“Consumer confidence is very strong”

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STAMFORD – Synchrony, the nation’s largest provider of private label and store-brand credit cards, reported an increase in profits and a slight decline in revenue on Tuesday, as company officials said they saw the consumer confidence increase during the economic recovery caused by the pandemic. slow-down.

Stamford-based Synchrony’s second-quarter profits climbed to $ 1.2 billion from $ 48 million a year ago, with net income reflecting a 112% decline in the allowance for credit losses. Quarterly revenue fell about 3% year-on-year to $ 3.3 billion, mainly due to lower financing fees and late fees.

“We are very pleased with our performance in the second quarter,” said Brian Wenzel, chief financial officer of Synchrony, to Hearst Connecticut Media. “Our products really resonate with consumers. “


Among other key metrics, Synchrony averaged nearly 66 million active accounts, up 2% from last year. In the last quarter, it generated 6 million accounts.

Synchrony Chief Financial Officer Brian Wenzel

Anthony Collins Photography 2018

The “loan receivables” balance of loans owed by customers was $ 78 billion, roughly the same as last year. Customer purchase volume increased 35% to $ 42 billion.

Another sign of improving consumer finances is the net charge rate, which refers to debts the company does not expect to collect, from 5.35% to 3.57%.

“I think consumer confidence is very strong,” Wenzel said. “Clearly, we see it in the behavior of purchasing volume and the willingness to consume. We see it, broadly speaking, in all aspects of our portfolio. “

Among the major deals in the second quarter, Synchrony announced a multi-year renewal with TJX Companies, extending a more than 10-year partnership with the low-cost clothing and “home fashions” retailer. He renewed 10 additional programs, including those with Shop HQ, Mitchell Gold Co., Daniels and Sutherlands. He added four programs, with new partners including JCB and Ochsner Health.

While acknowledging the continuing threat of COVID-19, Synchrony officials predict that the spread of the virus will generally remain under control in the United States over the coming months and that consumer spending will increasingly resemble the trends before. the pandemic.

“As consumers continue to spend more and their financial obligations increase and they walk away from mortgage forbearance, lease forbearance, automobile forbearance… you will see them revert to a type of use. more traditional credit products, which I think will increase income, ”Wenzel said.

After the results were released, Synchrony shares closed at $ 46 on Tuesday, up about 3% from Monday. They hit a 52-week high of around $ 51 and a 52-week low of around $ 22.

Synchrony, the No. 187 company on this year’s Fortune 500 list, is headquartered at 777 Long Ridge Road in Stamford, near Exit 34 of Merritt Parkway.

The company employs a total of around 16,500 people. Last week, the company announced it would increase its minimum hourly wage from $ 15 to $ 20. The company expects the change to benefit more than 5,000 employees, most of whom work in call centers across the country.

[email protected]; twitter: @paulschott


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