4Q'16 Financial Results
January 20, 2017
Exhibit 99.3
2
Cautionary Statement Regarding Forward-Looking Statements
The following slides are part of a presentation by Synchrony Financial in connection with reporting quarterly financial results. No representation is made that the information in these slides is complete. For
additional information, see the earnings release and financial supplement included as exhibits to our Current Report on Form 8-K filed today and available on our website (www.synchronyfinancial.com) and
the SEC's website (www.sec.gov). All references to net earnings and net income are intended to have the same meaning.
This presentation contains certain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which are subject to the “safe harbor” created by those sections. Forward-looking statements may be identified by words such as “outlook,” “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,”
“targets,” “estimates,” “will,” “should,” “may” or words of similar meaning, but these words are not the exclusive means of identifying forward-looking statements. Forward-looking statements are based on
management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ
materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include global political, economic, business, competitive, market, regulatory
and other factors and risks, such as: the impact of macroeconomic conditions and whether industry trends we have identified develop as anticipated; retaining existing partners and attracting new partners,
concentration of our revenue in a small number of Retail Card partners, promotion and support of our products by our partners, and financial performance of our partners; higher borrowing costs and
adverse financial market conditions impacting our funding and liquidity, and any reduction in our credit ratings; our ability to securitize our loans, occurrence of an early amortization of our securitization
facilities, loss of the right to service or subservice our securitized loans, and lower payment rates on our securitized loans; our ability to grow our deposits in the future; changes in market interest rates and
the impact of any margin compression; effectiveness of our risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, our ability to manage our credit risk,
the sufficiency of our allowance for loan losses and the accuracy of the assumptions or estimates used in preparing our financial statements; our ability to offset increases in our costs in retailer share
arrangements; competition in the consumer finance industry; our concentration in the U.S. consumer credit market; our ability to successfully develop and commercialize new or enhanced products and
services; our ability to realize the value of strategic investments; reductions in interchange fees; fraudulent activity; cyber-attacks or other security breaches; failure of third parties to provide various services
that are important to our operations; our transition to a replacement third-party vendor to manage the technology platform for our online retail deposits; disruptions in the operations of our computer systems
and data centers; international risks and compliance and regulatory risks and costs associated with international operations; alleged infringement of intellectual property rights of others and our ability to
protect our intellectual property; litigation and regulatory actions; damage to our reputation; our ability to attract, retain and motivate key officers and employees; tax legislation initiatives or challenges to our
tax positions and state sales tax rules and regulations; a material indemnification obligation to GE under the tax sharing and separation agreement with GE if we cause the split-off from GE or certain
preliminary transactions to fail to qualify for tax-free treatment or in the case of certain significant transfers of our stock following the split-off; obligations associated with being an independent public
company; regulation, supervision, examination and enforcement of our business by governmental authorities, the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the impact
of the Consumer Financial Protection Bureau's regulation of our business; changes to our methods of offering our CareCredit products; impact of capital adequacy rules and liquidity requirements;
restrictions that limit our ability to pay dividends and repurchase our common stock, and restrictions that limit Synchrony Bank's ability to pay dividends to us; regulations relating to privacy, information
security and data protection; use of third-party vendors and ongoing third-party business relationships; and failure to comply with anti-money laundering and anti-terrorism financing laws.
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included
elsewhere in this presentation and in our public filings, including under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed on
February 25, 2016. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current
expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement
to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law. Differences between this
presentation and the supplemental financials may occur due to rounding.
Non-GAAP Measures
The information provided herein includes certain capital ratios, which are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The reconciliations of such measures to
the most directly comparable GAAP measures are included in the appendix of this presentation.
Disclaimers
3
4Q'16 Highlights
Financial highlights
• $576 million Net earnings, $0.70 diluted EPS
• Purchase volume +9%, Loan receivables
+12%, Net interest income +13%
• Net charge-offs at 4.62% compared to
4.23% in the prior year
30+ delinquency at 4.32% compared to
4.06% in the prior year
• Expenses +6% ... Efficiency ratio 31.6%
compared to 34.0% in the prior year
• Deposits up $8.7 billion compared to prior
year, comprise 72% of funding
• Strong capital and liquidity
17.2% CET1 & $13.6 billion liquid assets
(a)
(a) CET1 % calculated under the Basel III transitional guidelines
Business highlights
Launched new program
Introduced SyPI and launched
CareCredit Pay My Provider to expand
digital capabilities
Announced new partnership
Completed quarterly capital return
$0.13 quarterly dividend
$238 million share repurchase
4
Growth Metrics
4Q'15 4Q'16 4Q'15 4Q'16
4Q'15 4Q'16 4Q'15 4Q'16
+9% Purchase volume
$ in billions
Loan receivables
$ in billions
Average active accounts
in millions
Interest and fees on loans
$ in millions
$32.5
$35.4
$68.3
$76.3
$3,919
$3,494 68.7 64.9
+6% +12%
+12%
5
Platform Results
Retail Card
Loan receivables, $ in billions
$47.5
$52.6
4Q'15 4Q'16
Strong receivable growth across
partner programs
Interest and fees on loans up 12%
driven by receivable growth
Payment Solutions
Loan receivables, $ in billions
$13.5
$15.6
4Q'15 4Q'16
Broad receivable growth led by
home furnishings, auto and power
Interest and fees on loans up 13%
driven by receivable growth
CareCredit
Loan receivables, $ in billions
$7.3
$8.1
4Q'15 4Q'16
Receivable growth led by dental
and veterinary
Interest and fees on loans up 11%
driven by receivable growth
Purchase
volume
Accounts
$26.8
52.0
$29.0
54.5
+8%
+5%
$3.7
7.9
$4.2
8.8
+13%
+12%
$2.0
5.0
$2.2
5.4
+10%
+8%
Interest and
fees on loans
$2,594 $2,909 +12% $462 $523 +13% $438 $487 +11%
+11% +15% +10%
(a)
(a) Accounts represent average active accounts in millions, which are credit card or installment loan accounts on which there has been a purchase, payment or outstanding balance in the
current month. Purchase volume $ in billions and interest and fees on loans $ in millions
V% V% V%
6
Financial Results
Summary earnings statement
Fourth quarter 2016 highlights
$ in millions, except ratios
Total interest income $3,947 $3,509 $438 12%
Total interest expense 319 301 (18) (6)%
Net interest income (NII) 3,628 3,208 420 13%
Retailer share arrangements (RSA) (811) (734) (77) (10)%
NII, after RSA 2,817 2,474 343 14%
Provision for loan losses 1,076 823 (253) (31)%
Other income 85 87 (2) (2)%
Other expense 918 870 (48) (6)%
Pre-Tax earnings 908 868 40 5%
Provision for income taxes 332 321 (11) (3)%
Net earnings $576 $547 $29 5%
Return on assets 2.6% 2.7% (0.1)pts.
4Q'16 4Q'15 % $
B/(W) • $576 million Net earnings, 2.6% ROA
• Net interest income up 13% driven by
growth in loan receivables
Interest and fees on loans up 12% driven by
receivable growth
Interest expense increase driven by growth
• Provision for loan losses driven by
higher reserve build and growth
30+ delinquency 4.32% compared to 4.06%
in the prior year
NCO's 4.62% compared to 4.23% in the prior
year
• Other expense up 6%
Other expense increase driven primarily by
growth
7
Net Interest Income
Fourth quarter 2016 highlights
• Net interest income increased 13%
compared to prior year driven by
growth in receivables
Interest and fees on loans increased 12%
compared to prior year driven by average
loan receivable growth
• Net interest margin up 49bps.
Loan receivables mix as a percent of total
earning assets increased from 80.8% to
82.0%
Receivable yield 21.36%, up 17bps. versus
prior year
Total interest-bearing liabilities cost
decreased 2bps. to 1.79%, due to more
favorable funding mix
Net interest income
$ in millions, % of average interest-earning assets
15.73% 16.22%
4Q'15 4Q'16
+13%
$3,208
$3,628
8
Asset Quality Metrics
Net charge-offs
$ in millions, % of average loan receivables including held for sale
$663 $668 $693
$633
$697
4.32% 4.53% 4.63% 4.02% 4.23%
Allowance for loan losses
$ in millions, % of period-end loan receivables
5.28%
$3,236
5.59%
$3,255
5.38%
$3,302
5.31%
$3,371
5.12%
$3,497
$780
4.70%
5.50%
$3,620
4Q'14 4Q'15 1Q'15 2Q'15 3Q'15 1Q'16 2Q'16 3Q'16
$747
4.49%
4Q'14 4Q'15 1Q'15 2Q'15 3Q'15 1Q'16 2Q'16 3Q'16
5.70%
$3,894
90+ days past due
$ in millions, % of period-end loan receivables
$1,162
1.90%
$1,056
1.81%
$933
1.52%
$1,102
1.73%
$1,273
1.86%
$1,212
1.84%
$1,143
1.67%
$765
4.38%
4Q'16
4Q'14 4Q'15 1Q'15 2Q'15 3Q'15 1Q'16 2Q'16 3Q'16 4Q'16
$1,334
1.89%
4Q'16
5.82%
$4,115
30+ days past due
$ in millions, % of period-end loan receivables
$2,772
$2,536
$2,209 $2,171
$2,553 $2,538 $2,585
4.02% 4.14% 3.79% 3.53%
4.06% 3.85% 3.79%
$3,008
4.26%
4Q'14 4Q'15 1Q'14 2Q'15 3Q'15 1Q'16 2Q'16 3Q'16 4Q'16
$3,295
$1,546
2.03%
$4,344
5.69%
$847
4.62%
4.32%
9
Other expense
$ in millions
Other Expense
Employee costs $285 $315 $30 11%
Professional fees 165 164 (1) (1)%
Marketing/BD 128 130 2 2%
Information processing 83 88 5 6%
Other 209 221 12 6%
Other expense $870 $918 $48 6%
Efficiency 34.0% 31.6% (2.4)pts.
$870
(a) “Other Expense” divided by sum of “NII, after RSA” plus “Other income”
(1)
V$ V%
+6%
(a)
$918
4Q'15 4Q'16
Fourth quarter 2016 highlights
• Expense increased 6% vs. prior year
• Employee costs up $30 million
Driven by employees added for growth and
bringing certain 3rd party services in-house
• Professional fees down $1 million
Driven by reduction of separation and 3rd
party costs partially offset by growth
• Marketing/BD costs up $2 million
Driven by growth and strategic investments
• Information processing up $5 million
Driven by continued IT investment and
purchase volume growth
• Other up $12 million
Increase primarily driven by growth partially
offset with reduction in separation costs
• Efficiency ratio of 31.6% improved
2.4pts. compared to prior year
10
Funding, Capital and Liquidity
(b)
Liquid assets $14.8 $13.6
Undrawn credit facilities 6.1 6.7
Total liquidity $20.9 $20.3
Basel III (fully phased-in) 15.9% 17.0%
Liquidity
% of total assets, $ in billions
4Q'16
22.5%
24.9%
4Q'15
Capital ratios
Common equity Tier 1 % - Basel III transitional
4Q’15
(c) Does not include unencumbered assets in the Bank that could be pledged
(c)
4Q’16
(a) Estimated percentages and amounts
(b) Calculated under the Basel III transition guidelines
16.8% 17.2%
(a)
Funding sources
$ in billions
4Q'15 4Q'16 Variance
Deposits 64% 72% +8pts.
Securitization 20% 17% (3)pts.
3rd Party Debt 16% 11% (5)pts.
$72.2
Deposits
Securitization
3rd Party Debt
V$
$43.3
$13.6
$10.7
$52.0
$12.4
$7.8
$67.6
(2.9)
(1.2)
+8.7
11
Loan Receivables Growth 7% - 9% 12%
Strong organic growth driven by value
propositions and strategic investments
Net Interest Margin ~ 15.5% 16.0%
Higher receivable yield and favorable
earning asset mix
Net Charge-off Rate 4.3% - 4.5% 4.5% Normalization off recent lows
Efficiency Ratio < 34.0% 31.1%
Driven by higher margins and
increased productivity
ROA 2.5% - 3.0% 2.7%
Better margin and
lower expense partially offset with
higher provision expense
2016 Outlook 2016 Actual Drivers
(a) 2016 outlook provided during January 22, 2016 earnings conference call. Synchrony Financial does not affirm guidance during the year
(a)
2016 Performance
12
Loan Receivables Growth 7% - 9%
Net Interest Margin 15.75% - 16.00%
Net Charge-off Rate 4.75% - 5.00%
Efficiency Ratio ~ 32.0%
ROA 2.5% +
2017 Outlook
2017 Outlook
13
Strategic Priorities
Grow our business through our three sales platforms
Position business for long-term growth
Operate with a strong balance sheet and financial profile
Leverage strong capital position
Expand robust data, analytics and digital capabilities
• Grow existing retailer penetration
• Continue to innovate and provide robust cardholder value propositions
• Add new partners and programs with attractive risk and return profiles
• Accelerate capabilities: marketing, analytics and loyalty
• Continue to leverage SKU level data and invest in CRM to differentiate marketing capabilities
• Deliver leading capabilities across digital and mobile technologies
• Explore opportunities to expand the core business (e.g., small business and proprietary networks)
• Continue to grow Synchrony Bank — enhance offerings to increase loyalty, diversify funding and drive profitability
• Maintain strong capital and liquidity
• Deliver earnings growth at attractive returns
• Organic growth, program acquisitions, and start-up opportunities
• Continue capital plan execution through dividends and share repurchase program, subject to Board and regulatory approvals
• Invest in capability-enhancing technologies and businesses
Engage with us.
15
Appendix
16
Non-GAAP Reconciliation
We present certain capital ratios. Our Basel III Tier 1 common ratio, calculated on a fully phased-in basis, is a
preliminary estimate reflecting management’s interpretation of the final Basel III capital rules adopted in July 2013 by
the Federal Reserve Board, which have not been fully implemented, and our estimate and interpretations are subject to,
among other things, ongoing regulatory review and implementation guidance. This ratio is not currently required by
regulators to be disclosed, and therefore is considered a non-GAAP measure. We believe this capital ratio is a useful
measure to investors because it is widely used by analysts and regulators to assess the capital position of financial
services companies, although this ratio may not be comparable to similarly titled measures reported by other companies.
17
Non-GAAP Reconciliation
The following table sets forth a reconciliation of each component of our capital ratios to the comparable GAAP component at
December 31, 2016.
COMMON EQUITY MEASURES
GAAP Total common equity ....................................................................................................
Less: Goodwill ...............................................................................................................
Less: Intangible assets, net .............................................................................................
Tangible common equity ........................................................................................................
Adjustments for certain deferred tax liabilities and certain items
in accumulated comprehensive income (loss) ................................................................
Basel III – Common equity Tier 1 (fully phased-in) ............................................................
Adjustments related to capital components during transition ........................................
Basel III – Common equity Tier 1 (transition) ...................................................................
Risk-weighted assets – Basel III (fully phased-in) ..............................................................
Risk-weighted assets – Basel III (transition) .......................................................................
$14,196
(949)
(712)
$12,535
337
$12,872
263
$13,135
$75,941
$76,179
$ in millions at
December 31, 2016