Synchrony sees returns plunge, announces new work-from-home policy
STAMFORD — Consumer financial-services giant Synchrony announced Tuesday plunging returns for the past quarter and said U.S. employees will be allowed to work from home permanently.
Third-quarter revenues for the Stamford-based firm dropped 21 percent year over year to $3.5 billion, a decline mainly due to the impact of COVID-19 and last year’s sale of its Walmart credit portfolio. Among key indicators, the company saw decreases in purchase volume, loan receivables and deposits.
Profits fell 70 percent to $313 million, which took into account a 19 percent increase in the provision for credit losses. The reserve growth reflected the company’s anticipated coronavirus-related losses and a Walmart-linked reserve reduction last year.
The bottom line also factored in an $89 million restructuring charge linked to a plan disclosed last month to exit a number of its leased properties and apparently reduce its workforce. With those changes, Syn
chrony has estimated it could save between $150 million and $250 million next year.
Synchrony’s approximately 17,000 employees have been working from home in the months since COVID-19 hit the U.S. Now, all of its U.S. workers are permitted to do so permanently, Synchrony CEO Margaret Keane said during an earnings call with investment analysts.
“These changes stem from our employees’ desire to work from home,” Keane said. “Their productivity in this environment will help us drive long-term efficiency and profitability.”
Synchrony shares closed Tuesday at $27.61, down 5 percent from their Monday finish.
To help customers affected by the pandemic, Synchrony announced earlier this year that it would be offering a number of forbearance options, including waiving late fees and interest charges and deferring certain accounts’ minimum payments for up to three months.
Last month, 66 percent of accounts enrolled in the forbearance program were making payments.
“Our intention is to cease enrolling accounts into or extending existing accounts in the forbearance program at the end of October and stand ready to offer other forms of assistance to impacted
cardholders,” Chief Financial Officer Brian Wenzel said.
Net charge-offs — which refer to debts the company does not expect to recoup — comprised 4.42 percent of loan receivables in the past quarter, compared with 5.35 percent in the same period last year. The company attributed the decrease to the sale of the Walmart portfolio and “improving credit trends.”
While the pandemic has disrupted in-person transactions, Synchrony officials said they were pleased with the increase in online activity. More than 65 percent of total payments on cardholders’ accounts are done digitally.
“We will continue to invest in our digital capabilities as they are paramount to driving digital sales penetration, an increasingly important component to the success of our program,” Synchrony President Brian Doubles said.
Among corporate partnerships launched in the past quarter, Synchrony rolled out the first credit card for the PayPal-owned mobile-payment service Venmo, renewed and extended its partnership with Sam’s Club and extended and added several other initiatives.
Synchrony, the No. 170 company on this year’s Fortune 500 list, is headquartered in Stamford, at 777 Long Ridge Road, near the Merritt Parkway’s Exit 34.