SYF Financial Analysis

Analysis Date: 1/29/2025

Business Model

Synchrony Financial generates revenue primarily through credit cards and consumer financing programs in partnership with retailers and service providers

Revenue Sources

• Interest and fees on loans (core revenue stream from credit products)
• Retailer share arrangements (revenue sharing with partners)
• Interchange revenue from card transactions
• Protection products revenue

Revenue Distribution by Channel

• Home & Auto: $32.0B loan receivables (31% of total)
• Digital: $29.3B loan receivables (28% of total)
• Diversified & Value: $20.9B loan receivables (20% of total)
• Health & Wellness: $15.4B loan receivables (15% of total)
• Lifestyle: $6.9B loan receivables (6% of total)

Income Statement Analysis

• Net interest income increased 3% driven by loan receivables growth and pricing actions
• Interest and fees on loans up 3% due to growth in average loan receivables and pricing changes
• Interest expense increased due to higher interest-bearing liabilities costs

Balance Sheet Analysis

• Total assets increased 1.7% driven by loan receivables growth
• Strong deposit base at $82.1B representing 84% of funding

Capital Allocation

Returned $197M to shareholders in Q4 2024 including $100M in share repurchases and $97M in dividends. Maintained strong CET1 ratio of 13.3%. Total liquidity of $19.8B including $17.2B in liquid assets.

Management Commentary

Synchrony's differentiated model and high level of execution enabled strong performance

Credit actions improving delinquency trajectory

Continued investment in competitive strengths and positioning for sustainable growth

Overall Sentiment: Positive and confident in strategic position while maintaining disciplined risk management

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals, improving credit trends, and attractive valuation support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 9:59:59 AM