Synchrony Financial at Goldman Sachs U.S. Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs Research - Analyst : <_ALACRA_META_ABSTRACT>So Brian, a lot has changed since the last time we heard from you, particularly around the election. Obviously, a lot of things can change. But maybe could you spend a minute talking about what this can mean for your business and just more broadly, how it positions you entering 2025.

Question: Ryan Nash - Goldman Sachs Research - Analyst : Got you. And thinking about the whole regulatory environment, obviously, over the last year, late fees has been a big focus. There was a ruling out Friday in Texas. Maybe just update us where things are in the courts of those who may have missed it and maybe what we're watching for at this point.

Question: Ryan Nash - Goldman Sachs Research - Analyst : So you guys were ahead of this issue, putting mitigation in place. Maybe just talk about how the mitigation efforts are going. How are they progressing relative to expectations? Maybe what's been better or worse? And maybe just -- what has the client response been as you put these in place?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Maybe just one last question on the topic. Brian, you alluded to the fact that there could be broader changes coming in DC, I think, particularly at the CFPB. Well, obviously, the court case has a lot of -- has to work itself out. But can you maybe just talk about how you think about the different changes you've implemented, what you think could actually stay over time versus what you could potentially ease over the longer term?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Maybe, Brian, let's shift gears and spend a few minutes talking about the health of the consumer. We've seen spend volumes move negative year over year. And there's been obviously a slowing of larger ticket items and less spending on discretionary. However, I think on the last call, you guys talked about spend starting to stabilize. So maybe just talk about what you're seeing across different cohorts. And what do you think it's going to take to get spend to start to improve?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Got you. And you referenced the 8-K that you put out this morning. It showed stable month-over-month delinquencies, and our metrics outperformed seasonality. Net charge-offs were down. Obviously, there's some days adjusted in there. But maybe just talk about what you're seeing in terms of credit trends. What does

Question: Ryan Nash - Goldman Sachs Research - Analyst : Maybe just to close out on 4Q. You obviously highlighted loan growth being a little bit slower than expected. Anything else to highlight, NII or any other moving pieces on the fourth quarter guidance?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Okay. So Brian, I feel like much of the year has been spent talking about credit and late fees, much less time focusing on the business and driving growth for your partners. Maybe just talk about the investment that you've been doing and how you're helping drive growth across your partner base?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Got you. Maybe to dig into some of the businesses. So there's obviously been a lot of fintechs coming after your health a nd wellness business, but that hasn't stopped it from being a strongest growth platform. I think it accounts were up 7%; and loans, 10%. Maybe just talk about what's driving the success in this business. And maybe what are some of the keys to sustaining this growth?

Question: Ryan Nash - Goldman Sachs Research - Analyst : (inaudible) in my life.

Question: Ryan Nash - Goldman Sachs Research - Analyst : Brian Wenzel, before we get into the organic pipeline, I wanted to just spend a minute just talking about loan growth before we get into the organic growth. We're expecting low single digits for this year. And obviously, you commented it's been a little bit slower. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, SYF.N - Synchrony Financial at Goldman Sachs U.S. Financial Services Conference Can you maybe just talk about just broadly expectations? What do you see driving loan growth? And then you've obviously taken actions to tighten underwriting, and this has obviously helped on the delinquency formation. Maybe just talk about what you've done and what you need to see to loosen some of the tightening that you've put in.

Question: Ryan Nash - Goldman Sachs Research - Analyst : Brian, earlier on, you referenced in the areas that you're investing. You talked about renewals and new business opportunities. Maybe if we could start on new business opportunities and new business wins. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, SYF.N - Synchrony Financial at Goldman Sachs U.S. Financial Services Conference Whether it's a startup or portfolios that are with competitors, what does the pipeline look like? And how are you thinking about new portfolio additions into 2025?

Question: Ryan Nash - Goldman Sachs Research - Analyst : And just one point of clarification. In your remarks, you said there's some startups and some larger programs. Was that in reference to newer programs? Is that inorganic opportunities?

Question: Ryan Nash - Goldman Sachs Research - Analyst : So you mentioned renewals. I think the last two quarters, you renewed or launched 15 new partners each quarter. And as you said, many of your largest partners, I think, are signed up at least through '26. Maybe just talk about -- and you referenced it a little bit in your last remarks. Like what are some of the recent trends been in renewals and how are you factoring in things like late fees or the broader economy when signing up or renewing a partner? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, SYF.N - Synchrony Financial at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs Research - Analyst : Brian, maybe let's shift gears and spend a couple of minutes to talk about credit. We obviously talked about the monthly data earlier on. When you look, delinquencies have been outperforming expectations, I think you said, for the last five or six months. Losses have still been, I think, a little stubbornly high. Can you maybe just talk about what's driving this divergence? And do you expect that this is going to normalize over the medium-term time frame?

Question: Ryan Nash - Goldman Sachs Research - Analyst : And you've made some upbeat comments on the -- I think it was the back half of the '23 vintage and what you've seen early in 2024. Can you maybe just update us on how those things progressing? And has the outperformance continued? And what does that mean for the overall loss content of the book?

Question: Ryan Nash - Goldman Sachs Research - Analyst : And maybe one last one on losses you referenced earlier. I'm sure we're going to get guidance at 4Q earnings. Losses have been running north of your 5.5% to 6% where you underwrite to. Can you maybe just talk about what you think we need to see or when do you expect losses to get back to that targeted loss range?

Question: Ryan Nash - Goldman Sachs Research - Analyst : And maybe to just round up the discussion on the overall credit. So the allowance is right around [10.8]. You talked about it being relatively flat year-over-year. Seems like the markets have gained confidence in soft landing or whatever you want to call the economic outlook. Maybe what does this mean for the allowance, where it's headed? And what do you need to see for this to come down further back towards the early CECL day-one levels? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, SYF.N - Synchrony Financial at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs Research - Analyst : Maybe to switch gears and just talk about margin and deposit repricing dynamics. So you've talked about tailwinds that you have in the margin into next year. You've moved aggressively to cut deposit rates since September. Maybe just talk a little bit about what your strategy has been in terms of reducing deposit rates and how slower loan growth has factored into that?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Brian, maybe let's spend a minute just talking about capital. Your capital ratio is over [13], continue to return to shareholders by the dividend buyback. And there's still some uncertainty regarding where rules will go, but things appear to be moving in the right direction. What are you waiting to see to be able to leverage the capital back to that 11% level? And how do you think about leveraging the capital versus maintaining some dry powder for the eventual return of loan growth that Brian --

Question: Ryan Nash - Goldman Sachs Research - Analyst : We've got about a minute or two to go here. So the stock has done incredibly well this year. Maybe you could argue that it was in the wrong place last year, but I do think that you made that point when you were here in the same seat last year. Obviously, we've seen a really nice re-rating. Do you think the market is missing anything anymore? Or -- and what do you think is the next leg for the story for Synchrony?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Well, I was going to end there, but you did make two references to regulations. So I did want to throw one last one to --

Question: Ryan Nash - Goldman Sachs Research - Analyst : Any last -- any things, Brian, that you're just most focused on that you think will be impactful in terms of regulations that we're waiting on to impact Synchrony?

Question: Ryan Nash - Goldman Sachs Research - Analyst : Great. Well, please join me in thanking Synchrony.