Synchrony Financial

Leading market share in U.S. private-label credit card (PLCC) industry Peer-leading regulatory capital ratios Robust earnings generation through economic cycles Narrow focus on unsecured consumer credit, with a meaningful exposure to subprime borrowers Reliance on deposits raised through online and broker channels Concentration in top merchant partners Asset quality performance weaker than most peers The negative outlook reflects S&P Global Ratings' view that Synchrony's financial performance could be more sensitive to the economic fallout from COVID-19 than the average U.S. bank because of its sizable concentration in credit card lending. This includes loans to subprime consumers through its PLCC business. We believe the increase in unemployment and weakened consumer confidence (leading to lower consumer spending and lending activity) from the

...Outlook: Negative The negative outlook reflects S&P Global Ratings' view that Synchrony's financial performance could be more sensitive to the economic fallout from COVID-19 than the average U.S. bank because of its sizable concentration in credit card lending. This includes loans to subprime consumers through its PLCC business. We believe the increase in unemployment and weakened consumer confidence (leading to lower consumer spending and lending activity) from the COVID-19-related economic shutdown has resulted in substantial headwinds for U.S. consumer lenders like Synchrony. Our outlook also incorporates the fluidity of the situation and risks to the economic forecast over our two-year outlook. The recession triggered by the COVID-19 pandemic could result in Synchrony modifying a meaningful portion of loans and taking substantial credit provisions. We could lower the ratings if the economic environment weakens Synchrony's financial performance more than we anticipate. This could be...

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