Synchrony Financial Q4 FY2025 earnings call

Brian Doubles noted strong fourth quarter performance, connected nearly 70 million customers, generated $49 billion purchase volume. Added or renewed over 25 partners in fourth quarter, including Bob's Discount Furniture and Polaris. Expanded portfolio across national and local businesses, entered over 10 merchant and practice management platform partnerships. Acquisition of Versatile to accelerate multi-source financing strategy. Launch of new products like Synchrony Pay Later. Digital ecosystem enhancements led to 18% increase in total visits and 17% more in sales in 2025. Digital wallet strategy accelerated with more unique provisioned accounts and sales. Brian Wenzel discussed financial performance, credit trends, funding, capital, and liquidity. Fourth-quarter loan receivables decreased 1%, payment rate increased. Net interest margin increased 82 basis points. RSAs increased. Provision for credit losses decreased. Other expense increased. Capital ratios declined but Synchrony well positioned to return capital to shareholders.

Fourth quarter net earnings were $751 million or $2.40 per diluted share. Purchase volume was $49 billion, a fourth-quarter record and up 3% year-over-year. Digital platform purchase volume up 6%, diversified and value up 4%, Health and Wellness up 4%, Lifestyle up 3%, Home and Auto down 2%. Dual and co-branded cards accounted for 50% of total purchase volume and increased 16% year-over-year. Net interest income increased 4% to $4.8 billion. RSAs were $1.1 billion or 4.3% of average loan receivables. Provision for credit losses decreased $118 million to $1.4 billion. Other expense increased 10% to $1.4 billion. Fourth-quarter efficiency ratio was 36.9%. Full-year net earnings were $3.6 billion or $9.28 per diluted share, return on average assets 3%, return on tangible common equity 25.8%.

2026 baseline assumptions include no regulatory/legislative changes, stable macroeconomic environment. Expect mid-single-digit ending receivables growth. Portfolio net charge-off rate expected in line with long-term target of 5.5% - 6%. Net interest income expected to continue to grow. RSAs expected to increase but remain within target of 4% - 4.5% of average receivables. Other expenses excluding notable items in 2025 expected to grow in line with loan receivables. Full-year net earnings per diluted share expected between $9.10 and $9.50.

Q: Sanjay Sakhrani asked about mid-single-digit growth guide, Walmart's early views, and underwriting stance.

A: Brian Doubles and Brian Wenzel discussed consumer resilience, macro environment, co-brand growth including Walmart, and underwriting stances.

Q: Sanjay Sakhrani asked about 10% APR caps and views on partners.

A: Brian Doubles stated APR caps would be bad for consumers and partners.

Q: Ryan Nash asked about credit guide and net interest margin.

A: Brian Wenzel discussed credit performance, losses, and net interest margin factors.

Q: Terry Ma asked about triple BCs tracking and expense growth guide.

A: Brian Wenzel talked about BCs tracking and expense growth related to investments.

Q: Moshe Orenbuch asked about loan growth opportunities and new programs.

A: Brian Doubles discussed multi-product strategy and new program state of play.

Q: Mihir Bhatia asked about reserve rate and pay later.

A: Brian Wenzel and Brian Doubles talked about reserve rate trajectory and pay later performance.

Q: Erika Najarian asked about reserve rate and tax refund impact.

A: Brian Wenzel discussed reserve rate and tax refund effects.

Q: Rick Shane asked about RSA and efficiency ratio.

A: Brian Wenzel explained RSA and efficiency ratio related to loan growth.

Q: Rob Wildhack asked about pay later and loan growth.

A: Brian Doubles and Brian Wenzel discussed pay later and loan growth connection.

Q: Jeff Adelson asked about credit actions and pay later at Amazon.

A: Brian Wenzel and Brian Doubles talked about credit actions and pay later at Amazon.

Q: Brian Foran asked about guide change to EPS range and key markers.

A: Brian Wenzel explained guide change and key markers.

Q: Don Fandetti asked about Walmart partnership.

A: Brian Doubles discussed Walmart partnership details.