Synchrony Financial (SYF) Q3 Earnings Top Estimates, Rise Y/Y

Synchrony Financial’s (NYSE:SYF) third-quarter 2019 earnings per share of $1.22 beat the Zacks Consensus Estimate by 8.9%. The bottom line also surged 34% year over year on the back of higher net interest income. This excludes the impact of the Walmart (NYSE:WMT) portfolio.

Results in Detail

The company’s net interest income increased 4% to $4.4 billion in the third quarter, primarily owing to loan receivables growth.

However, other income rose 35% to $85 million.

In the quarter under review, loan receivables climbed 6% year over year.

Deposits were $66 billion, up 6% from the year-ago quarter.

Provision for loan loss plunged 30% year over year to $1 billion on the back of a significant amount of reserve reductions pertaining to the Walmart portfolio.

Total other expenses inched up 1% to $1.1 billion, primarily due to higher marketing and business development, information processing and other expenses.

Sales Platforms Update

Retail Card

The company’s interest and fees on loans grew 5.5% year over year on the back of loan receivables.

Loan receivables reduced 11% while the average active accounts ascended 1%.

Payment Solutions

Interest and fees on loans rose 7% year over year on the back of loan receivables growth. Loan receivables augmented 7%, led by home furnishings and power products.

Purchase volume expanded 5% while average active account rose 3%.

CareCredit

Interest and fees on loans increased 9% year over year, attributable to higher loans receivables.

While purchase volume registered 10% growth, the average active account reported a 4% rise.

Financial Position

Total assets as of Sep 30, 2019 were $106 billion, down 0.8% from the level as of Dec 31, 2018.

Total borrowings as of third-quarter 2019 end were $20.3 billion, down 15.1% from 2018-end level.

The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $21.7 billion, reflecting 20.5% of the total assets.

While return on assets was 3.9%, the return on equity was 28.3%.

Efficiency ratio was 30.9% in the third quarter of 2019.

Capital Deployment

During the quarter under consideration, the company purchased shares worth $550 million and paid a dividend of 22 cents per share.

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.

Peer Releases From Finance Sector

Global Payments Inc. (NYSE:GPN) is slated to announce third-quarter earnings on Oct 31. The consensus estimate for earnings is pegged at $1.67, implying growth from $1.44 reported in the prior-year quarter. The stock carries a Zacks Rank of 3.

Discover Financial Services (NYSE:DFS) is scheduled to release third-quarter earnings on Oct 22. The Zacks Consensus Estimate for the same stands at $2.29, indicating growth of 11.7% from the year-ago reported figure. The stock is a Zacks #3 Ranked player.

Brown & Brown, Inc. (NYSE:BRO) is set to report third-quarter earnings on Oct 28. The consensus mark for earnings is pinned at 39 cents, suggesting 2.6% growth from the year-earlier reported figure. The company sports a Zacks Rank #1 (Strong Buy).

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