On January 28, 2025, Synchrony Financial (SYF, Financial) released its 8-K filing detailing its fourth quarter 2024 financial results. The company reported net earnings of $774 million, or $1.91 per diluted share, which fell short of the analyst estimate of $1.93 per share. This represents a significant increase from the $440 million, or $1.03 per diluted share, reported in the same quarter of the previous year.
Company Overview
Synchrony Financial, originally a spinoff of GE Capital's retail financing business, is the largest provider of private-label credit cards in the United States. The company partners with firms to market its credit products across various platforms, including physical stores, websites, and mobile applications. Synchrony operates through three segments: retail card, payment solutions, and CareCredit.
Performance and Challenges
Synchrony Financial's performance in the fourth quarter of 2024 highlights both achievements and challenges. The company experienced a 3% decrease in purchase volume, totaling $48.0 billion, and a 19% decrease in new accounts, which fell to 5.0 million. These declines were attributed to credit actions taken between mid-2023 and early 2024, impacting new account and purchase volume growth. Despite these challenges, the company maintained strong appeal for its financing solutions in an inflationary environment.
Financial Achievements
Synchrony Financial's net earnings increased by 76% compared to the previous year, demonstrating the company's resilience and ability to adapt to market conditions. The company's return on assets increased by 110 basis points to 2.6%, and return on equity rose by 650 basis points to 18.9%. These metrics are crucial for assessing the company's profitability and efficiency in utilizing its assets and equity.
Key Financial Metrics
The company's interest and fees on loans increased by 3% to $5.5 billion, driven by growth in average loan receivables and product, pricing, and policy changes. Net interest income also rose by 3% to $4.6 billion. The provision for credit losses decreased significantly by $243 million to $1.6 billion, primarily due to a reserve release.
| Metric | Q4 2024 | Q4 2023 |
|---|---|---|
| Net Earnings | $774 million | $440 million |
| EPS | $1.91 | $1.03 |
| Purchase Volume | $48.0 billion | -3% |
| Loan Receivables | $104.7 billion | +2% |
Analysis and Outlook
Synchrony Financial's fourth quarter results reflect its strategic focus on leveraging its competitive strengths and investing in sustainable growth. The company's ability to manage credit risk and maintain strong financial metrics positions it well for future growth. However, the decrease in purchase volume and new accounts highlights the challenges in the current economic environment.
“Synchrony's fourth quarter performance demonstrated the power of our differentiated business model and our ability to execute across our key strategic priorities to deliver strong results for our stakeholders,” said Brian Doubles, Synchrony’s President and Chief Executive Officer.
Overall, Synchrony Financial's performance in the fourth quarter of 2024 underscores its resilience and adaptability in a challenging market, while also highlighting areas for improvement in purchase volume and account growth. Investors and stakeholders will be keen to see how the company navigates these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from Synchrony Financial for further details.
