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Synchrony Q4 Earnings Beat Estimates on Improved Efficiency
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Synchrony Financial (SYF - Free Report) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 per share a year ago.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Net interest income improved 2.7% year over year to $4.6 billion in the fourth quarter. However, it missed the consensus mark by a whisker.
The strong quarterly earnings were supported by increased interest and fees on loans and an expanding loan receivables portfolio. Lower expenses also benefited the results, leading to an improved efficiency ratio in the fourth quarter. The positives were partially offset by lower purchase volume.
Synchrony Financial Price, Consensus and EPS Surprise
Retailer share arrangements of Synchrony increased 4.7% year over year to $919 million. Total loan receivables of SYF grew 2% year over year to $104.7 billion but missed the consensus mark of $104.9 billion in the quarter under review.
Total deposits were $82.1 billion, which rose 1.1% year over year but missed our estimate of $82.5 billion. Provision for credit losses decreased 13.5% year over year to $1.6 billion due to a reserve release, partially offset by increased net charge-offs, higher than our estimate of $1.4 billion.
The purchase volume of Synchrony declined 3% year over year to $48 billion in the fourth quarter due to selective consumer spending and credit actions. However, the figure surpassed the consensus estimate of $47.7 billion.
Interest and fees on loans of $5.5 billion improved 2.9% year over year due to a growing average loan receivables portfolio. Net interest margin deteriorated 9 basis points (bps) year over year to 15.01%, which was above the Zacks Consensus Estimate of 14.73%.
New accounts of 5 million slipped 19% year over year. Average active accounts decreased 2% to 70.3 million in the fourth quarter.
Total other expenses of SYF decreased 3.7% year over year to $1.3 billion, remaining below our estimate of $1.4 billion. The efficiency ratio of 33.3% improved 270 bps year over year in the quarter under review and remained below the consensus mark of 34.8%.
Movement in Individual Sales Platforms
Home & Auto period-end loan receivables climbed 0.2% year over year on the back of lower payment rates and the Ally Lending acquisition. However, the purchase volume declined 6.3% year over year in the fourth quarter as lower consumer traffic, fewer large ticket purchases, and the impact of credit actions more than offset the effects of the Ally Lending acquisition. Interest and fees on loans grew 6% year over year on the back of growth in average loan receivables.
Digital period-end loan receivables rose 1.5% year over year in the quarter under review on lower payment rates. Purchase volume was down 1.2% year over year due to fewer active accounts, offsetting stable spend per account. Interest and fees on loans climbed 0.2% year over year, driven by growth in average loan receivables, and lower payment rates.
Diversified & Value period-end loan receivables grew 1% year over year in the fourth quarter on decreased payment rates. Purchase volume fell 1.6% year over year, attributable to the impact of credit actions and fewer active accounts. Interest and fees on loans improved 0.2% year over year on higher average loan receivables and lower payment rates.
Health & Wellness period-end loan receivables rose 6.3% year over year in the quarter under review due to a reduction in payment rates. Purchase volume fell 3.3% year over year due to decreased spending in Dental, Cosmetic, and Vision and the impact of credit actions, partly offset by growth in Pet and Audiology. Interest and fees on loans improved 8% year over year on increased average loan receivables.
Lifestyle period-end loan receivables rose 2.5% year over year in the fourth quarter on payment rate moderation. Purchase volume declined 4.5% year over year, due to reduced transaction values and credit actions’ impact. Interest and fees on loans climbed 5.1% year over year thanks to growth in average loan receivables and benchmark rates.
Financial Position (as of Dec. 31, 2024)
Synchrony exited the fourth quarter with cash and equivalents of $14.7 billion, higher than the $14.3 billion recorded at 2023-end. Total assets rose to $119.5 billion in the fourth quarter from $117.5 billion at 2023-end. Total borrowings fell to $15.5 billion from $15.98 billion at the end of 2023. Total equity of $16.6 billion increased from $13.9 billion at 2023-end.
SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $19.8 billion accounting for 16.6% of its total assets.
Return on assets of 2.6% improved 110 bps year over year in the fourth quarter, and return on equity rose 650 bps year over year to 18.9%.
Capital Deployment
Synchrony returned capital worth $100 million through share buybacks and paid common stock dividends of $97 million in the fourth quarter of 2024. It had a leftover share buyback capacity of $600 million.
Full-Year Update
In 2024, Synchrony reported adjusted earnings per share of $8.55, which rose 64.7% from the 2023 figure. SYF's net interest income grew 6% year over year to $18 billion. Purchase volume of $182.2 billion declined 1.6% year over year.
2025 Guidance
SYF anticipates low single-digit growth in period-end loan receivables. Purchase volume growth is expected to reflect credit actions and consumer spending behavior. The company expects the payment rate to be generally in line with 2024. Net revenue is projected to be between $15.2 and $15.7 billion, lower from $16.1 billion in 2024.
The company expects net charge-offs to be between 5.8% and 6.1% and follow normal seasonal trends, with a peak in the first half of the year. The efficiency ratio is expected to be between 31.5% and 32.5%, up from the 2024 level of 30%.
The bottom line of Intercorp Financial Services outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 36.2%. The Zacks Consensus Estimate for IFS’ 2025 earnings suggests an improvement of 48.2% from the 2024 estimate. The consensus mark for revenues suggests growth of 9% from the 2024 estimate. The consensus mark for IFS’ 2025 earnings has moved 0.7% north in the past 60 days.
Primerica’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 4.89%. The Zacks Consensus Estimate for PRI’s 2025 earnings indicates a rise of 5.6%, while the same for revenues implies an improvement of 4.5% from the respective 2024 estimates. The consensus mark for PRI’s 2025 earnings has moved 0.8% north in the past seven days.
The bottom line of Civista Bancshares outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 7.72%. The Zacks Consensus Estimate for CIVB’s 2025 earnings suggests an improvement of 8.2% from the 2024 estimate. The consensus mark for revenues suggests growth of 4.9% from the 2024 estimate. The consensus mark for CIVB’s 2025 earnings has moved 1.5% north in the past 30 days.
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Synchrony Q4 Earnings Beat Estimates on Improved Efficiency
Synchrony Financial (SYF - Free Report) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 per share a year ago.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Net interest income improved 2.7% year over year to $4.6 billion in the fourth quarter. However, it missed the consensus mark by a whisker.
The strong quarterly earnings were supported by increased interest and fees on loans and an expanding loan receivables portfolio. Lower expenses also benefited the results, leading to an improved efficiency ratio in the fourth quarter. The positives were partially offset by lower purchase volume.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote
Q4 Results in Detail
Retailer share arrangements of Synchrony increased 4.7% year over year to $919 million. Total loan receivables of SYF grew 2% year over year to $104.7 billion but missed the consensus mark of $104.9 billion in the quarter under review.
Total deposits were $82.1 billion, which rose 1.1% year over year but missed our estimate of $82.5 billion. Provision for credit losses decreased 13.5% year over year to $1.6 billion due to a reserve release, partially offset by increased net charge-offs, higher than our estimate of $1.4 billion.
The purchase volume of Synchrony declined 3% year over year to $48 billion in the fourth quarter due to selective consumer spending and credit actions. However, the figure surpassed the consensus estimate of $47.7 billion.
Interest and fees on loans of $5.5 billion improved 2.9% year over year due to a growing average loan receivables portfolio. Net interest margin deteriorated 9 basis points (bps) year over year to 15.01%, which was above the Zacks Consensus Estimate of 14.73%.
New accounts of 5 million slipped 19% year over year. Average active accounts decreased 2% to 70.3 million in the fourth quarter.
Total other expenses of SYF decreased 3.7% year over year to $1.3 billion, remaining below our estimate of $1.4 billion. The efficiency ratio of 33.3% improved 270 bps year over year in the quarter under review and remained below the consensus mark of 34.8%.
Movement in Individual Sales Platforms
Home & Auto period-end loan receivables climbed 0.2% year over year on the back of lower payment rates and the Ally Lending acquisition. However, the purchase volume declined 6.3% year over year in the fourth quarter as lower consumer traffic, fewer large ticket purchases, and the impact of credit actions more than offset the effects of the Ally Lending acquisition. Interest and fees on loans grew 6% year over year on the back of growth in average loan receivables.
Digital period-end loan receivables rose 1.5% year over year in the quarter under review on lower payment rates. Purchase volume was down 1.2% year over year due to fewer active accounts, offsetting stable spend per account. Interest and fees on loans climbed 0.2% year over year, driven by growth in average loan receivables, and lower payment rates.
Diversified & Value period-end loan receivables grew 1% year over year in the fourth quarter on decreased payment rates. Purchase volume fell 1.6% year over year, attributable to the impact of credit actions and fewer active accounts. Interest and fees on loans improved 0.2% year over year on higher average loan receivables and lower payment rates.
Health & Wellness period-end loan receivables rose 6.3% year over year in the quarter under review due to a reduction in payment rates. Purchase volume fell 3.3% year over year due to decreased spending in Dental, Cosmetic, and Vision and the impact of credit actions, partly offset by growth in Pet and Audiology. Interest and fees on loans improved 8% year over year on increased average loan receivables.
Lifestyle period-end loan receivables rose 2.5% year over year in the fourth quarter on payment rate moderation. Purchase volume declined 4.5% year over year, due to reduced transaction values and credit actions’ impact. Interest and fees on loans climbed 5.1% year over year thanks to growth in average loan receivables and benchmark rates.
Financial Position (as of Dec. 31, 2024)
Synchrony exited the fourth quarter with cash and equivalents of $14.7 billion, higher than the $14.3 billion recorded at 2023-end. Total assets rose to $119.5 billion in the fourth quarter from $117.5 billion at 2023-end. Total borrowings fell to $15.5 billion from $15.98 billion at the end of 2023. Total equity of $16.6 billion increased from $13.9 billion at 2023-end.
SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $19.8 billion accounting for 16.6% of its total assets.
Return on assets of 2.6% improved 110 bps year over year in the fourth quarter, and return on equity rose 650 bps year over year to 18.9%.
Capital Deployment
Synchrony returned capital worth $100 million through share buybacks and paid common stock dividends of $97 million in the fourth quarter of 2024. It had a leftover share buyback capacity of $600 million.
Full-Year Update
In 2024, Synchrony reported adjusted earnings per share of $8.55, which rose 64.7% from the 2023 figure. SYF's net interest income grew 6% year over year to $18 billion. Purchase volume of $182.2 billion declined 1.6% year over year.
2025 Guidance
SYF anticipates low single-digit growth in period-end loan receivables. Purchase volume growth is expected to reflect credit actions and consumer spending behavior. The company expects the payment rate to be generally in line with 2024. Net revenue is projected to be between $15.2 and $15.7 billion, lower from $16.1 billion in 2024.
The company expects net charge-offs to be between 5.8% and 6.1% and follow normal seasonal trends, with a peak in the first half of the year. The efficiency ratio is expected to be between 31.5% and 32.5%, up from the 2024 level of 30%.
SYF’s Zacks Rank
Synchrony currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the Finance space are Intercorp Financial Services Inc. (IFS - Free Report) , Primerica, Inc. (PRI - Free Report) and Civista Bancshares, Inc. (CIVB - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Intercorp Financial Services outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 36.2%. The Zacks Consensus Estimate for IFS’ 2025 earnings suggests an improvement of 48.2% from the 2024 estimate. The consensus mark for revenues suggests growth of 9% from the 2024 estimate. The consensus mark for IFS’ 2025 earnings has moved 0.7% north in the past 60 days.
Primerica’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 4.89%. The Zacks Consensus Estimate for PRI’s 2025 earnings indicates a rise of 5.6%, while the same for revenues implies an improvement of 4.5% from the respective 2024 estimates. The consensus mark for PRI’s 2025 earnings has moved 0.8% north in the past seven days.
The bottom line of Civista Bancshares outpaced estimates in three of the last four quarters and missed the mark once, the average surprise being 7.72%. The Zacks Consensus Estimate for CIVB’s 2025 earnings suggests an improvement of 8.2% from the 2024 estimate. The consensus mark for revenues suggests growth of 4.9% from the 2024 estimate. The consensus mark for CIVB’s 2025 earnings has moved 1.5% north in the past 30 days.