portfolio good to really portfolio is move bigger from drivers from be to interest growth, really underlying etcetera. the

it’s To there know, the will the then extent going that you the RSAs, decrease. to be extent performance be will we less, improved to have, those RSAs on more lines,

but that's sides. in the both have that to RSA benefit buffer, a they us So, as company participate

contracts just So, of and are won’t performance a It’s and portfolios. the the underlying set again, change. growth generally really

Bill Ryan

you. Thank


And thank you.

Rick question with next JPMorgan. Our from Shane comes

Rick Shane

in value customers providing and proposition, the, retail just that with that your the don’t – my the their I you into to Thanks overstate talk are your that’s as sort toe in questions for I use of as Historically, proposition there, curious want you general you partners? part retailers I’m want think is how about that dip morning. you this exclusively assume Hi, part stores, I the of, private do toe to little with to of pitch label spending but will taking they a bit. purpose resonate that guys. retailers. on money their of general-purpose your sort the can and existing to dip

Brian Doubles

it Yes, a Rick. product. don't as Look see we competing thanks,

have about against, portfolio much substantial think what than we’re general competing we card more who you purpose have all there here. are that they If in

we on of out. look, trend that that a small a does early what of far, know, today; is it’s the some in positives portfolio. very You a know, diversification; lot piece new I you account here. of rolled it nice the give while still seeing we’re done terms the so like overall and the like this we’ve product in we’re pretty There's small us this but, as think innings we've We originations

That'll a partner-led still for foreseeable the We’re case future. the business. remain

Rick Shane

great. Okay, Thanks Brian.

Brian Doubles



thank And you.

from O'Neill question with next our have We Research. Matthew Autonomous

Matthew O'Neill

get more seasonal we little the know taking providing potentially but bit impacts we Thanks for hoping be could on needs ahead knock-on know capital through a of know, around hi. build, planning or ongoing the kind was Yes, I effects the the will I the you're question. provisioning know So, billion implementation? current us to give X.X not my guidance the you following XXXX XX% level/buyback authorization? far as Just yet, any and/or initial XX% just any you I insights there as, any remaining but capability thoughts sort maybe the of once of Thanks. helpful.

Brian Doubles

great. Yes,

you and to consistent CECL expectation You the with second now again, know is the quarter back on our then. earlier indicated know, we call that, regard first with the range provided we

and know get economy the You that moves of view of forward. asset that at end year, as will the the economy about posted ultimate it our upon really to we as that's depend kind think amount composition, the going the

are assumptions. the some and pieces as well of So, moving as finalizing some there we’re

about So, is seasonal the it’s going day a two. for an well, adjustment, as know, offset, little bit impact to to not the there you be RSA for talk premature day transition one

still our through with We’re working that partner.

that regulators your I’d regard in first part XX, impact regard our to runs that provide, know, with XXXX. in impact our your incorporated first say to the we [CECL] with as guidance We capital finalize the submission fourth quarter, does again, plan that you comprehensive of January. in you the So, not quarter. it back June to that capital, our question With second here through know, we’ll with of view

it's the plan] [first from So, perspective, addressed. already

we ongoing and forward You in the incremental with in should of of be know as we that think post for how dialogues post the move have as we occur. getting and those credit we reserves, up been in about stakeholders the up fact we’re that and and discussion capital our regulators reserves contact should on obviously the [CECL]

to guidance talk little have to plan capital and we future relative as incorporate when will it's give plans, you forward, So, we clarity. we greater but it a to about move premature that bit

Matthew O'Neill

of will the follow-up, With lot safe the was which Is it a going contracts least you to require Thanks. be main some, respect discrete sense. all, around partners. sounds to CECL, not of discussion, to front like with the a say? at makes my And that and ran that if That of of structure. kind kind RSA

Brian Wenzel

Yes. Obviously, in with we're discussions them.

the And not be one that First how really finalize does January, to impacts the guidance, But impact will that our come and impact provision I with CECL day we've an again, RSA flows on well then of past then with there the through RSA, go we them, with partners, from and move as complete the day think P&L. line. we explaining as two, the are perspective. sure implications adjustment, no it transition it the Again, as the the with structures. – make mean, all, educating how adjustment, going standard, they it. back understand as we'll them through I RSA in we through in working said to

Matthew O'Neill

All Great. Thanks. right.

We will wait till then.

Brian Wenzel

you. Thank


you. thank And

comes with question Dominick from next Gabriele Our Oppenheimer.

Dominick Gabriele

much pressure taking builds forward we Thank about any is about if efficiency quite some forward – for we your – efficiency part my general-purpose forward? anyway efficiency been part expect some initiatives given is the should is on initiatives the look think way? shouldn't Hi. so and your we so it kind this have general-purpose for stable time, when of pretty of the of moving to card impact has investment questions. moving you for there just buildout, material any When as ratio that think small normal on your it just and Or any in of ratio this

Brian Doubles

short Yes. this I the all, term, you're at don't the think to going see I pressure, certainly, think. in efficiency ratio

that we're returns. account testing we're different to Just going customer important very testing earlier. note different going into originations, I one and said around segments, important We're to it's but into profitability very APRs, back, etcetera, thing disciplined new be

we're where we to It's trying where here We're sales we're to return. new where those a in we we as the attractive find we areas run earn still competitive a very obviously tabs, disciplined those So, very trying short-term compete. market. one, but can, compete, very being find can can

So, that's primary our focus here.

Dominick Gabriele


for just expansion. that's Can seen past, is in see in you trends you like some you've of segment you Sounds Lowe's of mortgage now pre-IPO applications. unfolding, future NII it about your spike seen a this about home a outside the improvement and mortgage exposure when talk total some pre-IPO think of some separately, due the mortgage the seems then talk the you there to can a unique what opportunity And And Retail the about NII Card from in even right Synchrony great as seen applications. the you we've ramp, rate then run Retail home you've Can trends applications ramp of to fees? talk really to like and [indiscernible]? just where accelerated possible spending may growth improvement about good Card

Margaret Keane


improvement, furniture, Payment where our home. a business we dedicated But that would really – I in retailer us of helped is over and people home home you've HVAC, probably think home. And their verticals So, say Lowe's, is related big seen say seeing the the home, I fact which the last to invest that are of about Solutions all the months, the I types lot to things. us those has a definitely talk would we're XX have particularly obviously, really

So, on side, the we're and loans. in Payment for Solutions seeing that sure,

to continuing to allows did thing and partners Network, was very dedicated this of which you we year other invest We're It's particularly card – launch the that that in our card, a the is, to network network. home, which good. a in launched think purchasing a others. is number purchase I we retail the HOME a

home business So, critical to number a feel system your as forward the particularly this dedicated point, of have we across of merchants to and growth that are in that we see the that we a look vertical. element as

being So, a big definitely see part home as we of improvement and home a nice us opportunity that. for increase purchasing

Dominick Gabriele

you. Thank quarter. Excellent. Congrats on the

Margaret Keane

Thank you.


And thank you.

UBS. Wasserstrom Our from next Eric is question with

Eric Wasserstrom

functionality, growing is Maybe to the ways do you similar that in also on Thanks getting many PayPal-Venmo of noticed guys very I'm buy-now, back much. which just One finance. to what the is pay-later promotional have use phenomenon you sure relationship.

wondering discussion So, is there if are into those integrating your that functionalities PayPal? you about maybe any capabilities with having I'm relationship and

Margaret Keane

say of perspective, a as What all, called us already they digitally say are look obviously pilot way business, grow benefit SetPay a at I focused there out market. like to I very and the their That opportunities product our a we've a all would a focused, which product is, would have is and business. growing customer PayPal they to Venmo organization, a from a actually in we is tested first that So, that.

to them on we're like with of I'd in we different – the PayPal June. converted So, PayPal things, both a side everyone on bunch only remind talks in

we and And from particularly on, execute So, added Venmo. have work list opportunity to just PayPal product side, initiatives want that on perspective on we growth, design pure marketing, forward. we now a the the going of of have a

they're we the of the would at to say And right making make really in teams the sure digital. out ways there that's in-app for the right as are their really So, types all opportunity customer product leverage of in the looking and purchases. marketplace that have front I all would different be and the offer

Eric Wasserstrom

already, up as And been particularly this driving the there respect level, cash just with series – Card and of an in others experimenting – not and what what such, that know just you're but is there's and I you're maybe product general to I follow as questions purpose can just of high I might thesis Thanks. does on reasonably a a the with, back at where – given, marketplace, X% has think if been there Apple that others a have towards pointed really kind out, to demonstrate, in crowded it's acceleration adoption? level and but consumers the itself pursuing of

Brian Doubles

today adjacency core a say this to I'd business. very in first Look, our do we what close is Yes.

teams. very marketing credit very experienced have experienced teams, We underwriting

a like product, years. a card had product wallet card of have which purpose We for general dual is top

is this well. know really actually we a space So,

how learn a kind the bed actually and to an kind those have space. have provided convert strategy now the And Us great of portfolio, we of place cardholders, for was objectives. the team of to proposition, that general-purpose frankly we want future opportunity test way expertise. of them great into part long-term merging and us with a to is Toys give We that this to with when has the lot reality attractive in maintain R value enter has is a utility And kind a great of see card practical –

for roadmap on our years. It's strategic been

I But confused focused that on competitive we're conversion market. to also And very that us accelerate not We're targeting have profitable good excited. return. a is this we're pretty that. think cautious. accounts allowed We're adjusted a risk very the

maintaining but the our diversification, And profile we're nice in well. so, our we're as growth would focused modest, expectations return I getting – say, laser-like short-term but on are some about excited

Eric Wasserstrom

Thanks very much.


you. thank And

with last Moshe Credit question Orenbuch comes Our from Suisse.

Moshe Orenbuch

of your and Because it's you answered. the on maybe my talk Margaret, is Thanks. your retailers forward? either to maybe partners deeper how prioritize kind Great. you a that retailers of PayPal ability or comments, greenfield Credit, sort we – of little mean, been of bit allowing think going have the and on that you're retailers go you really up aren't, terms how about access are about asked and picking it the opportunities I – Most them? should to could in But questions priorities penetrate as

Margaret Keane

PayPal on our opportunities because couple we the we are just key the had kind product, One side their competing think they past, the were marketing. had a areas. of I pure In in product. is of

merge that's how of we're a opportunity. kind real So, a from think targeting customers, think I I on

decisions leverage from do we the very importantly, have I growth The – is of an which of has the most a we of perspective, underwriting they I both from part, that sharing proven information, is exciting but lot right fraud sure a to sides, making beneficial then has been think second information, on thing perspective meaning, a and, lot also that the we're more is information, both making protecting be data the think side. how have so on

efficient So, we on opportunity say, consumer. just lots the robust the underwriting then the marketing I credit protecting on to side, be and more of would more see and – what

which out we as think one. was days a conversion, you big know in as laid I we’ve the still are early

customer going we’re and the merchant and make that advances to We going I driving really technological that’s have more of really to around a we’re bunch what would be that together call experience.

will drive the working teams all all the here on it’s for done teams it’s as App I and the important seamless trying that. a side PayPal. within bunch and of key ensure both what and of around is possible which consumer never to growth make all side, of And on mean initiatives and things, we customer if and so people, that experience, to App say PayPal very have as two merchant Really really would the I that you and leaves

Moshe Orenbuch

– yourself care the as that about similar of bit of I think, little of of build the networks ability in heard that was the idea of kind given vertical networks you that kind this that’s built have is you’ve disclosure in And the pet-type you you things a these talked you terms vein, know Great, outlining to like the during and incursion thanks. fintechs when one detail? concern I kind about it because think by opposite a whether in and something thought health so and seems any that about give call on kind would there a that you greater some networks. some those of there of the to sort Is of talking about

Margaret Keane

we Yes. That’s say, talk all something the we itself you as have, fragmented space speaking, first we’ll is but fairly going all generally first have, at the right. forward, probably we of for know, would I look about XXXX of strategy

in learning, we still, are one fact space, name brand folks the of ourselves brought advantages for know we you I have we a after. side, an created who of big where still by honestly network just I the hospital is our lot we go are and think say we're of us through on very is each that to So, how and have recognized think a that particularly would that board area the this helping networks operate expert on to target And differently. these in but

that about more talk we go we’ll into as XXXX. So,

Moshe Orenbuch

much. so Thanks Great.

Margaret Keane

you. Thank

Greg Ketron

hope in you day. for your investor to further Synchrony everyone this a answer Thanks available great will The questions have. Okay. joining be team have us morning and interest We any relations may you Financial.


Thank Thank you and concludes for participating. you, conference This gentlemen. ladies call. today's

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