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Synchrony Financial's (SYF) Earnings Surpass Estimates in Q1
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Synchrony Financial’s (SYF - Free Report) first-quarter 2018 earnings per share of 83 cents surpassed the Zacks Consensus Estimate of 74 cents by 12.2%. The bottom line also improved 36% year over year.
Results in Detail
The company’s net interest income increased 7% to $3.8 billion in the first quarter, primarily owing to strong loan receivables growth.
However, other income was down 19.4% to $75 million, primarily due to higher loyalty program expenses, partially offset by increased interchange revenues.
Loan receivables rose 6% year over year to $78 billion.
Deposits were $57 billion, up 10% from the year-ago quarter.
Purchase volume expanded 3% from the first quarter of 2017 to $30 billion.
Provision for loan loss increased 4% year over year to $1.4 billion on credit normalization.
Total other expenses increased 8.8% to $988 million, primarily due to business growth and marketing expenses.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 7% year over year, primarily driven by loan receivables growth. Loan receivables grew 5% on broad-based across partner programs.
Purchase volume and average active account rose 2% each.
Payment Solutions
Interest and fees on loans rose 9% year over year on the back of period-end loan receivables growth of 8%. Loan receivables growth was led by home furnishings and automotive.
Purchase volume growth was 7%, adjusted to exclude the impact of the hhgregg bankruptcy, and a 5% rise in average active account.
CareCredit
Interest and fees on loans increased 8% year over year, attributable to period-end loan receivables growth of 8%. Loan receivables growth was enhanced by dental and veterinary.
While purchase volume registered 8% growth, average active account reported 7% rise.
Synchrony Financial Price, Consensus and EPS Surprise
Total assets as of Mar 31, 2018 were $95.6 billion, up 7.3% year over year.
Total borrowings as of Mar 31, 2018 were $21 billion, up 4.1% year over year.
The company’s balance sheet remained strong during the quarter with total liquidity of $25 billion or 26% of total assets.
Return on assets was 2.7% while return on equity was 18.2%.
Efficiency ratio was 30.9% compared with 30.3% in first-quarter 2017.
Share Repurchase and Dividend Update
In the first quarter, the company paid a quarterly common stock dividend of 15 cents per share and bought back $410 million of Synchrony Financial common stock.
Among other players in the Finance sector that have reported first-quarter earnings so far, Bank of America Corporation (BAC - Free Report) , Citigroup Inc. (C - Free Report) and U.S. Bancorp (USB - Free Report) beat the respective Zacks Consensus Estimate.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Synchrony Financial's (SYF) Earnings Surpass Estimates in Q1
Synchrony Financial’s (SYF - Free Report) first-quarter 2018 earnings per share of 83 cents surpassed the Zacks Consensus Estimate of 74 cents by 12.2%. The bottom line also improved 36% year over year.
Results in Detail
The company’s net interest income increased 7% to $3.8 billion in the first quarter, primarily owing to strong loan receivables growth.
However, other income was down 19.4% to $75 million, primarily due to higher loyalty program expenses, partially offset by increased interchange revenues.
Loan receivables rose 6% year over year to $78 billion.
Deposits were $57 billion, up 10% from the year-ago quarter.
Purchase volume expanded 3% from the first quarter of 2017 to $30 billion.
Provision for loan loss increased 4% year over year to $1.4 billion on credit normalization.
Total other expenses increased 8.8% to $988 million, primarily due to business growth and marketing expenses.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 7% year over year, primarily driven by loan receivables growth. Loan receivables grew 5% on broad-based across partner programs.
Purchase volume and average active account rose 2% each.
Payment Solutions
Interest and fees on loans rose 9% year over year on the back of period-end loan receivables growth of 8%. Loan receivables growth was led by home furnishings and automotive.
Purchase volume growth was 7%, adjusted to exclude the impact of the hhgregg bankruptcy, and a 5% rise in average active account.
CareCredit
Interest and fees on loans increased 8% year over year, attributable to period-end loan receivables growth of 8%. Loan receivables growth was enhanced by dental and veterinary.
While purchase volume registered 8% growth, average active account reported 7% rise.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial Price, Consensus and EPS Surprise | Synchrony Financial Quote
Financial Position
Total assets as of Mar 31, 2018 were $95.6 billion, up 7.3% year over year.
Total borrowings as of Mar 31, 2018 were $21 billion, up 4.1% year over year.
The company’s balance sheet remained strong during the quarter with total liquidity of $25 billion or 26% of total assets.
Return on assets was 2.7% while return on equity was 18.2%.
Efficiency ratio was 30.9% compared with 30.3% in first-quarter 2017.
Share Repurchase and Dividend Update
In the first quarter, the company paid a quarterly common stock dividend of 15 cents per share and bought back $410 million of Synchrony Financial common stock.
Zacks Rank
Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players in the Finance sector that have reported first-quarter earnings so far, Bank of America Corporation (BAC - Free Report) , Citigroup Inc. (C - Free Report) and U.S. Bancorp (USB - Free Report) beat the respective Zacks Consensus Estimate.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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