The Register Citizen (Torrington, CT)
Synchrony’s revenues and profits take virus hit in Q2
STAMFORD — Synchrony’s second-quarter returns and profits took major hits due to the coronavirus crisis, the Stamford-based consumer financial-services firm reported Tuesday.
Second-quarter revenues dropped 18 percent year over year, to $3.4 billion, a decline primarily due to the impact of COVID-19 and last year’s sale of the company’s Walmart credit portfolio.
Profits plunged 94 percent to $48 million, with the bottom line factoring in a 40 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.
“We continue to support our employees, partners, customers and communities during the uncertainty of today’s health and economic crisis,” Synchrony CEO Margaret Keane said in a statement. “We continue to be guided by the principle of putting clients, partners, shareholders and communities at the forefront of all we do and believe that the values which underpin our organization will empower us to become an even stronger, better company.”
After the release of the results, Synchrony shares closed Tuesday at nearly $23, up about 1 percent from their closing price Monday.
In response to the crisis, Synchrony announced earlier this year that it will 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.
Net charge-offs — which refer to debts the company does not expect to recoup — comprised 5.35 percent of loan receivables in the past quarter, compared with 6.01 percent in the same period last year. The decrease was driven by the sale of the Walmart portfolio.
While the pandemic has disrupted in-person transactions, Synchrony officials said they were encouraged by growing online activity. More than 60 percent of total payments on cardholders’ accounts are done digitally.
“We believe we have an advantageous position as the shift to digital has accelerated,” Keane said. “We will continue to prioritize investments to augment our digital assets and capabilities to meet the rapidly evolving needs of our cardholders and partners.”
Among partnerships launched in the past quarter, Synchrony announced last month it will issue the new Verizon Visa credit card. Company officials said it will give wireless customers savings on their monthly Verizon bills through rewards earned on purchases and use those rewards toward Verizon purchases, including bill payments and 5G phones and accessories.
Keane also referenced in her comments how “our country is awakening to the need to meaningfully address racial injustice and equality.”
Last month, Synchrony announced it will expand efforts to promote diversity and inclusion within its workforce and said it will also contribute $5 million through its foundation to nonprofit organizations working on racial justice and equality.
Other major companies in the area have announced similar initiatives in response to the recent deaths of Black Americans, including George Floyd, Breonna Taylor and Ahmaud Arbery, and protests across the country against racism and police brutality.
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.