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Synchrony Financial (SYF) Q2 Earnings Top Estimates, Rise Y/Y

Synchrony Financial’s SYF second-quarter 2019 earnings per share of 97 cents beat the Zacks Consensus Estimate by 1%. The bottom line also improved 5.4% year over year on the back of higher net interest income and the PayPal Credit Program purchase. This excludes the impact of Walmart portfolio.

Results in Detail

The company’s net interest income increased 11% to $4.2 billion in the second quarter, primarily owing to the PayPal Credit program acquisition and loan receivables growth.

However, other income rose 42.9% to $90 million.

In the quarter under review, loan receivables inched up 4% year over year to $81.8 billion.

Deposits were $65.6 billion, up 11% from the year-ago quarter.

Purchase volume expanded 12% from the second quarter of 2018 to $38.3 billion.

Provision for loan loss decreased 6% year over year to $1.2 billion due to the reserve release related to the reclassification of the Walmart portfolio to loans held for sale.

Total other expenses climbed 8.6% to $1 billion, primarily due to higher professional fees, marketing and business development and other.

Synchrony Financial Price, Consensus and EPS Surprise

Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote

Sales Platforms Update

Retail Card

The company’s interest and fees on loans grew 16% year over year.

Loan receivables inched up 2% while the average active accounts ascended 11%, all driven by the company’s consolidation of the PayPal Credit program.

Payment Solutions

Interest and fees on loans rose 6% year over year on the back of loan receivables growth. Loan receivables augmented 8%, led by home furnishings and power products.

Purchase volume expanded 4% while average active account rose 3%.


Interest and fees on loans increased 7% year over year, attributable to dental and veterinary.

While purchase volume registered 7% growth, the average active account reported a 5% rise.

Financial Position

Total assets as of Jun 30, 2019 were $106.4 billion, up 7.3% year over year.

Total borrowings as of second-quarter 2019 end were $21.2 billion, down 2.2% year over year.

The company’s balance sheet was consistently strong during the reported quarter with a total liquidity of $23.7 billion, reflecting 22.3% of the total assets.

While return on assets was 3.3%, the return on equity was 23.1%.

Efficiency ratio was 31.3% in the second quarter of 2019.

Capital Deployment

During the quarter under consideration, the company announced a new capital plan, which includes share buyback worth $4 billion. Moreover, it announced a quarterly dividend of 22 cents per share beginning the third quarter.

In the second quarter, it purchased shares worth $725 million and paid a dividend of 21 cents per share.


Synchrony Financial carries a Zacks Rank #3 (Hold). You can see _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases From Finance Sector

Brown & Brown, Inc. BRO is slated to announce second-quarter earnings on Jul 22. The consensus estimate for earnings is pegged at 28 cents, implying growth from 26 cents reported in the prior-year quarter. The stock carries a Zacks Rank of 3.

Discover Financial Services DFS is scheduled to release second-quarter earnings on Jul 23. The Zacks Consensus Estimate for the same stands at $2.11, indicating growth of 10.5% from the year-ago reported figure. The stock is a Zacks #3 Ranked player.

Willis Towers Watson Public Limited Company WLTW is set to report second-quarter earnings on Jul 31. The consensus mark for earnings is pinned at $1.76, suggesting 3.5% growth from the year-earlier reported figure. The company has a Zacks Rank #2 (Buy).

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