Synchrony Financial ( SYF Quick Quote SYF - Free Report) delivered first-quarter 2021 earnings per share of $1.73, which outpaced the Zacks Consensus Estimate by 15.3%. Further, the bottom line improved 198.3% year over year on the back of lower expenses. Results in Detail
The company’s net interest income plunged 12% year over year to $3.4 billion in the first quarter due to lower finance charges and late fees.
Its other income rose 35% year over year to $131 million owing to better investment income. In the quarter under review, loan receivables declined 7% year over year to $76.9 billion. Deposits were $62.7 billion, down 3% from the year-ago quarter. Provision for credit losses declined 80% year over year to $334 million owing to reduced reserves and net charge-offs. Total other expense decreased 7% year over year to $932 million, attributable to reduced operational losses and lower marketing and business development costs. Sales Platforms Update Retail Card
The company’s interest and fees on loans declined 16% year over year due to reduced loan receivables and lower yield.
Loan receivables were down 9%. While purchase volume improved 11%, the average active account fell 7%. Payment Solutions
Interest and fees on loans dropped 11% year over year due to reduced late fees, finance charges and merchant accounts. Loan receivables dipped 1% year over year due to the impact of the pandemic.
Purchase volume expanded 3% while average active account fell 9%. CareCredit
Interest and fees on loans decreased 7% year over year due to fall in merchant discount and lower late fees. Loan receivables were down 8% year over year.
While purchase volume was flat year over year, the average active accounts fell 11%. Financial Position (as of Mar 31, 2021)
Total assets were $95.9 billion, down 0.1% from the 2020-end level.
Total borrowings were $15.1 billion, down 3.9% from the level at 2020 end. The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $28 billion accounting for 29.2% of its total assets. While return on assets was 4.3%, the return on equity was 31.8%. Efficiency ratio was 36.1% in the first quarter of 2021. Capital Deployment
During the quarter under consideration, Synchrony Financial returned $328 million worth of capital via common stock dividends.
Synchrony Financial currently carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Other Finance Sector Releases
Of the finance sector players that already reported first-quarter results so far, the bottom-line results of
American Express Company ( AXP Quick Quote AXP - Free Report) and Discover Financial Services ( DFS Quick Quote DFS - Free Report) beat the respective Zacks Consensus Estimate. Upcoming Release
Here is a company worth considering from the finance sector as our model shows that this has the right combination of elements to beat on earnings this reporting cycle:
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