Synchrony Financial

The stable outlook on Synchrony reflects our expectation that the company's credit profile will remain resilient and is well positioned to absorb higher credit losses, which we expect will normalize over the next two years, beginning in 2022. We also think the company has the earnings power and financial flexibility to calibrate its reserves, capital, and liquidity to operate adequately through a stressed economy, as in 2020. Our anchor for a bank operating mainly in the U.S. is 'bbb+', based on an economic risk score of '3' and an industry risk score of '3'. The U.S.'s diversified, high-income, and resilient economy underpins our assessment of economic risk, which we see on a stable trend given the ongoing economic recovery from

...Synchrony Financial is well-positioned to navigate inflationary pressure. We believe that Synchrony's card-based businesses will benefit from higher prices which should support purchase volume, reduce repayments, and support loan growth. However, sustained inflationary pressure could result in deterioration in consumer credit in the next 18 to 24 months. We expect credit to normalize. Synchrony's recent credit performance has been excellent, mirroring broader industry trends, as consumers have paid down debt and limited borrowings. We expect credit performance to normalize over the next two years. Higher provisions will drive lower earnings in 2022 and 2023, relative to 2021 levels. Synchrony's credit reserves and capital remain robust, and although we expect both will normalize throughout 2022, this cushion should remain adequate to absorb increased losses....

Full Report