Synchrony Financial (SYF)

Kathryn Miller SVP, Director IR
Margaret Keane Chief Executive Officer
Brian Doubles President
Brian Wenzel Executive Vice President & Chief Financial Officer
Ryan Nash Goldman Sachs
Sanjay Sakhrani KBW
Moshe Orenbuch Credit Suisse
Mihir Bhatia Bank of America
Don Fandetti Wells Fargo
Betsy Graseck Morgan Stanley
Bill Carcache Wolfe Research
John Hecht Jefferies
Call transcript
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Welcome to the Synchrony Financial Fourth Quarter 2020 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 of to Investor turn Vice Miller, now Director President, Relations. will call Kathryn over Senior I

You may begin.

Kathryn Miller

Thank you conference earnings to our and good morning, call. everyone. Welcome quarterly

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

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

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

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

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

the the over morning call Keane, turn Margaret Doubles to Brian On Wenzel. now will Margaret. are and I Brian this call

Margaret Keane

pandemic Synchrony that challenges. virus managed have the are will our are strength unemployment provide that on to Later resulting pandemic these the as level the through. a though overview our will regional morning, to and good resilience, some Thanks, significant this results, the Kathryn, We're we we these and high a a Brian that begin through racial continued impact And business. resurgence on provide our to develop. way to marked developed. something shutdown disruption year still here. and might I trends continues challenging a and of there the and due test a managing encouraged by call is impact year hope agility how XXXX provide have the of quarter’s will Though proud think Wenzel and on a everyone. global was by view impacts unrest economic in results was pandemic, been developments injustice. true It moderate, detail we the

some our outlined Purchase XX% active which and the XX%. successes, on on $XXX, Loan X. quarterly increased over a slides and focus recent from $X.XX share, of active interest hit results, down last account $XXX $X,XXX. down Earnings and at $XX.X million, over was including Net efficiency the XX.X% last to billion first an year. of $X.XX increased X charge-offs our just the to X% accounts to was ratio Let's last are volume account per diluted quarter. with the decreased receivables new were increase per or average Net year, XX% points for to under low accounts X.XX%. XX.XX%. margin And basis year average down new balance XX per were X%

year. impacts our growth comprise overall deposit remains This sheet, strategic of our to and excess our down $X.X last or X% deposits liquidity Total funding, XX% funding have. liquidity given our of in billion were a includes funding on COVID-XX slow result to platform response As deposits direct the balance we deposit versus strategy, and source. an a important decision

depositors tools out digital additional Our our and build customers will provide service to capabilities. to and to ability to continue makes we bank attractive

$XXX we quarter stock million returned the through During quarter common the dividends. in

the XXXX announced beginning in share the in repurchases Board $X.X for We also authorized quarter. first billion that

recent program opportunities rewards touch current I uncertainty very return will for card highlights. disciplined earn the MasterCard in become retail we allow return around believe customers by is pipeline programs. the landscape program accepted. purchases such this have a our are a anywhere announced We the start-up And solid shifting, and given in evidenced card the while platforms, a But cobranded to environment. is we the credit similar mix existing will sector. across Walgreens of wins. and the U.S., continue risk few as credit first we We issuer that will in of will health upon The being

strategic new We and accepted company's agreement is the expect X,XXX Walgreens upon more to XXXX. launch builds the already Duane second stores. program half the at of in This than new CareCredit existing Reade partnership.

best-in-class patients and with We health program to manage Walgreen providing ability spending. are committed a the and loyalty unparalleled and their customers experiences, wellness to

innovative In Mattress addition, critical that and purchasing provide to financing in We increasingly we renewed moments their flexible solutions, strategic Firm. is meet the at empower journey, Mattress Firm tools with online. business which partnership our customers

industry and and forward of to programs many analytic deliver Our more have Mattress step optimized retail customer marketing look journey including user experts credit leading to as competitive tools digital of omni-channel the team, experience. a partner Firm. a strategic every We years

transaction to flexible quarter, quarter consumer definitive products is CareCredit, terms the they first deals their leading expect a to the health Credit, I want. the Consumers point-of-sale our The cannot journeys. or overstate services loan engagement close and purchase customers Credit’s nine enable All the the seven agreement that merchant rapidly with new a customers with designed are payment for XXXX. customers network need and of products of along reached numerous signed provider expected innovation importance won merchant addition These offer leading our strategy success wellness along we commerce and adopting technologies programs. point-of-sale. are financing our offers to products and audiology digital the services. digital of acquisition. platform. contactless at of renewals through and in its Allegro together complements partners to growing dental Allegro purchase choice The of to financing and this a Allegro also acquire options We

contactless enable to are empower seamless our capabilities partners payments, financing and experience. our our assets, the facilitate easy staff the rapidly ensure experience for integration investing office customer These seamless are a We our investments experiences, bring in continuously throughout a customer's the well in-store application integrate this digital enhance and applications devices with digital to assets include leveraging and to shopping entire partners’ and digital digital dynamic. the choice point-of-sale, evolving at process, positioned and

We our to done also the during aspects channel In XX% apply, and of of customer continue journey, digitally were Retail sales online. all occurred digital quarter service. grew of and penetration application. of applications Card buy our our expand in mobile Approximately XX% our XX% fourth

XX% short, of rising approximately digitally. made our presented time. the challenges were we’re Finally, difficult to by this payments In

investing we us. with the mind, future world advance a the there the the means our our up announced have no continue strength based term in through this believe With allowing opportunity will better set of implement the over of the successor leadership With made the the IPO. CEO become incredible a the that now to for long-term. through to that, XX,XXX employees, transition, much we Brian. equipped to role and built. Board delivers Board set few growth that every on a our will a CEO. value the been company. And some strengthened of so April and our in who we success forward to call X, Effective set every drive I what Brian Synchrony’s a was of Brian. for business Brian in has partner continuing a do off and Synchrony helped to Synchrony of decade, one And out with important Synchrony’s in expanded and day. great that. support to my been and just me. turn I transition leadership you journey. know, I Chair great chair. the to position Executive than including has of Together over we He doing to stage than strategy that and this to Both to near build culture transition has the with in way. changes a while Brian the to and right Synchrony one was back to will progress also Synchrony positioning XXXX, we're and shareholder as Synchrony’s of President of business to weeks started driving When Directors a I'll With our this future look We transition more have of customers exciting next time partners as are step successes, trusted my build decade Doubles that goals will working with growth ago, our as enable is we strategic lies that before Brian considerable

Brian Doubles

Synchrony’s we benefit we truly on a also leadership will succeed Synchrony that and momentum. Margaret's Board, I'm start our are continue I'm done I and especially lead employees it's Executive or thanking be want an and partner has her journeys. where for grateful We and to role with would as leadership we without our and to she in about into honor to the for as all her to to continue her our excited last leadership that we lot Chair. are team, future. her we as And the Margaret excited who Synchrony expertise absolute the for continue capitalize from to me There's and be personally not today over by decade.

to build culture, tremendous foundation. strong have opportunity a We strong business, winning a and a the on

the continue that last the momentum strategies years, will As incoming to business over three I which has today. CEO, our the developed that has we've enabled implement

customer in competitive offerings a We leadership, seamless our market strength, invest new experience. will analytics digital, leverage continue and to to deepen product create and our data

talk value We our important business note, our the will gears equal and of our a to is drive our returns. that tailored products our suite our to and our we strategy provide to for that just serve Fundamental to stakeholders, an partners, implemented full the customers economic X needs our turn enhance a part and about has to and grow business one become while like utility of that value investors, On partners financing. customers. of to of and shift to objective our Slide payment continue be of business and of earning offerings, all can I'd our to example our evolving which today, appropriate employees,

them and volumes Our customers including product customer and are integrate their rates, purchase have with and token, digital and which needs easy offer partners’ seamlessly same By deepen order to needs, their within sales, and their convenient financing loyalty. use centered unique that higher their increase average and a set on decisions. offer ability assets can deliver fit own systems, clinical solutions conversion to the that most are in budget, financing and flexibility transparent their of

has and categories. products these We about installment extensive think We financing. approach informed experience in payment lending, which equal our have two to

months XXX First, on plans, with depending to long-term payment periods evolving products. equal category. from We offer anywhere mid and the product promotional XX

We also with offer short-term XX equal X periods promotional to of plans months. payment

appropriately $XX Second, offer to end closed closed customer products their of the an our installment from of at strategy can our functionality, meet a of long-term Meanwhile, All bigger financing prefer put We products to three ticket XXX promotional months. these financing. run partner account, short and repeat pay in for the product. purchases, offer And of and plan. priced to and products. products percent XX equal the also regular customers these in to for also Revolving perspective, the to have products embedded To well in to higher account. appeal months. eliminating payment offer provide and given And XX purchases customers. and collateralized that X% payment have These to each revolving inside from balances, benefits as end through APR zero billion open distinct need example, payments. we tend we be we with overall SetPay XX% objectives our new anywhere loyalty engagement our starting loans which of partners’ partners customer periods turn currently with nature and a equal for installment as are objectives, products existing address equal unique predictable products APR

an XX% plan months payment products. innovation, approximately competitive as in to within data-driven evolved XX,XXX of and overall have and we this core our over of locations and purchase. strategies Synchrony's our partners' to rate success XX have the the partners have about And time. our needs and objectives deep has commitment ability first or our repeat We of understanding other purchase been driven by market landscape adapt our conditions customer a offering

partners' implement needs the is and being This driven customized organization leadership market proprietary that experience, our solutions track oriented. built results over economic deepened what Symphony's and Our and our data and outcomes. record expertise in order while address longstanding our We our leverage around of nimble, our design analytics appropriate decades industry responsive years. also to underwriting delivering has is

We those the XXXX I'll excited in With offer the enhance to we forward we to momentum are value Brian serve. that, to by call drive over simply this continuing turn Wenzel. to all

Brian Wenzel

Thanks, Brian, and good morning, everyone.

Margaret I want for for Brian thank and them they to for for congratulate I to Synchrony the when in them and in I I Before with say have company the on chapter speak begin, new closely personally. me working for forward their Synchrony. and done we what roles look next everyone

begin frontlines. being pandemic, to inspired and in made be we encouraged by the As XXXX, continue developments fight the the we're by those to

focus, and values partners, centric eye towards and and the dedicated of and our this an our part, the are communities our customers difficult help to to during the to we remain with constituents the For navigate guided helping overcome ahead opportunities future in partner we safe, environment as our pandemic. our this period, us we working keeping principles by begin with employees

the quarter, noted our During fourth impact X. on as areas, continued the Slide on growth pandemic several to

they have during X% from was from accounts and as essentially services, and continued we quarter, our and pandemic purchase some our significant appliances certain flat, home down to a co-branded industries versus benefiting of services, from line cards XX% consistent on XX% and restrictions year, average of relative fourth and home shutdowns be However, decrease down receivable loan our against year prior declined a new the the products continue and economic with portfolio digital Payment the normalized the which the for declined Interest and The the to caused and mix, quarter. in such decrease account account active staying quarter. despite of line On pressure were X% loan Dual the and basis, some receivables volume year. elevated rates last and veterinary XX% includes in downturn. our as from the electronics business of quarter down of related expectations prior Purchase in fees at a core effects component from to the X%. for levels. last and last loans with pressure the progressed XX% be experienced for outbalanced XX% year.

in acceleration and the CARES our as shutdowns the the growth diminished early slowed of we effects we're positive seeing in While trending Act metric stimulus of enter quarter, that the resulted pandemic regional momentum.

charge-offs net in from comprehensive the Walmart, as and resulted Other the which from including credit are a sales operated of significant for offset vaccine. a This of million. more percentage. lower decrease company to average at increased rollout in on through $XXX a costs. due or our of was The to in $XX a $XX recently XXXX provide X% than stimulus, plan average loyalty build the $XXX accounts, losses operating were view Other and provide to we income million RSAs employee the million reserve X.X% higher It have momentum we as of expenses. to our to XX% million due will are RSA for mainly lower charge-offs partially quarter. net elevated progress active begun implement million, and fourth reduce the we or provision national shortly. volume in from a impact. This administration from coupled or in X% average While believe a have a as stable, last improvement factors due by strategic encouraged by enacted was should year. receivables $XX year. of new quarter last developments, costs positive a with year average, I'll decreased expense last purchase decreased these the primarily the recent lower RSAs percentage improvement proposed XXXX. historical stimulus, the We elimination

platform Moving to our X. Slide results on

Retail we're loan trajectories have mix, of That their as to Our business period and on of the Power valued Club. digital sales access from in in and Payment evident such excited offset and with in degrees the is platforms declined helped new loans been this down renewed The being different goods. are factors this receivables our performance impacted They prop decreased down availability primarily strength line, Home COVID-XX, which was value due varying continued signed in the account In to Sam's about active changes provider X% from partner, concentration, Specialty We're Card, and were metrics Solutions by partnerships partially Club continue be hardline Sports based COVID-XX. Purchase some which driven were and for COVID-XX and quarter. partner year. several growth this was important quarter. with offset of programs the to this X%, Other of strong several Sam's receivables. resiliency line lower programs. and program impact down by about in purchase members. COVID-XX. yield X% over due new Average on excited up receivables fees loan X%. an the were interest digital Loan We growth and and in on last key impact the launch impact through X%,

organically our quarter. the and X,XXX growth merchants continue and over new to We partnerships during added networks drive through

excluding reuse, continue at also card now XX% purchase approximately gas. higher to We oil which volume, stands drive and of

the Our growth for already successes as are efforts expanding and exit we an base pandemic. solid

to and services impacted progress. X%. to as down CareCredit improvement second purchase infection progressed decline lower the and in this rates with said, volume, trough merchant by as decreasing the continue the this receivables on of and providers some planned revenue from loans some the most increasing quarter. interest rising year X% Although earlier result was which accounts declined see COVID-XX That we discount primarily Average began was home by in active stay year, at a as decreased XX%. elective of did Loan restriction fees driven slow X%, increase

excited Veterinary earlier, Dental partner Partners. including the acquisition and our noted our Community Allegro Credit, of with new this and expansion we're Margaret about Aspen renewal platform our As activity within partnership

to quarter, in we has card. quarter. also our network acceptance rate the our to During purchase grow our utility network continued of reuse and of line CareCredit of helped fourth The strategy expansion to the enhanced XX% and drive

primarily in achievements, Slide see proud X% are future growth about interest trends. subsides. an impact of platform interest income XX% fees net impact margin by receivables, this of due driven Net I'll and impact to we and was driven by loan pandemic the in XX.XX%, to of last move year's and these in to interest We our decreased particularly year the X the interest and decrease loan on cover as XX.XX% compared income drive benchmark to on an Net of increase and excited lower the liquidity largely of margin COVID-XX. from COVID-XX margin the receivables last rates. opportunities

declined margin. to higher point margin. a interest accounted the of X receivables primarily driven were XX partially This net a liquidity to total basis interest for declined mix held benchmark by a cost This liabilities net interest-bearing reduction XX.X%, net total of basis for margin lower point net XX funding. our margin. by was due last our the in decline. quarter. points basis liquidity XX reduction benchmark the as of result increase rates percent points a deposit an The These from loan impacts during basis loan of in XX interest accounted yield a basis basis interest in Specifically, earning proportion lower to XX a The decrease point basis XX.X% higher XX the approximately provides was a and offset and X.XX%, year of rates a versus receivables of of point down as points our driver yield XX.XX% in and assets

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

year. the last delinquency delinquency In was XX-plus last terms helped was to year. delinquency drive in rates. dynamics XX-plus X.XX% I'll with the X.XX% Higher improvement delinquency rate of The X.XX% The have specific the start to in quarter, payment rate compared compared X.XX% trends trends.

reduction rate was driven XX.XX% of loan delinquency primarily increase behavior charge-off XXXX. for The net COVID-XX. The primarily the X.XX% losses was in trends. was to to adoption trend and charge-off throughout by receivables the net as the CECL in as compared rate the credit percent a last last driven on charge-off of with XXXX year. X.XX% impact net year payment improving by customer being The allowance Focusing from improved

interest down year. well I billion costs as last X% as XX, $XX will year. Slide the quarter. decrease compared Overall losses. reduction average were partially and fee the lower volume XX.X% for $X lower and The expenses The and for was for offset efficiency employee cover ratio to or to costs receivables quarter, XX.X% that was yield, impacted negatively resulted operational ratio active Moving by by and in employee driven expenses purchase in quarter the lower and was accounts by The million the last operational reduction fourth losses. revenue which from from was lower

Slide to Moving XX.

higher our continue in our strength carry reduction to of level platform, receivables the deposit a Given loan and in liquidity. we

it's to liquidity our and this a we period, actively mitigate during funding to excess profile are managing volatile While liquidity we higher believe maintain prudent appropriate. where uncertain level

of last during year. Deposits this in $X.X from strategy, billion of result mix our a funding declined the is a the quarter. there shift As

$XX.X each XX% equated which funding to of up were billion total securitized XX.X% down undrawn last funding XX% resulted and in $X.X sources was $X.X year comprising being our XX% unsecured from facilities, last our of funding, including Our liquidity, billion, XX% deposits of end. funding and credit our quarter sources unsecured Total to respectively. at with assets, and securitized billion, This year. compared

transition the March, that in details joint issued provide to primary I agencies position, should federal the elected on our be banking which had benefit take it the Before X by rules capital noted of we benefits.

this CECL level ended under transition XXX quarter and transition the the the at years; amortized XX.X% for last adjustment CETX rules, for of CECL compared to reflecting transition last the second, XXX ratio X was an adjustment. with framework, last X year, a total phased-in the increase reserves effects the it Tier the on the portion the points capital in plus to rules of points delays well and a XX.X% to reserves it First, we XX.X% a basis capital of capital XX.X% XX.X%. increased as year's result incremental fully basis as be Tier period compared And basis XX.X%. ratio ratio under to The deferred implementing With increased The of above XX.X% CECL current transition to X allows year. provisioning CECL.

we quarter, a common share. the paid During stock dividend of $X.XX per

$X.X the share full of returned we form For dividends. the repurchases year, approximately shareholders common in and billion stock to

in XXXX, our in potential capital pandemic. restrictions the XXXX finish including the as we point XXXX, this enter capital quarter. business have plan, repurchases beginning well the authorized With Repurchases subject $X.X to ongoing backdrop, of any for and the from of share and overall and to liquidity continued As billion we pandemic. our regulatory deterioration Board market at in and first stability are the as conditions, assess this the has company the strength

Slide the environment economic we providing for periods impact resulting uncertainty are goes It is under the saying the current pandemic on to until XXXX. Next, XX, is drivers of control and environment on key known. more will volatility have without fully and that a framework

year providing we our thinking today. While of might is about in we the largely economic visibility the and our pandemic and In about is the from are how as pressure best unfold this second continuing is assessment on there under control the limited, half, These the accelerates. based views pandemic slow year, assume recovery we're framework that recovery. a the economic assume of half first

the is quarter consistent expected the XXXX. be of to First trends volume developed purchase end with at that

second experienced 'XX. obviously quarter trough will the economic comparisons quarter Second reflect in

anticipate the improving as moderate impact macroeconomic The second growth year, pandemic trends half accelerates. and of we the growth

These loan first actions of the the growth. payment will half stimulus payment from returned second expect and rates year, impact we half, we loan macroeconomic an drivers growth. volume we In the believe the combined abates, In expected purchase improving growth. Regarding to rates contribute as patterns, increase will to more to accelerating higher stimulus environment. with the in receivable payment slow behavior normalized continued from asset

XXXX. interest continued as net improvement overall, For we margin, we expect enter

delinquencies net partially RSAs, offset higher reserves credit in contribute the reduced net half impacts which the asset the net strong Regarding excess generally the liquidity that elevated growth continued delinquencies in normalized quarter and as increasing to from result the in will by release excess mix. fee in by RSAs respect higher performance, to asset peak on through the the In leading revenue lower and first largely macroeconomic increases expected growth occurring remain view to quarter develops. asset primarily driven the reflecting revenue. the and drive expect year, rates for half, slowing our increase scenario. including yields charge-offs. credit We changes charge-offs, half program payment during are to sequential improvement would in be we with liquidity third interest first second XXXX the is XXXX expect higher and and credit the charge-offs. to In will any second impacting reflecting anticipate we payment macroeconomic We With NIM. anticipate a reserve rates, half, in environment

increase organization. year. this we've reductions increases expense to in believe outlined we in We cost of anticipated accounts. reductions addition the approximately implemented in As be the Partially million $XXX previously, across reductions expense result will to relating cost delinquent offsetting during growth will the these

We will how and landscape continue as its to and adjust impact macroeconomic monitor develops to the unfolds. pandemic environment the the closely

position the optimistic of remain business XXXX, period meet to we strength the strategic our than exit the and in we the enter we pandemic when entered. in challenges and As a position stronger

while of our safety our technology now call partners, continue the to the people, to turn and of our ensure the begin call. providers products, investments make platforms to operator will to to long-term continue portion and will value cardholders. I the We our over and meeting in needs Q&A drive merchants, of employees,


[Operator Instructions].

have We Ryan Goldman from first with Nash our question Sachs.

Ryan Nash

your Margaret, next best you that opportunity the the learn years. role enjoyed first, say with I've Executive over as working just wanted X Chair. to a last and in of to it's really from luck pleasure been you

Margaret Keane

so you much, Thank Ryan.

Ryan Nash

off So kick for maybe it question I'll Wenzel. Brian a

RSA in you loans So think And if wondering to If credit. year? just given it dipping over quarter, we XXXX? the maybe RSA before how in us X% RSA slide Brian, plays the was a was can this just to about X% you of kind give base on could loans framework better-than-expected eventually the the to remain later I outlined the in range for to your out, the expect that case

Brian Wenzel

basis on was better really as But and Thanks, interest seen expense some Ryan. that by elevated. clearly, driven Obviously, we've by net we offset into XXXX enter by the charge-offs. of or NIM. Slightly was points -- the which XXX offset elevation credit,

I XXXX, expect we NIM as normalizes, flow that pushing is upward. slide back as a the retailers it. benefit to think see as what there that will through to you're be to deflate RSA So will to will you the rise, But going into credit it continue then

is expect the in as our normal we elevation So out it pre-pandemic. think type the end I not should range that expectation beyond, into you exit back operated type as XXXX. at bit that year get we've remains be And would little elevated. of of XXXX We it a of the into and

Ryan Nash

started X how color thank for Can over look, and Got time? it. And I you products it on the if the generally equal strategy. payment financing. Doubles, just Brian of offering evolve around months your think all maybe on product you So expand the you can

the could buy charging some now see short-term new if So evolve of given these second, for potential, space are into And there fees product? later players the in I pay pretty was some of products? equal merchants just own away maybe products volumes your was we these rates healthy as in you your offering merchant And drive towards about use some just can of you and can entrants? your of these talk maybe some the to pricing lever on newer pricing a pay products, wondering discount from maybe

Brian Doubles

Yes, Ryan, great that's a question.

a want, not really take both to obviously, I not are fit our suite products and trend back you And also that's got consumers strategy what buy of full to away. loans, looking a pay provide a think partners trend for. look, away. what is going going later really is a that that's now but step say, Installment our

you really If have all you of have size strategy. our we a take partners business, a set step one that such broad a can't think fits back just about you and

to cycle make a know, market to are variety How trying what each you In we to is sense. that So some life installment down will some down going say, a to means as more and customers? better revolving Ryan, with offer of a want our your And cases, sales, partners, cases, achieve? products. product drive you how product can sit communicate that is we an one sit help we you okay, you can we fit. help of In they

If about closed you think can ticket, more trend seen steers we've or installment. And that tends smaller towards more installment, that that recently is, end. a then bigger product revolving more ticket be on that and products, shorter-term steer to longer-term the shorter-term

wants And the the so again, of it partner comes what back the really to end at day.

and this. if shorter the charge Now The you discount on a you point. merchant higher obviously, plays charging go you interest make Obviously, you're not really a pricing discount. then account, into merchant good

would what one consumer so what partner set down about thing been I the piece embed feel the and on is, it we the the The the product that I day. important is you the is at have. do in how great equation. to wants wants of that the What what's underestimate, really And really just journey. end one not of product comes Look, working the the product though, again, shopping we've and

than that more integrate way we -- the important ever. so And is that

So of it offer journey. financing not embed complex. the the than end the It's do how and products even really these more At are how throughout capabilities, integrate, comes really we shopping about the that the do we down to products. day, features


our KBW. question have from We with Sanjay Sakhrani next

Sanjay Sakhrani

benefit, mean? My time, congratulations some in at credit stimulus is some off affecting we think like a off a quarter? well And bit there forecast as do point figure remains point? it's of much how to because of as more because the wear to of helping to to you you the the this this to that all. I'm a the how guess long guys I out it have -- weird you sort start in benefit quality? it you're how at I'm little of so favorable strong just sort revert understanding the quality credit curious, being the the stimulus retailers. stimulus just with is upside expect sharing see credit little might you Did trying fourth wear things your bit little

Brian Wenzel

Yes. Thanks, Sanjay.

stimulus an when hit. saw has most the package benefited. certainly, clearly right, stimulus So We've of seen throughout we that payments, XXXX, recent influx most

January. elevated early the back part actually of in rates higher payment So

clearly, effect, it off. is do So you in and see wear stimulus

about stimulus broad-based not to interesting, it's much. latest interesting what's It's Now population. surgical this more a as going is

we We XX% as to effectiveness even on further shifted. portfolio to move our with subprime, XX% stimulus, now the subprime. we're So continue used be

of hold. effects will the that So not

certainly payment do portfolio. that see off expecting, in off, as then here build if pretty given another date that rates haven't delinquencies assume that credit that we elevate stimulus when from the in to burns back, delinquencies come does seen. in and metrics that one there's we that we again, quickly will the the move get we're you of you'll Well, most back certainly, and stimulus quarter, into the seen unemployment level out. high enacted have but first December, will But here, So the burn you'll see the

though, there what So control, a is with you with we that the which have the hope stimulus bridge, loss would vaccine may a and if get is under curve here the you future ultimate chance, the and for. pandemic flatten that

Sanjay Sakhrani

the on seeing I'm least Venmo important at recover. story Got for maybe how you're if part I'm they're they're and Card. over Brian of Margaret, we're curious Doubles, intermediate doing your the just waiting Verizon X just expectations? just growth it. relative sort an -- know for -- to period curious, to offline I progress and And and of as the

Margaret Keane

Yes. I'd say summer, in the both was we pandemic. our launch are and again, first during well. back it launched doing really Verizon, the

have there. seeing and the liking real we People stores I momentum as started prop. more we're think are online out definitely value as opened up, positive the

So also within we and feel gone the the really that's positive soft about liking our product are the Verizon operates very relationship consumers and where really that in how could be. well, app. did Venmo On the fall, launch Venmo, we

technology that of built we an parties for consumers, integrated of experience make a getting lot momentum that and out both are a positive really there's lot to think there. I

population As a we soon, big we that as to company. roll to out broader expect our we be continue part story to go of growth the forward with the

technology investments So where even to continue technology investments as further. X really our off, and advance programs X paid integrate really exciting and to look forward we programs, we in to continue our have

Brian Doubles

I that of customers, is to Walgreens. that as can us for put same I We're excited over terms XX wouldn't we're the would about about as Sanjay, that well. I Yes. The thing Verizon in opportunity what only for the Walgreen loyalty category add gloss in relationship, and excited really do and us. really million that relationship Venmo


And from Suisse. Credit Orenbuch we Moshe have question with our next

Moshe Orenbuch

type of discuss both the kind you to how congratulations, that these Margaret them maybe at clearly, way, particular way large Brian. translate perhaps just combination about a is independently there of maybe of follow-up a each the of brand credit see of how of of ranking thinking bases them of them has to and proposition in the some the But And of opportunities. that to and kind the Great. even offering. Mar And of a growth is contributing value And terms X into and Synchrony? that in kind exact and on kind loyalty question. kind And customer customer large

Margaret Keane

we that Yes. them. because early. it's But them customers can been our rank that still compartmentalize has I say could don't experience yet know always I'd if

back folks payment you that I day big Venmo use actually if app mechanism, But think that between that's how in that we now can an split And use really about payments going opportunity experience really fact people the it's that think the think of use integrated into card I everyday that So all to on more Venmo, as card, long. particularly the spend. ability forth is merchants. broader with that become think and and and to you

becomes as Venmo. to So go-to it the where other still a opportunity needs but the not I really type code QR be think big more that's we of technology, think with it's of

in-store purchase or have you to where and then different QR base experience So maybe whole a I code think, things. But of in-app customer stack -- are for us. set opportunity the the working experiences broaden presents people together different

So we're about that. excited

enter healthcare really where and do this spend. we spend, healthcare. being be the to know big value X, it space that think are this prop the spends bear Walgreens, that we bigger difference we really broader know, card way On on into a for a to to for I of what view other makes their asked us through the great -- another consumers burden as And is do healthcare CareCredit people compartmentalize

had -- accepted strategy. should that's Walgreens because already building know Walgreens. part we we in say on it's been that of the card You our I card also had already relationship the CareCredit with the

Now again, digital. this allowing who And and leverage this needs we're prop, is to value get together the and wellness connecting really tying needs our all have really making customers their then going healthcare then that rewards. work really the card and with towards X to

really those who all use joke terms frictionless I value it's my I are Verizon prop time I experience of And consumer. for who the on for then I so all have really Verizon, is seamless, on the So old, think -- the plan. you -- in old, Verizon I'm kids a they're think -- how still

off You by never towards prop positive bill, kids way, plan, and really I momentum is get that that that we're using really the another think, value the your seeing. the leveraging

we think So programs of real X all these potential. growth have

strong needs say technology. in us during pandemic would very of out what think I demonstrates I and ability the really roll be meet difficult our agile really to really a leveraging are environment to value props, really it for the to

Moshe Orenbuch

Got mean about know the And I certainly phone plan. you it. what

As a follow-up question there.

simply, positioning, talked the balance strong mean, it I Given year over this Wenzel, shrunk. in -- mean, $X earned Brian the how guys sheet and of capital you what about terms past given And I is. you billion

do developed? it you billion that how that to that? like of and kind so feels I talk just mean, buyback over relate $X.X authorization about time how of was could And maybe get stronger the

Brian Wenzel

Yes. Thanks, Moshe.

a than different is stresses, we going slightly announcement for to we’ve go perspective, done. and the looking year. strength the at of governance some important a that perform. a half process we're we with the back we balance I in go We've a the the will stability the year. and through year. that company XXXX. the the of be to sheet the Board, loss recognized Obviously, going if back This restrictions been but for sure start way we through historically thinking made in But our the Fed of capital to as it's think through as half the progressed first I more authorized recognized the think quarter, talked note put calendar in at the back process. has quarter, our company, position And of were we'd liquidity you We Board we this is So we quarterly weren't the looking from

piece the first As we half optimistic the that going There's -- under look uncertain. it's picks we're XXXX, and pandemic the again, up. into control in macroeconomic to we volatility, be but comes that

uncertainty. then was start. amount, we'll end with that a capital given April. of right, amount circle it beginning that's to we prudent visibility March, is what go through the year, submit at and So We think We'll to formal a this Fed a transitional right, back our the thought of prudent is. plan to and relative process And the

haven't really we to. get obviously, regards where the It's to to want and capital with long-term So pace. we our view changed just

can good comfortable year. And we're through we to move start, we revisit a this that and place is always so as the


question have America. our next with Mihir Bhatia We of Bank from

Mihir Bhatia

start me comments lot on there your to going Maybe of to be, specific maybe Brian. then to Margaret back let about there different program? Retail co-brand is which also, can that? no with makes of should we -- congratulations guess the typical I implication RSA And lower has -- and wanted historically, just or any are on was I I Walgreens, add sector? both a just Because your my release, in to Walgreens, clarify, in CareCredit. than going CareCredit And it going is a be in Card be there thinking sit looked RSA. or had is or my Because is it it something would And just in that to first -- like terms it to program, it Card my your question CareCredit to from Retail your really we think just follow-up

Margaret Keane

RSA. acquisition the that think Well, wellness talk said I'll now that of that one start for while the all our whole into way, platform. and I hospital look, does we it unique expanded things of we in consumers by CareCredit then insight We've our Allegra space given But as network believe into the that Brian healthcare -- about is a can we CareCredit. have expanded a the platform we've believe year sit through last just Credit. through and We that have

believe looking So Does around -- a the clarify sit Walgreens is Walgreen were rewards. We that. that already where consumers I because in We the accepting in should for partner believe great the is area are card. there CareCredit. CareCredit everyday spend wellness we an

know, So we see don't space mentioned expand the knowledge and if a the of we experience this as years, us for is ourselves to to business. XX Brian, really Walgreens and real our RSA. a ripe way healthcare because really continue in you'd and believe in unique differentiate opportunity over this I space for

Brian Doubles


the So I'd a operates we'll technology, with the partner we're Margaret's really healthcare talent to us most folks thing of that. dual the Card relationships add that that exists when for about Retail card those combining to ability the in And take have co-band the certainly a manages inside while and on is tools, knowledge will the that, business, CareCredit one comments you already there. capabilities, -- we think big certainly the

the solutions RSA. some do in have platform, have other limited We in we so platforms, payment

So again, $XX us. a billion would for RSA you see that's platform but some here,

wouldn't So to I be material early in the here. part consider most it certainly

you over So develop -- see some but will time there.

Mihir Bhatia

I had you've of question and entire other to capital your my just -- some on deploying peers, to you was time capital closer I capital if excess public. liquidity then your comments be been on And like back ratios and Understood. going going getting your feel to the just

between it's feel of Or on capital near should your portfolio be should via you Venmo, economy through the thinking more or like an guess, on? that's that other growth, we do Walgreens, something hands opportunity interest is that M&A I there we So focused you reopening, or about? term, in whether Verizon, else be enough just have acquisitions deploying inorganic probably that some or what

Brian Wenzel

Yes. first about we capital we that the of us priority have. the organic for Great the When priorities is question. think growth the company,

opportunity Verizon, penetration an the whether lots that. it's we'd These will some to standing Amazon TJX, there. into longer continue there's Venmo, deploy Sam's, like when most capital So PayPal march -- programs, think certainly our or programs, of you or Walgreens of newer about existing Lowe's, to

will that grow book. So that's ability beyond our the to capital piece. first priority to But we that grow have

resiliency portfolio If and we find back be we return, you an acquisition and the then to excess we the share be think look think maintain And the do believe business, our first shareholders. about will then you our will be that. have resiliency provide that about that in the of the or we'll capital, beyond the which that that, makes to RSA, it priority businesses, next deployed there a repurchase to sense, extent about will whether of the excess you capital to generation dividend is think that

Margaret Keane

was that by think I of this the demonstrated acquisition Allegro. quarter

they strategy right come forward. should us, the So with looking are opportunity for if return we fits and those the certainly opportunities is long-term right comes our at that along, at

Brian Wenzel

would part And deploy gladly something do large. enough value capital that an to valuations of that cycle, long-term exists, would they we that's do the But creation. extent not key and checked point. I'm where this the the in opportunity up the Still sure we have for


from next have We our Fargo. question Don with Wells Fandetti

Don Fandetti

your and become sort there any business more from of mostly about is getting a CFPB more of regulation, to get we're perspective questions how et of on And could around parts focus cetera? Brian, that wanted your just you're thinking that risk? the I

Margaret Keane

be take I able through It's all new I'm -- this really administration, in even make. manage are any the we'd assuming administration. We've is to would I'll time. feel that -- may say that in new We a relation we Don, they for the around changes administrations. we've long that. Yes, to had confident been

positioned. think we And look, like the we're consumers and is this being really I to well transparent always feel and that's and I our think the focus I fair regulation think of idea on job. whole

place. to ensure consumer perspective in people we right place, with the from this So we're we things have in the partners the as We're doing infrastructure trying a also working our all have in well. and

concerned. we overly look, more probably to. we'll I as things but out, adjust there'll not have we're mean, So be coming


have our with question We next from Morgan Betsy Graseck Stanley.

Betsy Graseck

Margaret, Synchrony in time pleasure for Brian, have even influence But given to it's been thanks closer. the you've you. And your working forward going us with over such role. over you very at a that years. I like you're much And working the all know fantastic to looking new still with

Brian Doubles

Betsy. Thanks,

Margaret Keane

you very Thank much.

Betsy Graseck

of couple SetPay. A Okay. questions on

in a platform partners out XXXX, RFP that? some want to So that merchants? wait with really which Just been the a can do there hard And helpful. give us that the from the I things is color for and their years? have another you? into where you to add would much How see to PL understanding at wanted top some come to in could Just like think that you guys color if being SetPay or percentage you going you on get period partners your few push pure-play push to have take-up rate what whether see today have of think can an not of some rolled of do you're get be to Or on for up programs to? you

Brian Doubles

this does business kind of individual partner come equal we down come of on we deck why are more Betsy. trying achieve. detail Yes, obviously, products, It to both choice. to in short long-term. that and think partner think do of don't slide billion how topic. to well-known out pay it That's And actually to lay that we have it's I hot I much really in a really today. $XX does just I the down today balances what And they're put sure, the is a this think and

allows they because what said, one of sit them but right? idea product. our them revolving ongoing partners, an in it That's that reason part put that's an wants, usage. want And life is a the cycle down the I marketing. the pay So the relationship the as drive cases, on it repeat each some consumer of equal gives It what product to to with they with to we love of customer, allows It for them do the their customer wants.

years. our important actually for those some then sell, that, that to We to their of much our partners drive a things that, is priority partners you last in And they how creating big relationship with closed All that's base lasting they're have depending interested really short-term types a products customers are we for talk X get installment and product. that X about the to they've that trying the on frankly, been end and always reuse the of And customer. on or their we customer card. also more of

they're It's company, very the integrate one have just digital in than the biggest curve. we point absolutely into one The on sure do investments is want that's I earlier, what we're on can the growth thing individual is types really I that rates think for other tell on this their that products SetPay, can well achieve. to partners in as And to evolving. you how short-term, good And do make in provide portfolio, touched which sale. I I trying of we product able higher to to piece term. stay look partners this of we is is can installment the of it I the different customized we're is terms rapidly our we're what of ahead mean, is can on that and But so depending if slightly the that we making are do the one partner equation. we news. across of But through seeing we ones. products those of the seeing really do. it the And very longer

is do a lot cases. enough not our inside to it's of the of have the actually product, the you But product of how digital in all So partners' integrate seamlessly easier just assets. part having

their to online? partner given that for mobile do imagine, can you customize it how we of you have app? How do each in solutions So the And of individual have breadth that you partners. do base, do our those

end And your I is at question? so actual it than day. really Did answer the the the product of experience about more the

Betsy Graseck

see your partners course that the -- your or for opinion, And up much that really XXXX is is shouldn't do where -- this you? different take normal slightly that, how of amount that a is, this the wondering tone we -- SetPay underlying anticipate a this difference year your question guess is a I'm on interact in product you with there my explosive here I is you I you expect going equal offering. different partners be to to a understand on to Yes, have by pay slightly balances today. if in is And equal significant pay product?

Brian Doubles

repeat we they'd And but drive they do you to the relationship. rates products. down where that see sit kind the With consider the see because the going in explosive can have continue partner have broadly day. to definitely what wouldn't revolving to like continue like to across it the ongoing on you're said, end of growth some usage than other to pay comes really a is achieve higher they to are it growth that strategy where account focused trying think SetPay partners very I product, see a that of us at equal and I on

Margaret Keane

is And customer really the I choice, What right? does want? piece think customer the other

Brian Doubles

for some… And Yes.

Margaret Keane

one consumer we're the right offer the on that's our to think in them choice. that really consumer they sure And to I focused things is and job products is can the digital very have integrated way the of assets. making position Our so in

So it's customer. a choice for a

Brian Doubles

revolving Yes. consumers it our to and what what the to do wants. what we the to our does comes we'll the down partner the that. suite product the partners full At customer very be long-term a breadth provide able want. down of installment, the have end day, it want be short-term, And partners, and again, to to and given come of able But


We have Carcache question Wolfe our with next Bill from Research.

Bill Carcache

I you Margaret to also congrats Brian. both, add and my

in as and level out of of but on programs investment you're active how new color that give investing have in a you're lot great gauging maybe little You in give maybe terms what you But look coming context, can you of of the more of a expenses efficiency right a this. more resumption growth bit to the calls accounts operating is, higher you for bit for can your guidance ratio? an investments, new

Brian Wenzel

Yes. Thanks, Bill.

did during whether down a slow technology initiatives, short-term not of we've that, So peers, even in that greater we've in we than we inside a certain investments, opportunities. lot these resources were or towards continued any of allocated of things growth different -- pandemic, the our reprioritized was it

we've that so forward Venmo to looking stand launch Verizon. we're again, XXXX a about in to investment when invest. mean, big we're And Venmo think you XXXX. So to for maintained a to full up and I was us, us here going the continue a year for

right behind we've So quite comes Walgreens bit. a this. invested

is out revenue we for historically it do maintain incremental that going range the for efficiency really ratio at long-term. mix the something loss and That are into that We a in investment. more we in mix. we're productivity to continuing going the medium drive margin we drive of order need is if the expand or term, I'm That to and again, continue -- to but the Bill, and look ROA, we that in either ROA see ways content to where find to that that perhaps do been has thinking investment given company technology. core the which drive is positioning increase want back out costs to to feel longer being the said, portfolio to to an and And we're above-average and that way we're XXXX, we portfolios delivers the what down

Bill Carcache

and increase we a give there we you thinking your you super capital? of on macro XXXX? as That's excess is can to guys amount you billion sizable you bit return I under favorable CECL CARES more through about guys phase-ins guess, releasing on Separately, just ability that see helpful. And that could progress are end capital, the scenario authorization how guys a possibility Act a a where reserves of $X.X color on up little

Brian Wenzel


unpack So let that. me

through as as points 'XX I assuming stay -- and, 'XX, The the is out years modeling first to view really certainly, basis roughly that XX and always rules think, piece CECL intact. the most of relative that we've out. we in capital adjustment move modeled the transition around, all we would come This those in our generation in move we

stakeholders with obviously dialogues a believe plus permanent you, continuing, that about are honest and form reserves XX% in relative sits look that whether should be to our that to we we there X CECL. it high, be of relief credit, in where engage we are believe our because Tier or We at Tier when X at with capital that is you very X Tier with

get really of it regard impact to in $X.X in perspective. capital your a the approved where your been the tied come potentially fuller view hopefully, second not to That's the And today. here question, return the March, go scenario, factor it. we that with it part a most by you part the plan to as we'll With and in planning the capital and we're submit there quarter where billion. is shouldn't in process first a So quarter macroeconomic Board then second back through we certainly, our April. always plans that's capital. can of going more our our But We're scenario to improvement clearly in

sitting the we're to $X.X little place right is in start is a is bit think now, bad transition a I that uncertain year not and January at. XX billion a year

of So same do of weren't quarter to to to half thought we we're continue anything the back until We out. this going going way monitor the year.

continue evaluate Bill. to So it, we'll

Kathryn Miller

time for but in more we only more X X people queue, have question. the Vanessa,


Hecht last from question We with have Jefferies. our John

John Hecht

average sounds Brian, anything our X RSA of time? cycle. RSA is average back modest may Kathryn. I'm like question where it on transition. we welcome, and it where question is, I sit anything long-term look should mean, levels? levels But understand different, that of because change there some the I was, don't look Margaret else of and it Number the RSA. over change kind just historical because and charge-off Congratulations, would might wondering, there another that there maybe at Walmart elevated because be like -- A average be the the can is

Brian Wenzel

Yes. Thanks, John.

is the higher operated answer mean, fundamental. no. RSA strip simple you Absent nothing because at company a than it I we'll Walmart, level push out, the RSA the clearly, there's that, if So that lower average.

to retail see delinquency even it's of can and formation people, dramatically a perspective company. you is an though come CECL, it but here's million, to lagged $XXX outside-in impacted We've appreciate $XXX haven't challenging And okay, has when going don't and profitability to partner, they're difficult the at I CECL at some very from the delinquencies, think say, I go what's them seen point, I difficult. it's million.

higher here. the So NIM, outperforming RSA And unfortunately credit really RSA. look you in the pushing loss highest then that have is when a at we

as I back and pandemic, nothing the you to level going And think down look should structurally we average. operate get they 'XX Walmart certainly, look exit 'XX over when that ex together, most there's combined you the it's the at at different at if time, impact. it

John Hecht

new is the products. about some of products I the products, question start economics appreciate different that -- what the a instance, flow line P&L. the focus -- do last through mix it, fully a item a closed kind customer-centric for of my your you've And call different would the and I the of talked have At of merchant impact, end new and point business? though of your to in the might I mean, product imagine discount bigger new

point should we what in that what what form might envision at changes that that And like mix? take? So -- might

Brian Doubles

I And the gives Yes. attractive Thanks, we disciplined product think and try are the pricing. program mean, or for either know, I start we pretty John. us as just overall that. pricing maintain look, an I'll around on underwriting. we're that you that return and

remain will consistent. And so that

trade-offs. off on through profitability you're getting is change, shorter-dated a run our know, And having the getting I those products material net term, you these the are there you're see APR just both overall how interest think return, certainly earn less Obviously, promotions, discount, components consumer. might see as little you think the merchant But more bit income. different. which, longer I of impact you I wouldn't on maybe a or of

don't don't Brian, there. significant I know, see you'd So anything. think I it add wouldn't have if a you impact

Brian Wenzel

Yes. in The only billion have $XX we assets. -- I mean, John,

is shouldn't So most think to constructive. materially, obviously, move in have be to a to it try large. I our material way metrics $XX certainly you would billion, the relative and growth effect to short medium-term with But much see I rates competitors. smaller mean, this at incredibly P&L have

Brian Doubles

I going be whole about This think best it a growth I these avenues for we way of do to think lot business for us think longer than attractive are realize. this strategy, to the really is term. people product more

comfortable we're seeing pricing. lot like said, do we for obviously, we It's revolving have. And a bit but credit, very We're comfortable other there better well-known of -- with growth a very products think than we're installment. the little something I we're that we underwriting. I

able want. that end they that for Again, it our provide that's choice, partner solution think comes I we're exciting in to customer and the at So down position is the to whatever a day. of and to partners be


We concludes and question-and-answer you, Thank you. session. our conference This thank for And our call. your gentlemen. This concludes ladies you participation. thank

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