Synchrony Financial (SYF) 18 Jul 232023 Q2 Earnings call transcript

Good morning, and welcome to the Synchrony Financial Second Quarter 2023 Earnings Conference Call. Please refer to the company's Investor Relations website for access to their earnings materials. Please be advised that today's conference call is being recorded. Currently, all callers have been placed in a listen-only mode. The call will be opened up for your questions following the conclusion of the management's prepared remarks. Instructions] [Operator

turn Investor to Relations. now Vice Miller, call of President Thank the will Kathryn over Senior I you.

You may begin.

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

today's of accessed plan to This our section during a Investor to website. In financial have release, The website, by information address the release, are schedules Relations the we covers synchronyfinancial.com. and our provided presentation addition going topics to presentation press the press that be detailed call. can we 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 webcasts and teleconference transcripts responsive Financial website. earnings third The parties. Finally, for by located our edit authorized on only does or the our of provided Synchrony not are guarantee accuracy not

Chief Brian On President and and Doubles, the Brian Vice Wenzel, Officer. Synchrony's Executive this President Officer, Executive call Chief morning and Financial are

call will Doubles. over turn I now the Brian to

X.X% the Thanks, diluted diversified and propositions per share, resonate financial behavior common products value In as And to across and equity a and earnings Kathryn. good our pre-pandemic our delivered strong growth on financial performance of Synchrony million reverts set morning, average return or as partners. consumer demonstrate XX.X%. $X.XX continues a of second platforms to and of strongly strong of assets norms Synchrony quarter, and everyone. tangible results, on $XXX including net return

as X% quarter. and for opened During of record sales X.X accounts platforms. These by set $XX continue grew to volume reached level quarter, basis. diversified the we value ever billion second demonstrate average highest a our products a purchase core Once active new we our the of accounts million on again, and second new strong our

wellness based-growth along grew X% higher driven account. compared several and digital last reflected purchase active continued accounts, active active spend and reflecting The higher accounts per by of to was new volume average broad purchase Health with XX% growth programs. momentum volume year, our in in in

In diversified and the increased and reflecting average newer outdoor strong continued value XX%, performance in growth X%, and value, propositions increased impact of purchased growth. penetration out-of-partner higher transaction volume driving purchase values, luxury. retailer volume reflecting and Lifestyle spend,

auto, transaction year purchase of largely lower as growth offset and higher versus traffic by products in was benefit of propositions And gas core was value several in volume on and unchanged XX% with in prices. largely purchase and retail reduction the average home increased values volume a co-branded drive and for growth. basis Dual total and a quarter to continuing XX% cards the newer our of elevated in accounted commercial

our normalization was pre-pandemic partly the Our data expectations. decline, the toward gas has view average Average with in progressed we transactional lower informed into transaction in consumer consumer prices. the regularly billions frequency This time behavior grow modestly. which of continued quarter, monitor shows levels real values to attributable line transaction continued declined however, while by to in that

accompanied shows like reduction by average spend in as well grocery modest was in The out-of-partner stores. was in and also categories and transaction frequency. as in our into our such credit among categories quality entertainment, discretionary restaurants borrowers dive noted deeper some slowing values even A continued as stability which discount highest key non-discretionary

credit the the continue grades, those pace as from quarters, as Following spend. reduce borrowers, of trend previous well our lower younger to in

continued to quality seasonal refunds, largely credit driven segments. in increase payment age sequential across credit payment our saw the given we by decline of rates tax and small higher quarter, This rates, impact Year-over-year, bands. a however,

external quarter, savings consumer X% the remain balances the approximately declined above we approximately track X% first deposit from average Meanwhile, but the that XXXX’s shows data average level.

consumers So constructive savings and the continue healthy be labor to that taken norms. we're payment they trends balance revert market well-supported together, their watching by the suggest relatively spend gradually sheets and as pre-pandemic to

position our as And monitor long-term priorities the health closely our to continue we advancing business success. we strategic of the of are also consumers, key for to Synchrony

to strategy each key our and they customers’ how our continued financing solutions specific partners, multi-product that be markets, is address allowing of of a One channels and met across of to where in needs interaction. the financing want their us expansion and meet distribution with variety priorities our

that needs offers recognize choice analytics their Synchrony our applying through financing or purchase. our throughout life be for data we online advanced particular should person, Whether ecosystem and seamless designed can customers' stages. app, of And We change and fast, in customer's time. digital an each responsibly leverage to over support deliver our partner to

an simplicity driving engagement. Synchrony’s with flexible schedules, solutions are and of the terms now deeper later and payment customers options pay become buy popular attracting have appreciate loan accounts For new installment and who successfully

these In accounts expand of coming tool from sales XX% XX% solutions has insights another loyal our fact, our shoppers. most engaging integrated our the into customers. offer conveniently and new launched a effective partner clearly relationships over beyond with have set products matched for the and customers seen with their reach with partners who traditional broader offerings deep These our and into of new lift partners our product in consumer,

can partners, Customers of checkout, is announced At we later Allegro Synchrony that Synchrony data credit with without payment thanks And and select loans. suite Home capabilities, installment in impacting integrated joins our XXX Most merchants leading Synchrony's form be pay and our over online and utilize partner, our of secured integrating now product its selected their in and provider, buy score. our At of prequalified store. exclusive the later, most underwriting installment options. Later existing to this installment providers pay now at Home, can that recently, Pay its suite

these further over offerings are channels through our We to programs and distribution proprietary coming more out across the months. excited roll

acquire we build decision As these our cross-selling able to suite leading installment are our better product offerings product customers. relationships new see products capabilities, to opportunities business Synchrony continues the our helping and empower broaden upgrades and partners We to with and these and deepen customers. and lifelong across with dynamic

campaigns value Synchrony. to dual and across nearly propositions. and In customers seen value upgrade higher eligible various double portfolios, utility a cardholders which label have the upgrades, are XX% for to purchase brings our better to the lifetime X.X with of And respond these private times we volume that an card,

relationships more partners, our into these translate shoppers. For deeper better loyal, engaged

our the and ultimately, strategy everyone, for all so execution model of for means stakeholders. reinforcing dependable experiences a better multi-product of And resilient successful our

these of other head continuing new deliver we second As while the for our our customers, half opportunities capitalize to on into shareholders. Synchrony positioned to consistently well partners our is and and XXXX,

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

provide approach of purchase funding our our resilient and quarter offered and Synchrony's compelling in combined second were demonstrate of the environment. differentiated underwriting, everyone. our on Brian, key morning, Synchrony power Thanks, continue verticals disciplined good our and macroeconomic arrangements strengths, changes drivers model broad RSA volume. with value offsets to effective to industries to These our diverse the results model, the products propositions across and our core reach our

rate of On growth purchase a decrease XX% basis This in approximately basis, core payment a receivables ending volume. in points and grew a versus year. XXX last was core X% combination driven by

Our XXX five-year second higher of pre-pandemic points quarter basis than historical XX.X% rate pay remains approximately average. our

partially increased and levels. yields, fees loan receivables rate X% credit in prior by year receivables by rates interest offset period. lower and Net grew pre-pandemic and receivable towards of basis, a in continues XX% normalize interest interest impact reflecting from XX%, core higher higher On benchmark income growth, to billion, stronger to a driven the payment divestitures loan loan $X.X growth and fees the

to Our strong than additional loan reduced points yield net basis points interest increased XXX interest XX liquidity higher XX.XX% and points. Offsetting yields to more basis to grew and contributed interest loan specifically, XXX More interest interest-bearing costs an benefit funding of these liability improvements basis margin. XX offset receivable points XXX XXX portfolio higher net margin yields. of points contributed basis net by basis the which basis X.XX% as declined points net Higher margin cost, margin. was

reduced Finally, impact by continued in margin in the liquidity points of income. $XXX year the half million second portfolios us earning by this the assets the X.XX% the to deposit of in of The average net higher loan receivables receivables. second net of our quarter as inflows build interest approximately interest of from XX RSAs basis $XXX allowed sold were partially and interest reflected year. net charge-offs and growth mix pre-fund offset year, prior higher decline million prior anticipated

as a build demonstrated by million reserve and costs. this credit to year critical higher and which was credit provide to losses stability $XXX by largely period. in Synchrony's partners, net gain million of driven and in was The billion, risk for returns with RSA in portfolio the higher receivables. prior The our income on growth recorded adjusted reflecting continues $X.X loan normalization period funding Provision increased alignment $XXX other decline in sales charge-offs through driven

items and X% as by growth operational technology $X.X as Other expenses driven well to billion, losses related primarily investments. increased

X.X% or approximately generated Our year last return on return and quarter $X.XX average of net earnings for tangible second equity points XX.X%. Synchrony assets efficiency ratio diluted a XXX In quarter improved basis million by XX.X%. of total, $XXX the on second to to compared per common share, of

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

in to continues towards averages, pre-pandemic continue pre-pandemic to revert performance. delinquency behavior net historical towards our normalize rates payment As charge-off

to X.XX% second the points than XXXX. rate Our basis was year, lower approximately X.XX% XX-plus which quarter XX is delinquency compared of last

XX lower second Our versus in XX-plus is points than X.XX% delinquency which prior XXXX. of approximately rate quarter the year, was the X.XX% basis

year, was optimized. which X% of the X.X% X.XX% approximately X.XX% charge-off fully of more returns our basis versus net are below where underwriting Our midpoint target Synchrony's points risk last adjusted to XXX rate is

non-prime to While in we're portfolio and These credit focused proactive of we have inactive to material position actively have impact migration our have purchase of certain portfolio as continues on our to some seeing undertaken a actions well expectations, are portfolio monitoring actions the volume. been accounts, line unlikely XXXX. targeted as are into types on score significant with our where segments into normalize and

Focusing reserves. on

in the of down basis XX of in $XXX points Our as was quarter driven was percent build losses XX.XX%, by reserve million receivables The the from receivables a quarter. the largely first allowance growth. loan for XX.XX% credit

material provision or in Our any include our our macroeconomic in did significant assumptions. reserves qualitative changes not changes

performance. XX. liquidity Synchrony's highlights Slide to to be Funding, continue Turning and of capital

week, During partially Deposits offerings offset at the which direct second by quarter-end the in each quarter, experienced We quarter, to was deposit first billion continue consumer funding. net in represented flows deposits. $X.X total our culminating XX% growth broker customers. of positive our bank lower resonate with of

at from debt being unsecured of and our in up remainder and remain conditions X% The facilities, funding of stack both focused is comprised $XX.X We active undrawn last on billion, credit liquidity, $XXX respectively. XX% million allow. our Total issuers was year. as of securitized funding including markets

As of loan strong we receivables XX.X%, assets, a percent represented portfolio liquidity points down XXX from fund basis total manage our year as and growth. last liquidity

our on Focusing capital ratios.

will and January statement already take adjustment points of points approximately transition As impact we annual balance our has reminder, the until in The agencies. XX of each a federal adjustments of joint issued its the make to banking income to XX basis the rules basis been CECL January of benefit transitional Synchrony continue recognized sheet. by year and in made CECL of elected approximately annual XXXX.

XX.X% with rules, transition XX.X%, capital year. ratio ratio and of total compared we than rules quarter last Tier ratio capital on year's capital levels points CECL to under XX.X% last compared year. ratio XX% a last CECL the was the the phased-in X XX.X%. a plus The to XXX basis fully ended decreased lower Tier XXX decreased X CETX XX.X% to transition to the reserves second basis points basis The Under of XX.X%

Continuing capital authorization. million for prior Synchrony announced repurchase to an share to commitment $XXX the $X our remaining approval June addition incremental robust on authorization the returns, of billion of in XXXX,

beginning share from announced to increase intention by to per dividend share $X.XX X% in common $X.XX also the per company's third quarter. We the stock our

complete quarter, we will shareholders, to to capital by our $X million guided subject the million our repurchase dividends. $XX During $XXX continued had authorization. our repurchases share in At regulatory additional capital we plan. our performance, stock returned $XXX share to also seek structure quarter, preferred conditions, stock. of Synchrony remaining and restrictions plan developed of the to execute capital our and issuance in continue We've the through to market billion opportunities of second common the reflecting business on fully as end

management, and is a capital of business model. empowered which have strong by history generation We resilient our

capital managing the and remains long-term focused to the actively prudently Given services the we both value the Synchrony resiliency. generate and industry, managing on uncertainties the and creation in macroeconomic assets environment our originate financial optimize we

more Finally, please full outlook. Slide our our XX of to XXXX year detail refer presentation for on

our We by the of XX% more purchase impact loan combined ending moderation receivables expect grow and the or volume growth. for to payment reflecting XXXX, rate

We levels of interest expect of payment but our rates expect XX.XX% margin continue normalize within to XX% this now remain a pre-pandemic year. to year. full the net to remainder through range the above for We

Net half interest for flows expected Deposit margin competition and but half, was prefunding. in gross in since betas to the growing higher deposits. deposit trended first seen also liquidity the better we first by influenced receivables stronger-than-anticipated due than have

of the as the of the the possibility Our anticipated of revised half deposit year betas Federal half interest first impacts by Reserve year. increases further well as outlook the incorporates full higher in and second rate these trends,

As by continues as to credit net resulting variation growth pre-planned interest a growth and normalize. quarter and rising interest the offset partially to earning reversals quarter, liquidity as margin in in of fluctuate fee higher interest assets our by we to expect reminder, we driven mix

six our until reach Generally a outlook. peak Turning a in We peak of similar speaking, approaching mid-year. progression not should half now the versus during lacked charge reach expect level delinquencies. an lost Net pre-pandemic our but normalized delinquencies second the offs follow levels following will year. expectation through to in of to dollars the fully approximately XXXX months credit previous

more end delinquency normalization, lower slightly now X.XX% of between moderate we trend and our charge to prior pace toward of offs net the the outlook expect Given X.XX%.

to continue levels reaching XXXX. losses on basis anticipate We normalized fully an annual in

net reflects RSA and below outlook growth. receivables credit the and to X.XX% range trend prior continued of X.XX% of normalization, for the the This between improved year. We impact margin loan be our interest full lower our the of and receivables mix expect loan average

operating first half, anticipate higher-than-anticipated quarterly expenses remain And delivering operating XXXX. our the for full for to the leverage growth We $X.XX given trend at in we year. to now billion committed

half model we a as Taken to close to forward we on power resilient delivering of differentiated commitments range environments together, our Synchrony's to and results out look XXXX. continues of financial second the

I'll turn back now call Brian to for his closing the over thoughts.

for their We our partners differentiated Brian. positioned model power and best-in-class Synchrony's our outcomes Thanks, through customers environments. has consistently the strong well change. company for experiences as needs evolving even

Our strong capital. business generates

adjusted capital to work We an to in are longer-term that prudent growth adept manner at sustainable, effective putting deliver returns. at attractive risk

I ability look I of strategic ahead am this deliver on execute stakeholders. As year, confident and many in to our our to to value the our remainder priorities

With Kathryn the that, I'll to Q&A. back call the open to turn

prepared our remarks. concludes That

begin We the will now Q&A session.

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

the questions, available additional have after you call. be team If the will Relations Investor

start please Operator, Q&A the session.

with We'll Instructions] question our from [Operator Cyganovich Arren take first Citi.

drive from volumes relatively where for and that XX% still rates of year-end? of XX% normalizing bit growth stable, to the, been purchase in what's a a kind deceleration to recently plus talked closer your you've your about payment somewhat With it's going to

and Yeah, good morning, thanks for question. the Arren,

I think little our about it's less current bit a period.

a And see dollar volume We right. but moderate period. be rate move do anticipate purchase elevated You're growth. to basis, pre-pandemic continuing to the on payment the continue versus expect into do end, back we strong as to we

at the provides and through I an end beginning the the period, you more second last in think acceleration the out was of difficult back coming year, when pandemic there the which look Omicron of comps. acceleration year, quarter

high as V last the a comp. you build really asset difficult when rate it's off it year, more on at just came and I payer a basis think its look

about when platforms. going think to the quarter up across you that I think look end here through put you I we're way of the the volume think in our sales to the it's of year, strong performance when be second all at all going the

growth and are what's health digital in growth provide really continued, strong wellness of little you about then both a the color segments And Can within strong platforms, Thanks. there? the driving there. showing those and those

with say would platforms. I Look, across very all we're our growth sure. we're that Yeah, of pleased the seeing

far really talked pacing We've ahead wellness of about and made our receivables, expectations year. You up in company, auto digital in this the so is and a at wellness XX% up platforms products. for charge XX% investments result past, up good look XX% marketing the XX%, health the and health and where one of but even at we've the and home leading really is incremental

And so you're are well. obviously those all you've which of digital, performing I of benefit the new think sit the investments got of that pay seeing programs inside Digital, really off.

would to platforms. two those in we over-index So to continue expect

Arren. Thanks, Okay.

Thanks, Arren.

you. Don question Fandetti We'll from take Thank with our next Wells Fargo.

you terms in I dig wondering call-ins talked was change the seeing and in hours. what in I more slower morning. Has less there? know of hearing good Hi, in a terms you've there bit any you're consumer wage behavior. on customer of working could or you're what been if little past about

on Yeah, I'll start this one.

still consumer I look, think, is the strong.

I think but savings are a trending still excess XXXX levels. coming are still above bit, there's down obviously spending, they

So year the one so having pretty you the how labor surprise when say look consumer market, at has far strong resilient this been. is a I'd

see very record long-term XXXX second below still of X%. a our We expectations, quarter a touch much of just our with growth certainly our Credit reported in that operating We're on We're was target You is side. to in purchase X.X% levels. terms better. maybe the line below volume.

is as next. of this to kind seeing day, balance operating in cautiously. normalize line of the to and credit still is wouldn't every abnormal. into anything hearing this listening expectations, really with and the continue through year we're monitoring will say expected, It said, We're our calls. we're that still pretty every on we're we're hour, consumer everything I the So With positive.

rate, Got that steady you And on thinking it. bit? it's the sort improving maybe of a allowance still to are

Thanks Don. for that,

think look have reserve expect The I for think provisioning, quarter really second there when first half the been day at that quarter. and the I to one. X.XX% of down the year, from the and continue X.XX% provisions, CECL migration we first we Again, growth back towards respectively

I with in seen we our delinquency been expectations. have that line think formation has the

that time. over out again, So will trend

I us assumptions one pre-pandemic slower, this think mid student haven't think they've our I half in getting really just back you the that little we see levels delinquency of is around loans, to why bit a been about macroeconomic things why second changed shift or today year. talking which of

it migrate to -- again, the So believe macro will with continue migrate backdrop comes in we expectations. our as down as long line

Thank you.

Thank you, Don.

take We'll you. America. from our next of Bank with question Mihir Bhatia Thank

Good is question question. the just I front. have first for regulatory Thank taking morning. to my start, I you Maybe the think on

issues, Specifically just inquiry where share to updates into things about shaking costs. on perspective rules thinking late just also and CFPB's the the interest how around any are and preparing. and there's if those [indiscernible] out deferred fee talk medical Maybe your you're

Yes, sure.

to pricing with. tell and understand that clearly We've let proposal of around they been new So this on for when I working entire very you our partners actions models to been late year has We're with on over kind initial going came having in result me a out. deal an now the we've the is different issue fees. start conversations issuers. productive offsets. It's that industry all pricing that across likely would this

that fairly portion access around these they we that see partners. with So that lose of things dialogue underwrite customers that our think offsets the higher penalty having a might are also proposing no APRs, some today expected of And They pricing. appreciate the good had we're like fully we've pricing discussions been we've different surprises. to I'd types without to credit. significant say underwriting. of fees, And those real I

And want, clear, want. that's something that just that to that's don't we something be don't they

lot here to the are to there's do partners. to still the interests goal just we decided very lastly, day, offset be a impact of to is our today. Look, point. continue that that aligned I'd and on So the then much And customers say, look, underwrite protect We the at end the want here. our

on final as a what think We expect teams consensus likely It's while. had rule be to we're in We're the fourth for I quarter. as we've litigated. to a we prepared focused That's sometime least could this hearing. at the be. see But

what just we'll continue learn to through And updates second And as so your question? was give you play and more. then we

also if -- medical do It anything was the on about? deferred any interest they've you the on there's inquiry comments the talking of just been medical, into have to the comps that

I'd The view, proud we're elective vast look, medical card. wellness Yeah, majority very first, a and not is is we we of CareCredit credit that do of spend. CareCredit what products our the offer. In say there health

very Deferred is are decades. ensure a been So and interest actually actually for our pet We believe XX% hard are is worked of business products that dental We industry care. around the and to practices leading. product transparent. that's the fair

just that the playing So one positive every things standards level field be outcome the kind of to day. and the would issuers and to we up other bring do

the products very proud It's one on of of again, get the absolute product. feedback customers. best So we actually that from the

about a that? And to switch you think side, happens mean, good think I suggests get is then, the talked guess levels, could back talks will at while levels. guidance six right? about pre-pandemic for after XXXX levels little your and if comments resilient, pre-pandemic approaching you've months. those obviously it next, delinquencies consumer I pre-pandemic thing. charge-off guidance But which taking to your credit I for here a the I delinquencies being to Your here rates, delinquency What just in stabilize

maybe talk through happen that gives you. you confidence and what going levels versus pre-pandemic those continuing grind to just higher? that about Thank So will

Yeah. Thanks, Mihir.

balances focus performance, you today, watch period through that's slightly we want just today, into -- up at each we of XX% to to When levels to just pre-pandemic average of want right. we think our step vintage just the the to are we I how been of XX% in So and moving and about that the I XX-plus as delinquency. XX-plus delinquency compare where are world’s quarters. the historical come kind it we way watch and the look it apply and and think I --

I that's for than about think points XXXX basis XX lower XX translating XX-plus. points lower basis that, for XX-plus,

So different are I a a underwriting in issuers, move continuing loss Albeit, than our not are flowing rate, formation to that midpoint of measured loss pre-pandemic very when I now yet. closer And we you think are think think approach. that delinquency to about at at we of we average. lot to the of XX% our, what's

look at say the deterioration So back peak to the seeing go feel formation loss we today When and and we're we if their good look significant we real I those ‘XX about performances, ‘XX, periods. where is. through at that vintages, not in they're vintages

and standards When adjusted put credit the in vintages XXXX to those vintages we say, ‘XX and lot performing when and particularly the level of on, kind looking vintages. for issuers, started ‘XX in us a are at pandemic our with of I'd it XXXX line

our standards book, back performance in that you call the year. target we're or going underwriting be it that, through we in says next see in don't there to if So for range

I non-prime. think rate are and also these a significant next that the year, think this for see really migration de-risking around based time little or score these were actions did broader around, we the been are either into loss bit inactive first for we've year really I accounts and

prudent idiosyncratic So we're not that impact in actions across to the to doing. But addition or It's more material a significant. appropriate options credit. to what on the say sales portfolio, just have unlikely I'd taking

credit our decision we're PRISM the good line taking. inside feel in good performances We we actions in to manage and with of feel and that the expectations. vintage are about and trees to with adapt in order So quickly the the are environment PRISM

we be with how of So the rate. towards of them updated Hopefully, that and we the up full think sets back guidance some to gives how about give perspective end the that loss here. year XXXX obviously to We'll you us form. regard

you. Great. Thank

you. Thank

take you. with We'll from next our Ryan Sachs. Thank Nash Goldman question

good morning guys. Hey,

Hey, Ryan.

first just So interest about what line talk expectations. guide driving the your with half Brian, being the net is margin maybe updated in half, second

puts assuming an cuts think and longer over you are betas margin think rates now the just I be about the what have forward no higher. as period if I'm term to extended intermediate the for you're mentioned do could rate how assuming an about Maybe curve. stay takes higher and betas per talk you you trajectory for going the of time? of for

Ryan. thanks Yeah,

experienced the the make first we if savings in in mid-XXs, the and half I low and the year, broadly CDs. CDs, of it I savings between And So were were betas XXs of places. as the second little I step And from comes half, increases from forward more we thing think that was think a bit one a into competitors. price the couple different

cash certain are using. commercial have -- deposits You commercial two, on little that's of experiencing that a to and, risk firms outflows one, banks running relative there's some the tighter are that twofold, regional probably say them some strategies I'd mitigation

competitive more So becoming little deposits. are bit for a they

I'd some and using dynamic are trying not raise to institutions the to into That say brick have mortar their overall deposit rates. online raise to big June. an product in but see of May order also late merged, You who rate really

assumptions have XX we it points. percentage roughly about we half back in as think moving call, up, low-XXs, So our mid-XXs, that

in So you the see mid-XXs savings around XXX%. and you'd CDs see

see forward you it. it that will about lower fashion stable. deposits, the generally fairly expect assuming remains, rational, to what I market be think rate speaking, you betas a start hopefully be can type I'd think similar And the we in to then that as and decreases we in when the say would future

as broadly the relative the back margin, first back see some should portfolio when through an floating half interest the speaking in push the about they in portion I about tailwinds to to continue we think we rates think our of half the half. benchmark

increases. You continue to see revolve rate

some as will rise. as from to there write-offs first you the up. be in get reversals clearly tailwinds up of deployed. But come certainly, the revolve kind half rate we And Most if offset a there. bit again then come and the little in of There kind of through both should the line, of your losses will we expect some push delinquency liquidity

how potentially do impacted liquidity portfolio in be both and wholesale in some the out the unsecured half to funding also of will we're in half second second The going the secured market. that plays

for the the half, betas So we flavor Ryan. then that second you gives hopefully in and think a how about

Got it. And on the then, any, way, this think about you talk Can way regulatory will the what and both Brian, if we're coming a impact maybe obviously basis? months. in waiting potential capital Thanks. about think handful managing that liquidity on changes go-forward just a you you of

Ryan. Yeah,

capital, transition they then a period implementation put issued So again, rule couple which run period around years been fully changes when have risk scenarios is risk different think perspective. the in final will obviously from to have comment proposed rules relative out before different or about potential a you outcomes Vice indicated operating financial Chair implications Barr preparing the out to the a assets has may weighted of We've and a an -- in. towards

that been think our we've I haven't actions. definitive So to relative plans, capital contemplating taken we

manageable for I us. think it's

like in think the a Fed TLAC to good some based feel of surplus if we on or in rule requirements, exists I that today, position decides position. we're extend from the We're long-term to the debt know.

and certainly at look and actions it potentially be as changes good how we'll we to closely assets move we'll But and monitoring we'll we it. date, what weighted rules, risk with forward. to the to taken adapt feel but business be addressing haven't So optimize try and we'll certainly regard be I can the we obviously but think smarter we to our come, we'll most evaluate about

color. the for Thanks

Thanks, Ryan.

Ryan. Thanks,

Kevin take with you. next Sandler. Barker Piper from We'll question our Thank

fundamental feel there abnormally growth you. robust. an of do consumer what or high you We've I for payment these fairly you very pre-pandemic time do extended remain could Thank payment is expect just right XXXX, given in you obviously, rates to remain shift levels. time. were a loan is elevated XXXX, for And relative relative period extended now that still to mean, seen that experiencing of remain rates and high, period in behavior an

consumer us and there give of, an idea behavior shift today? was Just what a if seeing in you're

the Kevin, Thanks, Yeah. for question.

dynamics. look for different of second, we there's when couple a So payment rate, a inside

and been prime fundamentally be customers lower rates or look has different who Let higher that a of don't call payment last to and pre-pandemic years for for we up as and during liquidity the than back you've normalization of we have me something business, underneath levels rate the what When year the really grades. break built others at seen out And super what's a non-prime did a us or look to pre-pandemic. I start so. credit excess rate boosting segments, with, you'll it they prime fundamentally for will now pay the see customers kind they continue and couple paying into is says today

to wait those expect pre-pandemic to, we to I'd and back have happens. normalize say, We're to period. going the see people So that ultimately whether

other is us. in dynamic is, which have good The for arising a it thing auto pay, that seen has we been

we have that's paying And payment So of XX% we've to of a had to about not It does the there, point up about think change X but going does that on rate, accounts percentage help bit little something auto rate, dynamics shift. the help entry shift material pay. is on a that does the delinquency.

So money exit to again, more regard part excess totally credits. or and the get out during [case is the be accumulated this pandemic for we clarity (ph) pandemic of of part the we savings burns the think to recovery off those with of period that's when continuing been now of higher sheet] until the

the quite October? already know your the in side, of I spending restart on from spending implies on sales anticipate maybe give it a payments volume Okay. an made growth And we idea right, a where us slowdown then XX% follow-up impact on in a impact student an your just plus, due side. you credit Do the comments expected maybe on the you've and of are. just but loan to bit

Kevin. Yeah,

magnitude who is understand population student So, people currently of again, have loans. forbearance and the understand of to We ones the non-forbearance. amount that of what relative they have outstanding we the in the

about and we they're XX points we think delinquency. close discourse, think first me, they're on different when They're range mix that of the of the that FICO event basis XX have, look at excuse within population, points I difference. of very I all, population to

XX% have the underwritten people they those So payments. regular we're look like of making pre-pandemic book, we that

So their financial ability manage to the situation. feel about we good

on just Again, an year. demand basis back the we move So have goods in of about half comp for we both to a we which tough decelerating, don't of as call, purchase earlier the out into pent-up you really we I mention on Kevin, everyone as services. into was volume that in for be I it the pandemic, think when really spending early year and tried purchase see into, think I wouldn't a acceleration next dollar impact to the back goes I last year and the of saw backside anticipate this coming want clear,

the pulling here continue. feel engine and wellness health we are really volume. about Brian which and and that we good highlighted to expect digital, So the forward

Brian. you, Thank

Thanks, Kevin.

Thank you.

JPMorgan. come Our will Rick question from with Shane next

questions. Kevin of but a covered Thanks my topic, really bit my primary guys funding. little in I'd to for discuss love terms taking

second had you of the You've of not caused just whether events unsecured faced least secured sort the have alluded look I'm have you're your to to this guys realizing the issues going that the some in ratio and the financial markets. to of half year you to deposit forward? that institutions down year, fact to deposits, related that going target take have the at curious

Thanks, Rick.

feel very of and So, funding believe our intended our stack. deposit altered funding. confident our provides I no, which proud have for XX% the of targets we very not franchise We

was half As bank where there including net we performance week, the positive we at flows, are look the the this first year, on turmoil. weeks of every

vintages, deposits, the good the our to those back. we've grown the feel vintages we year half attract in So of deposits you the look ability and when at first about

sticking are with us. customers So

high to rate have retention regard CD. with We continue to

retail move essentially deposits the as stickiness really we XX% having are helping of forward. So us

wholesale tap our your becomes and markets go sources. to important willingness you think for degree, Our desire costly some I people is name. two part when the it more those to a markets, willing without And very to of underwrite into in buy to funding and longer being periods

active maturities time, debt we when have those a particularly be to and important. markets So presence over having in continuing is going be to

that. some relative back We the CDs have also like to half in year the things maturities and of

So manage sense market for to the intuitive makes wholesale in increments betas, us. try lot accessing the of a to certain

XX-plus-percent we be funding good would that forward stack again move the of our again, our to and as we about deposit feel So goal. continue franchise is

that's helpful. very Brian, Great. Hey,

As you funding and the potential a arbitrage terms little can this about supply what the environment rate you and talk market? of versus the demand, think deposit wholesale bit market, in is -- is in there

mean month. some are Yeah. people's wider spreads like the and certainly than credit uncertainty this bit Rick, access. it's we even I the well, some really where given may would a go for then, of benchmark after meeting about -- us, little later obviously, given Fed rates

forward. look the as a as proper the the in So very sheet do look of more the foundation going more it we steady how performance do spreads appropriate it is manage an at how liquidity we ability don't order create at we under less performance situations. really the But balance all the continue what credit provide degree, and we to we and some think get in to credit and good in the over as to regulatory our environment that tighten show the a mix balanced We I need I think look funding have protect here arbitrage, to show at time. company And arbitrage. business, drive will as

makes very sense. That Thank you much. Perfect.

Rick. Thanks,

Sanjay Thank take KBW. you. We'll our next from Sakhrani with question

one there any be flux. you portfolios I'm for There's of deals could larger still remains big any Synchrony there's that Doubles, curious, if where company other least a sense of technology that news portfolio morning. give some large out obviously, us RFP, Brian for in there? Good there and out Thanks. Walmart out at or stand might sort might

what's most now take exceptions, we're de novo pipeline kind of start-up, I but BD opportunities, to our say, would which Sanjay. Look, more sure, right excited smaller time Yeah, in are grow. about, with a of obviously really couple

I would think active we're say very extremely also disciplined as I as there larger well. on opportunities, But obviously, that's we’re well. where

got the critical. that's right alignment making terms of with partners, the I we just return, absolutely In think balance, risk sure right

or So on the deals bit partner. terms to to return -- the with see steer midsize deals you're bigger we higher scrutiny small the just always a little deals higher risk more I hold of the in alignment going think to level us and in a because of to

the assumption might that harbor I appreciate safe And one, late just And on like commentary. amount then of to there be follow-up what lot I of I seem could the just whole be some a was is on I the regulation forward guess, I'm partners? rate. we mean, not fee is that. hearing proposed. made, as be I move is think as that operating how as been talk it what decline about adjustments like low as as move guess it's pretty significant proposed? curious a your in the safe I that's you might harbor you

Yeah.

even So credit. small of businesses that consequences think on look, clearly, consumers, lot proposal this the to a has rely unintended who

credit not a is incentive to time. customers. we will more with on We make It pay an customers. $X So will restrict don't It think some that to agree deterrent, not credit expensive $X. it's many to

welcome the $X. the would higher comment And than of the we certainly very the rest letter so process. And active and industry a we're with amount

prepare now. into as said, go that for written with we But effect the to have $X to right

cost operating the kind assumption. base higher if We of certainly And cost that $X. designed think differently, our were substantiate we could a so than do that's calculation

pursuing goal again, And protect do just offset partners But revenue that to here so in we're need we're that our here. we that's to have we offsets because, like to to put underwrite continue to another angle and that customers their ready place today. is our

been that we've are are XX in focused And last, discussions for where the those. so the That's really ongoing months. kind of, those

for much so you thank color. the Well, great. Okay,

thanks, Sanjay. Yeah.

with our from next take ISI. Evercore Thank We'll you. John Pancari question

Good morning.

what the you're on seeing portfolios you're Regarding XXXX you're actions us detail migration more some little and into more you color can mentioned taking on if can Thanks. actions what taking, on front? you've non-prime a credit migration the that that us given you give this side, give

basis or I think John. XX of XX points (ph) look to if Thanks, get migration based, specifics it call was non-prime, portfolios. broader would saw -- regard the and basis that into into Obviously, points credit Yeah. at we that can't you with in [$XXX million] range we you a had a account. But

Before kind at it. of we to used wait and look

of Now, to down not we or other immediately we whether to the look exposure factors at combination and want balance. reduce it in the decide

other closure two, effectively that and it with, be account or credit may thing portfolio. on account. same has in line uncomfortable So if we closure do do that credit attributes we the decrease line inactive And our more we

because non-prime, a are, just would these it's these is are I'd at and very say, this to they significant the movement unlikely not material it's So movements had effect not way, time. into have a way they're next the in year they what -- significant performing because

It's if anywhere to likely more see little it draw broad based again. to idiosyncratic. minor with fact, based. de-risk year are be John, action more have not in broader that's only all been our to say again, are the said a portfolio, going material you, These next effect. bit, really take because the actions we to have that something I'd We we honest not again, refinements -- but So what we're but

I on up Brian. bit color that growth mentioned a front, you little in right. it, bumped separately updated bit us All can expense you. Thank know Got the losses. And and then more outlook. operating a your expense give you on

can more So give help you and out and out what color kind revision? there break it us set the maybe maybe drove of

Sure.

of the obviously the growth mean I the year. for beginning growth, us, at the look raised we guide when part we for So

product CareCredit, the that invest We little us particularly are Brian our we portfolio. to in more, for others us of opportunities to the seeing ability the or bit a health made with and portfolio. kind highlighted to and sense in opportunities grow more segment Allegro wellness into the to really for that lean grow saw

as little half. accounts more Again, overall added which -- we stronger resources as you active drive purchase we about a have that, in in think think to back cost some bit incremental year we seeing accounts. volume we the We've the it those increases some So are of around first been has the half growth. variable expect service

into place. we're this a are return a ones of years risk some lot strategies attributes, we a migrated to lean the the again, in and find fraud has adjusted robust industry and we we not going have those the now standpoint. of last couple the losses, of people fraud to to -- growth operational really of buy had if who environment, in may a from which So pay want The other some good as laters growth be, of standpoint, whole from benefited

to we to purchase historical saw is low is So is industry relative more abnormally fraud and migrating back again That volume. wide, this say level. I a

an had to particular RSA did was one an This a which it. but offset who a incident little exposure have quarter, there we here partner drove cost bit, from the up

It's more So us going levels. migration again, what would to period. more pre-pandemic see and to the in we for or say industry be not just -- just at individually, normal that more this look back migration is something back the a for we normalized to become challenge the

and you to leverage efficiency we're I operating getting improvement adding the ratio. a clearly pretty that in good saw think is year-over-year

that on. that's us very key a measure focused we're So obviously, for

it. Thank Got you.

Thanks.

John. Thanks,

Thank you. take Graseck question from with Morgan our next We'll Stanley. Betsy

are more a going in Does to where run morning. lower levels just This if you And the is your X% longer-term good of partners bit what to maybe you're is lower maybe was the is in Jeff could willing you guide wondering the OpEx well. XXXX through? rate NCO that seeing talk with have about higher taking lower RSA as Betsy. guide Allison these bit the sustainability at come little reflect the for Hi, share something relative X.X%. a on I retail the to that little

Yes. The incorporate does expense in. Thanks, RSA Jeff.

partners flow to cost. interest margin you of now expenses our pressure as saw as in the well. as They from interest-bearing through is impacting again well truly through the some liabilities would flow partner their net So

guide. the effect you lower year, to that at long-term you X% to with and is So at normalization X.XX% that the we I think now X.XX% credit the Again, combine where of really get started X.XX% the a end have. we

higher higher you net think I has long-term charge a rate again, where share. off slightly margin guide by

partners. see of liability when was interest-bearing the like bit little is net where slightly you But that you updated we RSA higher, much cost where higher. we had bit is any guidance a now the sharing good than and performance we year to net again, look estimate and economics be back. should in for long-term X.XX% we'll And when a the look offs to feel increase, the charge little profitability it's with expectation. performing be been But RSA good higher a lower RSA as there is that off and it be the of the again, we this at and Again, at hasn't guide we of lower a obviously expenses, X.XX% believe to is to and charge shifts is our increase, and the going the performance fundamental this designed about

months? in new And profile, relative you've your about wondering the of repayment tightening we could know quarters the side account was of then I I I know just update things. get acquisition in talked an an And already you update on any incremental you've actions gave doing. taken loan the terms been if over you guys prior last have just on three student

today what Just if and repayment on starting? are into folks that that people you're from you're calling that, who factors underwriting your hearing maybe in how wondering

adjusted default to any margin partner taken against broad-based performance on actions haven't account really we there with a acquisition. basis. Jeff, to risk and regard Yeah, look We channel at probability

broad-based making been we've not but action. So there assignments more

it. about good feel we So

for selected remember others choose for got as You credit. us mailings to versus do we get credit people and to issuer, an apply who

smarter usually partners, we smarter to data, decision. make from in have that hopefully we to that data of the it data our gather be decision attributes use which more can at So time bringing

other but acquisition make lever. fit, line. is and consistent partners and the assignments, we period, with managing We open relative we don't the So pandemic the to exposures close say we're line be during our through as adjustments to important point we see try I'd small really really

account significant acquisition. no changes again, So on

last the half year. origination and you in of of think both the through that this can consistency I see year account our new first

Great. Thanks question. for my taking

Thanks Jeff.

Thank you.

question with comes next Jefferies. Our Hecht from John

thanks And guys. morning, for… Good

Hey, John.

guys? Doubles. First Brian …taking my is questions. you are one How

color the some -- how on that does just gave so, the point the structures respect guess and BNPL like how guess for that, in at the to of It the your in and with your usage I you're acquisition customer BNPL sounded BNPL product portfolio. tool does of emphasizing sense a product increased counterparties. I it wondering volumes a maybe little impact now -- more bit of it I I'm the usage you as of a And overall? margins and overall impact if affects it fee where is it is metrics? those that think

Sure, Yeah. John.

what how reiterate a our So multi-product just back, I this complement each of benefits right? And They don't is choice step products both realizing actually that's I and there's here they the we partner real just think other. that there their think can are our complement think provide really each terms partners strategy to I now in think other, they fully long-term and take to these And to cannibalize, customers. is important.

on bring them in we where right, pay now a tool, then card. and and buy do time product a over revolving our acquisition customer be may this partners, some we in upgrade product dual later and So them

can look we make when can we customer, we And value at that that the economics make work. lifetime work, of the

more standpoint. this think the of partners power is from an and you I our attractive make model of that's So that kind both to can this us economic

little new we've a customers. they need if a to they bit that to of partners bring bit later, pandemic, took things of a is that One now want rate the in environment. step traffic sales, shift a in drive little the new of engaging talked in interest back through we've you they buy saw pay in a seen about higher And then

products a which and employing, And for that's expensive the sense. maybe we're So loan a lot model purchases, actually that different really customers makes some of these some really model are installment here. and is an there's

more For some purchases, sense. product a revolving makes

partner we terms that completely partner And strategy for them. by the partner we with is employing. the news given in so that economic we're arrangements have that and the it the can the that sharing is But good of customize really

make risk attractive different partner, really but helps us and balance can of the and a way return. a economically also that this it in is in ways customize we So the the work for number

to apologize NIM, helpful That's Thanks. on touched on seasonality And I think quick anything Okay. but very I Wenzel, maybe for any color this, redundancy, of QX QX then, there? the color. you consider Brian and

for John, Thanks, the question. Yeah.

then liquidity think margin, about to we as some of the I tailwinds half as interest you back the the increases, again, relative going you kind into a of some should plus see little benchmark net in the deployed fourth. some rate to begin of assets bit flatten net and think of the third the in out margin the up interest tick that build of quarter year

think So bit from I out again, you see of exit XQ. little -- short-term, I but think where benefit a of we

perfect. That's Thanks, guys.

Thanks, John.

you. Thank

question We from have Gabriele Oppenheimer. time for at more one Dominick

seem a that forward? moving about when net we into have debt Great. Thanks. question. up going collection if charge-offs I my was was line, to I industry but a the taking Thanks little read follow-up. be there's general And about should we for And anything I not still for just the wondering They just so bit. within for Synchrony, think much curious fees.

Yeah.

of the all, wouldn't first comment I'm So I when for that I I about sure think can not -- well product, industry.

its the think the as and to I two, really product, up you higher protected. the through push what at represents, a one. this you bit people primarily that's see as being And digital little it, a for as impact originate how I increasing, individuals, balances see conditions And, then balance do and see number you sign channels. average understand think this rate we look sign have more ability up more terms when we it, on we get I

the feel channels, that way transparent we product couple good And the obviously digital we the to consumers. more about in So again, little years of benefits heavily. in a a into bit it to a which that's do last we offer that we pushed our

about advancement? the pedal? Great. you're we on incremental Thank where the Is in, just we much. marketing? is and And expenses run numbers, guidance talk it it putting do little that you kind you incremental between of or expenses? spend could it a rate about about the at increase gas customer acquisition you. of Is bit, think Thank expenses tech drove How if so just the talk the

the for thanks question. Yeah,

engaging we're products. of place to where we're putting some look going initiatives marketplace people to is first, strategic about of with we think and inside platform expenses, you costs and as where drive our the when be the inside think health consumer employee some and really the in I and So wellness on to our

that in experience. that’s of there There have as our to order some headcount are So of drive we customers' enhance requires who capabilities clearly in some technology that the in is contractors that there. leans technology building really component a

you drive to costs or as and little then more are businesses wise, And we the experience marketing try the into continue very what to towards difficult for of wellness to a the we them. health healthcare promote seeing a direct-to-consumer really some inside and on the of who environment bit manage product is shifting have folks

And normalization we of move that as employee marketing. costs as well those three as So see you really that and losses will again, across it's technology levers, operational forward.

a very that. those return sure we're And investments. we've on the on got approach make that We right disciplined getting

through the top You're seeing come line growth. that in

You're efficiency earlier. the net and that of ratios I the seeing effect leverage mentioned operating

Perfect. Thank you.

Thank you.

Thank you.

This concludes Synchrony's conference earnings call.

You day. may disconnect have line Thank so a your at wonderful and time much. this you