2017 Fourth Quarter Investor Presentation
January 30, 2018
Exhibit 99.1
2
Cautionary Statement Regarding Forward-Looking Statements
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 “expects,” “intends,” “anticipates,” “plans,”
“believes,” “seeks,” “targets,” “outlook,” “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; cyber-attacks or other security breaches; 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; failure of third parties to provide various services that are
important to our operations; 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; 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; 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, 2016, as filed on February 23, 2017. 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.
Non-GAAP Measures
The information provided herein includes certain capital ratios, as well as certain financial measures that have been adjusted to exclude the effects from the Tax Cuts and Jobs Act of 2017
(the “Tax Act”), 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.
We refer to “managed-basis” as presenting certain loan performance measures as if loans sold by us to our securitization trusts were never sold and derecognized in our GAAP financial
statements. We believe it is useful to consider these performance measures on a managed-basis for 2009 when comparing to similar GAAP measures in later years since we serviced the
securitized and owned loans, and related accounts, in the same manner without regard to ownership of the loans. The reconciliation of the managed-basis loan performance measures in this
presentation to the comparable GAAP measures for the twelve months ended December 31, 2009 is included at the end of this presentation in “Appendix-Non-GAAP Reconciliations.”
Disclaimers
3
Synchrony Financial Overview
Strong Value Proposition for Partners
and Consumers
• Advanced data analytics and targeted
marketing capabilities
• Dedicated team members support partners
to help maximize program effectiveness
• Enhanced sales growth and additional
economic benefits for partners
• Access to instant credit, promotional
financing, and rewards for customers
Attractive Growth and Ample
Opportunities
• Strong receivables growth
• Significant opportunity to leverage
long-standing partnerships to increase
penetration
• Opportunity to attract new partners
• Developing broad product suite to
build a leading, full-scale online bank
Strong Financial Profile and
Operating Performance
• Solid fundamentals with attractive
returns
• Strong capital and liquidity with
diverse funding profile
• Paid quarterly common stock dividend
of $0.15 per share in 4Q17 and
continued to execute $1.64 billion
share repurchase program (through
June 30, 2018)
Leading Consumer Finance Business
• Largest Private Label Credit Card (PLCC)
provider in US(a)
• A leader in financing for major consumer
purchases and healthcare services
• Long-standing and diverse partner base
(a) Source: The Nilson Report (June 2017, Issue #1112) as measured by PLCC purchase volume and receivables, based on 2016 data.
Robust Data and Technology Capabilities
• Deep partner integration enables
customized loyalty products across
channels
• Partner and cardholder focused mobile
payments and e-commerce solutions
• Leveraging digital, loyalty, and analytics
capabilities to augment growth
Business Overview
5
Partner-Centric Business with Leading Sales Platforms
(a) Full year 2017, $ in millions.
(b) $ in billions, as of December 31, 2017.
$12,023
$56
$2,181
$17
$2,015
$9
Payment SolutionsRetail Card CareCredit
Interest and Fees
on Loans(a)
Loan
Receivables(b)
Private label credit cards,
Dual Cards™, general
purpose co-branded credit
cards and small- and
medium-sized business
credit products
Promotional financing for
major consumer
purchases, offering
private label credit cards
& installment loans
Promotional financing
to consumers for
health and personal care
procedures, products,
and services
6
Customized Credit Products
Retailer only
acceptance
Accepted at
network locations
Retailer and private
network acceptance
Accepted at
provider network
locations
Private Label Dual CardTM
Affinity to retailer, provides customized
benefits & features
Big-ticket focus, offering
promotional financing
Private Label Private Label
• Dental
• Vision
• Cosmetic
• Veterinary
• Cash back, discounts
• Credit events & promotions
• Reward/best customer programs
• Home
• Furniture
• Electronics
• Auto
• Luxury
• Power sports
Co-Brand Dual CardTM
Accepted at
network locations
Accepted at
network locations
Payment
SolutionsRetail Card CareCredit
Offering promotional financing,
expanded card utility
7
$19.7
$29.7
$37.9
$42.7
4Q14 4Q15 4Q16 4Q17
Fast-Growing Online Bank
FDIC-Insured Deposit Products
Certificates of Deposit
IRA Money Market Accounts
Competitive rates and
superior service afforded
by low cost structure of
online bank
Opportunity to further
leverage synergies
with cardholder base
Money Market Accounts Savings Accounts
Evaluating new product
offerings - checking, debit,
bill payment, small
business deposit accounts
Synchrony Bank
IRA Certificates of Deposit
Strong Direct Deposit Growth
$ in billions
8
Long-Standing Partnerships
(a) Existing partners as of December 31, 2017.
(b) Excludes certain credit card portfolios that were sold, have not been renewed, or expired in 2018, which represent less than 1% of our total Retail Card interest
and fees on loans for the year ended December 31, 2017. Does not reflect the announced PayPal extension which is expected to close in the third quarter of
2018.
20%
Partners (b)
14%
21%
20192018 2021
1 44
2020
21%
2022
5
Length of Major Partner
Relationships (Years) (a)
Last Renewal
38
2014
24
2014
21
2014
19
2014
18
2013
18
2013
13
2017
10
2015
Contractual Expiration (a)
% of 2017 Retail Card Interest and Fees on Loans (b)
5
2023
2
12% 11%
8
2024+
1%<
9
1.0% 2.2%
3.9%
0.0%
7.0%
2.0%
11.7%
2.5%
8.8%
6.1% 9.2%
13.2%
Mass Electronics Healthcare Apparel/Dept. Home Furniture
$538 $288 $246 $209 $236 $88
2012-2016 Market Growth Rate 2012-2016 Synchrony Financial Purchase Volume Growth Rate
2016 Market Size ($ in billions)
• Over 85 years of retail heritage
• Significant scale across platforms
• Robust data capture enables more customized offers
• Analytics and data insights help drive growth
• Joint executive management of programs—1,000+ SYF FTEs dedicated to drive partner sales
• Collaboration with partners ensures sales teams are aligned with program goals
• Economic benefits and incentives align goals and drive profitable program growth
Deep Integration Drives 2-3x Market Growth Rate
Sources for market data: Kantar Retail (2016 Mass & Apparel/Dept. market projections); IBIS World Research Group; CareCredit industry research; Joint Centers for
Housing Studies, Harvard University; Consumer Electronics Association.
10
10
Retail Card Payment Solutions
We attract partners who value our:
• Experience & partnership—long history of
improving sales, customer loyalty, and retention
• Differentiated capabilities:
- Marketing and analytics
- Innovation
- Mobile and online
- Underwriting and lifecycle management
- On-site dedicated teams
We seek deals that:
• Have an appropriate risk-reward profile
• Enable us to own key program aspects:
- Underwriting
- Collections
Attracting New Partners
Track record of winning programs
CareCredit
10
Robust Data, Analytics and Digital
Capabilities
12
Proprietary Closed-Loop Network Advantages
Customer Merchant Acquirer Network Issuer
General Purpose Card and Co-Branded Cards
Synchrony Financial Closed Loop Network for PLCC and Dual CardTM
Citi
Capital One
Chase
Date Merch. Channel Brand Cat./SKU $
1/2/18 Department
Store Partner
In-
Store
DKNY Women’s
Shoes
468XUTY
$83.44
1/9/18 Department
Store Partner
Mobile Coach Women’s
Handbags
229HHREO
$212.17
Date Merch. Channel Brand Cat./SKU $
1/2/18 Department
Store Partner
$83.44
1/9/18 Department
Store Partner
$212.17
Enables Valuable Data Capture and Eliminates Interchange Fees
• Limited data can be collected by the card
issuer when a General Purpose Credit
Card or traditional co-branded card is
used
• When Synchrony Financial Private
Label Credit Cards or Dual CardsTM are
used in-store, the transaction runs on our
network
• Valuable incremental data capture
occurs on transactions that run over the
Synchrony Financial closed loop network
- Brand or category
- SKU-level data
- Channel: in-store, online, or mobile
• No interchange fees when Synchrony
Financial Private Label Credit Cards or
Dual CardsTM are used over our network
*illustrative data
13
Prior After Launch
Analytics at Synchrony Financial
• Generic Offers
• Mass Marketing
• Portfolio Level Analytics
SKU/Category Level Coverage Evolution of Analytics
<50%
Present and Future
Past
~70%
2014 2017
• Provides the ability to analyze
significantly more data than general
purpose credit cards
• Ability to analyze SKU, category and other
important data has greatly expanded
• Customized Offers
• 1-on-1 Marketing
• Customer/Channel/Store Level Analytics
• Customer 360° View
• 170+ Dedicated Analytics Professionals
• Big Data Platform
14
Innovative Digital Capabilities
Expanding Online and Mobile Capabilities
Expanding Digital Capabilities
• Investing in enhanced user experience
• Mobile applications deliver customized features
including rewards, retail offers and alerts
• Developed SyPi, a mobile platform that can be rapidly
integrated across retailers and wallets
• Significant experience with online retailers
Wallet-Agnostic Mobile Payments Strategy—
Offering Choice to Retail Partners and
Consumers
Benefits to Synchrony Financial and
Our Customers
• Preserving unique benefits and value propositions
• Synchrony Financial continuing to capture
valuable customer data on our network
• Developing proprietary solutions like Digital Card
Consumer
• Investing in enhanced user experience:
- Customized offers
- Quickscreen
- Auto pre-fill
• Mobile applications deliver customized features including
rewards, retail offers and alerts
Small Business
• Enhance user experience and
features:
- Project-level invoicing and billing
- Invoice search
- Simplified payments
Synchrony Bank
• Upgraded digital banking platform; including Remote
Deposit Capture
• Responsive design allows customers to access account via
any device
Performance & Strategic Priorities
16
4Q17 Highlights
• $385 million Net Earnings, $0.49 diluted EPS; $545 million
Adjusted Net Earnings & $0.70 Adjusted diluted EPS
• Strong growth metrics
‒ Loan Receivables up 7%
‒ Net Interest Income up 8%
‒ Purchase Volume up 3%
‒ Average Active Accounts up 4%
• Net Charge-Offs 5.78% compared to 4.65% in the prior year
• Provision for Loan Losses up 26% primarily driven by credit
normalization
• Efficiency Ratio 30.3% compared to 31.6% in the prior year
• Deposits up $4.5 billion compared to prior year, comprising
73% of funding
• Strong Capital and Liquidity
‒ 16.0% CET1 & $15.1 billion Liquid Assets
• Paid quarterly dividend of $0.15 per share and repurchased
$430 million of common stock
(a) Adjusted net earnings and Adjusted diluted EPS are non-GAAP measures. These measures represent the corresponding GAAP measure, adjusted to exclude the effects to Provision for income taxes in the
quarter ended December 31, 2017, resulting from the Tax Act.
(b) CET1 % calculated under the Basel III transitional guidelines.
(b)
• Renewed key relationships
• Significantly expanded our strategic credit relationship to
become the exclusive issuer of the U.S. PayPal Credit
financing program
(a)
Financial Highlights Business Highlights
17
Loan
Receivables
Growth
7% - 9% 7%
Net
Interest
Margin
15.75% – 16.00% 16.35%
RSAs/Average
Receivables
Net
Charge-off
Rate
4.4% – 4.5%
Low 5% Range
3.9%
5.37%
Efficiency
Ratio ~ 32.0% 30.3%
ROA 2.5%+ 2.3%
• Renewed more than 15 key relationships and won more
than 20 new deals
• Announced agreement to significantly expand strategic
consumer relationship with PayPal, making PayPal a top
5 partner upon transaction closing; extends reach into
rapidly growing digital payments channel
• Launched CareCredit Dual Card™
• Launched Synchrony Car Care & HOME networks
• Acquired Citi Health Card portfolio
• Increased card utility and usage: Reuse rate in Payment
Solutions was 29% and 54% in CareCredit
• Acquired GPShopper
• Developed and launched leading digital capabilities:
Launched SyPi—10 partners now using the app plug-in
• Advanced capabilities: marketing, analytics and loyalty;
continued to invest in ‘next generation’ data environment
• Strong Deposits growth: direct deposits increased 13%
over the past year, overall deposits now comprise 73% of
total funding
• Improved capital deployment through strong growth and
higher dividends and share buybacks
2017 Performance
Financial Performance Business Highlights
2017 Actual2017 Outlook
(a) 2017 outlook updated July 21, 2017 and included in Company’s Form 8-K filing for Monthly Charge-Off and Delinquency Statistics filed on November 15, 2017
(b) 2017 ROA excluding the tax law change; represents Adjusted net earnings as a percentage of average total assets, refer to Non-GAAP reconciliation page in appendix.
For 2017 ROA, refer to slide 23
(c) 4Q17
(a)
(b)
(c)
18
(a) Segment data for AXP-U.S Consumer Services and COF-Domestic Card. Other data-total
company level.
(b) SYF yield calculated as loan receivable yield less net charge-off rate. AXP yield calculated as
total card member loan yield less net charge-off rate on card member loans (ex-HFS). Other
peer information calculated as credit card yield less net charge-off rate on credit cards.
(c) CET1 ratios are on an estimated, fully phased-in basis. See non-GAAP reconciliation in appendix.
30.3%
39.6%
46.4%
63.2%
SYF DFS COF AXP
Efficiency Ratio
(a)
Risk-Adjusted Yield
(b)
15.7%
10.0% 10.0% 9.8%
SYF AXP COF DFS
15.4%
8.8% 7.9%
3.4%
COF DFS AXP SYF
Purchase Volume Growth
(a)
Liquidity % of Assets
(e)
19.9%
16.8%
14.9% 14.1%
AXP SYF DFS COF
15.8%
11.6%
10.2%
8.8%
SYF DFS COF AXP
CET1 Ratio
(c)
Strong MarginsSignificant Growth Strong Balance Sheet
Loan Receivables Growth
(d)
10.0% 9.4%
8.4%
7.3%
AXP DFS COF SYF
(d) Segment data for AXP-U.S Consumer Services (ex-HFS), COF-Domestic Card, and DFS-Credit Card.
SYF-total company level.
(e) For AXP, DFS, and SYF calculated as: (cash and cash equivalents + investment securities) / total
assets. COF calculated as: (cash and cash equivalents + AFS securities) / total assets.
Sources: Company filings and SNL.
Purchase volume and loan receivables growth are 4Q17 vs. 4Q16.
Peer Comparison: 4Q17
19
1%
22%
38%
39%
19%
11% 9% 8% 7% 7% 7% 8%
20%
18% 20% 20% 20% 20% 20% 18%
28%
32% 35% 36% 37% 37% 38% 37%
33% 39% 36% 36% 36% 36% 35% 37%
• Synchrony Financial controls underwriting and credit line decisions
• Focus on stronger underwriting has led to higher quality portfolio
- 74% of loan receivables have FICO > 660
Stronger Portfolio
Consumer FICO
(a)
(a) Based on most recent FICO scores available for our customers in each period, weighted by balance, as a % of period-end receivables. If FICO score was not
available credit bureau based scores were mapped to a FICO equivalent. If neither score was available, the account was excluded.
601-660
2008 4Q17
≤ 600≤ 600
601-660
661-720
721+
At origination
Disciplined Underwriting
FICO, consumer accounts opened since
beginning of 2010
Focus on Higher Quality Asset Base
4Q164Q154Q144Q134Q124Q11
661-720
721+
20
Net Charge-Off Ratio
Risk-Adjusted Yield
(a) Peers include: AXP U.S. Card Services prior to 2014 and AXP U.S.
Consumer Services starting in 2014, BAC U.S. Credit Card, C Citi-
Branded Cards North America, COF Domestic Card, DFS Credit
Card, JPM Credit Card, and WFC Consumer Credit Card. SYF –
total company level.
(b) Peers include: AXP U.S. Card Services prior to 2014 and AXP U.S.
Consumer Services starting in 2014, BAC U.S. Credit Card, C Citi-
Branded Cards North America, COF Domestic Card, DFS Credit
Card, and WFC Consumer Credit Card. SYF – total company level.
SYF yield calculated as loan receivable yield less net charge-off rate.
Peer information calculated as credit card yield less net charge-off
rate on credit cards. Citi-Branded Card yield calculated as average
quarterly yield less net charge-off rate on credit cards (average
quarterly net charge-off rate).
(c) Data on a managed-basis for 2009. See non-GAAP reconciliation in
appendix.
(a,c)
(b,c)
• Net charge-off performance was
generally consistent with general
purpose card issuers during the
financial crisis
• Risk-adjusted yield outperformed
general purpose card issuers by >700
bps through the financial crisis
• Risk-adjusted yield outperformance
has improved post-crisis to ~800 bps
Delivered Strong
Risk-Adjusted Returns
Historical Net Charge-Offs & Risk-Adjusted Yield
Sources: Company filings. Risk-adjusted yield involved
calculations by SYF based upon company filings.
0%
2%
4%
6%
8%
10%
12%
2009 2010 2011 2012 2013 2014 2015 2016
N
et
C
ha
rg
e-
of
f R
at
io
SYF
Bank Card Average
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2009 2010 2011 2012 2013 2014 2015 2016
R
is
k-
A
dj
us
te
d
Yi
el
d
SYF
Bank Card Average
21
100%
50%50%
1.5%
2.5%
Total Program
Return
Shared Components Illustrative Examples
Program Revenue
• Interest Income
• Fee Income
• Interchange Fees
Program Expenses
• Interest Expense
• Provision for Loan
Losses
• Loyalty Expense
• Operating Expenses
SYF Share of Return
Retailer Share of Return
2.75%
1.25%
4.0%
Total Program Return
Allocation
Provides a countercyclical buffer in stressed environments: 2013-2017 RSAs were 4.3% of average loan receivables(a)
2009 RSAs were 1.6% of average loan receivables(b)
100%
50%50%
1.5%
1.0%
Total Program
Return
2.00%
0.50%
2.5%
N
or
m
al
Lo
w
er
P
ro
gr
am
P
er
fo
rm
an
ce
Operating
Environment
Program
Return
(a) RSA as a percentage of average loan receivables averaged over the five year period.
(b) Loan receivables on a managed-basis in 2009. See non-GAAP reconciliation in appendix.
Retailer Share Arrangements (RSA)
SYF – 69% of
Program Return
SYF – 80% of
Program Return
22
Diverse Funding Sources and Strong Liquidity
Deposits
Securitized Debt
Unsecured Debt
4Q17 Long-term
target
11%
73%
16%
10%-15%
70%-75%
15%-20%
Diverse Funding Sources
% of liabilities excluding non-debt liabilities
Strong Liquidity Profile
$ in billions
$21.1
Liquid
assets
Undrawn
Credit Facilities
$6.0
$15.1
• Diverse and stable funding
sources
• Fast-growing direct deposit
platform to support growth
• Positioned slightly asset
sensitive
4Q17
23
Strong Position Relative to Peers
Strong Capital Profile
Peers include AXP, DFS, and COF.
(a) CET1 ratios are on an estimated, fully phased-in basis. See non-GAAP reconciliation in appendix.
(b) Subject to board and regulatory approval.
Sources: Company filings and SNL.
2.1%
1.5%
SYF Peer Average
ROA – 2017
15.8%
10.2%
SYF Peer Average
CET1 Ratio – 4Q17(a)
• Current level of capital well above peers
• Generating solid relative earnings power
• Significant capital return opportunity over the
long-term(b)
Capital Deployment Priorities
1. Organic growth
2. Program acquisitions
3. Dividends
4. Share buybacks
5. M&A opportunities
24
20% 22% 25%
43%
75%
84%
0%
20%
40%
60%
80%
100%
120%
2016 SYF Capital Plan 2017 SYF Capital Plan Peer Capital Plan Average
Dividends Buybacks
Capital Deployment
(a) 2016 SYF Capital Plan is for illustrative purposes only. It incorporates the 7/7/16 capital plan announcement of $0.13/share quarterly dividend and $952
million buyback over the prior four quarters of net earnings ending 2Q16.
(b) 2017 SYF Capital Plan is for illustrative purposes only. It incorporates the 5/18/17 capital plan announcement of $0.15/share quarterly dividend and $1.64
billion buyback over the prior four quarters of net earnings ending 2Q17.
(c) Data captures announced capital plans over the prior four quarters of earnings ending 2Q17. Peers include AXP, COF, and DFS.
(d) Allocation for growth is estimated by applying 2Q16 CET1 Ratio (fully phased-in basis) to the 2017 period-end loan receivables growth rate of 7% over the
prior four quarters of net earnings ending 2Q17.
Sources: Company filings and SNL.
Capital Payout Distribution
• Improved capital payout distribution, with stronger buyback weighting
‒ Assuming loan receivables growth of 7%, an additional ~40% of
capital would be consumed(d)
• Opportunity to enhance components of capital return
(b) (c)
63%
97%
109%
(a)
25
Strategic Priorities
Grow our business through our three sales platforms
• Grow existing retailer penetration
• Continue to innovate and provide robust cardholder value propositions
• Add new partners and programs with attractive risk and return profiles
Invest in ‘Next Generation’ data, analytics and digital capabilities
• Continue to expand the use of advanced analytics to leverage SKU level data to drive sales and customer loyalty
• Further develop a frictionless mobile & digitized environment through the use of customer journey insights
• Leverage unstructured data and machine learning to drive an even higher level of customer engagement
Position business for long-term growth
• 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
• Investment in core infrastructure to drive scale, efficiency and agility
Operate with a strong balance sheet and financial profile
• Maintain strong capital and liquidity
• Deliver earnings growth at attractive returns
Leverage strong capital position
• 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
Appendix
27
Non-GAAP Reconciliation
We present certain capital ratios. Our Basel III Tier 1 common ratio, calculated on a fully phased-in basis, is
an 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
required by regulators to be disclosed at December 31, 2017, 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.
We also present certain financial measures that have been adjusted to exclude the effects from the Tax Cuts
and Jobs Act of 2017 (the “Tax Act”). We have adjusted net earnings and earnings per share to show these
measures excluding additional tax expense incurred in the quarterly period ended December 31, 2017 related
to the impact from the Tax Act. The additional tax expense was primarily due to the Tax Act’s reduction in the
corporate tax rate that resulted in a remeasurement of our net deferred tax asset. We also present return on
assets, adjusted to include Adjusted net earnings as the numerator for this ratio. We believe these measures
help investors understand the impact of this recent law change on our reported results.
28
Non-GAAP Reconciliation
The following table sets forth a reconciliation of non-GAAP measures included in this presentation to the comparable
GAAP component at, and for the periods ended, December 31, 2017.
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) .......................................................................
ADJUSTED NET EARNINGS
GAAP net earnings .................................................................................................................
Adjustment for tax law change.......................................................................................
Adjusted net earnings ...........................................................................................................
ADJUSTED DILUTED EPS
GAAP diluted EPS ..................................................................................................................
Adjustment for tax law change.......................................................................................
Adjusted diluted EPS ............................................................................................................
$14,234
(991)
(749)
$12,494
254
$12,748
142
$12,890
$80,526
$80,669
$385
160
$545
$0.49
0.21
$0.70
$ in millions
Quarter Ended
December 31, 2017
$ in millions
Twelve Months Ended
December 31, 2017
$1,935
160
$2,095
$2.42
0.20
$2.62
29
Non-GAAP Reconciliation
The following table sets forth a reconciliation between GAAP results and non-GAAP managed-basis results for 2009.
Net charge-offs as a % of average loan receivables, including held for sale:
GAAP 11.3%
Securitization adjustments (0.6)%
Managed-basis 10.7%
Interest and fees on loans as a % of average loan receivables, including held for sale:
GAAP 19.7%
Securitization adjustments 0.8%
Managed-basis 20.5%
Retailer share arrangements as a % of average loan receivables, including held for sale:
GAAP 3.4%
Securitization adjustments (1.8)%
Managed-basis 1.6%
Risk-adjusted yield(a):
GAAP 8.4%
Securitization adjustments 1.4%
Managed-basis 9.8%
Twelve months ended
December 31, 2009
(a) Risk-adjusted yield is equal to interest and fees on loans as a % of average loan receivables less net charge-offs as a % of average loan receivables.