Synchrony’s First Quarter Performance Highlights Continued Consumer Strength

Synchrony 's first quarter performance highlighted the continued strength of the consumer, paired with the power of our diversified sales platforms, compelling value propositions and prudent financial position. To see the full results, click here.

?Asset Quality

?As conditions normalize, we continue to see credit metrics performing in line with, or better than, 2019 performance, as credit normalization continues at a measured pace. The continued tapering of accumulated consumer savings is contributing to a slow moderation of payment behavior towards pre-pandemic levels.

?As a result, we saw payment rates decline versus the prior quarter, while delinquencies and losses increased, in line with our expectation. Our allowance for credit losses as a percentage of loan receivables reflects the impact of additional reserves and seasonally lower receivables.

?Funding, Capital and Liquidity, and Direct Deposits

?In the quarter, Synchrony's management of funding, capital and liquidity remained a source of strength. We set and maintain appropriate target levels of common equity, liquidity and reserves, and generally manage our funding strategy to be interest rate neutral and to minimize duration risk. The vast majority of our liquidity portfolio is in cash and short-term U.S. Treasuries, largely maturing in under one year.?

?So, as depositors across the country navigated the uncertainty of several bank failures and pronounced deposit flows during mid-March, Synchrony Bank was well positioned as a reliable source of stability for both our customers and our business. Our stable, direct-to-consumer deposit base is largely insured, with no concentrations in geographic areas or high-balance accounts. Our average depositor has banked with us for approximately 5 years, and nearly 80% of our deposit balances are more than 3 years old.?

?This loyalty makes sense, given Synchrony Bank’s award-winning platform and industry-leading customer satisfaction scores.?Depositors are attracted to our seamless, digital-first experience as well as our competitive rates. In fact, as customers sought to either balance exposure to their banks or remix their balances to take advantage of available FDIC insurance limits during the last three weeks of March, Synchrony Bank saw net direct deposit inflows of nearly $700 million as we generated double-digit account growth sequentially.

Looking at April trends, Synchrony Bank activity has returned to more seasonal flows, highlighted by continued growth in new accounts and deposits. Our deposit base provides a strong foundation for our business, and

Synchrony continued our track record of robust capital returns in the first quarter. In total, we returned $500 million to shareholders through $400 million of share repurchases and $100 million of common stock dividends.?

?Synchrony remains well-positioned to continue to return capital to shareholders, as guided by our business performance, market conditions, regulatory restrictions and subject to our capital plan. We will also continue to seek opportunities to complete our fully-developed capital structure through the issuance of additional preferred stock.

?2023 Outlook

?Overall first quarter purchase volume came in ahead of our expectations which, when combined with slightly faster payment rate normalization than anticipated, delivered stronger receivables growth for the quarter. As a result, we now expect ending receivables to grow by 10% or more by year-end, although we anticipate payment rates ending the year well above pre-pandemic levels.

?In sum, Synchrony's model is built for sustainable performance at strong risk-adjusted returns, as we grow to meet the needs of our customers, our partners and our shareholders. As conditions normalize, we remain on track to achieve our long-term, financial operating targets.