Synchrony Financial (SYF) 23 Jan 242023 Q4 Earnings call transcript

Good morning, and welcome to the Synchrony Financial Fourth 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. [Operator Instructions]

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

begin. may You

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

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

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

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

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

for, the third earnings not is website. Finally, does edit and Financial only The parties. transcripts guarantee or located teleconference webcasts authorized not on Synchrony are our our of provided responsible accuracy by

to now Synchrony's the this President Chief Doubles, Brian will are Officer. Brian Wenzel, Chief Doubles. Brian and and the call I Officer; On Executive Executive over morning Vice call President Financial and turn

average of common everyone. of Thanks, $XXX tangible including on net share, X.X% fourth million diluted on Kathryn, earnings and return equity or and strong assets morning, reported Today, return a of good a Synchrony quarter results, XX.X%. $X.XX per

and on XXXX common $X.XX earnings diluted on per XX.X%. average of fourth return contributed These full a tangible $X.X of share, quarter results return or billion of a X% net equity to a year assets

by and platforms. and continued diversified consumer financial strong supported performance multiproduct strategy This powered our sales resilience was by

last of achieved billion volume year. up record from X% for the We $XXX full year and year totaling another purchase

and in average new products helped of by value active accounts X.X%. XX and the origination XXXX drive our propositions accounts almost compelling helped also Our million grow

resonate moderation the to receivables XX.X%. purchase customer leading offerings to value with our loan rates base, of and payment of utility deeply broad to continued with another in product of continue combined The record This, growth drive year our volume.

normalize net quarter levels, our still of underwriting to year continued charge-offs a net Print below reached to in fourth rate charge-off range full line contributing and our X%. X.XX%, to prepandemic X.X% expectations, of target with this

our maintaining We the while investments also progress long-term efficiency drove of franchise. discipline continued our operating demonstrating toward to ratio, ensure cost success target

through paid Since strong reduced returned including Synchrony And capital $X.X and long have shares returns, continued billion execution history by XXXX, in time, $X.X we billion dividends over year. XX%. this shareholders capital of prudent outstanding and management our to our

to by cycles. ability our capital return delivery economic model, of changing Synchrony's which attractive market generate through the conditions enabled is and our to prioritizes shareholders sustained business returns differentiated and risk-adjusted consistently

our priorities strategic changing key reinforcing meet win by across needs. execution Synchrony's focused strengths Our resilient and mind, preferences year. in and ongoing continued the and enable to core facilitating Synchrony our past grow over partners new that returns to evolution With

than the and relationships. renewed XX With XX partners more addition over of

of partners focus to J.Crew innovation, selected is that capabilities, to to apply and to strategic our This our be omnichannel co-branded our digital program direct-to-device scan card, experiences. credit will wallet partnerships, applications. in Among and best-in-class testament a credit Synchrony mobile which through competitive announce preapproval our connect to digital-first robust its our and seamlessly win culture were investment we with new provisioning, ecosystem, launch to excited first empower consistent a customers

options. and power and suite person engage for and across our they financing reach. diversify to partners, markets digitally in our of choice believes merchants, during utility full providers our XXXX, We programs, broadening of customers also a the Synchrony our offerings the and and products continue extending of in choice, everyday as

prequalification the multiproduct to customers of empower needs revolving the launched to with side-by-side best These suit forefront. various make and weigh bring to we enhancements and choice customers of that financing benefits year, in time their offers moment. installment began that decisions presenting options solutions both This real the and in

to now Pay our Later We at solution, Wellness scale & our locations offered continue in provider over platform at is which and retail partners. XX Health XXX

our And partner tool another with seamlessly product the integrates strong. and partners broader engagement response For and and providers, has the Pay customers. deepening provides into Later for relationship been offering,

XX% these sales offered a Later in of Since we new with customers. have from solutions launched accounts, new lift partners who Pay have seen coming XX% net

year we the the a announced insurance through leading extend partnership a minority opportunities America. companies Pet one expansion the sale, that and sale the reach. pet-focused opportunity last from or North Synchrony's IPH, of offerings diversification to of In our business, and build our to strategic of interest from continued the our Best Independence Holdings, with benefited quarter, over fourth in Pets

been more in average, acquiring on with of to which We're such considerable double industry's force years. into insight more gain U.S. pet great by over rate, per Since broadly business provider achieve us proud we've Pets able year pets the enabled pet the over a what X to last team, XX% the a the growth very and industry, grown in become and XXXX, in business the than Best leading we've insurance

expertise for Best IPH be Pets that for pet its able customers. still new offer Best use Pets insurance and unlock opportunities greater We are to will to confident value

pet into country. gain IPH greater ourselves, pet growing across is And expand still we positioned strategic to between seek as financing and forged industry, to through on Synchrony relationship insights exposure the the the rapidly to flexible care access

More accelerate supports of of locations our This loan billion and acquisition health improvement the point-of-sale industries. Lending's and $X.X services our opportunity Ally recently, partnerships business portfolio active expand financing care borrowers home the still with X,XXX nearly XXX,XXX consists business. more to merchant Synchrony than in growth with another announced and

the loans and of the this credit and Through Synchrony solution offering will in point differentiated installment acquisition, at create sale simultaneously both vertical. improvement a industry, revolving the home

roofing, choice, product for consumer sales electrical delivering financing home windows and our enables multiproduct while strategy, Synchrony This our and conversions expand partners. maximizing services. furthers in to our opportunity also This specialty presentation diversification

the about natural operating excited and to and profiles return drive between time. forward Auto look see and with Synchrony's and Ally Lending leveraging We and Home and opportunities industry our Wellness scale growth across are we and to platforms. accelerate Health efficiency market We expertise synergies attractive platforms, over

experiences to network customer of Synchrony's successfully distribution a solutions each delivering financing interaction. across with expansive ability And reliant course, breadth of deliver is best-in-class on an

presence offerings Venmo, Belk. Verizon, across total X% And X outsized our [ sales. climbing pace, and provisioning continue PayPal our we year, to by capabilities digital partners, at including our XXXX sales elevate TJX digital to and grow adding nearly for XX% utility of This wallet and the transactions and digital continue of to in-person an ]

brands, Over offers find multiproduct first shoppers partner the showcasing of our launched hundreds on marketplace financing with our our the Synchrony's year, Synchrony can phase synchrony.com tailored of and solutions. last app, which native cared within

to participating. fact, In and our XXX merchants, in as of Synchrony doubled leverage than million attracted number and cross-shopping initial the partners, providers develop more analytics visits Marketplace compelling launch. as over capabilities our this by partners we marketing opportunities shoppers for

met, and a customer to summary, of purchase and to range In payment, to them whenever digitally of across any our a in and a looking solutions in-person an flexible is where with or We however their is meet increasingly they large be ever-expanding can financing markets or want industries. variety Synchrony or given moment. small, any needs meet make

and conditions sustainably to ecosystem Synchrony grow what is deliver so versatility returns, financial as industries, ability to positions channels, the our evolve. and well Our market of particularly customer risk-adjusted deliver and partners across seamlessly providers needs alike, attractive

that, the With call over I'll performance our detail. to Brian financial greater to in turn discuss

differentiated good performing as and financial of designed. quarter fourth everyone. Synchrony's demonstrate Thanks, Brian, the and model, power morning, results business our

expectations. platform in Our credit kept volume purchase diversified record underwriting in spend sales as with disciplined our line growth, performance enabled management credit categories and our

between our share arrangements partners. retail ensured Synchrony interest alignment and economic of Our

As our to the capital flexibility shareholders, balance a credit towards goals, higher prepandemic evolving risk-adjusted provides RSA buffer needs strong achieve normalize delivering environment strategic while their for our to longer-term partial and attractive and our to investing return consistent, Synchrony our providing delivery from all customers economic increased while opportunities in levels And sheet enabling to today. benchmark the partners and funding costs were historical returns. payments lower, of rates,

Overall, model Synchrony prudent financial uncertain positioned through shareholders, past and backdrop to partners business customers, in our management year forward have and an we this differentiated for move deliver our as sustainable macroeconomic outcomes and XXXX.

the products offer, Now Purchase fourth compelling our combined let's quarter year, versus and and increased consumer. to reflected breadth with and of depth sales X% the the our turn resilient value results. platforms last volume our

cosmetic by verticals. reflecting volume Health broad-based growth in Wellness, pet purchase In active dental, XX%, and and accounts led increased

engagement. growth Digital in purchase accounts active and customer with X%, average volume strong increased

X%, increased higher spend. volume purchase value Diversified a out-of-partner and end reflecting

and Lifestyle luxury. values X%, stronger average with transaction outdoor purchase increased volume in

In purchases and as and prices network home ticket decreased volume lower lower traffic, in auto Auto, large offset gas and our specialty, more growth Home purchase commercial. than X%, fewer customer

co-branded across products and these XX% Purchase customers. volume value deliver Synchrony, volume cards and total quarter, the our grew broad reflecting the represented for of X% dual purchase that and utility for

nondiscretionary in split this steady discussed is discretionary trend categories, we've throughout year. As held past, the roughly the and spend evenly between our and out-of-partner

and shift from In for consumers spend discount automobiles towards quarter, gasoline travel categories, and some the in and we from as grocery instance, at clothing, to fourth saw shifted stores. spend

in the between discretionary overall seen nondiscretionary not changes We have and spend. any composition meaningful

in growth volume XXX point drove payment ending approximately growth decrease purchase rates, of broad-based basis of combination loan XX.X%. The in receivables

points payment Our average. approximately X-year still pre-pandemic of basis rate higher remains XX.X% XXX historical our fourth quarter than

The interest impact rate. and and a well loan income billion, interest $X.X XX% increased driven receivables Net X% benchmark fees. the a in interest payment by as as lower fees increase growth of in higher reflected and to rates combined

points of by growth margin. compared basis higher basis largely increased impact to basis XX XX in the Our XX.XX% margin XX of which interest net points by loan which reduced was interest-bearing year. declined partially net net decrease points liability interest basis This reflected costs, interest to The X.XX%, basis yield, offset and points XXX prior points. receivables contributed margin XXX to

basis to improved the basis And contributing mix receivables yield assets, X Higher of XX liquidity portfolio loan margin. added to interest margin. points net points net growth interest-earning interest our

versus RSAs year, loan income. higher of $XXX net partially in fourth by or interest the higher average quarter of reflecting million $XXX the X.XX% a receivables, million prior of offset net charge-offs, reduction

charge-offs net which $X.X build, Provision higher and losses reflected receivables. loan a reflecting billion, to for in largely reserve million increased the $XXX growth credit

primarily items as purchase Other a average as percent operational strong volumes see in a losses $X.X billion. expenses growth-related our of return to the to continue pre-pandemic as growth as well The levels grew XX% volume. to increase we reflect of

hybrid expenses a in including environment, the $X expenses million program, voluntary of retirement estate-related favor also sale potential we employee related of costs several charges, early the the preparatory rule in a to million footprint Pets continue in $XX of change our and Best. $X in million as items, Expenses quarter special to notable adjust related real physical included for to in million assessment, of working fee of $X $X anticipation a FDIC late transaction-related million restructuring

to improved compared for XX%. ratio by efficiency XXX last the Our points year, basis to approximately fourth quarter

Excluding have the ratio notable items the quarter, efficiency lower points approximately basis in our impact been the of fourth in quarter. XXX would the

$X.XX $XXX of in, of diluted tangible or All million equity on average XX.X%. Synchrony common assets on a and of share, X.X% return generated net return earnings per

closer fourth it quarters. from shows third above average XXXX view, Next, account levels we see we as to deposit as interest remained monitor higher savings balances industry resilient, this Slide remain inflation returned trends remaining Overall, also supports manage and I'll they balances year-end, levels [indiscernible] XXXX. through prepandemic X% external average At cover and the consumer through data steady savings key relatively XX. The our rates. approximately and on the during

Our discipline credit well has entered and through cycle underwriting we positioned XXXX. us management active as

rate the finished our year to to basis the above year-end, prior ratios X.XX% year, X.XX% quarters XXXX. the prior average of in our XXXX above from delinquency compared pandemic. levels to to points fourth XX was delinquency Our average XXXX for and At XXXX slightly XX-plus the

of consistent XXXX charge-offs of in X.XX% versus X.XX% net and X above XXXX, the reached and delinquency basis XXXX. the fourth XX-plus X.XX% And in our quarters last of year, XXXX. at for X.XX% points fourth average expectations, Synchrony's prior in with average quarter the fourth rate our to was the quarters an compared X.XX% XXXX Our to year

implement and necessary our XXXX for We continue to position actions monitor and our proactively as business beyond. portfolio to

Moving to reserves.

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

of source balance strength. be a Turning to Slide Synchrony's continues XX. flexibility to sheet and

customers with or growth the resonate the bank quarter deposits XX% the $X continue offerings total to compared consumer Our of over in billion fourth to prior year. quarter, in driving in

funding, [indiscernible] XX% comprised our funding end, deposits unsecured X%. X% while total represented and At of quarter securitized

were up of liquid end assets, points at ] from last assets [ ] facilities year. and basis billion, year billion $XX.X Total undrawn last and total credit $X.X represented from up quarter [ XX.X% XX

Moving on to our capital ratios.

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

classified of assets of previously reclassified to $XXX this Synchrony amounts to and were change the presentation. intangible related in contractual retailer reclassified were to which made fourth quarter, million, other perform Additionally, assets agreements. sheet to balance were as its prior year-end, presentation our partner assets, a approximately At periods to

corresponding This in presentation of an change our had the that capital years. current increase in both prior our each impact basis a and to resulted in regulatory metrics approximately capital points ratios of to XX

capital compared reserve XX.X% last In basis ratio a to basis to XX total capital to quarter including to rules XX.X% year's phased-in the Under balance decreased a X XX.X%. capital change, ended XXX XX.X%, basis CETX fourth fully ratio XX.X% and Tier points lower compared decreased was year. of ratio sheet a this ratio last on Tier with last year. the The CECL than XX.X% X plus points transition The XX.X%. we

During quarter, and stock shareholders, of returned repurchases of million to we the share $XXX dividends. million $XXX consisting of fourth $XXX common million

our well capital to end performance, to regulatory conditions, as we the At to had and restrictions of our positioned remaining $XXX the We're by in repurchase plan. our quarter, shareholders subject million return authorization. guided market share capital business

development conditions allow. the to of also structure the capital additional opportunities seek our We will continue of to complete issuance through stock as preferred

in framework, organic committed of exceed remains capital. meet our capital our share in investments payment of which of to growth where allocation opportunities, inorganic growth Synchrony followed other rates return dividends, of our investment potential by uses that and the and prioritizes or regular repurchases

Improvement financing Synchrony the acquisition unlock great as to point-of-sale our verticals, we the leveraging and Health To value. Brian as announced position purchase billion Home Wellness approximately expertise and that while greater end, to $X.X mentioned, of agreed the opportunity and our a Ally which loan still expand business, view leadership to receivables Lending We've discount. in industry scale of at a

the we to ratio closing transaction approximately accounting, subject and reduced points, to for be of of Upon basis reserve completion approximately provision builds. million CETX losses the our of our credit to purchase $XXX relating inclusive expect by the XX initial

excluding to be of acquisition for XXXX this expects the initial reserve impact the per accretive full share, losses. to build credit Synchrony year earnings

X.X-year of of approximately our book a tangible business, On internal conversion with and integration expect attractive earn execution back. achieve to model rate our Prism of strategy, to return our underwriting we value

approximately of million of Additionally, XXXX, point capital interest inclusive on tax an will to which IPH. to net Best business in CETX in basis will of gain our to ratio, sale our the approximately held required result $XXX be Pets XX contribute the increase minority in the

Excluding earnings. the neutral sale, expect gain to transaction on to the we be

track objectives. long about both consistent established excited to appropriate drive and returns, have to and strategic risk-adjusted the record a and have identified across We're execution growth opportunities we continue financial of

we with drove rate solid to XXXX, loan volume, in which During purchase growth strong deliver receivables. combined payment moderation the in growth

interest And with and in finally, RSA in positive we deliver expand our expectations our functioned to and growth funding as Credit are line franchise We our attractive opportunistic and turn, deliver continue deposit designed. operating commitment net fuel that leverage. normalized our income. in to

XX. Slide to Turning

review Let's for XXXX. outlook our

XXXX second discussion Our cuts baseline in ] include: and growth assumption Fed rate stable [ for year X.XX%, X.X% full of beginning ending XXXX. of this GDP year-end an with approximately a macroeconomic environment, unemployment of rate a the X.X%, of half funds on

of the have a the And final assumed that of rule potential Ally late Best outlook. impact impact financial a first published, uncertainty to and any in we we fee the outlook quarter In will XXXX Pets and late to given XXXX. our fees, This lending associated the transactions also assumes our the timing implementation event regarding final is of of provide update guidance. an our not related rule with financial closing

Starting with loan receivables.

We to expect the and our our products compelling propositions utility value growth. volume broad of continue purchase drive will

remain X% of continue they rates XXXX. levels to loan We anticipate also through will growth receivables although pre-pandemic we Together, deliver to payment dynamics expect moderate, these should X%. above ending to

billion. of liabilities cuts follow deposit the expect for should of $XX.X $XX.X begin. through the two, deposits expense adjusted one, income of impacts: to trends reprices higher repricing interest rate billion year, We with year rates; interest rate benchmark for higher net fixed and as our income several competition seasonal debt impact Net typical once full interest-bearing retail pace

Our for to to expectation offset expense yield three, as in higher partially income fee begin and impact to thereby decline reducing the betas near rates later XX% by and trend interest reversals. during XXXX; year, growth, interest is

expect to peak half are We before charge-offs targeted net metrics normalization of following returning the the delinquency within underwriting X%. X.X% of Losses of to to X.XX% to first trends, expected in seasonal prepandemic XXXX. range in X% our

loan RSA receivables design We the continued functional and of the growth, growth. interest partners. loan of of expect interest of the our alignment by volume receivables year. credit This for offset the reduction purchase the ROCs X.X% partially the of demonstrates The expense higher in average continued X.XX% and normalization, to mix of reflects with impact full RSA our

year, outlook on gain Pets ratio of credit the optimization other efficiency yields of of XX.X% as impact the loan occurs. primarily operating to Best will This excludes expect we in sale, for an to which the the be recognized our normalization income. finally, by And driven reach XX.X%

full of committed business. our remain success leverage operating for invest continuing We to our and delivering in year the long-term to

this growth, purpose-built demonstrated our in economic is stable leading balance performing changes sheet as year, portfolio against and designed. an creates drive Through our credit Synchrony's financial to and platforms of RSA products a attractive our past performance opportunity. again model buffer diversified evolving management returns, provides As backdrop, business and ensures risk-adjusted continue our

continued Taken stakeholders to of XXXX. value business XXXX in together, for positioned and well our our for each deliver

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

that core delivered deliver customers, the Synchrony and Thanks, our continuing our strategic our also and depth acquisition with services executed returns strong to merchants. This partners, providers for of enhance diversify to evolve of ever-changing XXXX. Brian. enabled provide priorities future. has the another and engagement, of shareholders, on world products, and breadth customer quality performance for key expand on strong results in We deepening and Synchrony our value further strengths, to our the the and preparing while we experiences focus while financial power commerce the the business we

We ability sustainably are see still greater in and many excited ahead and value are we time returns confident deliver about to near over deliver both to stakeholders. our resilient opportunities longer-term and grow to the risk-adjusted continue for our

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

prepared our concludes That remarks.

We will session. session. Q&A the please Instructions]. the Operator, Q&A [Operator start now begin

with take We'll [Operator Ma Barclays. our Terry from Instructions] first question

talk we the range should first expect out peak that this to as And about confidence Can cadence X%. to then you'll talk level stay quarter fourth kind be just can you delinquencies? maybe you look of forward charge-off or of maybe in for your delinquencies just XXXX, Should X.XX% XXXX? net within the we quarter about

the pandemic. didn't of quarter, attributable credit all to formation you look normalize fact really partially we peers, our we When think than is fourth box we Terry. which Thanks, the our I have delinquency the during first, recognize to adjust Sure. the that in really at slower

tool, Our bring since we advanced in the invested in. Prism, which XXXX heavily underwriting and we elements data

look the So delinquency to XX-plus basis at helped XXXX. It's in the XX you is XX-plus they're we really points formation the the delinquency and that at look XXXX. X important as today, when rate that out of average that both from credit credit the it's XXXX only substantially X-year that then to that fourth the quarter, and exit basis of note when mix respectively, XXXX sits of similar the in I over mix. And points, to

XX-plus you then consistency very XX-plus, and XX. points look It's I little of and bit between -- not between performance at is has and XX-plus When XXX delinquency. been So XX the that look the a Terry when the a XXX deterioration. at year-over-year, basis consistent, look of shown trending, growth been it, month. range basis at points month-on-month, each

it's very consistent. So been

Relative it's been line. in generally to seasonality,

be factors we enter to entry than continues So XXXX. -- I better can as at look those rate

that half ] first in a of to now So we expect charge-offs in the the you year, [ to a what our the half, should first give half range going forward, perspective so that charge-off X% higher underwriting be your roll from are for second that of inside target. and X.XX% lower

did we the in to beginning XXXX. see that first delinquencies season, recall take second you beginning quarter, here and which actions effect those effects into the Again, quarter of are Those third of outlined. in the we the you and should

So with to the is. the is which has positive as credit that, for good year. what's monitor feel in slightly where to encouraging trends we but rate in, entry us but enter credit, loss, positive on a rate, negative continue that float the effect really the enter about rolling We'll we

NII get And you looks more then we year? just should than cuts. rate follow-up you expect like what of X the cuts guide. talk the Can for it. just on we maybe my It assumed about if rate X kind Got is about

hit point that for really XX%. the look beta, projecting, at rate in we're it's beginning -- through of the we on year, going of XXXX, had September which the Thanks Yes. X I end actually If cuts I'll question, what Terry.

to cuts quarter level to of when XX the you days to think into about with then maintain And want start growth. the financing fact to generally they the late year, fund rate consideration in in you seasonal having rates. a if higher banks to fourth when have take you regard about XX digital also that move So to that lag

lower. that's a bit beta little is why So the

get were interest you theory, get If to the in to net liabilities. are some on interest and would you lower on early year, bearing more increases than margin rate the that in interest benefit

Our Rick with Shane next question comes JPMorgan. from

end, not RSAs. 'XX range a NCO NCO little guidance the you between an NCOs Really basically just a about the When bit look want perspective from we relationship to at at puts guidance. talk 'XX and the than but a higher I'm within basis. the a of looks really lower we what have bit on little function assuming targets. would seen that's pre-pandemic come RSA of rates. And a to target the sense RSA we for function credit, want look a what wind forward, that charge-offs the of I more that be should in but looking in will normal of net ratio. start interest assume range, to as sort trend rates if environment back at up? we X% interest get we up down, to a just of X.X% but RSA And

Sure. Thank you, Rick.

and this The return morning, risk-adjusted generally continue which the really first trend X of line each page going between the to our with NCOs shows materials other. point which thing, to -- to you RSA, relationship I'm in

are right. You

As back you offline, [ continuing some the charge you see that lift ] about think on do which through RSA. XXXX, flows

to will reset. continue as interest-bearing liabilities get headwinds the You

reset XXXX. in XX% of debt in of XX% XXXX. have our our We will CDs were reset

in full through that So XXXX to of rate going you're we've increases the the and year book. flow seen have XXXX, a effect

back get we're the in And think, I not guidance, to said, levels. expecting, prepandemic does rate listen, again, we payment

you getting low faster theory, liabilities, to that full in RSA. an other through back higher benefit fee So yield interest-bearing increase extent the the interest will, which going through, interest-bearing not comes resets, and a you have the To the see RSA. would through down liabilities you're company

Nash comes Goldman question Sachs. with next Ryan Our from

to Is the bottom Brian, of a a pretty beta. bit wide bit a just to you range. to top little Obviously, first a maybe that the range a what make to of about a what And to us wanted XX% more. point NIM flesh the downside? that talk Is is the I that. the maybe maybe end point? out fully just the range? gets NII sure to follow-up question. the I further guide little explain we just it's as and Can just understand want

lastly, on NIM liability way time to XX% just sensitive up, what you the over still see and a you given a were that path frame? And do

question, Thanks Ryan. the Yes. for

let So deal with me comment the beta first.

you So beta this really really end beta, think the for is about the when year. of year the in

so think down. would about you over a time, on wouldn't I beta cycle We in of expect here, you the about period get think rate betas I get X. way X what think the on a so way longer not see if didn't decline would we up, a X

our cycle down. look at approximately XX% that you When would beta I liabilities, on of of our expect were book beta portfolio we XX% on that CDs. savings, over coming

kind went you're of So over nearer way down. time, see it will the to probably going way it up, it mirror the on

beta term. longer about think would over I how that's the So

the -- the the in, cuts market what If about have interest X. question think here you go, is rate income assumption? becomes we you the When X net has

have could and early greater as there's starts earlier interest-bearing push will some March, liabilities certainly dollars as your NII that up. Some have declines, rate

little lower. that's bit this team And to going factor get Conversely, here a be you could through rates come don't the other big continue is it if to push rate off, what to cut do. going

conservative. been have We

I paying think levels. get I'm to saying rates it doesn't back prepandemic

been it's think here in slower anticipated our I decline than XXXX.

between would generally slide XX.X. the I range moving are XX.X you of think those pieces how the as to So

down quarter. if down? of to maybe charge-offs your a help outlook Got could correct, follow it over And also second potential do and maybe the on us see we by and you does when year. the to the proves just Brian, normal credit, come start the peak starting allowance it. coming delinquencies down? it understand see more magnitude patterns follow-up that talked be the about peaking to as And When course come

Yes.

] over. a just bring the vision entering and It the will on P&L. $XXX number that one. $XXX two, on increase go in There the under rate will coverage bit that going some to as year through a we're for or covered little of rise down, a expect see I first in your would [ receivables around as quarter, you're So that Number XX XX at the basis. well. rise million go normally account Ally very purchase the million we lending portfolio March be doesn't seasonally

call So in seasonally. first rise the a you're see to going quarter, it, really

We [ lower [ out ] XX than XX at anticipate be as exit it XX will the that we ]. XX

to going So declines. you're you but builds primarily see as throughout rate the we move see year, will growth

burn Some of the get QAs off realized. or

be performs you'd credit as would be down. think it we if again, And exiting

in ] downwards Towards the day at as year. move [ certainly through X more we XXXX, X, the be day but we won't trending

Our Orenbuch Cowen. next question with from TD comes Moshe

late I are January things and sitting we're kind the -- that guidance you But yet your of of the haven't in because any that kind of could it you here spent mention preparation preparation. yet [indiscernible]? know been issued. have you thoughts you maybe -- talk and doing doesn't in you that towards the fee $X hasn't Could of the ruling updated the you about that anything million kind in contemplate on did end fact from heard

implementation been still a obviously very with be other at issued. sure, said, final things complicated. I'll still now that almost see the this the some for start period that We're terms Yes, we've Moshe. while final But there's this on we'll waiting point. year on of unknown the rule, in this. in It's to for full and working rule

a for the deploy of we teams pricing would partners. lot done time of on offsets that Our We in We've actions and when final spent with work a see lot this. agreed preparation rule. we our have

I So it's mean over going the has on really work. been the past systems work that year. all it's

of -- got to terms. a lot change you in have You issue CIT's

of kind And that so really stuff. it's

that not customers portion offsets, of conversations they we that They say have meaningful with longer have these credit without fully our would want. we something that's give want, the very do that I constructive. been credit. will approve do that today partners underwrite a clearly and recognize not to to, their and And that access no we

said in past. So really no change to what the we

we do the today. provide to when is fully does rule final the Our continue that impact come, our credit the and offset goal to we to partners, of it to want protect customers

and strong particularly a at in different verticals, had of Great. kind Auto of weaker, of year-end. And you growth kind when Home the as obviously, been and in to just had get them you couple second thought, as you as look somewhat a closer XXXX

growth, in terms any product drive you're changes or in anything seeing that refreshes various of are into mix look launches you and the in that As XXXX, going to lines? those

Yes.

Credit. expect where the I It's in really growth or in acquisition year is growth got to leading think, dental, a Health that good investment a seeing This past generally, big continue of Wellness. outsized market. partner we've position. X. the look, would That's great platform accelerated from engagement a We've Allegro our We're and network. we in cosmetic,

invest a relative side expect see platforms. other higher there we in, that's we'll would the to so and continue to to platform And the on growth

mention The we've other one would is PayPal, I got Verizon, where digital. Amazon. Venmo, That's

Auto. And so and I some maybe think then growth and outsized and there a to in bit Home see you'd little softer Lifestyle continue

that? to if Brian, have you know, don't anything I

[indiscernible] value lifestyle. average, see would average. Diversified you'll company be below you'll then in No, hair around be see and a maybe will digital above

lower in is frequency, trend, terribly but what it's we're Listen, values. there the and the in seeing transaction and we home, the traffic more foot down, see Home necessarily store Auto not particularly

they're a high-end -- are a mattress, bit people Our buying mattress, little not they're buying they're buying lower.

expect to XXXX. would we trend into So the continue of that start

with from comes next Hecht question John Jefferies. Our

that does have guess the of the past and recoveries couple on But had my equation wondering, the have asked questions one impact degree of over I think recoveries Brian, is, recovery I'm the questions been maybe of guide? years. of part what in a charge-off we've NCO depleted answered. I I Most to side,

recoveries, to for one, the we strategic of a made the a we operations. John. couple Number done really things Thanks we've to pandemic. look shift in-source at question, Yes. When recovery our

So now. we used to externally have of a managed. it it in We brought lot

drove effectively recoverability rate off. which on So dollars written of ultimate increases

move So through. a positive that was as you

efficient your You that. total When rate down. has were we on more particularly But some by you being a that at charge-offs of offset swing -- helped to of are look I level the down and you're doing right. basis, think forward when that's had in-sourcing flow

So I been relative flat. think on a it's percentage,

do for on volume charge-off your the just better net an in you'll get see certainly, reasons. purchase rise who get with couple step we associated should written we'll go easing should paper market. one, rate, people rates, a out Most you of basis. Number off of if more capital a it cost then XXXX And of of pricing as the down,

tailwind number of So there's hasn't charge-offs maybe been of net much beyond. a it different and out exiting 'XX dynamics us issue for that provides of an probably a on

level a kind maybe And question. Okay. of higher

repayments she margin back steady mentioned have you think, seeing macro? on you was the wondering, inflation you sort Or still would we've of versus goes, as is given it purchase I mean, Brian, is discretionary are got the I behavior? nondiscretionary consistent. changing changes those loan student consumer think turned just reflect I been in on, anything stabilizing, I'm activity that given

Yes.

other We a that to fourth we trend into travel some move bit ease would highlighted, of As of little what in out items. we're John, the as a a XXXX. into seeing rotation some Again, was of the travel quarter. of more you expect

shift. bigger that's So

consumer between not is dollars where they as a a which frequency do the see see consumer and really is We see with are down that shift but dollars. nondiscretionary, be pulling the making shift stretch We up really to values not means do not the our bit, trying little purchases, the do transaction efficient to trying discretionary, we back.

and XX of tell that's I trends. ] first bit [ than sales into that as little don't as softer would always only days, big put entered XX reference, for days a overwhelming So the at XXXX, look been I a that, data. have you but as see expectations frame we I I

some you talk factors. my I play of if did would friends, to And they retail whether tell

storms, been have there's that generally lower XXXX. states cold as traffic been several the started had and we foot board You significant across but

comes question next Bank Our from Mihir Bhatia America. . with of

firstly, your the programs Maybe any up next renewals just Are coming there renewal months? ask and movements. apologize, And portfolio a of for I us portfolio large remind with, X-part to you I question. just can cadence? start wanted it's in XX But about to renewal here

And gone a just we've period second credit through is then of part normalization.

fee late the have outstanding. still rule You

So Or I this to environment? waiting other just years what I like the what last I ago maybe retailers, morning, like the Or retailers mean to and more environment or J.Crew but big a like is talk you RFPs. buying -- about for and do us that for But bit wondering retail announced was Ally you certainty? send context portfolio. you're or like know as the you also are what year Currently pipeline put a little looks can relative it for into in a programs? you context few put normal your like renewals

Yes.

fees make is say impacting renewals, work I So some even that's business, challenging, but would a do pipeline. pricing kind I'll and take -- first, to late first I it does of how to part the we've extent, little more think second that. which new through been the able

that You you mentioned spend to new there's the And J.Crew. and excited time, We're of got that's part program. announce there uncertainty. some But right? negotiation, to speculation there's

believe And kind for yourself to we got which those done. try of so cover outcomes, we've and you possible

easier But that not or things conversation of and here clear from next new do I make, other think influenced, market month up participants. that renewals more through. be clarity X, the think, will a It's once some it perspective. challenging. and or I So but has part that little us, I bit gets it business she the think does only a make pricing little big there'll a

that's the all analytics, you process, of lot about the this there over given the kind last in get a months, big data to XX things. of data is think uncertainty. I share, a when the or about But way then financials, discussion those the capabilities, part it's the sales the crept The just BD technology,

majority the there deal have renewals, opportunity an said, if we are With term kick that beyond. in if programs we few to we our if of thing, and the in change, have terms there's the years. The to the an if just early, out renew a as and other want of partner XXXX see change always, our together wants pipeline vast we something to opportunity, we'll something for or can out get

work we're our that's So partners. always something on to actively trying with

in see to continue The under just [ we'll ] update only you'll thing contract in add, but I'd beyond. again, is 'XX revenue answer February, the or to and that's

that in expect So February.

Excellent. switching And then just gears.

of of stable, about pretty terms the like feel sounds it health still good consumer, it. the In

landing So I your is view. more Clearly, wondering underwriting here. about of becoming posture consensus was soft a

little posture. feeling maybe X today versus Maybe prone to gyrations what ago how aren't growth? is know are I just about big normal year? a like But talk even there. there loosen and comments still a look XXXX. this Is Just like side on you -- like drive your you or that there? more any like to -- XXXX, of underwriting about year tight Is opportunity standards the and it the

Yes.

try Here are and lot issues a 'XX now. gotten they are people a for again, underwrite the of in it's 'XX price in trouble growth which as to vintages, paying

as and returns. [indiscernible] standards to to refer those growth Some lower losing it refer

not we're growth a us. credit lever as So use for to going mere

ago. were We prudent we are year a than more

about every and in and have certainly, it what we other say done took given we We broader-based to don't day. and actions, talked an day, XQ we every consumer Again, I basis. the [indiscernible] but underwriting XQ, from do actions on both watch want partners channels. people shared

fourth will bureaus I in going -- the quarter part which XXXX. we've issues begun throughout the we're We're other slightly benefit industry cautious take actions, be to going year. think as the that of the seen move to the But encouraged the continue consumer. benefit we which credit to in We were the of watch at to have trend as will latter

mover at relatively When probably person. [ have seen ] look the payment XXX payment range you'd a consistent, nonprime Again, than been has the rates, and in the rate by the to been consumer biggest rate movements we XXX in see haven't we credit stretch. what

stretching say, watch it and standpoint a and look going We're delinquency. changing. at the payment any we don't from consumer We again, rate flow So I don't the spending to continue in okay, struggling. to the see see

X.XX we're to optimistic better of be again, reflected is gets entry rate Again, down. worse flow X. than which But to which guide XXXX, in cautiously the entry goes whenever continues generally on and to credit, generally [indiscernible] rate the --

next with question from comes Sakhrani Our KBW. Sanjay

were the maybe drove the there's you Ally then of front acquisition transaction big just and I sort of other you the think on business what of those terms sale and one fish active of business Could of then on in pet the a the -- for business. a I what more least mean bit look Doubles, out like? decisions? little there And the at pretty the Brian insurance Lending portfolio. part pipeline with deals

So maybe what is about talk there. just positioning the

Yes.

Ally because the Let I start look, I recent super think me mean, about it's more excited acquisition. why -- this with X don't we're transactions. the of I

that actually and it's are 'XX. in of These first half started conversations JB companies. back for I the think both I great

wellness. acquisition this but that home think absolutely on in obviously a we improvement wasn't are a scale well. businesses and and scale exactly really Ally, already for business our type This the industries for. of I is that we health business. look We have and side, this know is a These presence

serve partners. we we some the In same realized into this, as got fact, we that of

think So just about really it current Ally, as accelerates strategy. I and complements our

a think ROA the that in will It's a also profile. a average. little accretive. company than that be very merchants, maybe got or attractive It's I this, financial bit We better new X,XXX line nice get EPS -- I new got covered XXX,XXX Brian got we've and customers.

a both I here. auto, nice and to bolt-on a add home wellness. us there's lot mean health and like nice but acquisition and also be is So this for will really a for

in short really was insurance business. been And to Best a sell great opportunistic. obviously of provider grew took of [indiscernible] a to was or then Pets #X great the we time. period to us. a the force U.S. in the a lot XXXX, job business more #X business. From pets insurance for pet looking We Xx. value #X It's relatively weren't did the business creating pet We're We growing the We over in the

tough that after-tax pet the stay our invested there's us, approached someone, with space, offer, than like the IPH it has allows But over turn do the down. more a it it to a or that, us has IPH [indiscernible] great and to when in And think It's core great expertise. importantly that gain. partner original investment XXx I scale

strategic long-term think will we not benefit a nice so that And here gain, but there's play financial us. only a

close to year way great out transactions. nice a I the think, X, with really So

there? else Other deals? is What out

Sorry, that again. more. Say Sanjay. One

Yes.

might I One You of -- portfolio big were else sort there? out there, know. saying be out I what asked Yes.

we We start quarter. got XXXX we to Look, lot closed, got in going Yes. first a our with lot hope in got get for to both of the that. sure. do I'd plate. on transactions which on these We a

get typically for into things -- that for invited haven't With for we in changed. the We to us look really said, we risk-adjusted good partner. good that space. look alignment most important RFPs this return. the are And We look with

particularly times in marketing interests program. that's that underwriting times, aligned probably and and think the I when aspects most sure thing, of partners and large credit the you're important looking really around like that the bad and at you both our are deals, all good deal make to got

market screen. will that fit be the So opportunities in that for always

it. for And are is guess, follow-up. year, reserve what your one the assuming specifically? like you Got Brian -- what in rate I Wenzel, or just the coverage, unemployment for

rate out unemployment of exit as X%. XXXX The is we

Got it.

Stanley. Morgan with Adelson Jeff from comes question next Our

your ended potential there's expectations up some if about a that guess comment you of of upside up set or kind growth the loan I X% year, I'm you maybe this wondering initial Last think seeing XX%. initial to similar year.

consumer this your little the bit maybe installment new leaning think opportunity you you're growth? how addive to be more acquisition here the that this like payment more talk the to of end about you the see could a rate, the the terms X% range getting of that specific you end to specifically, you seems It even maybe and growth could there then versus more with in that on account high drivers in launch and And low prequalification bit year? a little X% spend,

softens the The softer Yes. When what environment one. gets of things is growth you right? I up, lower right? consumer, look of to rate, the couple potentially, A macroeconomic end Jeff, number a at range the

a it's put the than could material elevated the that the range. be that you'll expect, of of more remains lower low to the anticipate of taken again, deliver end credit we sales in we rate we -- we've be payer more two, end the at not the Number could than -- low at actions range. impact whole, If

Conversely, end think, we as faster you than the pay think about one. rates declined range, the high number of

be economy you bit we see gave can we're maybe -- If robust you we on some little there, a but more rate see more more than a spending seeing see robust you is what there. the little a and the elevate, comp growth GDP

inside continue that's the that grown and It's regard to a average. not really been grow We'll certainly it. to to us. auto specialty, nicely has With company the for for home nicely vertical home move going of

necessarily acquisition move lot So enough it's metrics. to itself a of to going a nice acquisition, is not the the underlying material generally

certainly we'll will between the very we You'll our grow Ally a we get X, as attractive specialty create home as and platform the [indiscernible] day and what's Lending point-of-sale synergies platform.

little grow So the company. faster, a needle it combination bit but shouldn't will move the the overall of

type you're follow-up gaining single-digit from a Got marketing, efficiencies on dollar a you it. past, in that seems et implying low expense the quarterly where think know of And like some just given next amount. the guide. cetera? Is you've I be new It you ratio do lower a kind expense And pretty more very comp, of year. here right? as growth might

Yes.

because guided efficiency ratio, Jeff, the dislocation on were the a implications the of to recall ratio, on we the We paying that So you that's ago, of switch pandemic years and term. really to actually revenue, first we pivot during if saw. ] what we all, because long rate [ efficiency of number

to to more and to dollars. helpful we're be So analysts investors trying by going

to ratio operates, where should Now efficiency back industry one. generally just we an migrating number standpoint and really where we're be from the

expense I expense us. losses and you volume, slower again, Based a marketing, X them, take the If at operational which at contractual to upon if are controllable regard that can up, is we for out we dollars, but for dollars. control take I second, rate. With more look so growing remove

So the company. we're getting operating leverage inside

our as meaningful XXXX. a We but as a in our will facilities to early investments, retirement items, made several well drive in you benefit impacts again, smaller notable on voluntary program some saw that as both

to standpoint, So you're when to controllable be I it operating see think -- they're going comes to a that. going leverage expense from

With some strategies. regard to invested there tools incremental operational have that losses, we've in new some in

'XX. we expect that flatten to growth move as So to 'XX out really rate you

John comes Evercore next ISI. Our with from question Pancari

follow-ups couple incremental likely I us rate Is to guess of Just in mechanism late late fees? material have in it fees offsetting the on dialing the most the terms could a just fee offsets, topic. of underlying is in? be that remind the the what of the impact you're you or interest

the And you how offsets there it in the that eat any how of competition the you competitors heavy out it cost, result to in of you then a talk could possibly terms this? negotiating relationships is there Is as place? indicated move can secondly, competition? -- see -- about are willing Are for and

Yes.

Let me start first. with the second one

of all a proposal. level late think, playing in the new I we're look, here on fee field terms

same. impact the new in to is the trying it's So whether there business, we're renewal as or -- a

it think what what return, comes is issuers of important down I to are rate the are that them. to all the things required

what's I impacts depends talked competitive all important it the portfolio, the on So the really changing the the to alignment, partner, of sharing, see things don't equally. much It about. because it dynamic, the type all us I

here in. don't see even in have clarity I a some I final around clearer then impact of particularly it I big at think bake the So think rule, to And the in there. what point -- having don't terms which it becomes we

little don't the a why bit fees? talk Brian, about [indiscernible] And you

Yes.

there and APR of will which of faster in through gets we cadence oriented 'XX, a come pricing be well come John, build obviously, as build strategy some So as fee be policy of which into have that which then then that set you'll will changes a with through, issued if some see XXXX the And rule XXXX. increases with orientation. will some in

issued, does of about that probably come be regard in how back. XXXX. a bit color to to get more rule So we'll context provide the If little back we'll think with and the

a bigger these will only a to of have long-term impact. impact bigger have Some short-term

more in a final start when provide a have we'll a of roll clarity to so position and some these rule, out And actions. we little be to we

Got it.

volume, appreciate around then your And color just Great. of gave drivers Okay. the in the I between the different purchase verticals. you secondly, terms

year the for versus at volume volume XXXX, what's Overall, purchase overall looking purchase your card [indiscernible] as and as you're for or full XXXX you expectation at growth. account total overall look

Yes.

have 'XX volume. which, specifically was not we're of an again, decline from year Obviously, around as impact purchase say I'd of payment don't last impact rate it growth John, that there in growth XXXX. you've guiding 'XX, we stemming seen So on rates will the to decline, big asset from asset think really some

think I back grow sit probably at going consistent So year. you're do a say, to and see to mean, X.X, generally good with see something a last benchmark we I multiple GDP that. of we

consistent So again, last generally year. with probably the

was You high line $XXX at purchase record company. billion our for got for to remember, too, XXXX this

the and difficult a facing platforms of and again, platforms. are as we're diversification of differentiation But into 'XX. we proud those that's the we sales So move comp inside

Mark Bank. come question from last will Our with Deutsche DeVries

and common? to you kind some at year. it about what need Talk see about to or might preferred you bit some to perspective thoughts equity to much wanted that timing, to potential capital of a return does around issue? replace Or for your market that does also a how from little total issuance look with need you of this up ask levels? be free I Brian, additive

the Mark. for Thanks Yes. question,

X. developed the at fully look Tier stack, we we As capital our

$XXX to don't We in max have do. relative for take, equity We just common of to which to X develop. as probably capacity reach can million about of ultimately puts to basis points, that Tier XX as we Tier million want $XXX the think X, of that you amount about the to necessarily target do more want level you'd give or

want. develop of retail-oriented the invest not stock which at and how ensure we'll or or necessarily the The timing to or time to were incredibly demand in market look not. rates depend the It look we'll certainly is throughout a capital whether there's best they XXXX, products, most Most the cost-effective high. desire the structure kind or more markets whether to also for preferred going and structure of at wasn't conditions, upon XXXX that's not

levels in. a a So how fully from stack factors of there's do go regulatory goes standpoint. of I different number capital just It all the really into develop the that

updated for created sale? how Okay. kind to Great. deploy follow-up And your a the of thoughts plans the then just on capital on Pets by Best

some points Yes. XX the in spend I capital Ally about taking transaction. by basis some capital investment generated We'll adjustments. of our of We'll IPH. generate that about back changed. We on in the don't on Pets XX we're 'XX Best sale basis priorities the think making and points net

kind So goes I pie. that think the of in

two. of opportunities. organic look number inorganic growth, or then the We maintaining will we'll look there's to other priorities one, three, repurchases And if either dividend, share at the

the think very thing. we're to I right it when to comes which we we opportunities, got inorganic well, be It focused Again, be has lending. priced feel has it to incredibly with Ally

or the comes But deploying that cadence the Best it And not changing so Pets the to because when we're transaction. of we'll prudent again, be strategy capital.

participation. your for Thank you

time, this You line have at and may wonderful... disconnect your a