What Boosted Synchrony Financial Earnings in Q3

Synchrony Financial (NYSE: SYF) released its third-quarter earnings report before the markets opened on Friday. The company posted $0.73 in earnings per share (EPS) and $3.48 billion in revenue, versus consensus estimates from Thomson Reuters of $0.69 in EPS on revenue of $3.33 billion. The same period of last year reportedly had EPS of $0.69 and $3.1 billion in revenue.

Loan receivables grew $7 billion, or 11%, from the third quarter of 2015 to $71 billion. Strong deposit growth continued as well, up $9 billion, or 23%, to a total of $50 billion over the third quarter of 2015.

The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 18.2%, and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 17.9%.

Return on assets was 2.8% and return on equity was 17.4%.

The company also commenced quarterly common stock dividend payment of $0.13 per share and repurchased $238 million in shares.

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Margaret Keane, president and CEO of Synchrony, commented:

Broad-based growth across our sales platforms generated double-digit loan receivables and net interest income growth and strong purchase volume growth this quarter. Organic growth is an important business driver for us and we are pleased to have recently renewed several key relationships. We also signed new partnerships and launched new programs. Strong deposit growth continued this quarter as we remain focused on this important source of funding to support our business. We are pleased to have initiated our quarterly dividend and share repurchase program during the quarter. We are focusing resources on driving strong organic growth and pursuing new profitable partnership opportunities, while also returning capital to shareholders through dividends and share repurchases—a testament to the strength of our business model and strategic focus.

On the books, Synchrony’s cash, cash equivalents and investment securities totaled $16.9 billion at the end of the quarter, versus $15.9 billion in the same period of last year.

Shares of Synchrony traded Friday morning at $27.97, with a consensus analyst price target of $35.03 and a 52-week trading range of $23.25 to $34.60.

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