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Synchrony Financial (SYF - Free Report) delivered second-quarter 2021 earnings per share of $2.12, which outpaced the Zacks Consensus Estimate of $1.47 by 44.2%. The bottom line also compares favorably with the year-ago quarter’s report of 6 cents per share, aided by lower expenses.
Results in Detail
The company’s net interest income dipped 2.5% year over year to $3.3 billion in the second quarter due to lower interest and fees on loans.
Its other income dropped 6.3% year over year to $89 million due to higher program loyalty costs from higher purchase volume.
In the quarter under review, loan receivables inched up 0.1% year over year to $78.4 billion.
Deposits were $59.8 billion, down 6.7% from the year-ago quarter.
Provision for credit losses declined 111.6% year over year to ($194) million) owing to reduced reserves and net charge-offs.
Total other expense decreased 3.9% year over year to $948 million, attributable to reduced operational losses.
Synchrony Financial Price, Consensus and EPS Surprise
Home & Auto period-end loan receivables were up 1% year over year. This was mainly owing to solid home partners and merchants. In the second quarter, interest and fees on loans were down 6% from the year-ago period. Purchase volume increased 25% year over year.
Digital loan receivables rose 2% year over year while purchase volume surged 30% owing to better digitalbased partners. Interest and fees on loans slid 2%.
Diversified & Value period-end loan receivables decreased 5% year over year. In the second quarter, purchase volume soared 51% year over year on the back of lifting government restrictions on retail experiences. Interest and fees on loans were down 14%.
Health & Wellness period-end loan receivables increased 3% while purchase volume surged 53% year over year, riding on better consumer confidence. Interest and fees on loans decreased 2%.
Lifestyle period-end loan receivables and purchase volume rose 9% each on the back of power sports. Interest and fees on loans increased 6% on the back of loans receivables growth.
Financial Position (as of Jun 30, 2021)
Total assets were $92 billion, down 4.7% year over year.
Total borrowings were $13.5 billion, down 16.3% from the level on Jun 30, 2020.
The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $21.2 billion accounting for 23% of its total assets.
While return on assets was 5.3%, the return on equity was 36.5%.
Efficiency ratio was 39.6% in the second quarter of 2021.
Capital Deployment
During the quarter under consideration, Synchrony Financial returned $521 million worth of capital via common stock dividends.
Here are a few companies worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:
Ally Financial Inc. (ALLY - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #2 (Buy), currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Capital One Financial Corporation (COF - Free Report) has an Earnings ESP of +3.71% and a Zacks Rank of 3 at present.
Principal Financial Group, Inc. (PFG - Free Report) has an Earnings ESP of +0.66% and is currently Zacks #3 Ranked.
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Synchrony Financial's (SYF) Q2 Earnings Beat Mark, Surge Y/Y
Synchrony Financial (SYF - Free Report) delivered second-quarter 2021 earnings per share of $2.12, which outpaced the Zacks Consensus Estimate of $1.47 by 44.2%. The bottom line also compares favorably with the year-ago quarter’s report of 6 cents per share, aided by lower expenses.
Results in Detail
The company’s net interest income dipped 2.5% year over year to $3.3 billion in the second quarter due to lower interest and fees on loans.
Its other income dropped 6.3% year over year to $89 million due to higher program loyalty costs from higher purchase volume.
In the quarter under review, loan receivables inched up 0.1% year over year to $78.4 billion.
Deposits were $59.8 billion, down 6.7% from the year-ago quarter.
Provision for credit losses declined 111.6% year over year to ($194) million) owing to reduced reserves and net charge-offs.
Total other expense decreased 3.9% year over year to $948 million, attributable to reduced operational losses.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote
Sales Platforms Update
Home & Auto period-end loan receivables were up 1% year over year. This was mainly owing to solid home partners and merchants. In the second quarter, interest and fees on loans were down 6% from the year-ago period. Purchase volume increased 25% year over year.
Digital loan receivables rose 2% year over year while purchase volume surged 30% owing to better digitalbased partners. Interest and fees on loans slid 2%.
Diversified & Value period-end loan receivables decreased 5% year over year. In the second quarter, purchase volume soared 51% year over year on the back of lifting government restrictions on retail experiences. Interest and fees on loans were down 14%.
Health & Wellness period-end loan receivables increased 3% while purchase volume surged 53% year over year, riding on better consumer confidence. Interest and fees on loans decreased 2%.
Lifestyle period-end loan receivables and purchase volume rose 9% each on the back of power sports. Interest and fees on loans increased 6% on the back of loans receivables growth.
Financial Position (as of Jun 30, 2021)
Total assets were $92 billion, down 4.7% year over year.
Total borrowings were $13.5 billion, down 16.3% from the level on Jun 30, 2020.
The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $21.2 billion accounting for 23% of its total assets.
While return on assets was 5.3%, the return on equity was 36.5%.
Efficiency ratio was 39.6% in the second quarter of 2021.
Capital Deployment
During the quarter under consideration, Synchrony Financial returned $521 million worth of capital via common stock dividends.
Zacks Rank
Synchrony Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Here are a few companies worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:
Ally Financial Inc. (ALLY - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #2 (Buy), currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Capital One Financial Corporation (COF - Free Report) has an Earnings ESP of +3.71% and a Zacks Rank of 3 at present.
Principal Financial Group, Inc. (PFG - Free Report) has an Earnings ESP of +0.66% and is currently Zacks #3 Ranked.