Synchrony Q4 2022 Results

This week, Synchrony reported our 2022 Q4 earnings results. We closed the year on a strong note delivering:

• Fourth quarter net earnings of $577 million, or $1.26 per diluted share
• A return on average assets of 2.2%
• A return on tangible common equity of 22.1%

These financial results contributed to:

• Full year 2022 net earnings of over $3.0 billion, or $6.15 per diluted share — our second highest in company history
• A return on average assets of 3.1%
• A return on tangible common equity of 28.5%

Below is an abbreviated version of what I shared during our investor call. To read the full results, click here.

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What We Reported

This performance was driven by continued strength across the fundamental drivers of our business and a high level of execution across our key strategic priorities throughout the year:

• We achieved record purchase volume of $180 billion for the full year, which surpassed our prior year's record and was 15% higher on a core basis.?Spend per active account was 7% higher for the year, reflecting robust consumer demand across the broad range of products and services for which Synchrony offers flexible financing.
• We also acquired 23.6 million new accounts and grew average active accounts by 8% on a core basis.
• The combination of strong consumer spend and some moderation in payment rate contributed to ending receivables growth of 15%.
• As expected, credit continued to normalize across our portfolio, with full year losses of 3.00% — still more than 250 basis points below our underwriting target of 5.5 to 6%, which is generally the level at which our Risk-Adjusted Margin is more fully optimized.
• And, finally, Synchrony continued to drive progress toward our long-term operating efficiency target, reflecting the combined impacts of our cost discipline, the inherent operating leverage in our highly scalable model, and strong revenue growth.

Synchrony's ability to deliver consistent growth and strong returns is a testament to our well-diversified portfolio, our balanced approach to product and credit strategies, our compelling value propositions, and the strength of our business model.

When we look back on 2022 and the caliber of results we were able to deliver for our customers, our partners and providers, and our shareholders, it really all comes back to the dedication shared by the Synchrony team as we realize our ultimate goal: to power commerce by delivering a leading digital ecosystem, connecting our partners and customers through world class technology, products and capabilities.

Building on our Strengths

Over the last year, Synchrony has built upon the core strengths of our differentiated business model by executing on the key strategic priorities that are driving progress toward that collective goal.

• We continued to expand and enhance our partner programs, including the addition of more than 30 partners and the renewal of more than 50 relationships — including most recently Lowe’s, with whom we've partnered for over four decades, to drive innovation and value to both their "Do-It-Yourself" and "pro" customers.?
• Synchrony also continued to diversify our products, programs and markets during 2022, deepening our reach and expanding the utility and value we offer to our customers and partners alike.?

We continued to scale our diverse product suite with the launch of Synchrony's Installment and Pay-in-4 products at a number of retailers and providers, including Belk and Discount Tire. These fixed pay offerings represent another financial tool that we can offer to qualifying customers, while also driving incremental sales to our partners and providers.

And whether it's delivering flexible financing offers in a dental practice, connecting a customer with a large partner through a seamless mobile transaction, or driving incremental sales at small and mid-sized businesses, Synchrony meets our customers, partners and providers wherever they are in their digital or retail journey and deliver the right product at the right time.

Enhancing the Customer Experience

Synchrony also launched our new cardholder service platform across many of our largest portfolios in 2022. This new platform offers customers the ability to service their accounts in one dashboard and enables a broad suite of account notifications across every aspect of the credit lifecycle. These notifications include a range of instant transaction alerts — all enhanced with enriched merchant data and a completely redesigned digital service experience.

While this new account manager is still in its early stages, we observed some strong trends in response to the launch:

• 60% of those logging in have more than one account
• 80% of our users stated that their experience was "Easy" or "Very Easy" to use and a top driver of their satisfaction.

Accordingly, as we continue to scale and integrate more of our products in the coming year, we believe this enhanced account manager will become an increasingly powerful tool to drive higher quality engagement and deeper value for our customers, partners and Synchrony alike.

To that end, we also remain focused on driving greater connectivity across our vast customer and partner bases with the expansion of our Synchrony marketplace. MySynchrony.com connects consumers with information and relevant offers from brands they trust. These offers are powered by proprietary insights that Synchrony has gleaned through a variety of resources, including online search activity within their shopping category and location, to provide personalized offers to the right audience at the right time.

This is a testament to the deep customer relationships that our network products foster. Synchrony's ability to leverage our marketplaces like MySynchrony.com or CareCredit.com to drive new and existing customer traffic, as well as incremental and repeat sales to our partners, has been — and will continue to be — a meaningful competitive differentiator and an important growth driver for our business longer term.

In Sum

Synchrony is increasingly anywhere our customer is looking to make a purchase or a payment — big or small, in-person or digitally. We can meet them whenever and however they want to be met with a broad range of products and services to meet their needs in any given moment. This ability to deliver the versatility of our financial ecosystem seamlessly across channels, industries, partners and providers alike is what positions Synchrony so well to sustainably grow — particularly as customer needs and market conditions evolve.