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Synchrony Financial's (SYF) CEO Margaret Keane on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 22, 2016 08:30 ET


Greg Ketron - Director, Investor Relations

Margaret Keane - President and Chief Executive Officer

Brian Doubles - Executive Vice President and Chief Financial Officer


Ryan Nash - Goldman Sachs

John Hecht - Jefferies

Sanjay Sakhrani - KBW

Betsy Graseck - Morgan Stanley

Moshe Orenbuch - Credit Suisse

Bill Carcache - Nomura

David Ho - Deutsche Bank

Mark DeVries - Barclays

Don Fandetti - Citigroup


Welcome to the Synchrony Financial First Quarter 2016 Earnings Conference Call. My name is Vanessa and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. And I will now turn the call over to Greg Ketron, Director of Investor Relations. Sir, you may begin.

Greg Ketron

Thanks, operator. Good morning, everyone and thanks for joining our call. In addition to today’s press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules and presentation are available on our website, This information can be accessed by going to the Investor Relations section of the website.

Before we get started, I want to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company’s performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today’s call. Finally, Synchrony Financial is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third-parties. The only authorized webcasts are located on our website.

Margaret Keane, President and Chief Executive Officer and Brian Doubles, Executive Vice President and Chief Financial Officer will present our results this morning. After we complete the presentation, we will open the call up for questions.

Now, it’s my pleasure to turn the call over to Margaret.

Margaret Keane

Thanks, Greg. Good morning, everyone and thanks for joining us. During the call today, I will provide a review of the quarter and then Brian will give details on our financial results. I will begin on Slide 3.

First quarter net earnings totaled $582 million or $0.70 per diluted share. Overall, solid momentum continued across each of our business platforms driving strong double-digit growth in purchase volume, loan receivables and platform revenue this quarter. Compared to the first quarter of last year, purchase volume grew 17% and platform revenue and loan receivables grew 13%. We continue to see strong growth in our online and mobile purchase volume. Our online and mobile sales growth has been steadily accelerating and first quarter sales grew 29% over the same quarter of the prior year. Our online and mobile sales growth has far outpaced U.S. growth trends, which had been in the 14% to 15% range.

Asset quality metrics were relatively stable this quarter in line with our expectations. 30-plus day delinquencies were 3.85% and our net charge-off rate was 4.7% in the range of losses we have experienced in the first quarter over the past 2 years. Expenses were in line with our expectations increasing 7% over last year. This was largely driven by investments we made in support of our growth initiatives. However, our overall efficiency ratio improved 1.8 percentage points to 30.4%, reflecting our strong revenue growth this quarter. Our receivables growth is supported by continued deposit growth, which grew $10 billion or 29% to $45 billion this quarter. Deposits now comprised 69% of our funding sources at the high end of our targeted range of 60% to 70%. Competitive rates, outstanding customer service and the continued enhancement of our product suite have driven these results. And at this point, you can expect for us to grow a little beyond that original target range.