Synchrony Financial’s SYF second-quarter 2018 earnings per share of 92 cents surpassed the Zacks Consensus Estimate of 82 cents by 12.2%, mainly driven by interchange revenues and loan receivables growth. The bottom line also improved 51% year over year.
Synchrony Financial Price and EPS Surprise
Synchrony Financial Price and EPS Surprise | Synchrony Financial Quote
Results in Detail
The company’s net interest income increased 3% to $3.7 billion in the second quarter, primarily owing to strong loan receivables growth.
However, other income was up by $6 million or 11% to $63 million, primarily owing to increased interchange revenues.
Loan receivables rose 5% year over year to $79 billion.
Deposits were $59 billion, up 12% from the year-ago quarter.
Purchase volume expanded 2% from the second quarter of 2017 to $34 billion.
Provision for loan loss decreased 3% year over year to $1.3 billion due to lower reserve build.
Total other expenses increased 7% to $975 million, primarily due to employee costs and other expenses.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 3% year over year, primarily driven by loan receivables growth. Loan receivables grew 3%, partially offset by underwriting refinements.
Purchase volume inched up 1% while average active accounts remained flat.
Payment Solutions
Interest and fees on loans rose 6% year over year on the back of period-end loan receivables growth. Loan receivables grew 8%, led by home furnishings and automotive.
Purchase volume expanded 9% while average active account rose 4%.
CareCredit
Interest and fees on loans increased 6% year over year, attributable to period-end loan receivables growth of 8%. Loan receivables growth was enhanced by dental and veterinary.
While purchase volume registered 8% growth, average active account reported a 5% rise.
Financial Position
Total assets as of Jun 30, 2018 were $99.1 billion, up 8.8% year over year.
Total borrowings as of Jun 30, 2018 were $21 billion, up 4.9% year over year.
The company’s balance sheet remained strong during the reported quarter with total liquidity of $28 billion or 28% of total assets.
Return on assets was 2.9% while return on equity was 19.4%.
Efficiency ratio was 31% compared with 30.1% in second-quarter 2017.
Share Repurchase and Dividend Update
In the second quarter, the company paid a quarterly common stock dividend of 21 cents per share and announced a plan to repurchase up to $2.2 billion of shares.
Zacks Rank
Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Players’ Releases From the Finance Sector
American Assets Trust, Inc. AAT is set to release second-quarter 2018 earnings on Jul 31 and the consensus mark for the same stands at 51 cents per share, representing an improvement from 49 cents in the year-ago period. The stock carries a Zacks Rank of 3.
CyrusOne Inc CONE is slated to release second-quarter 2018 earnings on Aug 1 and the Zacks Consensus Estimate for the same is pegged at 79 cents, reflecting a year-over-year rise of 2.6%. The stock is a Zacks #3 Ranked stock.
Apollo Investment Corporation AINV is set to report second-quarter 2018 earnings on Aug 8. The Zacks Consensus Estimate for the same is 15 cents per share, flat with the year-ago results. The stock is a #3 Ranked player.
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