Synchrony revenues grow in Q1
STAMFORD — Consumer financial-services firm Synchrony reported Thursday rising revenues and profits for the first quarter, as it moved ahead with key initiatives.
Revenues reached about $4.2 billion, a 10 percent increase from the same period in 2018. Profits surged to $1.1 billion, from $640 million a year ago — a jump that reflected a $522 million release from the company’s reserve related to the pending sale of its Walmart credit portfolio.
“We generated strong results this quarter, as our focus on organic growth, program renewals, strategic partnerships, forwardthinking technology investments and actionable data analytics continue to be factors in our success,” Synchrony CEO and President Margaret Keane said Thursday on a call with investment analysts.
Synchrony’s growth was fueled, in large part, by its acquisition last July of PayPal’s $7.6 billion consumercredit portfolio.
With that agreement, Synchrony and PayPal extended their 14-year cobranded credit card program agreement. Synchrony is now the exclusive U.S. issuer of PayPal Credit’s online consumer-financing program through 2028, supporting its goal of becoming a major digital-payments player.
“It’s performing exactly like we thought it would perform, both in terms of growth, (loan) delinquency and overall performance,” Keane said of the PayPal portfolio.
Among other key indicators, quarterly loan receivables grew 3 percent year-over-year, to about $80 billion. Purchase volume increased 10 percent to nearly $33 billion. Deposits rose 13 percent to $64 billion.
Net charge-offs — which refer to debts the company does not expect to recoup — comprised 6.06 percent of loan receivables in the past quarter, compared with 6.14 percent in the same period of 2018.
“While credit trends continue to improve, this was partially offset by the addition of the PayPal credit program,” Synchrony Chief Financial Officer Brian
Doubles said of the charge-off rate.
At the same time, Synchrony officials confirmed that they still planned to sell to Capital One the company’s package of Walmart customer loans, which are expected to be worth about $9 billion when they are transferred in the third or fourth quarter of this year. Capital One has been tapped as the next, exclusive issuer of Walmart’s private label and co-branded credit card program.
In January, Walmart announced it would drop a lawsuit against Synchrony. The country’s largest brickand-mortar retailer had sued last November, following its move last July to end Synchrony’s two-decade run as its credit-card provider. But the companies are maintaining their ties by extending a separate, 25-year partnership that provides cards to Sam’s Club members.
Among significant deals clinched in the past quarter, Synchrony acquired pet health insurer Pets Best and extended its consumer-financing program for appliance-and-electronics chain P.C. Richard & Son, heating-and-cooling firm Rheem and automobile maker Suzuki.
Synchrony shares closed Thursday at $33.34, up 0.3 percent from their Wednesday finish.