SYNCHRONY FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||||
MONTHLY CHARGE-OFF AND DELINQUENCY STATISTICS | |||||||||||||||||||||||||||||||||||||||||||||||||||
AS OF AND FOR EACH OF THE THIRTEEN MONTHS ENDED | |||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited, $ in billions) | |||||||||||||||||||||||||||||||||||||||||||||||||||
The following table provides monthly charge-off and delinquency statistics as of and for each of the thirteen months ended January 31, 2019. | |||||||||||||||||||||||||||||||||||||||||||||||||||
The increase in over-30 day loan delinquencies as a percentage of period-end loan receivables (the “30+ delinquency rate”) at January 31, 2019 compared to the same period in the prior year, is primarily due to the reclassification of loan receivables related to the Walmart portfolio to loan receivables held for sale. The loan receivables held for sale do not include certain loan receivables we believe will charge-off prior to the expected closing date of the sale of the Walmart portfolio. | |||||||||||||||||||||||||||||||||||||||||||||||||||
The core 30+ delinquency rate(1) at January 31, 2019 increased slightly compared to the same period in the prior year primarily due to the PayPal Credit program. Excluding the PayPal Credit program, the core 30+ delinquency rate at January 31, 2019 was lower than January 31, 2018 by approximately 15 basis points. There is no change to the Company's expectations for both our net charge-off rate for the year ended December 31, 2019 and our loan loss reserve build in the first quarter of 2019 from the outlook provided during the Company’s 4Q 2018 earnings conference call held on January 23, 2019. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Jan 31, 2019 | Dec 31, 2018 | Nov 30, 2018 | Oct 31, 2018 | Sep 30, 2018 | Aug 31, 2018 | Jul 31, 2018 | Jun 30, 2018 | May 31, 2018 | Apr 30, 2018 | Mar 31, 2018 | Feb 28, 2018 | Jan 31, 2018 | |||||||||||||||||||||||||||||||||||||||
Period-end loan receivables | $ | 82.6 | $ | 93.1 | $ | 90.5 | $ | 88.2 | $ | 87.5 | $ | 87.4 | $ | 87.1 | $ | 78.9 | $ | 78.7 | $ | 77.6 | $ | 77.9 | $ | 78.4 | $ | 80.1 | |||||||||||||||||||||||||
Average loan receivables, including held for sale | $ | 91.5 | $ | 92.0 | $ | 88.6 | $ | 87.3 | $ | 87.4 | $ | 86.9 | $ | 86.1 | $ | 78.5 | $ | 77.7 | $ | 77.4 | $ | 77.6 | $ | 79.1 | $ | 80.6 | |||||||||||||||||||||||||
30+ days past due as a % of period-end loan receivables | 5.2 | % | 4.8 | % | 4.9 | % | 4.8 | % | 4.6 | % | 4.3 | % | 4.1 | % | 4.2 | % | 4.2 | % | 4.3 | % | 4.5 | % | 4.9 | % | 4.8 | % | |||||||||||||||||||||||||
Adjustment to exclude Walmart portfolio(1) | (0.6 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.3 | )% | (0.4 | )% | (0.3 | )% | |||||||||||||||||||||||||
Core 30+ delinquency rate(1) | 4.6 | % | 4.5 | % | 4.6 | % | 4.5 | % | 4.3 | % | 4.0 | % | 3.8 | % | 3.9 | % | 3.9 | % | 4.0 | % | 4.2 | % | 4.5 | % | 4.5 | % | |||||||||||||||||||||||||
Net charge-offs (annualized) as a % of average loan receivables, including held for sale(2) | 5.7 | % | 5.8 | % | 5.5 | % | 5.3 | % | 4.9 | % | 4.8 | % | 5.2 | % | 5.8 | % | 5.9 | % | 6.3 | % | 5.8 | % | 6.7 | % | 6.0 | % | |||||||||||||||||||||||||
Recovery adjustment(3) | — | % | (0.1 | )% | 0.1 | % | — | % | (0.1 | )% | 0.1 | % | — | % | (0.1 | )% | — | % | 0.1 | % | 0.1 | % | — | % | (0.1 | )% | |||||||||||||||||||||||||
Adjusted net charge-offs as a % of average loan receivables, including held for sale(4) | 5.7 | % | 5.7 | % | 5.6 | % | 5.3 | % | 4.8 | % | 4.9 | % | 5.2 | % | 5.7 | % | 5.9 | % | 6.4 | % | 5.9 | % | 6.7 | % | 5.9 | % | |||||||||||||||||||||||||
(1) Core 30+ delinquency rate is a non-GAAP financial measure. This measure represents the Company’s 30+ days past due loan receivables as a percentage of period-end loan receivables, adjusted to exclude the delinquent accounts related to the Walmart portfolio and the effects of the reclassification of loan receivables related to the Walmart portfolio to loan receivables held for sale. The loan receivables held for sale do not include certain loan receivables we expect to charge-off prior to the sale date, leading to a temporary increase in our delinquency metrics. We believe the presentation of this measure is useful to investors as it represents the measure more indicative of the performance of our ongoing credit programs. | |||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Charge-offs are executed on charge-off cycle dates which occur on various days during each calendar month. The number of different charge-off cycle dates in each month varies based on such factors as the calendar and the timing of billing cycles. As a result, the amount of charged-off loan receivables can vary between monthly periods with no corresponding change in the performance of the portfolio. The following table sets forth the number of different charge-off cycle dates for our consumer credit card loan receivables, which represent greater than 95% of total period-end loan receivables at January 31, 2019, for the calendar months indicated. | |||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
January | 29 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
February | 28 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
March | 25 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
April | 30 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
May | 28 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
June | 26 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
July | 30 | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||
August | 28 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||
September | 28 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
October | 29 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
November | 27 | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||
December | 28 | 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
(3) Represents adjustment to allocate recoveries, including debt sales, evenly across the three calendar months of each respective quarterly reporting period. The adjustments for periods other than for the last month of each calendar quarter incorporate estimated recoveries for the applicable full quarterly reporting period. Such estimates are subject to change within each applicable quarter and may differ from actual quarterly results. | |||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Adjusted net charge-offs represent a non-GAAP financial measure. Adjusted net charge-offs as a % of average loan receivables, including held for sale, represent the Company's net charge-off rate for each month including the 'recovery adjustment' defined above. We believe the presentation of this measure is useful to investors as it represents a monthly measure which is more indicative of both our quarterly and annual net charge-off rates. | |||||||||||||||||||||||||||||||||||||||||||||||||||