Synchrony Financial Still Rises on Mixed Earnings

Synchrony Financial (NYSE: SYF) reported its first-quarter financial results before the markets opened on Friday. The company said it had $0.70 in earnings per share (EPS) on $2.9 billion in revenue, which compares to consensus estimates from Thomson Reuters of $0.69 in EPS on revenue of $3.17 billion. In the same period of last year, the company posted EPS of $0.66 and $2.88 billion in revenue.

Loan receivables grew $8 billion, or 13%, from the first quarter of 2015 to $66 billion. At the same time, strong deposit growth continued to $45 billion, up $10 billion, or 29%.

The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 18.1%, and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 17.5%. Return on assets totaled 2.8% and return on equity was 18.1%.

In terms of the sales platforms, Synchrony reported as follows:

• Retail Card platform revenue increased 15%, driven primarily by purchase volume growth of 17% and period-end loan receivables growth of 14%.
• Payment Solutions platform revenue increased 14%, driven primarily by purchase volume growth of 15% and period-end loan receivables growth of 13%.
• CareCredit platform revenue increased 6%, driven primarily by purchase volume growth of 14% and period-end loan receivables growth of 9%.

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Margaret Keane, president and CEO of Synchrony, commented:

Our strong operational momentum and solid financial results continued in the first quarter. Each of our business platforms delivered strong performance resulting in double-digit growth in overall purchase volume, platform revenue and loan receivables. To support this growth, we have significantly expanded our deposit base, growing deposits $10 billion over last year. Our innovative payments, analytics, loyalty and financing solutions are delivering value to our partners and cardholders and continue to build the foundation for future growth.

On the books, cash, equivalents and investment securities totaled $15.45 billion, compared to $14.34 billion in the same period of last year.

Shares of Synchrony were trading up 1.2% to $30.77 Friday morning, with a consensus analyst price target of $37.20 and a 52-week trading range of $23.74 to $36.40.