Quite the day for Synchrony as CEO Margaret Kean reports 4Q 2018 earnings.
- The Wal-Mart breach of contract suit settled
- Synchrony retains Wal-Mart’s Sam’s Club
- Google and Amazon Renewed
- Receivables up 14%
- Net Interest up 11%
- Average Active Accounts up 8%
- Deposits up $7.5 billion, covering 73% of funding
- All 3 Business Lines performing well.
- Retail Card +11%
- Payment Solutions +8%
- Care Credit +7%
- Net Charge-Offs bullseyed to the 2018 Outlook
- Return on Assets: 2.8%, 10% better than forecast due to lower loan loss reserves
The numbers speak for themselves; getting in the ring with the world’s largest retailer, and surviving, warrents special mention. Tons of credible media sources note the conclusion of the festering lawsuit and the end of an $800 million claim.
Hometown newspaper, the Stamford Advocate, announces:
- Walmart is dropping its lawsuit against Synchrony, while the consumer financial-services firm said Wednesday it would sell the loan portfolio it manages for the retailing giant and continue a longstanding agreement with the Walmart-owned Sam’s Club chain.
- The country’s largest brick-and-mortar retailer’s decision resolves a breach-of-contract complaint it filed last November, following its move last July to end the Stamford company’s two-decade run as its credit-card provider in favor of a new deal with Capital One. But the companies are maintaining their ties by extending a separate, 25-year partnership that provides cards to Sam’s Club members.
The American Banker headlines with:
- Loans sold, partnership renewed, lawsuit dropped: Synchrony’s win-win-win
The Wall Street Journal mentions:
- Walmart said that some of Synchrony’s underwriting standards financially harmed the retailer. Walmart was seeking estimated damages of at least $800 million.
- A Walmart spokesman confirmed that the retailer is dropping the lawsuit.
- Synchrony Chief Financial Officer Brian Doubles declined to comment on the pricing arrangement.
- “We delivered the most profitable year in our history,” Mr. Doubles said in an interview. “We have the Walmart situation behind us.”
Mercator Advisory Group’s recent research report on Private Label Credit Cards reported on how the market rebounded since the recession; Synchrony’s performance last year bears special note.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
