Synchrony Financial Notches Another Solid Quarter

Banking, finance, and taxes

Published: October 19, 2018 11:15 am

Last Updated: January 11, 2020 4:10 pm

When Synchrony Financial (NYSE: SYF) reported its third-quarter financial results before the markets opened on Friday, the company said that it had $0.91 in earnings per share (EPS) and $4.69 billion in revenue. Consensus estimates had called for $0.80 in EPS and revenue of $4.24 billion. In the same period of last year, Synchrony posted EPS of $0.70 on $3.88 billion in revenue.

During the most recent quarter, loan receivables grew $11 billion, or 14%, from the third quarter of 2017 to $88 billion. Also, purchase volume growth was 11% and average active account growth was 9%, primarily driven by the PayPal Credit program acquisition and growth.

At the same time, deposits grew to $62 billion, up $8 billion, or 14%, and comprised 72% of funding.

The estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 14.2%, compared to 17.2% last year, reflecting the impact of capital deployment through the PayPal Credit program acquisition, growth and continued execution of the capital plan.

The company offered no guidance for the fourth quarter. However, consensus estimates call for $0.87 in EPS and $4.39 billion in revenue.

Margaret Keane, president and CEO of Synchrony Financial, commented:

We generated strong results this quarter, adding a top new program with the completion of the acquisition of the U.S. PayPal Credit program, while also continuing to drive organic growth. In addition to renewing key partnerships, we won exciting new programs. We have also been expanding our valuable CareCredit network, entering more than 25 new markets over the last several quarters. We continue to invest in our digital capabilities and network, focusing on ease of card use across platforms, as well as card utility, enhancing our competitive position in the rapidly changing marketplace. We are also seeing other important elements of our business, such as credit quality, continue to perform in-line with our expectations.

Shares of Synchrony were last seen up about 3.6% at $30.72, in a 52-week range of $28.64 to $40.59 and with a consensus analyst price target of $39.33.

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