Synchrony Financial (SYF) 24 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to the Synchrony Financial First Quarter 2024 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 will started, differ comments wanted that Before subject and and could include to These risks you are get results statements materially. statements. our I to actual

We SEC actual filings, cause list website. results our available are materially on our in that the which factors to might differ

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

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

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

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

will the now to over Doubles. I call Brian turn

Thanks Synchrony first results, X generated and pet extend an reported growing industry the gain the international everyone. morning, after-tax quarter in our of Kathryn, pet our the quarter interest we rapidly in previously health wellness will market received partner offerings successful Synchrony's insurance value strong existing completion of and the business, sale through we transactions long-term these that point-of-sale holdings stakeholders. transactions, of sales business the which which augment many as our good including part platforms. offerings and Ally for differentiated the and announced sale and reach of Together, and Best Today's a Pets of position minority Lending's financing $XXX acquisition in home as the the our our choice auto in in drive strengthen billion as will and expand $X.X million

impact tangible of of of Pets gain deliver time the on on diluted positioning for on net delivered ahead. X.X% highlights Best million earnings sale, $X.XX $XXX while Synchrony's return the per performance the This Synchrony quarter assets a over Excluding we or average and adjusted strong first as earnings of return common of power results risk-adjusted the business a equity XX.X%. growth resiliency share,

and with differentiated our assess resonate react and new million technology average in consumers X.X the quickly innovative quarter product opened by first accounts cycles to as compelling Our our environments enables us accounts value both proposition and We model through and suite, broad grew and to continue partners. X%. active

and above Our the quarter $XX quarter drove and performance. our first ever X% billion volume, products purchase highest in first year prior value propositions

auto volume and as co-branded engagement active volume increased & broad-based accounted and in continue to our purchase increased driven and for cards our ticket our of the accounts. home of impact network decreased and large Ally consumer reflecting partners. Digital growth home purchase led purchases fewer outside partners propositions volume In dental the purchase and X% Health purchase strong and X%, and by cosmetic and gas and customer growth by In lower Wellness purchase X% value, spend increased reflecting specialty by Lending the the traffic, impact for and increased average of active prices. engagement value continued a Dual diversifying increased pet, combination reflecting as XX% acquisition lifestyle was decreased X% volume quarter values. transaction in of purchase auto, of lower in and lower growth growth. through offset X%, X%, volume accounts. total drive the at volume both

February throughout behavior Spending offers and reflects of was transaction spend impacted categories, into of partner declined a a however, year. industries products a entertainment. the the categories range consumer average X% furnishings, out more of home conditions and particularly and in quarter weather rebound, frequencies March, by challenging on In spend quarter. we and as prior out the certain Overall, in saw deeper January shifted comprehensive nondiscretionary discretionary in versus consumers travel Synchrony's view like nondiscretionary focused and categories.

frequency see take is similarly, relative who portfolio's shape continuing the financially nonprime adjustments behavior selective Despite Synchrony's nondiscretionary growth the trend indications continued more and purchase in The broad-based generally their consumer become we higher in to spend in borrower be driven continues over, has and in values discretionary performance. by change increase. our also growth spend super see super to align continue credit a see Synchrony cash grade prime from prime borrowers mix consumer continue has and to among Average that many to business, healthy And Across in to average growth continues transaction slowed, to and their categories. purchases A which our flows. we prime consumers. transaction segments. credit reflect volume

deposit that with and stability are supported norms. rate reinforces also across our when Portfolio and combined number payment reached basis payment XXXX. from moderate for has pre-pandemic These financial trends savings relative and both relative average reverting rate with other across behaviors of our more data borrowers we've XXXX are and level trends consistent industry view lower last about by has a basis first slow quarters quarter, than a balances. than that to points labor consumer to spending credit which including The observed about XX are perspective, to from XX.X% a account generational first the rates year health payment indicators, of XX the our shown moderation to market that continue and pace external generally grade spending the points continued payment strong higher

recent contributing the year-over-year our majority and these encouraged gradual our and stabilization first Slide combination performance the expect normalization delinquency Synchrony's on to across of monitor credit has of by for industry's broader the pre-pandemic recent where continually pace underwriting, to indicators underscoring our reached with portfolios has continue ranges. Taken a tools. industry optimize XXXX credit to to credit than of our our powerful and together, advanced half the portfolio at to dynamics of change portfolio's analytics We peers, performance charge-offs slowed trends delinquency more these and in along the The portfolio, performance this net of are XX, disciplined our peak rate and year. actions highlighted sophisticated We're as continue has management take our beyond. positioning occurred

characteristics, including deliver port Synchrony strategies and utilizes a broad that our behavior payment billions transactions and credit underwriting, product management insights range the and levels. account, external inform alerts channel data, to across credit of proprietary actionable of bureau and

us and in positions software customers our or most technology the partners the choice. Our increasingly evolve including X added even partnerships conditions for the insights outcomes and first to Synchrony end, leverage quarter, stakeholders many needs shift solutions consistently as with what enables To added than is as these our ability XX and BRP that deliver and ServiceTitan. experiences that optimized market financing deliver and Adit of Synchrony management partner matter new partners and renewed more and practice for to

enable [ Ski-Doo, of See-Doo, power and in partnerships drive which strategic through well-known or Synchrony our on technology preferences financial and the experiences with financing customers. dealership while offers terms software about offer to our to ServiceTitan installment process, to Synchrony's products global products, Canam [ of diversified partnership of ability customer their application services. secured loan off-road their flexible will seamless deliver with the and sports including And U.S. our to leader new management excited line and are also each and ] marine dealers address powersports Adit access for our a our opportunities ] BRP, online vehicles. We and in expanding highlighting products their diverse represent will solutions suite needs practice

management practice partnership and an easy-to-use at patients practices to an payment Adit with CareCredit Connecting integration Tech and and patients, their will seamless for to expand dentist access essential Adit, for enabling nationwide dental Synchrony's a solutions practitioners. [ is experience office software provider both industry-leading patients with includes as ] ServiceTitan, journey businesses, leading practices platform home their application our from improvement Similarly, offer built possible through care contractors financing management. enabling their trades and power as to ensuring of timely more smooth direct-to-device a revenue part cycle to software Synchrony with is integrate and effective process. benefit dental dental will

their experience. are to By customers gets flexible empowered goal at financing their fingertips, a their a choice frictionless that providing them contractors benefit while access to make closer to from sales

ones. So supporting providers enhancing Synchrony deeply new relationships, and and need to our existing understands merchants and what our what and are achieve. partners, are expect customers whether seeking we building or

attract speaking Synchrony's commitment of demonstrates business consistently Our ability achieved strong of outcomes incredible team. our in deliver And best strength team, stakeholders employees do these through never culture. us the been and which and talent, and world, model of our and important for the to our it today's varying conditions to for our retain to more we our has unwavering commitment to

share So moved positions I'm Synchrony companies proud rankings, #X unique in to up among top to the Places work U.S. by named and continuously on our XXXX Fortune been Brian magazine strive financial detail. focus I'll in for we've turn greater in the to as with to that we best-in-class best for Work. And to reflecting call Great the our over first, our people many relentless discuss stakeholders. our to putting to and culture the achieve special and that, performance experiences XX

share everyone. morning, results Synchrony's generated differentiated reflected or of macroeconomic business an a We in net the environment. good first our per earnings diluted evolving resilient Brian, quarter reported Thanks, model billion in consumer and basis. combination and $X.XX a on $X.X

sale per million completion billion. reflected and receivables basis Lending to net continued volume the XX% $XXX purchase gain share. of $XXX acquisition. impacts grew an loan XX Lending earnings after-tax approximate business, the Excluding rate point Ally in million the $X.XX payment or growth, our Best growth generated decrease This from the in our of $XXX Pets the diluted of we

XX%, of $X.X Best billion reported the Pets through Net revenue sale approximately driven on income. by billion, or $X.X was other which gain increased

a net quarter billion, interest partially Best interest X% rates. lower and XX%. and higher net of fees. interest of rate Pets of benchmark income interest partially average versus Excluding loan was higher Partly Net interest combined $XXX offset fees reflected increased the higher benchmark charge-offs, receivables, expense by the receivables, driven from XX% and higher by loan of rates net offset by reduction prior million $X.X the income. by the sale, growth impacts $XXX X.XX% payment revenue [ million and million driven higher increased year, $XXX or a in in on This were higher gain to ]

employee credit a of acquisition costs the in to build, Ally reflecting higher and higher a $X.X our losses in increased X% continued for primarily technology. Provision growth included Other $XXX related of $X.X Lending. charge-offs million which investment grew to and support bill reserve driven $XXX net to billion, billion, million by expenses

Our quarter of ratio efficiency an the the gain approximately was year. last basis for impact versus of XXX improvement on excluding points XX.X%, sale the

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

At rate quarter average to and for the X.XX% frequency the XX end, of basis was X.XX% points year above XXXX. first our to quarter our prior compared XXXX XX-plus in

XX-plus XXXX. versus XX year rate the last average our X.XX% of Our for was points and delinquency to first X.XX% quarter basis above XXXX

was compared the the to rate X.XX% first year, quarters to in X.XX% charge-off prior net Our X.XX% of in of an quarter first XXXX the average in XXXX.

basis build impact a largely reflecting quarter percent the of Lending the addition trends. credit reserve of XX.XX%, was Ally from the in in the loan up portfolio. for the allowance of The primarily reflected XX.XX% XX seasonal losses quarter, as the receivables fourth Our points

Synchrony's has performance with been expectations. our credit consistent Brian As discussed,

for that beyond. we've done the monitor portfolio of and we've March. portfolio periodically industry's we that with to actions credit broader Across as consumer segments mid-XXXX, specific starting our and been our portfolio's industry reinforce our performance continue peers, Synchrony the taking shares credit incremental our Given should since broader performance in XXXX

aligns a our performance As demonstrates, attractive underwriting, record the rate a Synchrony targets of performance. X% and has achieving been program combination Slide changing track risk-adjusted market on to X.X% average which which built disciplined conditions. RSA, portfolio returns of through consistent, and loss has X This by enabled

our sales suite, and priority. product and analytics We consumer technology will and verticals our continue data lending leverage that diversified experience, further to to deep deliver our platforms sophisticated on

capital funding, to Synchrony's XX. strong a for Slide to our business. continue provide liquidity foundation and Turning

by grew with billion and Deposits as XX% deposits represented Our continue debt consumers we and complemented at which resonate total represent our to $X.X strategies, funding total consumer funding quarter our first each of the bank offerings quarter. securitized in are X% our of end, funding. our unsecured

our million quarter a During the credit $XXX billion fully $XX.X assets, of of quarter, last end represented from secured capital and XX.X% stock to year. undrawn year facilities of last optimize up basis $XXX $X.X more issuance issued and points billion, XX funding at Total total were structure. we which from assets million included up served preferred liquid

our ratios. on Moving capital to

our and statement rules, transition income first of net As benefit Ally Best impact CETX to adjustment added Lending lower a the metrics CETX to Synchrony ratio. sheet. rules Pets reminder, of of annual transition of in impact continue we will elected The ended joint our balance to approximately the federal our by XX through CECL XX ratio issued banking transition CECL our XX.X%. each been approximately its take recognized The to basis capital points and acquisition already basis than regulatory of with capital Under XXXX. CECL the XX agencies. quarter last XX.X%, has points the we January year's make points basis sale

ratio capital unchanged XX.X%, Tier year. last compared Our X to was

basis our fully XX.X% Tier ratio capital reserve and a capital phased-in total to year. XX.X%, plus Our last to XX% decreased on basis compared increased to points X ratio XX

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

we XX, remaining $XXX share XXXX, in As repurchase million had of authorization. our March

capital by market Synchrony Board June shareholders maintain of Board return subject authorization per period business the authorization XX, and total $X.X $X.XX the repurchase intends to planning ending dividend Directors, current the well conditions, Furthermore, of increased of share for to our regulatory billion XXXX. to our guided to by our positioned plan. by our our approved our billion, quarterly part restrictions As to bringing was share. performance, capital as capital remains $X

of Turning a review for to Slide trends. business XX our XXXX

a related timing to our and fee changes, around and including March, EPS late pricing financial pending and there fee a litigation rule for rule. a late be we filed product, product, with of uncertainty As change X-K to framework revised as behavior the and reminder, an outcome changes related fee potential changes in potential filed consumer in previously late the a to response March specifically XXXX, changes Synchrony policy guidance consumer result implement the outlook, in new the full of the year occur on the and behavior X, in pricing that of continues rule that could as changes the policy was XXXX, regarding result any the

impact Outcomes these any related to EPS and the actual of performance could uncertainties outlook.

the strategic year. an priorities will Looking key execute our business at we prepare our continue the remainder to of evolving and as Synchrony across navigate operating environment.

which our We X clarity have majority next policy product, greater having be pricing will to commenced and of and likely the anticipate the over many X our the second the business implementation on we of completed the changes season we impacts demonstrate In the the to metrics. year. key changes months, expect our meantime, in of these patterns of half continue of to typical in

year-end lower half net of that the than year-end expect first be in at the should peak to the coverage rate. reserve XXXX the and We charge-offs year

will Finally, closing, is as to business program history on align and strengths leveraging Synchrony steady, performance function risk-adjusted we growth our designed. our expect of our and strong build long to continue core and In that continue the returns. to delivering position focused optimize RSA

depth experience informs go-to-market Our product lending of and strategies. consumer our

of turn our Our to consistently differentiated changing our stakeholders investment the RSA financial will empower back to resilience. for deliver closing tools supports continues environments. in each over thoughts. and to sophisticated agility our I model credit Together, value management our through his Brian now our call

model to Synchrony's and were our strong Thanks, stakeholders. by for results and first quarter partners commitment differentiated driven delivering business results Brian. our customers, sustainable, our

consumer to our provide proprietary We're consistently responsible ahead. for strong as as for to our and solutions diversified of from a for returns operating We navigate sales loyalty advanced insights, position year and is the financing our analytics sustainable products stakeholders. Synchrony are risk-adjusted our and partners access data platforms our that confident and we customers, strength industry leveraging and our growth

credit our we as XX to Q&A. opportunities back still the and continue call thousands with needs small to partner We're their long-term I'll and to And see businesses than excited greater wants. the access with midsized that, more to providers about of open and to customers everyday of for to Kathryn to million the provide hundreds drive health we turn value

our prepared concludes remarks. That

now We will session. Q&A begin the

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

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

our take from Ryan Nash with first Goldman [Operator Instructions]. We'll Sachs. question

to than starting So it are seen patterns. inflect a seasonal now seems delinquencies but like we've little charge-offs and follow higher in bit coming potentially expected,

maybe you time view rate? intermediate do the if can And accurate? talk allowance about the in see the loss for where over losses means your year you out So this forward proves full what settling frame

the question, for Thanks Yes. Ryan.

been believe look delinquency I trend half peak charge-offs that somewhat you again, think in year So decline. will clear as we the of into and we that the first have charge-offs when we at XXXX entered the

that, well, certainly think see quarter. I end the in the first you in

you when you we reported what we when a today. think delinquencies on down in basis XX-plus results I see rate, put here April see to out and just both XX-plus will relative a the

year. at back that, will third took We decline So actions seasoning the I really that of second that in year. feel good in think at the of you we charge-off the you start the credit look quarter half when the the looking of and rate last

range, to the generally we X% underwriting certainly, And X.X% speaking. in targets be haven't changed to our

XXXX the that if the of belief back more see the which the charge-off the end of forward project the we and year net last into reflective of seasonal that reserve half that quarter here had really good coverage really about was the in that, leads rate year lower the in So than feel us below we XX.XX should rate you that to that ] patterns the and anything else. increase at first rate be [ you

as follow-up. then And it. maybe Got a

quarters has you row. RSA several a that prior outlined well [ beaten in $X.XX guidance. in the below I the So had think XQ to $X.XX was ],

thinking how below this So maybe X% X.X% past? just think And This normal [ about the talk fees. excellent outlined you're about the do ] you to you've course, for is X.XX%, a bit new the for little RSA of 'XX. in that is,

about higher look the the at as the about as offset and the core suppressed the I it we're And really have a that I liability upward full Ryan, taking a our other last be in offset the of through of should the your X/X you substantial little net variable quarter by a year, on impact you of for look an step partially back costs bias we talked was Ryan, bit was when no the a NII trend, peaked peaked it amount step the Yes, you on volume. believe as about charge-off first interest-bearing RSA growth. NII I on first second point charge-offs, a assuming the rate increases where I quarters on take decrease in think the liabilities. the remaining and the was year-over-year rate in at business, If will which RSA see the than we clearly, half, RSA net had because interest-bearing

as clients costs year-over-year So being a little factor, the the charge-offs. even RSA we through, looked the peaking given for down nature of on it upwards volume being basis, should linked will play liability trend if bit step you a but down and quarter interest-bearing of a some and

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

Obviously, accelerates? just Could when continues about that of is we on back in it of to get weighing question guess how I But know we on and just baseline that's that baseline first a volume. inflation that to about driving sort back the it we I weak. get sort higher. talk consumer. what's remain talk maybe a how purchase my to and

think Brian. seeing in then I it we're this we're I'll Sanjay, start mean, maybe growth pretty that look, Yes, the generally, I on and pleased the to with business. pass

strong, of consumer Obviously, still helping. the a higher that And job -- in But spend you being is income not seeing higher that's by consumer. market good are very think bad consumer a driven thing. end lot the that's I the is the actually shape.

they're market, think benefiting job are prices house prices up, obviously I up. are stock

lower the the perspective, that's worst where seeing end, credit of slowdown. On not some And a you're that's from the thing.

prudent. being people see we think I

flows. I cash they're to a they're their not overextending. managing budget, to managing think They're

think credit on So positive a perspective want Brian, a I from don't know, there's that. you if read-through I add. to

I Sanjay, strong want I'd comping we're is to year. The of first people, say remind quarter really a what last thing, off

a in you the when is little freight a plus that for lower differences, you're at on down X% company higher I cost. quarter. the think our It's for strong. some record the first X% is up, look Brian highlighted very a bit So freight of year-over-year cost

you the We transaction those step in in the strengths down are you areas, bigger really in which lifestyle. purchase seeing certain But in down most either pockets. reflected auto and see right, ticket values, certainly going in see think being consumer and back line I home what

is up up. business double digits is Our or outdoor our business home specialty in

selected. just are Again, frequency it's prudent more with dollars though even down. values being is see the transaction consumer we So up transaction The

managing consumer, through is the I'd So this period. say,

the doing. big So profile that a they're too into and consumer I wouldn't what read it much change necessarily there's in

without And helpful. away get you late Very let guys I Okay. question. a couldn't fee

injunction this have in the on So implementation PPPC just And how I current you a on here waiting behavior after early the talk and about period? planning half. maybe second just that Maybe planned mid-May if changes? courts be the point. of will can there's we're how you're observations an flexibility know implementation for as at you any most much the

Yes, Sanjay.

outcome first. we to waiting the the said litigation the the beginning this for uncertainty. So thought uncertain but going might given the weren't we're outcome on our we're from we Obviously, We that is are executing of not question, plan. second surprised that it litigation, we wait be the on was just

majority send The got X et done those out in next with the terms, will changes We're implementation over the of We've XX% already of to done the vast months. in our cetera. began those. we December. be So changes in

So look, we're the executing plan.

operationally October timing, as it to In terms scenario. a injunction. X will we're be was assumed With an of extremely for that challenging implemented this but that basis in May, well our as get that said, preparing

next Ma with We'll our take Terry Barclays. question from

and I any we changes. of think of phased to up benefits on whether think there there a way just ramp? or slower in? Is to a wanted like way pricing how should through kind materialize policy quicker product kind step not Is about follow ramp up or fully it's the those it's a sort once about the year, a of

follow-on. I'll take if this a and see has Brian

I expect beginning the is to think a with what in it third more second the little an bit you see should then quarter regard mitigants to the impact in quarter, and continues think we talked and in the consumer. about it. very how to hadn't I've phases you in past, really about gotten there. question build the APR the much When from the for in

the notice, So effects to months the that, XX I'd that days if you'll of XX roll out, begin feel XX% after when that in becomes about XX XX% months. effective, which APR as think of again, first say the you

out. So you fill that to begin

other and Now [ other they some changes, fees more that come ]. in immediate. through year of When. It are of the some comes the policy

it will like and adoption that parts with be relating as there things of e-statements we through flows but will that, P&L that really certainly Now different to the through, see, we'll going some flow expect. the

you the a upon than kind But just sense relying some that neutrality in. the order to how immediate more with of again, things So little of in blend gives comes APR see on why a are APRs. it point to that's you think there I a to was that ramp get and sooner a bit begin

question my balances. And year. quite there you on last about I That's to Got just follow-up, Any relative think this It on going how looked helpful. can should we cash elevated quarter for that forward? had it. your a then provide color

be have go quarter. and honest franchise. to we strength excess of deposit the to I back with Terry, you, attribute really that our this liquidity

retail kind we from last cash then $X.X in, but the Pets of coming million, from of Ally at deposits billion core we And just the purchased the $X when got I of the sale up as us served million franchise. think the of the comes you $XXX seasonal Best end were nature also you well it look that in for year. put

I'd say kind is So liquidity peaking. of

So about margin low and the that effects on net excess margin liquidity. year I think in for through, all margins, a first at if the quarter, the point interest is you step given think you probably

And listen, I we've talk over being balances heard lenders balance week or what think flatter other last not down, expecting. about That's the sheets. we're two

clearly, deposit gathering So in still we're mode.

really just It's attractiveness our anything franchise. new deposits. the to and track haven't We of significantly done strength digital

We'll take our Hecht next question from John with Jefferies.

And you ] just -- of margin pricing markets about always XQ sense incremental could account growth of causing relative seasonal and the balances. guess as where deposits Brian, in interest cash out. in kind CD the then some and kind maybe a [ 'XX? impact the gather little PetSmart But for bit out margin, mentioned more And net to there's year. QX to, of on I you're the like you I deposit know a kind what markets prefund deposit should you for talk the later us drove and savings -- say, decline this the costs parse the quarter maybe when give the then level marginal in

the question, for Thanks John.

basis your investment points. XX I think came basis coming if your So off XX interest-bearing points margin, the biggest year-over-year costs offset about about income of down There's off XX that's another costs, about by so of do net driver right, think portfolio, I decline funding net that liability points it's at is The neutralize interest of that. believe mix that when a will we here. we by develops We -- That's the offset -- how having costs the higher for of interest on portfolio back about year, been plus asset peaked out. decline interest-bearing the kind liability think higher yield, as ALR XX. a liquidity of Again, the year-over-year. which that fee of from

when throughout second So To think tenors. you you pricing, step margin you as various should move interest really, through, net improve year. your question the as really the in theory, about around

XX-month year down have flat points followed of all If from to you XQ which generally promo we're days end XX the or people CD at the rate, is our looked issuers banks basis XX 'XX the rates. We ]. down to down All XXXX. our digital of do quarter [ second

one over have which on be ] have tenor. XX-month the our X%, that's which competitive really with kind we the other off CDs and lever at promo people, is still of day, to retention our of and rate manage end So [

I The down, would their here. the digital market the banks, liquidity throughout expect, will We but we'll brick-and-mortar but say, year. their X from the moved in, significant didn't as there's we down as and have year Fed. impact John, so are no trying I'd manage unless we banks down cuts more lag see follow follow people final piece move really the balancing, into was September, to something the have we real we we them still coming generally who sooner the rate is in

there reflective pulled a just of still consider the other trend of and we Okay. changes to you've modeling? And this $X terms maybe your that original guidance, but with Or hold? question, I to but ex are little know rate -- want sticky we of EPS a kind should if consider in EPS the -- then changes is that fees of $X.XX

Yes.

didn't ahead what guidance. morning. I'd so thought reiterate it and the If be we put be. we it we're about probably you to of to it's that on the that Brian business, this I we is think just say, pulled because ago, would tell XX guidance, out I days page EPA on have X going did only that we're put what core the not we X-K March just We So clear, John, had that

March ], better XX line drops generally being mentioned up guidance costs or Charge And this I I ago. it's think just with call in it's we your think our sets about think But one, in [ when highlighted line days up think expectations. then our are some out peaking; than only were expectations. and second sequential I've that about. decline delinquencies. I bearing on you reserve rate see a XX than That's about in provided two, liability Number going interest-bearing you lower that half. to things the I peaking you're when X. XX, again, the then the is in number charge-offs consistent to in so the cost liabilities with start of think And

We'll from Adelson Morgan question take our Jeff Stanley. with next

wanted Just a bit credit little 'XX. versus to half the on on outlook, the mid-'XX I dig first in more

the formation given for to be improvement tends seeing best delinquency quarter second nice the seasonally and your you've been NCO. Just

Or there. help to maybe Is seasonally like that just Just what mid-XXXX growth -- peak more and adjusted of us year-over-year thinking wanted you're what peak? looks help here. understand about understand a

Maybe try thanks simplify seasonally Yes. is to I'll this, the but Everything for adjusted. Jeff, question.

last overlays, plan. been which has move we normalization So the I the it and we have of a way built as happen in to seasonal the back muted about to given just of levels our this delinquency. fairly It couple years, would pre-pandemic simple. think

XX-plus that kind to just think than and kind I get believe higher First of you're April, are second in a will how through band you will see than can half and play if half out, going losses XX-plus you you further dollars. of that losses most if rolled in certainly be here

can flows see how out. You it

simplify when in an trying half just to it So date it think peaks. get I exact about to to versus

Got question be you? Could the $X.XX impact does might of $X.XX I talk response in it. it in those to And you changes mentioned how fee part look And XX% difficult specifically to are May. we the kind bit the little behavior, operationally how rate well, implement on maybe would about they're out you out. And of what that as you can previously, of about again, as think reacting about the you just consumer like a late changes for think made the mentioned Can you if just far? to I terms talk know that happen? of so how

the first of Yes, I'll part that. take

issuers different challenging So rely And the that the from but operationally, it's for also the very number issuer, a on. of angles. vendors obviously, it's

important the too, It's Everybody think this we it's that If same to the us. note, any has event have is I May XX. across not on do got to specific this challenges. to implement industry.

real things and come the were around changes that. I make systematic changes updating things and to think like we that. challenges prepared terms like collateral and The

I'll is. And it to turn that's So operational of complexity the lot Brian. where a over

Yes.

it, to dimension, framework So think try to more Jeff. a to really about provide a

assumption of implementation the a the case as base and litigation going There was lot on action the in we are to walked an that's case. day, October when and here thought Our the we injunction. be pending scenarios will between courts take

particular uncertain. scenario So it's it's difficult so because speculate to just any on

different, framework being would X opinion. at would think a had everyone That to thought have if everyone this for something different least call a second. think about have you want on said, I

say impact October it whether doing of two, the changes. and business from from is point this where doesn't same, impact October, out our we're of really XXXX exit one. the I'd stability exactly exit PPPC that or you one, Number doesn't number Number earlier our projective what than it's

talked rolled about we've Brian much As out. how

don't fundamentally XXXX, you those there's about or impact at than being then higher date, the higher 'XX basis said, larger scenario So as to look that change. much actual -- on significantly think as EPS about you EPS. if think on be it. either that X an things That But would XXXX 'XX October generally a an implementation then you in

to happens greater when with We'll understand incremental frameworks well. But get benefit any 'XX So financial exit it's provide or when in a the date and 'XX occurs actual incremental have then once important 'XX or to try then clarity and relative in occur. regard we on both theory transparency for we to will the think implications, those it implementation to detriment dimensionalize I how as 'XX. in about people 'XX

on line early. our a your anything far, so what we're and we There's in terms consumer the haven't is it's than from what only side very is lot different But last have of consumer would the then seeing these with bleed I'd for generally period in I changes. expected. that's say in a seen expectations. behavior on impact. I'd question say line. caution And yet it's largely just But we

our take will We next question from Saul HSBC. Martinez with

a on impact. on last up to the the response follow So just PPPC question the

those -- in -- into the because fourth good the pretty of benchmarks end ranging X $XXX does time gave quarter. the use are should a significant to still offsets does significant gave guidance So and as pretty which to from X-K, it ramp -- $XXX the a of I We ramp terms rises other there obviously That's the million that imply year estimates pretax, impact. hear million imply fee the or the given that assume late you right, in the NII. you the March back of

sure So something that applicable missing or I make still to numbers just those are want am there? I

you have you the Well, October the let date. with. third me think partially PPPC second implementation to the quarters, about offset it That's start is just And in happen some on based off of begin way and fee detriment changes to by a then fourth all you that have if come going date. away, higher offset RSA that quarter. into you would but RSA, an quarter, implementation the the to in the from late went earlier Obviously, shifts

range if come the clarity I that implementation does as on impact in that the changes fees a Again, provide day that doing. well on where we're potential the impact October. we'll had So think on materially will back situation greater happen, to you the change late as a and prior

Okay.

a Okay. I a broader question. guess That's And helpful. -- broader guess I just

your thinking pretty in XX-plus to ROA, effectively the presentation be [ revenue But your it targets the what of But but guys and X.X-plus it significant of forward, did travel applicable the a source the fully at just at percent long-term away you reduction like the in how of on still offset it see least RPC III, that. significant about or going goes impact. think confidence is curious you gets it's profitability degree -- we'll those is is for are I you and you implemented, I'm reiterate offsets do that percent get higher. maybe where happens Basel direction least You pretty a ]. not to long-term if going an working -- with target, targets? capital -- are moving you're how

look we -- And we the at the ROA I at to date, that we rule bit Brian the timing. Obviously, been it impact regard better fee that end Yes. organization, change. of neutral have very again, little and the we late implementation goal about be when could the of a clarity our to clear get and with talk is

rolling Understand are and regard So are we things get impact ROA more rates the normalized you That about there can assumptions that a the a neutral. and said, And to think in are there think X.X% right? is normalized. today. consumer behavior to out that's beginning goal plan lot that to that it. back interest I being execute So if environment, of with other not are to

that's I of that inflation should other support to of I'm about mean From rate can, where a Fed that. When to think regard evolving Basel forecast or the that. an get people one around certainly, you there when kind ] -- the exactly of can't lot standpoint, may back I come not may really they capital III. with go and you and of that's ROA not back to been not a normalize, sure us has [ itself be strengths to able the that's RSA that profile helps

our continue towards So to said, actually down and going have we're we'll target, see excess the us to being what those get to helps we ROTCE. changes capital, move are. That which

again, one, or neutral we accretive on being back number in the rule shareholders. capital, So our it the that's whether deploying earnings being ROA RWA, ROA to focus excess [ to through that turn team ], when to our

Our out we of years is back to get medium goal those to put a to long-term couple ago. targets

from We Don with question next Wells will take Fargo. Fandetti our

movements could I pretty you is over deals or curious any to if Your two? some like capital do And lead CFPB opportunistic year see just the portfolio strong. Ally? you changes was position next the thought more still

of our -- Yes. well. know Ally model perfectly. understand we We products, Look, we're acquisitions checked It's really that new cultural that fit, type for on in for. acquisition look like business programs, it boxes. the fit we potential always or the great a just all the exactly the it industries It's lookout

have certainly over we do So if financial we to opportunity -- generate We the resources the capital the we it. And do opportunistic, do something year. we a today. of excess have calendar have lot to capital

Yes. Page does capital, that of to that the if the deck, from on this thing we at just dimensionalize we to of add months, only XX of net power our you just earnings for showed CETX last X.X% look business generate you earnings I'd it The year-over-year, business. earnings that, the generated you, look XX

really that the of and at can there between have effects weigh plus target CETX. that level look the So capital you our you positive excess and lean into

it comes fit. only I'd disciplined years. mean, you've this is acquisitions I The the I accretive are to very discipline we make that strategic point seen when really Yes. other think a over on have good that

large-scale row modest We've grow really but for example our that, finding very been a haven't done example is outlay can I Ally great a businesses about of that from relatively leg a to capital are perspective, us. going well. be we perfect things We run that, thoughtful M&A. That's a of a think really home that

look we So we are very in for. terms of what disciplined

next the take question with We'll Rick Shane JPMorgan.

morning. this Two questions

I'm industry higher. have policies terms related of one you how you the accountants assume that CFPB, will with will pull-throughs? reserve had if discussions higher the changes, has potentially in deterrents, you your the guys raised of DQs treat have on delinquencies if but of that to suggest be First, curious consequences the would the lower loss rule

potential a we'll one over to get again, those event, it comfortable They're that the certainly active to roll that with accounts or really Rick. going This certainly, in the job there's to to is level who demonstrated had a are loss pay, for plays it We delinquency, And and see not out, to deterrents decision have them. you're turn. the be Well, CARD certainly, one how Act this have rehabilitate of how in then are another Most who an or who see made we'll to again, have lot we done and is. of -- payment. deterrent -- we've the cetera. payment going what this here had they et change prioritize deterrence, looking to wasn't to but at the people back at out individuals the lost a things control to roll no because in did of we'll choice that model testing it's model not and But effects making would how going internal any conversations really about their delinquency. roll health a settlement, you're

then into move past. perhaps X are have middle in over rebound Got of seasonally year, the the of the they quarter. about next months steadily peak, a charge-off that in they in fourth fourth concept And to of not in terms starts the we it. but decline or the and you talking normally seasonality in will then When works your peak favor really you're to reverse the as quarter, will suggesting quite that charge-offs as continue much as the

Yes. Thanks for the question again, Rick.

will to haven't to they dollar normalized both fourth We as seasonal We plus prepandemic and in we're third the back and flow-through just We given as quarterly April, the quarter I to have come and see, on a in think again, quarter XX you effect kind plus, the XX you And works declines see, the framework. through. which you rate Again, of begin again. more give loss I'm how the to believe applied patterns going levels. guidance.

rates So higher not year. But first to year now. guidance than the in going rates the of second half the the specific the into we're will the quarter be of get again, in half

Research. Autonomous question next Foran our take with We'll from Brian

speak elevated all capital you window can enough maybe little feel business already the X-year do look peak and annual late that of just become considerations? wondering kind to you've you sight in, neutrality you in but excess I a [ you constraint it's internal to like was screwy, I that because line through have got weakened if process. stress ] And with Does the this of result. capital stress this testing that at would Or losses. a fee temporarily a for you folding guess, enough then test could your ROA

just So first, let clear. me be

were of plan horizontals, until we part get albeit not capital We to of group, our capital XXXX. do the part the the they that were -- CCAR buffer submitted have a stress

than stress will same So the comes capital engage the have the again, in somewhat a process XXXX. buffer in When past. differently than with Fed the bit specifically other you as years little the scenarios were capital the But we them, in it prior around at there approved management look put there of that Board fees and scenario presented to fees and late there. in impact our plan late that or the just remains

and came would implementation little if That said date, plans this we interfere doesn't had. that that the had on the else, talked but back not an things we with is plan morning. which the plans. the all fee announced ] and impact we'd capital to capital late we But bit this I Again, informed everything a restrict that our impact decision, conditions I earlier say necessarily capital doesn't that's necessarily targets of our the normal call, Brian. subject that the doesn't necessarily -- our market Even overall roll [ and

or of That's Is competitors if efforts? there of kind any very helpful. in maybe big the competition. combinations respond on generally different you these on I PPPC is And evidence could people doing from kind everyone things. ways common in Or pack? of to breaking similar sneak the divergence in seeing Are any of market putting

-- going playbook. public everybody to combination pretty of We in a same terms. in the changes terms what's out of tell we're I do that would But a there only things is expectation It's it's my standard relatively that you, a see doing. is

whole, But be You et important it's it's we that types do of issuers things a of cetera, think fees, some going to to offset the might I And see this. on couple increases, different differently. APR the do.

the beginning we without unfortunately, the that's partners to has to our And today. protect Our impossible offsets. continue and been goal do that customers credit to from these to provide do

only little do urgency -- gotten of more discussions probably you more of a this one bit think bit the have The with surprise showed add, out thing partners. see will I sense we thing our little or ahead I'd and upon Brian, been a based

bit, Brian here. the where you're So over think that may That's medium see I pay convergence. the but right a little going term to is

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

morning. Good

happen point, businesses of fee Co-Brand smaller some begun private a label late vendors up the they and the result fees late brought last see you where willingness the absorb overall very that on -- revenue, in players if foregone smaller card competitive of the the your we do that the Co-Brand that of absorb about view late piece peer have of talk rule as just to -- a do label Can business, fees as at that some change. somewhat card They their they're in a private impact? threat? maybe are you that indicate do have Some a to but

threat today. see don't as it competitive I a

our in business, in space, think that do we're same doing. majority think of going I issuers to the of vast our see you're types I things the

going it's the partners. really in the terms to think of economic I important be sharing with

protect credit And obviously think you I to do focused some things customers fortunately, today. we're and that that to partners. in providing need these the on to of we do order our protect

now. see think to start and So -- you'll this do starting I to see we're

pricing building we We're you've contemplate issuers. some late see our at as bring into portfolios to competitors an from we new as fee. this look to We're to start on starting You'll build $X models business. it got

scenarios late on to You while got where better build the hoping we to in obviously, much litigation, you have a assume that for outcome have lower we're a fee.

I So primarily today. over time industry, that will it space we think in the even across out operate the in

took second. it for just up level thing, one you a a John, The

these a allocate suboptimal time and we long case absorb institutions. out The be, to our is seen come you this that? institution-wide businesses, where had if what look a This that, of you of our performing, over inside some late theoretical business in think, So businesses into decides of better in inside is institutions to part. it capital over flavor be what that And way may of does we attract some where higher is we've small sustain will And immaterial. have that And has would end you happen smaller the certain do ours returning return someone a to portfolio I large profile. to history, who up how can fee, portions larger capital? a same than a question platforms the our

a it's viable if to again, not theoretical do sure very that wants your that's long-term So strategy I'm that. question. someone But

reiterating rates, your changed not want that was you're back in that components makes late have but thinking sorry at days sense. and enough to And dynamics. materially Got trends? change that, March underlying you in that And I that in the had just EPS, ago, then development not part point fee the because expectations about had it on $X have But underlying the it's to it. want had No, the I of make to that guide. to that not the how to know core $X.XX -- $X.X to separately, XX know some were changed all. just just I we've sure to believe at understand, baked you're I $X that only moves

margin, on raised of favorably to up need kind what that Yes. think we Again, that put feel the quarter BAU is days expenses, think on need again, performance the based I positive the just again, viewed should to points losses, back page I this it it update -- I'm I put XX be the to a feel of and going Brian I net reserves, say or to of I've guidance didn't two about said kind base business. ago. interest or relative

in on pleased out first how very and basis. exiting core quarter we're we're moving of on a So BAU the

at almost And allotted time. we are our

from take of Bhatia Bank final America. will with one question We Mihir

-- of choices Just just for Like a much percent consumers more impacted Symphony any out to are in terms or with track it. I'm more situation. terms offers necessarily being like market purchase of how already in picture so on the wanted programs, are -- on sophisticating consumers that having to to questions. there just at share that? or the is How today? but financing retail anything not turning the really you competitive Maybe by of start two the And big all volume first others? consumers. sales there versus just As your often penetration partner sure new share

by rate, we're on it our I'll inside penetration gaining track generally, we're at partner. versus you, pleased do the sales that tell programs the our We products. share. of we of other majority very that card partner Yes, look

us of And think partners helping card, engaging we that things now buy being more think helps us gain I think to see revolving a product, that that's as share. one about on I strategy, a able later. secured pay multiproduct do our the offer maybe we a

I that's think one strategy is will strategy, If multiproduct you stick a the product one. strategy over is I time, a lose we a share, time think to over think losing why you and which winning

feel but midsized to generally share continue we space. inside ability really good So the to about of and more also our just take of our even programs, to some partner smaller

question. just And last then, Brian,

you your In the in I terms highlighted prepared the small- remarks, well as providers. in think as and partnership of -- today, press medium-sized health with the release businesses

on the the to emphasis one. businesses I think is a small- old and of relative emphasis little bit the new medium-sized a

smaller growth a the proprietary historical more is for just little of or the the just was maybe large bit focus switching choice maybe a retailers. on partner versus being curious, So that Synchrony to I programs focus

of definitely an that's model. business part underappreciated I think our Well,

I think businesses. the focus -- to hundreds tend to but we programs, serve large thousands people providers small- do on we partner medium-sized of of and

And sometimes that gets lost a little bit.

when in that definitely up the you paying the I we're and reaping investments. wellness the like of off and you really were shifted there. into the look more numbers, health I'd wellness leaning receivables think say space, those we've see health at we're So benefits XX%, dollars -- investment

lot of always think very the that's I a large of space attractive as medium-sized gets of we but attractive business a small- hundreds well, We're partner the that that to still trying the for very businesses enough us. of is to dentists care talk The about part the attention. specialists So and pet make we thousands sure across serve. all that and space country

And this concludes Synchrony earnings conference call.

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