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Synchrony Financial's (SYF) Q2 Earnings Beat Mark, Surge Y/Y

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Synchrony Financial SYF delivered second-quarter 2021 earnings per share of $2.12, which outpaced the Zacks Consensus Estimate of $1.47 by 44.2%. The bottom line also compares favorably with the year-ago quarter’s report of 6 cents per share, aided by lower expenses.

Results in Detail

The company’s net interest income dipped 2.5% year over year to $3.3 billion in the second quarter due to lower interest and fees on loans.

Its other income dropped 6.3% year over year to $89 million due to higher program loyalty costs from higher purchase volume.

In the quarter under review, loan receivables inched up 0.1% year over year to $78.4 billion.

Deposits were $59.8 billion, down 6.7% from the year-ago quarter.

Provision for credit losses declined 111.6% year over year to ($194) million) owing to reduced reserves and net charge-offs.

Total other expense decreased 3.9% year over year to $948 million, attributable to reduced operational losses.

Synchrony Financial Price, Consensus and EPS Surprise

Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial Price, Consensus and EPS Surprise

Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote

Sales Platforms Update

Home & Auto period-end loan receivables were up 1% year over year. This was mainly owing to solid home partners and merchants. In the second quarter, interest and fees on loans were down 6% from the year-ago period. Purchase volume increased 25% year over year.

Digital loan receivables rose 2% year over year while purchase volume surged 30% owing to better digitalbased partners. Interest and fees on loans slid 2%.

Diversified & Value period-end loan receivables decreased 5% year over year. In the second quarter, purchase volume soared 51% year over year on the back of lifting government restrictions on retail experiences. Interest and fees on loans were down 14%.

Health & Wellness period-end loan receivables increased 3% while purchase volume surged 53% year over year, riding on better consumer confidence. Interest and fees on loans decreased 2%.

Lifestyle period-end loan receivables and purchase volume rose 9% each on the back of power sports. Interest and fees on loans increased 6% on the back of loans receivables growth.

Financial Position (as of Jun 30, 2021)

Total assets were $92 billion, down 4.7% year over year.

Total borrowings were $13.5 billion, down 16.3% from the level on Jun 30, 2020.

The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $21.2 billion accounting for 23% of its total assets.

While return on assets was 5.3%, the return on equity was 36.5%.

Efficiency ratio was 39.6% in the second quarter of 2021.

Capital Deployment

During the quarter under consideration, Synchrony Financial returned $521 million worth of capital via common stock dividends.

Zacks Rank

Synchrony Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Here are a few companies worth considering from the finance sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Ally Financial Inc. ALLY has an Earnings ESP of +6.64% and a Zacks Rank #2 (Buy), currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Capital One Financial Corporation COF has an Earnings ESP of +3.71% and a Zacks Rank of 3 at present.

Principal Financial Group, Inc. PFG has an Earnings ESP of +0.66% and is currently Zacks #3 Ranked.

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Capital One Financial Corporation (COF) : Free Stock Analysis Report

Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report

Ally Financial Inc. (ALLY) : Free Stock Analysis Report

Synchrony Financial (SYF) : Free Stock Analysis Report

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