Synchrony Says Digital Mix Delivering Against Consumer Demand for Choice, Flexibility
In uncertain times, certainty pays off. And in uncertain times, many consumers tend to look for certainty in the financing options they have available to them.
That was the central theme of financial services company Synchrony’s third-quarter 2024 earnings call on Wednesday (Oct. 16), with Synchrony President and CEO Brian Doubles highlighting the company’s ongoing commitment to providing responsible access to credit through innovative financial solutions that cater to a wide array of consumer needs.
“Synchrony’s third quarter results reflect our focus on driving value for our many stakeholders through evolving market conditions,” said Doubles. “During the quarter, we continued to provide responsible access to credit through powerful omnichannel experiences. Customers continued to engage across Synchrony’s diversified portfolio, as the broad utility of our flexible financing solutions and compelling value propositions resonated amidst an inflationary environment.”
The company reported third-quarter 2024 net earnings of $789 million, or $1.94 per diluted share, compared to $628 million, or $1.48 per diluted share in the third quarter 2023. Synchrony’s loan receivables increased 4% to $102.2 billion; while average active accounts remained flat at 70.4 million and new accounts decreased 18% to 4.7 million.
The company’s stock was up mid-single digits on the news as of reporting.
See also: Synchrony: Personalized Financing Strategy Boosts Big-Ticket Commerce
Digital Mix Key to Navigating Complex Economic Conditions
According to its executives, Synchrony’s focus on delivering value through omnichannel experiences, expanding its program partnerships and managing credit risk has allowed it to navigate inflationary pressures and changing consumer behaviors effectively.
“Whether it’s through the delivery of scalable, innovative financial solutions that empower our customers, the addition and renewal of programs that span most consumer spend categories, Synchrony is driving access, versatility and value for our customers and partners alike,” said Doubles, adding that, “as we continue to leverage our core strengths and execute across our key strategic priorities, we are deepening our leadership position as the partner of choice in the consumer finance landscape.”
During the most recent quarter, the company added or renewed more than 15 partner programs, including with retailers and brands such as Dick’s Sporting Goods, CF Moto, Reeds and Gibson.
More than 60% of consumers who hold at least one co-branded credit card said that their most frequently used co-branded credit card is affiliated with a retailer — a far greater share than said the same of any other kind of brand, such as travel, local business or technology company — according to PYMNTS Intelligence.
“The unique combination of Synchrony’s industry expertise, proprietary data and analytics, and innovative digital capabilities is powering our trajectory forward, and we believe we are well-positioned to drive sustainable and strong risk-adjusted returns over the long-term,” Synchrony’s Executive Vice President and Chief Financial Officer Brian Wenzel said, noting that retailer share arrangements decreased $65 million, or 7%, to $914 million, reflecting higher net charge-offs.
The company’s provision for credit losses increased $109 million to $1.6 billion, driven by higher net charge-offs partially offset by a lower reserve build; while at the same time net earnings increased 26% to $789 million, compared to $628 million.
Read also: New Study Looks at Economic Factors That Define Women’s Health
Synchrony also during the quarter launched a first-of-its-kind, patent-pending payment experience to seamlessly integrate CareCredit and Pets Best products and enable direct insurance claim reimbursement. Last month (Sept. 18), Synchrony’s CareCredit health and wellness credit card became accepted for select items in nearly 2,200 Albertsons, Safeway, Vons, Acme, Shaw’s and Jewel-Osco stores.
Giving people tools to afford the health and wellness products they need can help build consumer loyalty, Erin Gadhavi, senior vice president and general manager, wellness at Synchrony, told PYMNTS in an interview posted in January.
“Offering financing for those products and services is attractive to consumers,” Gadhavi said. “Patients can make an informed decision related to their care, but also with respect to their budget — leading to a more engaged and healthier customer base.”
The responsibility of managing household health-related tasks disproportionately falls on women, with over 60% of both single mothers and those in nuclear families reporting that they shoulder these responsibilities, according to PYMNTS Intelligence’s “2024 Women’s Wellness Index.”
In an earlier expansion of its network, Synchrony said in May that it teamed up with Affordable Care to make CareCredit available as a payment option at more than 450 dental practices to help them finance dental implants and dentures.
“While we continue to monitor consumer behavior and our portfolio performance closely, we are confident that the measures we’ve taken thus far to provide dynamic financial solutions to our customers — while also driving loyalty and sales for our partners — are driving progress toward our shared objectives,” said Wenzel.
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