Synchrony Financial — Call Transcript 2026

Good morning, everybody. My name is Jeff Adelson, U.S. Consumer Finance Analyst here at Morgan Stanley. Kicking off the 17th Annual Financials Conference here at Morgan Stanley is Synchrony Financial. Before we get into that, just a few stats. We have 136 participating companies this year. That's a record for us. 483 corporate attendees overall representing $5.5 trillion of market cap. With that, Brian Wenzel, welcome. Jeff, thank you. Thanks for the invite, and glad to be here. Maybe we can start with some exciting data you put out this morning. You put your 8-K out. Looks like you saw a third consecutive month of positive loan growth. Delinquencies came in a little bit better than seasonality. How do these trends compare to your expectations for the year? Yeah. First of all, we're incredibly proud of the results this morning. For those that didn't get up at 6:00 to read it, our 30-plus delinquencies was 4.2. If you really look back at that trend over the last 12 months, it's been very consistent. When we look at it versus seasonality, it's better than seasonality. When you look back to the 2017-2019, more normalized window, net charge-offs, right in line. You've got to cycle adjust a couple of things when you look at it, either year-over-year or sequentially. But, losses came in great. Credit continues to perform. The focus of a lot of discussions, Jeff, has been around growth. The EOP asset growth up 1.8%. When you look at it on a linked quarter basis, particularly when you look at April having Lowe's commercial kind of come in, you actually did beat seasonality in May. Right? If you think about end of first quarter, we're 42 basis points. We did add Lowe's, now we're 1.8, and we continue to be there. Purchase volume continues to be strong. You're recently starting to see this better growth. Second quarter is seasonally important for several of these discretionary categories you have in the business, home and auto, power sports, so forth. Based on what you saw in today's data and based on what you saw around Memorial Day into June, how are the spending trends tracking for this quarter? Yeah. It's interesting for CFOs as we kind of come here because you feel like you're all saying the same thing. The consumer has been resilient. I know people, if you watch CNBC, maybe you don't feel that quite as much from what they say. Really, as we look at what purchase volume has done, first of all, started exiting out of 2025, it accelerated into the beginning part of the first quarter, and it's actually maintained that pace in the mid to high single digits. We feel good about purchase volume overall as you kind of go in. If you drop down, you're incredibly right about how important part of our business is in the second quarter, particularly on Memorial Day, when you look at it. We have really started to see some green shoots. If I kind of look at Memorial Day, some areas where we've seen pressure were positives, by a good bit over 2025. When I think about HVAC, when I think about home improvement, when I think about furniture, we've seen strength in those categories. Even in luxury, you kind of see people out shopping, maybe because there's a lot of rain here in the Northeast. People went through that. Outdoor continues to be a little bit of a challenge on some of those bigger-ticket places there. We really saw green shoots with regard to discretionary purchases and what the consumer's willing to do. Relative strength, I'd say, from a purchase volume perspective. That's particularly notable given what we've seen from gas prices, I think, recently. What else are you seeing from the consumer under the hood there? Any shifts in behaviors as consumers have dealt with those higher prices? Obviously, we saw the higher tax refunds come through as well. Let me unpack that question a little bit. I think the first thing, Jeff, is to understand how gas prices really kind of flow through to the consumer. Everyone kind of presumes you see this increase and immediately has an effect. We've gone back a long period of time to look at significant gas price increases and what it correlates to and what it doesn't correlate to and how it works. The first, I'll say a little bit of misnomer or urban legend is gas prices are correlated to delinquency. They're actually not. We haven't seen any of the data in our data where it's coordinated. Where you start to see the first thing that has to happen is you have to have a significant increase in gas. That would be $1 to $1.25. Okay, you can check that box. It was $3 nationally in February, and it's up over $4 now. You're there. There is a period of time it takes for it to work its way to the consumer. If people are expecting to see changes in behavior patterns after a couple of months, that's not what the data historically has told us. It has to be much more prolonged. I think if you look out in, call it end of September and October, if there's not relief when it comes to gas, then I think you sit back and say, okay, is there going to be ramifications? As it flows through the consumer, clearly, the consumer feels the pressure of gas prices. I'd say they're in the stage 1 right now, which is you go to the gas pump and you're annoyed, watching the meter if you're in a state where you actually pump gas, not like Jersey. You go through that annoyance factor that you have, but it hasn't really changed their overall level of consumption. We do see a little bit of shift where the non-discretionary piece is rising faster than the discretionary. Clearly, it is having some effect, but it's not impacting the overall impact of spending for the consumer itself. As you sort of did that historical look back on delinquencies where it didn't have an impact, what maybe are the early indicators elsewhere you look at there? The first thing, when gas starts to land the consumer. What you'll see is in the middle section, right? You'll see some of the consumers start to save maybe a little bit more money, putting it in their checking account because they know gas is going to be a little bit higher. Overall, what you'll start to see is, okay, the consumer will begin to decrease the average transaction value, but increase frequency. They're trying to make cash go a little bit further than it has there. You start to see it flow through. They're making more frequent purchases, but because they're trying to stretch dollars, you'll see that they may try to stretch dollars in other ways, particularly grocery, et cetera. What you would just start to see is the first thing that begins to impact is sales, and you'll pull back and you'll have payment rate slow down, which to be honest with you would be somewhat helpful for asset growth. You need those factors to kind of work its way through the system. I generally believe when you think about the unemployment market here in the U.S. and where unemployment strength is, you're not going to see it tip the consumer. At least that's not our belief, that it tips the consumer, but it most certainly can impact spending behavioral patterns and payment behavioral patterns really in the latter part of 2026 if it's unabated from the levels that it is today. Got it, not seeing it yet, but something to keep an eye on in the back half of the year. Yeah. Okay. Makes sense. Maybe just switching to some of the more growth-oriented parts of the business. You took a number of credit actions, and with those largely behind you now have your charge operate at or below the historic range you target, 5.5%-6%. As you've started to see this loan growth inflect, I think about 30% of your credit adjustments are now back on or reversed and those start to season, how are you thinking about the pace of incremental reopening of credit from here? Maybe longer term, how are you balancing the credit risk of returning to your long-term growth objective versus maintaining good credit discipline? The first thing, I think for those people who invest in Synchrony, I think they appreciate the fact that we are laser-focused on risk-adjusted returns. We're not going to bend on risk-adjusted returns to just try to grow the business for growing the business's sake. Lending businesses are the easiest businesses to grow. They're more difficult to obtain credit on. Our belief is we'd rather have a better ROA than try to just get growth. We're going to be much more disciplined when it comes to how we think about that. Particularly when you think about our credit aperture and what we did in the back half of 2025, that takes about a year to season in. You'll start to see the effects of that in the latter part of 2026 into 2027. While the credit's good now, you should see a nominal increase as relates to that, which is expected as you open the credit aperture. You're also going to start to feel the effects of some of the new programs. If you think about it, Walmart only started in the fourth quarter, you're only starting to see a very little bit of out losses today, but that will begin to come through the book in the latter part of this year, particularly the fourth quarter into 2027. That will continue to kind of grow in here. Again, we feel really good about the aperture. I don't think we feel a need to do that. I think when you hear people talk about, well, at the margins, that's lower return, we're just not going to take a lower return. There's no reason for us to do that. We'd rather be consistent and more stable with our partners, merchants, and providers. Speaking of Walmart, as you look at the first year of OnePay, you're coming up on that anniversary. How meaningful has that been to the growth so far, and what do you expect over the next few years? First, Walmart is just such an iconic retailer, and it has such scale and distribution, both not only in the stores, but digitally. We're very proud of the fact that they selected us to come back after our relationship terminated in 2019. That really speaks to the testament of our capabilities, both digitally, our capabilities to execute, whether it's in a digital channel or a physical channel, and the way in which we are leaders in this space. We're really proud of that aspect. Let me just start there. Obviously, because of the size and scale of this, it is probably the fastest de novo, or is the fastest de novo that we've had. Now, again, the first Walmart program was a de novo, and we got from $0 to $9 billion over 20 years. This is different because it's much bigger than what it was before. I think when we look at the program itself, I think we're really proud of, one, the value proposition that really resonates with the Walmart+ consumer. They see the 5% off and they're engaging with the brand. That's really where your first start is. Do you have a compelling value proposition to provide that? Walmart's meaningfully leaning into that Walmart+ as an important aspect for loyalty for the consumer. The value proposition is great. We're seeing great engagement at that high end in the Walmart+. I think if you look at the digital placement, it's terrific on the site. We're really proud about that. Something very different than what we had back in 2018 and 2019. I'd sit there and say the opportunity, though, Jeff, as we step into the back half of this year is how do we get a little bit more production out of the stores, right? You got great signs in the stores, QR codes in the stores. There's certain places in the stores you can do it. How do we get into the point of sale and not disrupt the flow that's there? We're really proud of the relationship we have with the senior Walmart team. The OnePay team is terrific. It pushes us on innovation every day. From our standpoint, it's off to a terrific start, and there's more opportunity to go here as we look forward. The last thing I'd say is most certainly you can see some of the effects that are going to be in that diversified value segment. In that segment, we also have some tremendous retailers who are doing quite well, TJX, Sam's Club, et cetera. Obviously, it's contributing, and you can feel the effects slightly in the growth rate. Hopefully we can get to that $9 billion quicker than 20 years this time, right? I don't know. Listen, our view is it's going to be a top 10. Can it be a top five? Obviously, it has the potential, we'll take it day by day. Relatedly, the pipeline, you've described that as pretty robust. You continue to add partners at a pretty healthy clip. How have your partnership priorities evolved over the past few years, and where do you see the most compelling growth opportunities near term versus long term? Yeah, Jeff, let's first start about what we've done since the pandemic, exiting the pandemic since 2021. We renewed over 300 partnership relationships. 16 of our top 20 partner relationships have been renewed in that period. All of our top five are 30 and beyond. 97% of interest and fee revenue from our top 25 are 28 and beyond. We've done a very good job, I think, of maintaining our current relationships and demonstrating value to our partners, merchants, and providers. We feel really good about that. I think you think about the number of wins that we've had, yes, we have Walmart. But yes, Bob's, which is a top 10 furniture retailer in the U.S., RH, Chico's, J.Crew, you go down. There's some iconic brands that are in there. It just goes back again to the capabilities that we have, both digitally and that. I think when you think about what's important to the retailers and the merchants and the providers is a couple things. One, we are digitally advanced, right? Whether it's the applied pre-qualification, the significance we have in Synchrony PRISM and the innovation we have in our advanced underwriting, which recently was recognized with the Innovation of the Year award from American Banker. Those are real competitive advantages when we go to get relationships. What we focus on in priority there is number one, why does someone have a program? What is it? For us, a really successful program goes, I'm going to my most loyal customers. If you're not a loyal customer, and you're just kind of going in there, and you want credit, that's probably not the right product for that individual. First of all, do they have a focus on what they want to accomplish with the program? Is it the focus of the C-suite, right? Are they going to push that, or is it okay, hey, listen, I'm going to focus on something else, either digitally or in store. Really, as it kind of goes back to can you have people that have a loyal base, is it important to them as they navigate their business? Then it kind of goes into, okay, are they going to grow, or what's happening with that? There's a lot of things that we have the potential to look at and bid on. If it's something that's not really going to grow or people are trying to monetize a different way, it's something that we'll pass on. Again, it goes back to having multi-product, having the digital capabilities, having the advanced underwriting. Again, I'll just end on this. Everyone, Jeff, will come here and tell you their underwriting's the best, right? I would sit back and say, in any competitive process, I would tell a merchant or a partner, if you gave me a FICO score, I guarantee, well, I shouldn't say guarantee, but I would lead to believe that we would have a better outcome on underwriting versus what they're getting today. That's proven past history. Maybe it's not all true every time, but I would tend to bet that we would have a better underwriting because the data in what we do. As you've been able to win some of these partnerships recently and since COVID, as you acknowledged the renewals there. You touched on some of this, what are the priorities your partners are focused on in these discussions, and have you seen a shift or any evolution in the competitive environment around renewals and RFPs and maybe just where is buy now, pay later coming in the equation as well? I've been in this business 28 years, I think if you go back 15 years ago, it was about economics. They said, okay, great, you have the capabilities. We'll see. It's about economics. Now there's much more discussion, the discussions happen actually more advanced than they did earlier. They start earlier, they really want to focus on what are your capabilities. Can you deliver for me digitally? Is it seamless for the consumer? I look at some of the innovations that we've brought in over the last five years, whether it's our API calls. If you're in Venmo, you cannot tell you're dealing with us versus Venmo. Can you have the digital assets to embed wherever they're kind of going to go, number one. Number two, I think with our scale is multi-product. We can do installment lending. We can do secured. We can do private label. We can do dual card. We have the full suite. We can do that for consumer. We can do it for commercial. Having a broad suite allows them to sit back and say, okay, if a consumer's coming with us digitally or in a retail format, how can I get the best product in their hands? You look at our base, and you sit around and say, listen, with approximately 70 million average active customers, you have a deep customer knowledge that you can get value props that resonate. That's really what we see. Now, when it kind of gets to buy now, pay later, their model's different, right? They don't give as much credit out. They don't want to go into the bigger ticket because they don't want the line tied up there. They generally play in a smaller ticket and generally play with a different type of consumer. They're one that was more cash-oriented. Maybe a little bit lower on the credit spectrum. That's why they use the kind of purchasing power or a line as a throttle to control credit because they can't take exposure on the bigger tickets where we can. So even where they're in place with our merchants or partners, we haven't really felt any true ramifications of that. That's not to say that we don't have a healthy, productive paranoia about what they're trying to do. They're trying to get scale, number one. Number two, they realize that just having an installment offering is not something that providers necessarily want or partners. They're trying to get a multi-product set, but they don't really have the scale yet. The competitive dynamics are interesting. I think when you think about true competitors we deal with, Citi shifted focus more to co-brand. I think they'll try to maintain some of their premier brands in Macy's and The Home Depot. Cap One, I'm sure who will be here, and they're trying to figure, I shouldn't say, they probably understand, but where they go in the retail partnership business versus Discover versus their brand. Barclays is one that's probably a little bit more aggressive and at times, I'd say irrational as they try to get scale. Again, if you don't have a lot of history, it's tough. They don't have a lot of levers other than price sometimes to compete. Then Bread, we don't really see them as much. We overlap in a small segment, but I think they probably want to come closer to some of our segment, but they just have a different scale and balance sheet than we have. Speaking of some of your larger competitors, we just got a new re-proposal for the capital rules. The comment period's wrapping up here. Maybe just touch into how you're thinking about using this 125-150 basis points of capital relief you estimated. Could these changes, in your view, maybe create some advantages for you versus your larger peers that have to deal with the more burdensome requirements potentially? Any other feedback you've maybe been giving your regulators? Let's first start with if you're investing in Synchrony, our capital position and our ability to generate significant amount of capital is a strategic advantage. You look at our current capital position at 12.7% CET1 at the end of the first quarter. Our target's 11. Our stress capital buffer is at 250 until 2028. When you look at that, and then look when we showed you back in the first quarter, in the last trailing 12 months, we generated 350 basis points of CET1. This is business because the higher return throws off a lot of capital. Start there, that we have this tremendous ability with the capital we generate, but also in the capital that we produce each quarter and year. That's a competitive strength. With regard to where you started the question about how do you think about the 125-150 basis points, we spend no time on that, Jeff, right now because there's a number of things that have to happen in advance of that. The first thing is you have to have the comment period to close on this rule. You have to get through their stress testing that will come out probably in the third quarter, rules around that and what's going to change there. You have the responses to this, and you'll have the rules that kind of come out at the end of the year, most likely. When you look at what Basel III says, and I'll go through it, if it went in as written, we would go under the standardized approach and get that benefit of 125-150 basis points, more likely. The advanced approach is not as favorable for us because while you get incremental RWA reduction, what it brings into is two things that are really, or three elements that are really hurtful to us. Number one, it treats all open to buy as equal. Right? A lot of our open to buy is on one and done furniture accounts, high-end tickets, high FICOs. It just does, it puts the conversion factors and peanut butters it. It takes off quite a bit of the benefit from the RWA reduction. The second thing, it introduces operational risk RWAs, which double counts with what happens in stress. Third, it's a little bit more punitive around the DTA. Obviously, we'll comment on that. I think the industry most certainly, from the card side, will lean into the operational risk piece a little bit, and most certainly we'll provide our comments. Hopefully, the rule's out by the end of the year, and then we can figure out what we want to do with that capital. I think people got to think about what the rating agencies or other people are going to think when this comes out. The good news with the rating agencies and us, we just went through our process with the rating agencies, but they look at our balance sheet and the loss absorption capacity we have at close to 25%, it just puts us in a really good position with them. Something we have to watch. All right. As we take it back to the conversation we had around your investments in digital engagement, launching new partners, your efficiency ratio has ticked up a little bit. As you look to return to positive operating leverage, where do you see yourselves today in your overall investment cycle? How much efficiency upside do you think exists beyond this year? How do we think about you getting back down to that 32%-33% level that you target? Yeah. The first thing, this is interesting because the RSA have played a role in the denominator. Some of the inflation you see in the efficiency ratio is because that comes into play, which is more unique for Synchrony. I think when you think about a dollar expense base, we're generally consistent quarter-on-quarter, and that's where we gave some frameworks as we move out. The investment has been relatively consistent. No matter where we are, we're looking for that longer term. We're going to continue to focus on health and wellness, which is our, just a strategic asset that we have in our sales platforms. We're going to continue to focus on accelerating our customer experiences with digital. We're going to continue to invest in Synchrony PRISM. We're going to continue to invest in the consumer bank. Where we've ticked up spending this year has been really in a couple of technology areas, right? Number one, AI, and number two, cloud. We want cloud to accelerate here and get through our journey, which we expect to be the end part of 2027. Listen, we have to be investing in AI, both from a growth standpoint, also from a productivity standpoint. I don't view investment as accelerating from here. I know that's a lot of fear from customers, that it's going to accelerate. I think you'll see some modest increase this year, then, in theory, as we get back to growth, you'll get that operating leverage to come back through. Most certainly as losses come back inside the long-term target zone, I think it helps on the denominator side to bring the efficiency ratio down. Speaking of AI, some of that tech spend is going towards agentic commerce. As commerce does become more automated, how do you see Synchrony's role evolving maybe beyond the traditional retail card product you've historically offered? Where do you think you can maybe differentiate between the other providers in the ecosystem? Yeah. We're working in almost every swim lane as we can because I think, Jeff, no one knows how agentic commerce is actually going to win and evolve here, right? I think everyone has their own view depending upon their own business model, but the consumer is not screaming, I want agentic commerce. Right? So, these technology companies and others are trying to figure out what the right way for the consumer to do it, and consumer preference is going to come in. We're focused on working through the apps, and where you see AI. We're focused on browsers and things like that, where you have protocols that you want to go through there. We're working with our merchant partners who are using agentic commerce as a means if you come onto their site. Obviously we're investing in agentic AI as it relates to our marketplace. We don't know who's going to win. No one knows who's going to win. We're three to five years out with agentic, but you have to play all the pieces. What's really important for us is how do we get our products to show up, whether it's in a ChatGPT or a Claude or a Gemini. How do you have that provisioning there? How do you kind of direct it back to some of our merchant partners? It's really about making sure that we don't get disintermediated as someone else tries to create the experience. You want the experience to be somewhat seamless, but we're going to have to play all the angles out here. That's where we're focused on it. Again, we're partnering with the big AI companies as well as the big browser companies. We're going to continue to play through. It is a transformational period, we can't lose sight of what is the consumer preference going to be. Okay. As I think about Synchrony, speaking of evolution here, you've historically operated as more of a, what I would think of as behind the scenes for your retail partners. The consumer doesn't always know who you are. You have increasingly leaned into proprietary co-brand. Do you see more of an opportunity over the long term to really build greater consumer affinity for your brand? Or do you still view your mode as kind of being that embedded partner of choice for your retail partners? I think it's broader. When you think about $140 million trade lines, you think of the fact that we opened $20 million accounts last year, that every application that comes through, 60%-70% of them, we've seen them or do business with them. More people actually know who Synchrony is than you give it credit for. If you go onto our platform we call Vista, you can see your accounts all on there. Consumers actually do know what it is. What we have to be able to do better in any case is how do I kind of bring more options to them, not to intermediate where our partner business is, but how do we augment it? I think you're seeing that. It goes back to having partnerships and having broad-based utilities and strong value propositions that resonate with those consumers that drives you forward. I don't think it's a dramatic shift for us. It's part of our evolution. We've been doing this for 100 years now, or close to 100 years. It's part of an evolution where we can leverage the scale of our business. Are there any other capabilities you think will become increasingly important for you to build or deepen over the coming years as we sort of see this evolution in the retail ecosystem? Yeah. It's all about the customer experience. How do you make it seamless for the customer to do business with you? I think this is where scale matters, right? How do you make it easy for them to apply, to buy, to service? That experience with strong value proposition is going to resonate more. That multi-product view that says, hey, listen, Synchrony will be there for whatever my financing needs are going to be to purchase a good or service. All right. If we fast-forward three years from today, what do you think investors are most underestimating about the earnings power of your business today? Yeah. The first thing, again, I'll start with some things that people don't tend to focus on. If you go back to since 2021, so exiting out of the pandemic, our average growth rate's 7%. Our average ROA is high 2s to 3. ROTCE is 25%+. That's pretty good performance in the last several years. I think as we look forward, our goal is, listen, how do we get back to, again, with an uncertain environment today, but hopefully the environment becomes more certain. How do we get back to that long-term growth framework of 7%-10%, maintain the losses, and then through strong capital, delivering back double-digit EPS growth? That's what I think we want. The investment thesis here in the company is going to be, and always has been, I want to be a higher growth, not necessarily to the top, but a couple times GDP. I want to be the best-in-class ROA, right? I want to have stability. You see that with the RSA. Couple that with strong capital generation, that's why you invest in this company. We've been around for 100 years. We continue to evolve. We have probably some of the best digital assets that will produce hopefully double-digit earnings growth. All right. Well, with that's our last question. Thank you, Brian. Appreciate you joining us today. Great. Jeffrey, good luck with your conference, and thanks for the invitation. Appreciate it. Thank you.

Speaker 2: Good morning, everybody. My name is Jeff Adelson, U.S. Consumer Finance Analyst here at Morgan Stanley. Kicking off the 17th Annual Financials Conference here at Morgan Stanley is Synchrony Financial. Before we get into that, just a few stats. We have 136 participating companies this year. That's a record for us. 483 corporate attendees overall representing $5.5 trillion of market cap. With that, Brian Wenzel, welcome. Good morning, everybody. good morning everybody My name is Jeff Adelson, U.S. my name is jeff adelson u.s Consumer Finance Analyst here at Morgan Stanley. consumer finance analyst here at morgan stanley Kicking off the 17th Annual Financials Conference here at Morgan Stanley is Synchrony Financial. kicking off the 17th annual financials conference here at morgan stanley is synchrony financial Before we get into that, just a few stats. before we get into that just a few stats We have 136 participating companies this year. we have 136 participating companies this year That's a record for us. 483 corporate attendees overall representing $5.5 trillion of market cap. that's a record for us 483 corporate attendees overall representing $5.5 trillion of market cap With that, Brian Wenzel, welcome. with that brian wenzel welcome

Speaker 1: Jeff, thank you. Thanks for the invite, and glad to be here. Jeff, thank you. jeff thank you Thanks for the invite, and glad to be here. thanks for the invite and glad to be here

Speaker 2: Maybe we can start with some exciting data you put out this morning. You put your 8-K out. Looks like you saw a third consecutive month of positive loan growth. Delinquencies came in a little bit better than seasonality. How do these trends compare to your expectations for the year? Maybe we can start with some exciting data you put out this morning. maybe we can start with some exciting data you put out this morning You put your 8-K out. you put your 8-k out Looks like you saw a third consecutive month of positive loan growth. looks like you saw a third consecutive month of positive loan growth Delinquencies came in a little bit better than seasonality. delinquencies came in a little bit better than seasonality How do these trends compare to your expectations for the year? how do these trends compare to your expectations for the year

Speaker 1: Yeah. First of all, we're incredibly proud of the results this morning. For those that didn't get up at 6:00 to read it, our 30-plus delinquencies was 4.2. If you really look back at that trend over the last 12 months, it's been very consistent. When we look at it versus seasonality, it's better than seasonality. When you look back to the 2017-2019, more normalized window, net charge-offs, right in line. You've got to cycle adjust a couple of things when you look at it, either year-over-year or sequentially. But, losses came in great. Credit continues to perform. The focus of a lot of discussions, Jeff, has been around growth. The EOP asset growth up 1.8%. When you look at it on a linked quarter basis, particularly when you look at April having Lowe's commercial kind of come in, you actually did beat seasonality in May. Yeah. yeah First of all, we're incredibly proud of the results this morning. first of all we're incredibly proud of the results this morning For those that didn't get up at 6:00 to read it, our 30-plus delinquencies was 4.2. for those that didn't get up at 6:00 to read it our 30-plus delinquencies was 4.2 If you really look back at that trend over the last 12 months, it's been very consistent. if you really look back at that trend over the last 12 months it's been very consistent When we look at it versus seasonality, it's better than seasonality. when we look at it versus seasonality it's better than seasonality When you look back to the 2017-2019, more normalized window, net charge-offs, right in line. when you look back to the 2017-2019 more normalized window net charge-offs right in line You've got to cycle adjust a couple of things when you look at it, either year-over-year or sequentially. But, losses came in great. you've got to cycle adjust a couple of things when you look at it either year-over-year or sequentially. but losses came in great Credit continues to perform. credit continues to perform The focus of a lot of discussions, Jeff, has been around growth. the focus of a lot of discussions jeff has been around growth The EOP asset growth up 1.8%. the eop asset growth up 1.8% When you look at it on a linked quarter basis, particularly when you look at April having Lowe's commercial kind of come in, you actually did beat seasonality in May. when you look at it on a linked quarter basis particularly when you look at april having lowe's commercial kind of come in you actually did beat seasonality in may Right? If you think about end of first quarter, we're 42 basis points. We did add Lowe's, now we're 1.8, and we continue to be there. Purchase volume continues to be strong. Right? right If you think about end of first quarter, we're 42 basis points. if you think about end of first quarter we're 42 basis points We did add Lowe's, now we're 1.8, and we continue to be there. we did add lowe's now we're 1.8 and we continue to be there Purchase volume continues to be strong. purchase volume continues to be strong

Speaker 2: You're recently starting to see this better growth. Second quarter is seasonally important for several of these discretionary categories you have in the business, home and auto, power sports, so forth. Based on what you saw in today's data and based on what you saw around Memorial Day into June, how are the spending trends tracking for this quarter? You're recently starting to see this better growth. you're recently starting to see this better growth Second quarter is seasonally important for several of these discretionary categories you have in the business, home and auto, power sports, so forth. second quarter is seasonally important for several of these discretionary categories you have in the business home and auto power sports so forth Based on what you saw in today's data and based on what you saw around Memorial Day into June, how are the spending trends tracking for this quarter? based on what you saw in today's data and based on what you saw around memorial day into june how are the spending trends tracking for this quarter

Speaker 1: Yeah. It's interesting for CFOs as we kind of come here because you feel like you're all saying the same thing. The consumer has been resilient. I know people, if you watch CNBC, maybe you don't feel that quite as much from what they say. Really, as we look at what purchase volume has done, first of all, started exiting out of 2025, it accelerated into the beginning part of the first quarter, and it's actually maintained that pace in the mid to high single digits. We feel good about purchase volume overall as you kind of go in. If you drop down, you're incredibly right about how important part of our business is in the second quarter, particularly on Memorial Day, when you look at it. We have really started to see some green shoots. Yeah. yeah It's interesting for CFOs as we kind of come here because you feel like you're all saying the same thing. it's interesting for cfos as we kind of come here because you feel like you're all saying the same thing The consumer has been resilient. the consumer has been resilient I know people, if you watch CNBC, maybe you don't feel that quite as much from what they say. i know people if you watch cnbc maybe you don't feel that quite as much from what they say Really, as we look at what purchase volume has done, first of all, started exiting out of 2025, it accelerated into the beginning part of the first quarter, and it's actually maintained that pace in the mid to high single digits. really as we look at what purchase volume has done first of all started exiting out of 2025 it accelerated into the beginning part of the first quarter and it's actually maintained that pace in the mid to high single digits We feel good about purchase volume overall as you kind of go in. we feel good about purchase volume overall as you kind of go in If you drop down, you're incredibly right about how important part of our business is in the second quarter, particularly on Memorial Day, when you look at it. if you drop down you're incredibly right about how important part of our business is in the second quarter particularly on memorial day when you look at it We have really started to see some green shoots. we have really started to see some green shoots If I kind of look at Memorial Day, some areas where we've seen pressure were positives, by a good bit over 2025. When I think about HVAC, when I think about home improvement, when I think about furniture, we've seen strength in those categories. Even in luxury, you kind of see people out shopping, maybe because there's a lot of rain here in the Northeast. People went through that. Outdoor continues to be a little bit of a challenge on some of those bigger-ticket places there. We really saw green shoots with regard to discretionary purchases and what the consumer's willing to do. Relative strength, I'd say, from a purchase volume perspective. If I kind of look at Memorial Day, some areas where we've seen pressure were positives, by a good bit over 2025. if i kind of look at memorial day some areas where we've seen pressure were positives by a good bit over 2025 When I think about HVAC, when I think about home improvement, when I think about furniture, we've seen strength in those categories. when i think about hvac when i think about home improvement when i think about furniture we've seen strength in those categories Even in luxury, you kind of see people out shopping, maybe because there's a lot of rain here in the Northeast. even in luxury you kind of see people out shopping maybe because there's a lot of rain here in the northeast People went through that. people went through that Outdoor continues to be a little bit of a challenge on some of those bigger-ticket places there. outdoor continues to be a little bit of a challenge on some of those bigger-ticket places there We really saw green shoots with regard to discretionary purchases and what the consumer's willing to do. we really saw green shoots with regard to discretionary purchases and what the consumer's willing to do Relative strength, I'd say, from a purchase volume perspective. relative strength i'd say from a purchase volume perspective

Speaker 2: That's particularly notable given what we've seen from gas prices, I think, recently. What else are you seeing from the consumer under the hood there? Any shifts in behaviors as consumers have dealt with those higher prices? Obviously, we saw the higher tax refunds come through as well. That's particularly notable given what we've seen from gas prices, I think, recently. that's particularly notable given what we've seen from gas prices i think recently What else are you seeing from the consumer under the hood there? what else are you seeing from the consumer under the hood there Any shifts in behaviors as consumers have dealt with those higher prices? any shifts in behaviors as consumers have dealt with those higher prices Obviously, we saw the higher tax refunds come through as well. obviously we saw the higher tax refunds come through as well

Speaker 1: Let me unpack that question a little bit. I think the first thing, Jeff, is to understand how gas prices really kind of flow through to the consumer. Everyone kind of presumes you see this increase and immediately has an effect. We've gone back a long period of time to look at significant gas price increases and what it correlates to and what it doesn't correlate to and how it works. The first, I'll say a little bit of misnomer or urban legend is gas prices are correlated to delinquency. They're actually not. We haven't seen any of the data in our data where it's coordinated. Where you start to see the first thing that has to happen is you have to have a significant increase in gas. That would be $1 to $1.25. Okay, you can check that box. Let me unpack that question a little bit. let me unpack that question a little bit I think the first thing, Jeff, is to understand how gas prices really kind of flow through to the consumer. i think the first thing jeff is to understand how gas prices really kind of flow through to the consumer Everyone kind of presumes you see this increase and immediately has an effect. everyone kind of presumes you see this increase and immediately has an effect We've gone back a long period of time to look at significant gas price increases and what it correlates to and what it doesn't correlate to and how it works. we've gone back a long period of time to look at significant gas price increases and what it correlates to and what it doesn't correlate to and how it works The first, I'll say a little bit of misnomer or urban legend is gas prices are correlated to delinquency. the first i'll say a little bit of misnomer or urban legend is gas prices are correlated to delinquency They're actually not. they're actually not We haven't seen any of the data in our data where it's coordinated. we haven't seen any of the data in our data where it's coordinated Where you start to see the first thing that has to happen is you have to have a significant increase in gas. where you start to see the first thing that has to happen is you have to have a significant increase in gas That would be $1 to $1.25. that would be $1 to $1.25 Okay, you can check that box. okay you can check that box It was $3 nationally in February, and it's up over $4 now. You're there. There is a period of time it takes for it to work its way to the consumer. If people are expecting to see changes in behavior patterns after a couple of months, that's not what the data historically has told us. It has to be much more prolonged. I think if you look out in, call it end of September and October, if there's not relief when it comes to gas, then I think you sit back and say, okay, is there going to be ramifications? As it flows through the consumer, clearly, the consumer feels the pressure of gas prices. It was $3 nationally in February, and it's up over $4 now. it was $3 nationally in february and it's up over $4 now You're there. you're there There is a period of time it takes for it to work its way to the consumer. there is a period of time it takes for it to work its way to the consumer If people are expecting to see changes in behavior patterns after a couple of months, that's not what the data historically has told us. if people are expecting to see changes in behavior patterns after a couple of months that's not what the data historically has told us It has to be much more prolonged. it has to be much more prolonged I think if you look out in, call it end of September and October, if there's not relief when it comes to gas, then I think you sit back and say, okay, is there going to be ramifications? i think if you look out in call it end of september and october if there's not relief when it comes to gas then i think you sit back and say okay is there going to be ramifications As it flows through the consumer, clearly, the consumer feels the pressure of gas prices. as it flows through the consumer clearly the consumer feels the pressure of gas prices I'd say they're in the stage 1 right now, which is you go to the gas pump and you're annoyed, watching the meter if you're in a state where you actually pump gas, not like Jersey. You go through that annoyance factor that you have, but it hasn't really changed their overall level of consumption. We do see a little bit of shift where the non-discretionary piece is rising faster than the discretionary. Clearly, it is having some effect, but it's not impacting the overall impact of spending for the consumer itself. I'd say they're in the stage 1 right now, which is you go to the gas pump and you're annoyed, watching the meter if you're in a state where you actually pump gas, not like Jersey. i'd say they're in the stage 1 right now which is you go to the gas pump and you're annoyed watching the meter if you're in a state where you actually pump gas not like jersey You go through that annoyance factor that you have, but it hasn't really changed their overall level of consumption. you go through that annoyance factor that you have but it hasn't really changed their overall level of consumption We do see a little bit of shift where the non-discretionary piece is rising faster than the discretionary. we do see a little bit of shift where the non-discretionary piece is rising faster than the discretionary Clearly, it is having some effect, but it's not impacting the overall impact of spending for the consumer itself. clearly it is having some effect but it's not impacting the overall impact of spending for the consumer itself

Speaker 2: As you sort of did that historical look back on delinquencies where it didn't have an impact, what maybe are the early indicators elsewhere you look at there? As you sort of did that historical look back on delinquencies where it didn't have an impact, what maybe are the early indicators elsewhere you look at there? as you sort of did that historical look back on delinquencies where it didn't have an impact what maybe are the early indicators elsewhere you look at there

Speaker 1: The first thing, when gas starts to land the consumer. What you'll see is in the middle section, right? You'll see some of the consumers start to save maybe a little bit more money, putting it in their checking account because they know gas is going to be a little bit higher. Overall, what you'll start to see is, okay, the consumer will begin to decrease the average transaction value, but increase frequency. They're trying to make cash go a little bit further than it has there. You start to see it flow through. They're making more frequent purchases, but because they're trying to stretch dollars, you'll see that they may try to stretch dollars in other ways, particularly grocery, et cetera. The first thing, when gas starts to land the consumer. What you'll see is in the middle section, right? the first thing when gas starts to land the consumer. what you'll see is in the middle section right You'll see some of the consumers start to save maybe a little bit more money, putting it in their checking account because they know gas is going to be a little bit higher. you'll see some of the consumers start to save maybe a little bit more money putting it in their checking account because they know gas is going to be a little bit higher Overall, what you'll start to see is, okay, the consumer will begin to decrease the average transaction value, but increase frequency. overall what you'll start to see is okay the consumer will begin to decrease the average transaction value but increase frequency They're trying to make cash go a little bit further than it has there. they're trying to make cash go a little bit further than it has there You start to see it flow through. you start to see it flow through They're making more frequent purchases, but because they're trying to stretch dollars, you'll see that they may try to stretch dollars in other ways, particularly grocery, et cetera. they're making more frequent purchases but because they're trying to stretch dollars you'll see that they may try to stretch dollars in other ways particularly grocery et cetera What you would just start to see is the first thing that begins to impact is sales, and you'll pull back and you'll have payment rate slow down, which to be honest with you would be somewhat helpful for asset growth. You need those factors to kind of work its way through the system. I generally believe when you think about the unemployment market here in the U.S. and where unemployment strength is, you're not going to see it tip the consumer. At least that's not our belief, that it tips the consumer, but it most certainly can impact spending behavioral patterns and payment behavioral patterns really in the latter part of 2026 if it's unabated from the levels that it is today. What you would just start to see is the first thing that begins to impact is sales, and you'll pull back and you'll have payment rate slow down, which to be honest with you would be somewhat helpful for asset growth. what you would just start to see is the first thing that begins to impact is sales and you'll pull back and you'll have payment rate slow down which to be honest with you would be somewhat helpful for asset growth You need those factors to kind of work its way through the system. you need those factors to kind of work its way through the system I generally believe when you think about the unemployment market here in the U.S. and where unemployment strength is, you're not going to see it tip the consumer. i generally believe when you think about the unemployment market here in the u.s and where unemployment strength is you're not going to see it tip the consumer At least that's not our belief, that it tips the consumer, but it most certainly can impact spending behavioral patterns and payment behavioral patterns really in the latter part of 2026 if it's unabated from the levels that it is today. at least that's not our belief that it tips the consumer but it most certainly can impact spending behavioral patterns and payment behavioral patterns really in the latter part of 2026 if it's unabated from the levels that it is today

Speaker 2: Got it, not seeing it yet, but something to keep an eye on in the back half of the year. Got it, not seeing it yet, but something to keep an eye on in the back half of the year. got it not seeing it yet but something to keep an eye on in the back half of the year

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Okay. Makes sense. Maybe just switching to some of the more growth-oriented parts of the business. You took a number of credit actions, and with those largely behind you now have your charge operate at or below the historic range you target, 5.5%-6%. As you've started to see this loan growth inflect, I think about 30% of your credit adjustments are now back on or reversed and those start to season, how are you thinking about the pace of incremental reopening of credit from here? Maybe longer term, how are you balancing the credit risk of returning to your long-term growth objective versus maintaining good credit discipline? Okay. okay Makes sense. makes sense Maybe just switching to some of the more growth-oriented parts of the business. maybe just switching to some of the more growth-oriented parts of the business You took a number of credit actions, and with those largely behind you now have your charge operate at or below the historic range you target, 5.5%-6%. you took a number of credit actions and with those largely behind you now have your charge operate at or below the historic range you target 5.5%-6% As you've started to see this loan growth inflect, I think about 30% of your credit adjustments are now back on or reversed and those start to season, how are you thinking about the pace of incremental reopening of credit from here? as you've started to see this loan growth inflect i think about 30% of your credit adjustments are now back on or reversed and those start to season how are you thinking about the pace of incremental reopening of credit from here Maybe longer term, how are you balancing the credit risk of returning to your long-term growth objective versus maintaining good credit discipline? maybe longer term how are you balancing the credit risk of returning to your long-term growth objective versus maintaining good credit discipline

Speaker 1: The first thing, I think for those people who invest in Synchrony, I think they appreciate the fact that we are laser-focused on risk-adjusted returns. We're not going to bend on risk-adjusted returns to just try to grow the business for growing the business's sake. Lending businesses are the easiest businesses to grow. They're more difficult to obtain credit on. Our belief is we'd rather have a better ROA than try to just get growth. We're going to be much more disciplined when it comes to how we think about that. Particularly when you think about our credit aperture and what we did in the back half of 2025, that takes about a year to season in. You'll start to see the effects of that in the latter part of 2026 into 2027. The first thing, I think for those people who invest in Synchrony, I think they appreciate the fact that we are laser-focused on risk-adjusted returns. the first thing i think for those people who invest in synchrony i think they appreciate the fact that we are laser-focused on risk-adjusted returns We're not going to bend on risk-adjusted returns to just try to grow the business for growing the business's sake. we're not going to bend on risk-adjusted returns to just try to grow the business for growing the business's sake Lending businesses are the easiest businesses to grow. lending businesses are the easiest businesses to grow They're more difficult to obtain credit on. they're more difficult to obtain credit on Our belief is we'd rather have a better ROA than try to just get growth. our belief is we'd rather have a better roa than try to just get growth We're going to be much more disciplined when it comes to how we think about that. we're going to be much more disciplined when it comes to how we think about that Particularly when you think about our credit aperture and what we did in the back half of 2025, that takes about a year to season in. particularly when you think about our credit aperture and what we did in the back half of 2025 that takes about a year to season in You'll start to see the effects of that in the latter part of 2026 into 2027. you'll start to see the effects of that in the latter part of 2026 into 2027 While the credit's good now, you should see a nominal increase as relates to that, which is expected as you open the credit aperture. You're also going to start to feel the effects of some of the new programs. If you think about it, Walmart only started in the fourth quarter, you're only starting to see a very little bit of out losses today, but that will begin to come through the book in the latter part of this year, particularly the fourth quarter into 2027. That will continue to kind of grow in here. Again, we feel really good about the aperture. I don't think we feel a need to do that. I think when you hear people talk about, well, at the margins, that's lower return, we're just not going to take a lower return. While the credit's good now, you should see a nominal increase as relates to that, which is expected as you open the credit aperture. while the credit's good now you should see a nominal increase as relates to that which is expected as you open the credit aperture You're also going to start to feel the effects of some of the new programs. you're also going to start to feel the effects of some of the new programs If you think about it, Walmart only started in the fourth quarter, you're only starting to see a very little bit of out losses today, but that will begin to come through the book in the latter part of this year, particularly the fourth quarter into 2027. if you think about it walmart only started in the fourth quarter you're only starting to see a very little bit of out losses today but that will begin to come through the book in the latter part of this year particularly the fourth quarter into 2027 That will continue to kind of grow in here. that will continue to kind of grow in here Again, we feel really good about the aperture. again we feel really good about the aperture I don't think we feel a need to do that. i don't think we feel a need to do that I think when you hear people talk about, well, at the margins, that's lower return, we're just not going to take a lower return. i think when you hear people talk about well at the margins that's lower return we're just not going to take a lower return There's no reason for us to do that. We'd rather be consistent and more stable with our partners, merchants, and providers. There's no reason for us to do that. there's no reason for us to do that We'd rather be consistent and more stable with our partners, merchants, and providers. we'd rather be consistent and more stable with our partners merchants and providers

Speaker 2: Speaking of Walmart, as you look at the first year of OnePay, you're coming up on that anniversary. How meaningful has that been to the growth so far, and what do you expect over the next few years? Speaking of Walmart, as you look at the first year of OnePay, you're coming up on that anniversary. speaking of walmart as you look at the first year of onepay you're coming up on that anniversary How meaningful has that been to the growth so far, and what do you expect over the next few years? how meaningful has that been to the growth so far and what do you expect over the next few years

Speaker 1: First, Walmart is just such an iconic retailer, and it has such scale and distribution, both not only in the stores, but digitally. We're very proud of the fact that they selected us to come back after our relationship terminated in 2019. That really speaks to the testament of our capabilities, both digitally, our capabilities to execute, whether it's in a digital channel or a physical channel, and the way in which we are leaders in this space. We're really proud of that aspect. Let me just start there. Obviously, because of the size and scale of this, it is probably the fastest de novo, or is the fastest de novo that we've had. Now, again, the first Walmart program was a de novo, and we got from $0 to $9 billion over 20 years. This is different because it's much bigger than what it was before. First, Walmart is just such an iconic retailer, and it has such scale and distribution, both not only in the stores, but digitally. first walmart is just such an iconic retailer and it has such scale and distribution both not only in the stores but digitally We're very proud of the fact that they selected us to come back after our relationship terminated in 2019. we're very proud of the fact that they selected us to come back after our relationship terminated in 2019 That really speaks to the testament of our capabilities, both digitally, our capabilities to execute, whether it's in a digital channel or a physical channel, and the way in which we are leaders in this space. that really speaks to the testament of our capabilities both digitally our capabilities to execute whether it's in a digital channel or a physical channel and the way in which we are leaders in this space We're really proud of that aspect. we're really proud of that aspect Let me just start there. let me just start there Obviously, because of the size and scale of this, it is probably the fastest de novo, or is the fastest de novo that we've had. obviously because of the size and scale of this it is probably the fastest de novo or is the fastest de novo that we've had Now, again, the first Walmart program was a de novo, and we got from $0 to $9 billion over 20 years. now again the first walmart program was a de novo and we got from $0 to $9 billion over 20 years This is different because it's much bigger than what it was before. this is different because it's much bigger than what it was before I think when we look at the program itself, I think we're really proud of, one, the value proposition that really resonates with the Walmart+ consumer. They see the 5% off and they're engaging with the brand. That's really where your first start is. Do you have a compelling value proposition to provide that? Walmart's meaningfully leaning into that Walmart+ as an important aspect for loyalty for the consumer. The value proposition is great. We're seeing great engagement at that high end in the Walmart+. I think if you look at the digital placement, it's terrific on the site. We're really proud about that. Something very different than what we had back in 2018 and 2019. I think when we look at the program itself, I think we're really proud of, one, the value proposition that really resonates with the Walmart+ consumer. i think when we look at the program itself i think we're really proud of one the value proposition that really resonates with the walmart+ consumer They see the 5% off and they're engaging with the brand. they see the 5% off and they're engaging with the brand That's really where your first start is. that's really where your first start is Do you have a compelling value proposition to provide that? do you have a compelling value proposition to provide that Walmart's meaningfully leaning into that Walmart+ as an important aspect for loyalty for the consumer. walmart's meaningfully leaning into that walmart+ as an important aspect for loyalty for the consumer The value proposition is great. the value proposition is great We're seeing great engagement at that high end in the Walmart+. we're seeing great engagement at that high end in the walmart+ I think if you look at the digital placement, it's terrific on the site. i think if you look at the digital placement it's terrific on the site We're really proud about that. we're really proud about that Something very different than what we had back in 2018 and 2019. something very different than what we had back in 2018 and 2019 I'd sit there and say the opportunity, though, Jeff, as we step into the back half of this year is how do we get a little bit more production out of the stores, right? You got great signs in the stores, QR codes in the stores. There's certain places in the stores you can do it. How do we get into the point of sale and not disrupt the flow that's there? We're really proud of the relationship we have with the senior Walmart team. The OnePay team is terrific. It pushes us on innovation every day. From our standpoint, it's off to a terrific start, and there's more opportunity to go here as we look forward. The last thing I'd say is most certainly you can see some of the effects that are going to be in that diversified value segment. I'd sit there and say the opportunity, though, Jeff, as we step into the back half of this year is how do we get a little bit more production out of the stores, right? i'd sit there and say the opportunity though jeff as we step into the back half of this year is how do we get a little bit more production out of the stores right You got great signs in the stores, QR codes in the stores. you got great signs in the stores qr codes in the stores There's certain places in the stores you can do it. there's certain places in the stores you can do it How do we get into the point of sale and not disrupt the flow that's there? how do we get into the point of sale and not disrupt the flow that's there We're really proud of the relationship we have with the senior Walmart team. we're really proud of the relationship we have with the senior walmart team The OnePay team is terrific. the onepay team is terrific It pushes us on innovation every day. it pushes us on innovation every day From our standpoint, it's off to a terrific start, and there's more opportunity to go here as we look forward. from our standpoint it's off to a terrific start and there's more opportunity to go here as we look forward The last thing I'd say is most certainly you can see some of the effects that are going to be in that diversified value segment. the last thing i'd say is most certainly you can see some of the effects that are going to be in that diversified value segment In that segment, we also have some tremendous retailers who are doing quite well, TJX, Sam's Club, et cetera. Obviously, it's contributing, and you can feel the effects slightly in the growth rate. In that segment, we also have some tremendous retailers who are doing quite well, TJX, Sam's Club, et cetera. in that segment we also have some tremendous retailers who are doing quite well tjx sam's club et cetera Obviously, it's contributing, and you can feel the effects slightly in the growth rate. obviously it's contributing and you can feel the effects slightly in the growth rate

Speaker 2: Hopefully we can get to that $9 billion quicker than 20 years this time, right? Hopefully we can get to that $9 billion quicker than 20 years this time, right? hopefully we can get to that $9 billion quicker than 20 years this time right

Speaker 1: I don't know. Listen, our view is it's going to be a top 10. Can it be a top five? Obviously, it has the potential, we'll take it day by day. I don't know. i don't know Listen, our view is it's going to be a top 10. listen our view is it's going to be a top 10 Can it be a top five? can it be a top five Obviously, it has the potential, we'll take it day by day. obviously it has the potential we'll take it day by day

Speaker 2: Relatedly, the pipeline, you've described that as pretty robust. You continue to add partners at a pretty healthy clip. How have your partnership priorities evolved over the past few years, and where do you see the most compelling growth opportunities near term versus long term? Relatedly, the pipeline, you've described that as pretty robust. relatedly the pipeline you've described that as pretty robust You continue to add partners at a pretty healthy clip. you continue to add partners at a pretty healthy clip How have your partnership priorities evolved over the past few years, and where do you see the most compelling growth opportunities near term versus long term? how have your partnership priorities evolved over the past few years and where do you see the most compelling growth opportunities near term versus long term

Speaker 1: Yeah, Jeff, let's first start about what we've done since the pandemic, exiting the pandemic since 2021. We renewed over 300 partnership relationships. 16 of our top 20 partner relationships have been renewed in that period. All of our top five are 30 and beyond. 97% of interest and fee revenue from our top 25 are 28 and beyond. We've done a very good job, I think, of maintaining our current relationships and demonstrating value to our partners, merchants, and providers. We feel really good about that. I think you think about the number of wins that we've had, yes, we have Walmart. But yes, Bob's, which is a top 10 furniture retailer in the U.S., RH, Chico's, J.Crew, you go down. Yeah, Jeff, let's first start about what we've done since the pandemic, exiting the pandemic since 2021. yeah jeff let's first start about what we've done since the pandemic exiting the pandemic since 2021 We renewed over 300 partnership relationships. 16 of our top 20 partner relationships have been renewed in that period. we renewed over 300 partnership relationships 16 of our top 20 partner relationships have been renewed in that period All of our top five are 30 and beyond. 97% of interest and fee revenue from our top 25 are 28 and beyond. all of our top five are 30 and beyond 97% of interest and fee revenue from our top 25 are 28 and beyond We've done a very good job, I think, of maintaining our current relationships and demonstrating value to our partners, merchants, and providers. we've done a very good job i think of maintaining our current relationships and demonstrating value to our partners merchants and providers We feel really good about that. we feel really good about that I think you think about the number of wins that we've had, yes, we have Walmart. i think you think about the number of wins that we've had yes we have walmart But yes, Bob's, which is a top 10 furniture retailer in the U.S., RH, Chico's, J.Crew, you go down. but yes bob's which is a top 10 furniture retailer in the u.s rh chico's j.crew you go down There's some iconic brands that are in there. It just goes back again to the capabilities that we have, both digitally and that. I think when you think about what's important to the retailers and the merchants and the providers is a couple things. One, we are digitally advanced, right? Whether it's the applied pre-qualification, the significance we have in Synchrony PRISM and the innovation we have in our advanced underwriting, which recently was recognized with the Innovation of the Year award from American Banker. Those are real competitive advantages when we go to get relationships. What we focus on in priority there is number one, why does someone have a program? What is it? There's some iconic brands that are in there. there's some iconic brands that are in there It just goes back again to the capabilities that we have, both digitally and that. it just goes back again to the capabilities that we have both digitally and that I think when you think about what's important to the retailers and the merchants and the providers is a couple things. i think when you think about what's important to the retailers and the merchants and the providers is a couple things One, we are digitally advanced, right? one we are digitally advanced right Whether it's the applied pre-qualification, the significance we have in Synchrony PRISM and the innovation we have in our advanced underwriting, which recently was recognized with the Innovation of the Year award from American Banker. whether it's the applied pre-qualification the significance we have in synchrony prism and the innovation we have in our advanced underwriting which recently was recognized with the innovation of the year award from american banker Those are real competitive advantages when we go to get relationships. those are real competitive advantages when we go to get relationships What we focus on in priority there is number one, why does someone have a program? what we focus on in priority there is number one why does someone have a program What is it? what is it For us, a really successful program goes, I'm going to my most loyal customers. If you're not a loyal customer, and you're just kind of going in there, and you want credit, that's probably not the right product for that individual. First of all, do they have a focus on what they want to accomplish with the program? Is it the focus of the C-suite, right? Are they going to push that, or is it okay, hey, listen, I'm going to focus on something else, either digitally or in store. Really, as it kind of goes back to can you have people that have a loyal base, is it important to them as they navigate their business? Then it kind of goes into, okay, are they going to grow, or what's happening with that? For us, a really successful program goes, I'm going to my most loyal customers. for us a really successful program goes i'm going to my most loyal customers If you're not a loyal customer, and you're just kind of going in there, and you want credit, that's probably not the right product for that individual. if you're not a loyal customer and you're just kind of going in there and you want credit that's probably not the right product for that individual First of all, do they have a focus on what they want to accomplish with the program? first of all do they have a focus on what they want to accomplish with the program Is it the focus of the C-suite, right? is it the focus of the c-suite right Are they going to push that, or is it okay, hey, listen, I'm going to focus on something else, either digitally or in store. are they going to push that or is it okay hey listen i'm going to focus on something else either digitally or in store Really, as it kind of goes back to can you have people that have a loyal base, is it important to them as they navigate their business? really as it kind of goes back to can you have people that have a loyal base is it important to them as they navigate their business Then it kind of goes into, okay, are they going to grow, or what's happening with that? then it kind of goes into okay are they going to grow or what's happening with that There's a lot of things that we have the potential to look at and bid on. If it's something that's not really going to grow or people are trying to monetize a different way, it's something that we'll pass on. Again, it goes back to having multi-product, having the digital capabilities, having the advanced underwriting. Again, I'll just end on this. Everyone, Jeff, will come here and tell you their underwriting's the best, right? I would sit back and say, in any competitive process, I would tell a merchant or a partner, if you gave me a FICO score, I guarantee, well, I shouldn't say guarantee, but I would lead to believe that we would have a better outcome on underwriting versus what they're getting today. That's proven past history. There's a lot of things that we have the potential to look at and bid on. there's a lot of things that we have the potential to look at and bid on If it's something that's not really going to grow or people are trying to monetize a different way, it's something that we'll pass on. if it's something that's not really going to grow or people are trying to monetize a different way it's something that we'll pass on Again, it goes back to having multi-product, having the digital capabilities, having the advanced underwriting. again it goes back to having multi-product having the digital capabilities having the advanced underwriting Again, I'll just end on this. again i'll just end on this Everyone, Jeff, will come here and tell you their underwriting's the best, right? everyone jeff will come here and tell you their underwriting's the best right I would sit back and say, in any competitive process, I would tell a merchant or a partner, if you gave me a FICO score, I guarantee, well, I shouldn't say guarantee, but I would lead to believe that we would have a better outcome on underwriting versus what they're getting today. i would sit back and say in any competitive process i would tell a merchant or a partner if you gave me a fico score i guarantee well i shouldn't say guarantee but i would lead to believe that we would have a better outcome on underwriting versus what they're getting today That's proven past history. that's proven past history Maybe it's not all true every time, but I would tend to bet that we would have a better underwriting because the data in what we do. Maybe it's not all true every time, but I would tend to bet that we would have a better underwriting because the data in what we do. maybe it's not all true every time but i would tend to bet that we would have a better underwriting because the data in what we do

Speaker 2: As you've been able to win some of these partnerships recently and since COVID, as you acknowledged the renewals there. You touched on some of this, what are the priorities your partners are focused on in these discussions, and have you seen a shift or any evolution in the competitive environment around renewals and RFPs and maybe just where is buy now, pay later coming in the equation as well? As you've been able to win some of these partnerships recently and since COVID, as you acknowledged the renewals there. as you've been able to win some of these partnerships recently and since covid as you acknowledged the renewals there You touched on some of this, what are the priorities your partners are focused on in these discussions, and have you seen a shift or any evolution in the competitive environment around renewals and RFPs and maybe just where is buy now, pay later coming in the equation as well? you touched on some of this what are the priorities your partners are focused on in these discussions and have you seen a shift or any evolution in the competitive environment around renewals and rfps and maybe just where is buy now pay later coming in the equation as well

Speaker 1: I've been in this business 28 years, I think if you go back 15 years ago, it was about economics. They said, okay, great, you have the capabilities. We'll see. It's about economics. Now there's much more discussion, the discussions happen actually more advanced than they did earlier. They start earlier, they really want to focus on what are your capabilities. Can you deliver for me digitally? Is it seamless for the consumer? I look at some of the innovations that we've brought in over the last five years, whether it's our API calls. If you're in Venmo, you cannot tell you're dealing with us versus Venmo. Can you have the digital assets to embed wherever they're kind of going to go, number one. Number two, I think with our scale is multi-product. We can do installment lending. We can do secured. I've been in this business 28 years, I think if you go back 15 years ago, it was about economics. i've been in this business 28 years i think if you go back 15 years ago it was about economics They said, okay, great, you have the capabilities. they said okay great you have the capabilities We'll see. we'll see It's about economics. it's about economics Now there's much more discussion, the discussions happen actually more advanced than they did earlier. now there's much more discussion the discussions happen actually more advanced than they did earlier They start earlier, they really want to focus on what are your capabilities. they start earlier they really want to focus on what are your capabilities Can you deliver for me digitally? can you deliver for me digitally Is it seamless for the consumer? is it seamless for the consumer I look at some of the innovations that we've brought in over the last five years, whether it's our API calls. i look at some of the innovations that we've brought in over the last five years whether it's our api calls If you're in Venmo, you cannot tell you're dealing with us versus Venmo. if you're in venmo you cannot tell you're dealing with us versus venmo Can you have the digital assets to embed wherever they're kind of going to go, number one. can you have the digital assets to embed wherever they're kind of going to go number one Number two, I think with our scale is multi-product. number two i think with our scale is multi-product We can do installment lending. we can do installment lending We can do secured. we can do secured We can do private label. We can do dual card. We have the full suite. We can do that for consumer. We can do it for commercial. Having a broad suite allows them to sit back and say, okay, if a consumer's coming with us digitally or in a retail format, how can I get the best product in their hands? You look at our base, and you sit around and say, listen, with approximately 70 million average active customers, you have a deep customer knowledge that you can get value props that resonate. That's really what we see. Now, when it kind of gets to buy now, pay later, their model's different, right? They don't give as much credit out. They don't want to go into the bigger ticket because they don't want the line tied up there. We can do private label. we can do private label We can do dual card. we can do dual card We have the full suite. we have the full suite We can do that for consumer. we can do that for consumer We can do it for commercial. we can do it for commercial Having a broad suite allows them to sit back and say, okay, if a consumer's coming with us digitally or in a retail format, how can I get the best product in their hands? having a broad suite allows them to sit back and say okay if a consumer's coming with us digitally or in a retail format how can i get the best product in their hands You look at our base, and you sit around and say, listen, with approximately 70 million average active customers, you have a deep customer knowledge that you can get value props that resonate. you look at our base and you sit around and say listen with approximately 70 million average active customers you have a deep customer knowledge that you can get value props that resonate That's really what we see. that's really what we see Now, when it kind of gets to buy now, pay later, their model's different, right? now when it kind of gets to buy now pay later their model's different right They don't give as much credit out. they don't give as much credit out They don't want to go into the bigger ticket because they don't want the line tied up there. they don't want to go into the bigger ticket because they don't want the line tied up there They generally play in a smaller ticket and generally play with a different type of consumer. They're one that was more cash-oriented. Maybe a little bit lower on the credit spectrum. That's why they use the kind of purchasing power or a line as a throttle to control credit because they can't take exposure on the bigger tickets where we can. So even where they're in place with our merchants or partners, we haven't really felt any true ramifications of that. That's not to say that we don't have a healthy, productive paranoia about what they're trying to do. They're trying to get scale, number one. Number two, they realize that just having an installment offering is not something that providers necessarily want or partners. They're trying to get a multi-product set, but they don't really have the scale yet. The competitive dynamics are interesting. They generally play in a smaller ticket and generally play with a different type of consumer. they generally play in a smaller ticket and generally play with a different type of consumer They're one that was more cash-oriented. Maybe a little bit lower on the credit spectrum. they're one that was more cash-oriented. maybe a little bit lower on the credit spectrum That's why they use the kind of purchasing power or a line as a throttle to control credit because they can't take exposure on the bigger tickets where we can. that's why they use the kind of purchasing power or a line as a throttle to control credit because they can't take exposure on the bigger tickets where we can So even where they're in place with our merchants or partners, we haven't really felt any true ramifications of that. so even where they're in place with our merchants or partners we haven't really felt any true ramifications of that That's not to say that we don't have a healthy, productive paranoia about what they're trying to do. that's not to say that we don't have a healthy productive paranoia about what they're trying to do They're trying to get scale, number one. they're trying to get scale number one Number two, they realize that just having an installment offering is not something that providers necessarily want or partners. number two they realize that just having an installment offering is not something that providers necessarily want or partners They're trying to get a multi-product set, but they don't really have the scale yet. they're trying to get a multi-product set but they don't really have the scale yet The competitive dynamics are interesting. the competitive dynamics are interesting I think when you think about true competitors we deal with, Citi shifted focus more to co-brand. I think they'll try to maintain some of their premier brands in Macy's and The Home Depot. Cap One, I'm sure who will be here, and they're trying to figure, I shouldn't say, they probably understand, but where they go in the retail partnership business versus Discover versus their brand. Barclays is one that's probably a little bit more aggressive and at times, I'd say irrational as they try to get scale. Again, if you don't have a lot of history, it's tough. They don't have a lot of levers other than price sometimes to compete. Then Bread, we don't really see them as much. I think when you think about true competitors we deal with, Citi shifted focus more to co-brand. i think when you think about true competitors we deal with citi shifted focus more to co-brand I think they'll try to maintain some of their premier brands in Macy's and The Home Depot. i think they'll try to maintain some of their premier brands in macy's and the home depot Cap One, I'm sure who will be here, and they're trying to figure, I shouldn't say, they probably understand, but where they go in the retail partnership business versus Discover versus their brand. cap one i'm sure who will be here and they're trying to figure i shouldn't say they probably understand but where they go in the retail partnership business versus discover versus their brand Barclays is one that's probably a little bit more aggressive and at times, I'd say irrational as they try to get scale. barclays is one that's probably a little bit more aggressive and at times i'd say irrational as they try to get scale Again, if you don't have a lot of history, it's tough. again if you don't have a lot of history it's tough They don't have a lot of levers other than price sometimes to compete. they don't have a lot of levers other than price sometimes to compete Then Bread, we don't really see them as much. then bread we don't really see them as much We overlap in a small segment, but I think they probably want to come closer to some of our segment, but they just have a different scale and balance sheet than we have. We overlap in a small segment, but I think they probably want to come closer to some of our segment, but they just have a different scale and balance sheet than we have. we overlap in a small segment but i think they probably want to come closer to some of our segment but they just have a different scale and balance sheet than we have

Speaker 2: Speaking of some of your larger competitors, we just got a new re-proposal for the capital rules. The comment period's wrapping up here. Maybe just touch into how you're thinking about using this 125-150 basis points of capital relief you estimated. Could these changes, in your view, maybe create some advantages for you versus your larger peers that have to deal with the more burdensome requirements potentially? Any other feedback you've maybe been giving your regulators? Speaking of some of your larger competitors, we just got a new re-proposal for the capital rules. speaking of some of your larger competitors we just got a new re-proposal for the capital rules The comment period's wrapping up here. the comment period's wrapping up here Maybe just touch into how you're thinking about using this 125- 150 basis points of capital relief you estimated. maybe just touch into how you're thinking about using this 125- 150 basis points of capital relief you estimated Could these changes, in your view, maybe create some advantages for you versus your larger peers that have to deal with the more burdensome requirements potentially? could these changes in your view maybe create some advantages for you versus your larger peers that have to deal with the more burdensome requirements potentially Any other feedback you've maybe been giving your regulators? any other feedback you've maybe been giving your regulators

Speaker 1: Let's first start with if you're investing in Synchrony, our capital position and our ability to generate significant amount of capital is a strategic advantage. You look at our current capital position at 12.7% CET1 at the end of the first quarter. Our target's 11. Our stress capital buffer is at 250 until 2028. When you look at that, and then look when we showed you back in the first quarter, in the last trailing 12 months, we generated 350 basis points of CET1. This is business because the higher return throws off a lot of capital. Start there, that we have this tremendous ability with the capital we generate, but also in the capital that we produce each quarter and year. That's a competitive strength. Let's first start with if you're investing in Synchrony, our capital position and our ability to generate significant amount of capital is a strategic advantage. let's first start with if you're investing in synchrony our capital position and our ability to generate significant amount of capital is a strategic advantage You look at our current capital position at 12.7% CET1 at the end of the first quarter. you look at our current capital position at 12.7% cet1 at the end of the first quarter Our target's 11. our target's 11 Our stress capital buffer is at 250 until 2028. our stress capital buffer is at 250 until 2028 When you look at that, and then look when we showed you back in the first quarter, in the last trailing 12 months, we generated 350 basis points of CET1. when you look at that and then look when we showed you back in the first quarter in the last trailing 12 months we generated 350 basis points of cet1 This is business because the higher return throws off a lot of capital. this is business because the higher return throws off a lot of capital Start there, that we have this tremendous ability with the capital we generate, but also in the capital that we produce each quarter and year. start there that we have this tremendous ability with the capital we generate but also in the capital that we produce each quarter and year That's a competitive strength. that's a competitive strength With regard to where you started the question about how do you think about the 125-150 basis points, we spend no time on that, Jeff, right now because there's a number of things that have to happen in advance of that. The first thing is you have to have the comment period to close on this rule. You have to get through their stress testing that will come out probably in the third quarter, rules around that and what's going to change there. You have the responses to this, and you'll have the rules that kind of come out at the end of the year, most likely. When you look at what Basel III says, and I'll go through it, if it went in as written, we would go under the standardized approach and get that benefit of 125-150 basis points, more likely. With regard to where you started the question about how do you think about the 125-150 basis points, we spend no time on that, Jeff, right now because there's a number of things that have to happen in advance of that. with regard to where you started the question about how do you think about the 125-150 basis points we spend no time on that jeff right now because there's a number of things that have to happen in advance of that The first thing is you have to have the comment period to close on this rule. the first thing is you have to have the comment period to close on this rule You have to get through their stress testing that will come out probably in the third quarter, rules around that and what's going to change there. you have to get through their stress testing that will come out probably in the third quarter rules around that and what's going to change there You have the responses to this, and you'll have the rules that kind of come out at the end of the year, most likely. you have the responses to this and you'll have the rules that kind of come out at the end of the year most likely When you look at what Basel III says, and I'll go through it, if it went in as written, we would go under the standardized approach and get that benefit of 125-150 basis points, more likely. when you look at what basel iii says and i'll go through it if it went in as written we would go under the standardized approach and get that benefit of 125-150 basis points more likely The advanced approach is not as favorable for us because while you get incremental RWA reduction, what it brings into is two things that are really, or three elements that are really hurtful to us. Number one, it treats all open to buy as equal. Right? A lot of our open to buy is on one and done furniture accounts, high-end tickets, high FICOs. It just does, it puts the conversion factors and peanut butters it. It takes off quite a bit of the benefit from the RWA reduction. The second thing, it introduces operational risk RWAs, which double counts with what happens in stress. Third, it's a little bit more punitive around the DTA. Obviously, we'll comment on that. I think the industry most certainly, from the card side, will lean into the operational risk piece a little bit, and most certainly we'll provide our comments. The advanced approach is not as favorable for us because while you get incremental RWA reduction, what it brings into is two things that are really, or three elements that are really hurtful to us. the advanced approach is not as favorable for us because while you get incremental rwa reduction what it brings into is two things that are really or three elements that are really hurtful to us Number one, it treats all open to buy as equal. number one it treats all open to buy as equal Right? right A lot of our open to buy is on one and done furniture accounts, high-end tickets, high FICOs. a lot of our open to buy is on one and done furniture accounts high-end tickets high ficos It just does, it puts the conversion factors and peanut butters it. it just does it puts the conversion factors and peanut butters it It takes off quite a bit of the benefit from the RWA reduction. it takes off quite a bit of the benefit from the rwa reduction The second thing, it introduces operational risk RWAs, which double counts with what happens in stress. the second thing it introduces operational risk rwas which double counts with what happens in stress Third, it's a little bit more punitive around the DTA. third it's a little bit more punitive around the dta Obviously, we'll comment on that. obviously we'll comment on that I think the industry most certainly, from the card side, will lean into the operational risk piece a little bit, and most certainly we'll provide our comments. i think the industry most certainly from the card side will lean into the operational risk piece a little bit and most certainly we'll provide our comments Hopefully, the rule's out by the end of the year, and then we can figure out what we want to do with that capital. I think people got to think about what the rating agencies or other people are going to think when this comes out. The good news with the rating agencies and us, we just went through our process with the rating agencies, but they look at our balance sheet and the loss absorption capacity we have at close to 25%, it just puts us in a really good position with them. Something we have to watch. Hopefully, the rule's out by the end of the year, and then we can figure out what we want to do with that capital. hopefully the rule's out by the end of the year and then we can figure out what we want to do with that capital I think people got to think about what the rating agencies or other people are going to think when this comes out. i think people got to think about what the rating agencies or other people are going to think when this comes out The good news with the rating agencies and us, we just went through our process with the rating agencies, but they look at our balance sheet and the loss absorption capacity we have at close to 25%, it just puts us in a really good position with them. the good news with the rating agencies and us we just went through our process with the rating agencies but they look at our balance sheet and the loss absorption capacity we have at close to 25% it just puts us in a really good position with them Something we have to watch. something we have to watch

Speaker 2: All right. As we take it back to the conversation we had around your investments in digital engagement, launching new partners, your efficiency ratio has ticked up a little bit. As you look to return to positive operating leverage, where do you see yourselves today in your overall investment cycle? How much efficiency upside do you think exists beyond this year? How do we think about you getting back down to that 32%-33% level that you target? All right. all right As we take it back to the conversation we had around your investments in digital engagement, launching new partners, your efficiency ratio has ticked up a little bit. as we take it back to the conversation we had around your investments in digital engagement launching new partners your efficiency ratio has ticked up a little bit As you look to return to positive operating leverage, where do you see yourselves today in your overall investment cycle? as you look to return to positive operating leverage where do you see yourselves today in your overall investment cycle How much efficiency upside do you think exists beyond this year? how much efficiency upside do you think exists beyond this year How do we think about you getting back down to that 32%-33% level that you target? how do we think about you getting back down to that 32%-33% level that you target

Speaker 1: Yeah. The first thing, this is interesting because the RSA have played a role in the denominator. Some of the inflation you see in the efficiency ratio is because that comes into play, which is more unique for Synchrony. I think when you think about a dollar expense base, we're generally consistent quarter-on-quarter, and that's where we gave some frameworks as we move out. The investment has been relatively consistent. No matter where we are, we're looking for that longer term. We're going to continue to focus on health and wellness, which is our, just a strategic asset that we have in our sales platforms. We're going to continue to focus on accelerating our customer experiences with digital. We're going to continue to invest in Synchrony PRISM. We're going to continue to invest in the consumer bank. Yeah. yeah The first thing, this is interesting because the RSA have played a role in the denominator. the first thing this is interesting because the rsa have played a role in the denominator Some of the inflation you see in the efficiency ratio is because that comes into play, which is more unique for Synchrony. some of the inflation you see in the efficiency ratio is because that comes into play which is more unique for synchrony I think when you think about a dollar expense base, we're generally consistent quarter-on-quarter, and that's where we gave some frameworks as we move out. i think when you think about a dollar expense base we're generally consistent quarter-on-quarter and that's where we gave some frameworks as we move out The investment has been relatively consistent. the investment has been relatively consistent No matter where we are, we're looking for that longer term. no matter where we are we're looking for that longer term We're going to continue to focus on health and wellness, which is our, just a strategic asset that we have in our sales platforms. we're going to continue to focus on health and wellness which is our just a strategic asset that we have in our sales platforms We're going to continue to focus on accelerating our customer experiences with digital. we're going to continue to focus on accelerating our customer experiences with digital We're going to continue to invest in Synchrony PRISM. we're going to continue to invest in synchrony prism We're going to continue to invest in the consumer bank. we're going to continue to invest in the consumer bank Where we've ticked up spending this year has been really in a couple of technology areas, right? Number one, AI, and number two, cloud. We want cloud to accelerate here and get through our journey, which we expect to be the end part of 2027. Listen, we have to be investing in AI, both from a growth standpoint, also from a productivity standpoint. I don't view investment as accelerating from here. I know that's a lot of fear from customers, that it's going to accelerate. I think you'll see some modest increase this year, then, in theory, as we get back to growth, you'll get that operating leverage to come back through. Most certainly as losses come back inside the long-term target zone, I think it helps on the denominator side to bring the efficiency ratio down. Where we've ticked up spending this year has been really in a couple of technology areas, right? where we've ticked up spending this year has been really in a couple of technology areas right Number one, AI, and number two, cloud. number one ai and number two cloud We want cloud to accelerate here and get through our journey, which we expect to be the end part of 2027. we want cloud to accelerate here and get through our journey which we expect to be the end part of 2027 Listen, we have to be investing in AI, both from a growth standpoint, also from a productivity standpoint. listen we have to be investing in ai both from a growth standpoint also from a productivity standpoint I don't view investment as accelerating from here. i don't view investment as accelerating from here I know that's a lot of fear from customers, that it's going to accelerate. i know that's a lot of fear from customers that it's going to accelerate I think you'll see some modest increase this year, then, in theory, as we get back to growth, you'll get that operating leverage to come back through. i think you'll see some modest increase this year then in theory as we get back to growth you'll get that operating leverage to come back through Most certainly as losses come back inside the long-term target zone, I think it helps on the denominator side to bring the efficiency ratio down. most certainly as losses come back inside the long-term target zone i think it helps on the denominator side to bring the efficiency ratio down

Speaker 2: Speaking of AI, some of that tech spend is going towards agentic commerce. As commerce does become more automated, how do you see Synchrony's role evolving maybe beyond the traditional retail card product you've historically offered? Where do you think you can maybe differentiate between the other providers in the ecosystem? Speaking of AI, some of that tech spend is going towards agentic commerce. speaking of ai some of that tech spend is going towards agentic commerce As commerce does become more automated, how do you see Synchrony's role evolving maybe beyond the traditional retail card product you've historically offered? as commerce does become more automated how do you see synchrony's role evolving maybe beyond the traditional retail card product you've historically offered Where do you think you can maybe differentiate between the other providers in the ecosystem? where do you think you can maybe differentiate between the other providers in the ecosystem

Speaker 1: Yeah. We're working in almost every swim lane as we can because I think, Jeff, no one knows how agentic commerce is actually going to win and evolve here, right? I think everyone has their own view depending upon their own business model, but the consumer is not screaming, I want agentic commerce. Right? So, these technology companies and others are trying to figure out what the right way for the consumer to do it, and consumer preference is going to come in. We're focused on working through the apps, and where you see AI. We're focused on browsers and things like that, where you have protocols that you want to go through there. We're working with our merchant partners who are using agentic commerce as a means if you come onto their site. Obviously we're investing in agentic AI as it relates to our marketplace. Yeah. yeah We're working in almost every swim lane as we can because I think, Jeff, no one knows how agentic commerce is actually going to win and evolve here, right? we're working in almost every swim lane as we can because i think jeff no one knows how agentic commerce is actually going to win and evolve here right I think everyone has their own view depending upon their own business model, but the consumer is not screaming, I want agentic commerce. i think everyone has their own view depending upon their own business model but the consumer is not screaming i want agentic commerce Right? So, these technology companies and others are trying to figure out what the right way for the consumer to do it, and consumer preference is going to come in. right? so these technology companies and others are trying to figure out what the right way for the consumer to do it and consumer preference is going to come in We're focused on working through the apps, and where you see AI. we're focused on working through the apps and where you see ai We're focused on browsers and things like that, where you have protocols that you want to go through there. we're focused on browsers and things like that where you have protocols that you want to go through there We're working with our merchant partners who are using agentic commerce as a means if you come onto their site. we're working with our merchant partners who are using agentic commerce as a means if you come onto their site Obviously we're investing in agentic AI as it relates to our marketplace. obviously we're investing in agentic ai as it relates to our marketplace We don't know who's going to win. No one knows who's going to win. We're three to five years out with agentic, but you have to play all the pieces. What's really important for us is how do we get our products to show up, whether it's in a ChatGPT or a Claude or a Gemini. How do you have that provisioning there? How do you kind of direct it back to some of our merchant partners? It's really about making sure that we don't get disintermediated as someone else tries to create the experience. You want the experience to be somewhat seamless, but we're going to have to play all the angles out here. That's where we're focused on it. Again, we're partnering with the big AI companies as well as the big browser companies. We're going to continue to play through. We don't know who's going to win. we don't know who's going to win No one knows who's going to win. no one knows who's going to win We're three to five years out with agentic, but you have to play all the pieces. we're three to five years out with agentic but you have to play all the pieces What's really important for us is how do we get our products to show up, whether it's in a ChatGPT or a Claude or a Gemini. what's really important for us is how do we get our products to show up whether it's in a chatgpt or a claude or a gemini How do you have that provisioning there? how do you have that provisioning there How do you kind of direct it back to some of our merchant partners? how do you kind of direct it back to some of our merchant partners It's really about making sure that we don't get disintermediated as someone else tries to create the experience. it's really about making sure that we don't get disintermediated as someone else tries to create the experience You want the experience to be somewhat seamless, but we're going to have to play all the angles out here. you want the experience to be somewhat seamless but we're going to have to play all the angles out here That's where we're focused on it. that's where we're focused on it Again, we're partnering with the big AI companies as well as the big browser companies. again we're partnering with the big ai companies as well as the big browser companies We're going to continue to play through. we're going to continue to play through It is a transformational period, we can't lose sight of what is the consumer preference going to be. It is a transformational period, we can't lose sight of what is the consumer preference going to be. it is a transformational period we can't lose sight of what is the consumer preference going to be

Speaker 2: Okay. As I think about Synchrony, speaking of evolution here, you've historically operated as more of a, what I would think of as behind the scenes for your retail partners. The consumer doesn't always know who you are. You have increasingly leaned into proprietary co-brand. Do you see more of an opportunity over the long term to really build greater consumer affinity for your brand? Or do you still view your mode as kind of being that embedded partner of choice for your retail partners? Okay. okay As I think about Synchrony, speaking of evolution here, you've historically operated as more of a, what I would think of as behind the scenes for your retail partners. as i think about synchrony speaking of evolution here you've historically operated as more of a what i would think of as behind the scenes for your retail partners The consumer doesn't always know who you are. the consumer doesn't always know who you are You have increasingly leaned into proprietary co-brand. you have increasingly leaned into proprietary co-brand Do you see more of an opportunity over the long term to really build greater consumer affinity for your brand? do you see more of an opportunity over the long term to really build greater consumer affinity for your brand Or do you still view your mode as kind of being that embedded partner of choice for your retail partners? or do you still view your mode as kind of being that embedded partner of choice for your retail partners

Speaker 1: I think it's broader. When you think about $140 million trade lines, you think of the fact that we opened $20 million accounts last year, that every application that comes through, 60%-70% of them, we've seen them or do business with them. More people actually know who Synchrony is than you give it credit for. If you go onto our platform we call Vista, you can see your accounts all on there. Consumers actually do know what it is. What we have to be able to do better in any case is how do I kind of bring more options to them, not to intermediate where our partner business is, but how do we augment it? I think you're seeing that. It goes back to having partnerships and having broad-based utilities and strong value propositions that resonate with those consumers that drives you forward. I think it's broader. i think it's broader When you think about $140 million trade lines, you think of the fact that we opened $20 million accounts last year, that every application that comes through, 60%-70% of them, we've seen them or do business with them. when you think about $140 million trade lines you think of the fact that we opened $20 million accounts last year that every application that comes through 60%-70% of them we've seen them or do business with them More people actually know who Synchrony is than you give it credit for. more people actually know who synchrony is than you give it credit for If you go onto our platform we call Vista, you can see your accounts all on there. if you go onto our platform we call vista you can see your accounts all on there Consumers actually do know what it is. consumers actually do know what it is What we have to be able to do better in any case is how do I kind of bring more options to them, not to intermediate where our partner business is, but how do we augment it? what we have to be able to do better in any case is how do i kind of bring more options to them not to intermediate where our partner business is but how do we augment it I think you're seeing that. i think you're seeing that It goes back to having partnerships and having broad-based utilities and strong value propositions that resonate with those consumers that drives you forward. it goes back to having partnerships and having broad-based utilities and strong value propositions that resonate with those consumers that drives you forward I don't think it's a dramatic shift for us. It's part of our evolution. We've been doing this for 100 years now, or close to 100 years. It's part of an evolution where we can leverage the scale of our business. I don't think it's a dramatic shift for us. i don't think it's a dramatic shift for us It's part of our evolution. it's part of our evolution We've been doing this for 100 years now, or close to 100 years. we've been doing this for 100 years now or close to 100 years It's part of an evolution where we can leverage the scale of our business. it's part of an evolution where we can leverage the scale of our business

Speaker 2: Are there any other capabilities you think will become increasingly important for you to build or deepen over the coming years as we sort of see this evolution in the retail ecosystem? Are there any other capabilities you think will become increasingly important for you to build or deepen over the coming years as we sort of see this evolution in the retail ecosystem? are there any other capabilities you think will become increasingly important for you to build or deepen over the coming years as we sort of see this evolution in the retail ecosystem

Speaker 1: Yeah. It's all about the customer experience. How do you make it seamless for the customer to do business with you? I think this is where scale matters, right? How do you make it easy for them to apply, to buy, to service? That experience with strong value proposition is going to resonate more. That multi-product view that says, hey, listen, Synchrony will be there for whatever my financing needs are going to be to purchase a good or service. Yeah. It's all about the customer experience. yeah. it's all about the customer experience How do you make it seamless for the customer to do business with you? how do you make it seamless for the customer to do business with you I think this is where scale matters, right? i think this is where scale matters right How do you make it easy for them to apply, to buy, to service? how do you make it easy for them to apply to buy to service That experience with strong value proposition is going to resonate more. that experience with strong value proposition is going to resonate more That multi-product view that says, hey, listen, Synchrony will be there for whatever my financing needs are going to be to purchase a good or service. that multi-product view that says hey listen synchrony will be there for whatever my financing needs are going to be to purchase a good or service

Speaker 2: All right. If we fast-forward three years from today, what do you think investors are most underestimating about the earnings power of your business today? All right. all right If we fast-forward three years from today, what do you think investors are most underestimating about the earnings power of your business today? if we fast-forward three years from today what do you think investors are most underestimating about the earnings power of your business today

Speaker 1: Yeah. The first thing, again, I'll start with some things that people don't tend to focus on. If you go back to since 2021, so exiting out of the pandemic, our average growth rate's 7%. Our average ROA is high 2s to 3. ROTCE is 25%+. That's pretty good performance in the last several years. I think as we look forward, our goal is, listen, how do we get back to, again, with an uncertain environment today, but hopefully the environment becomes more certain. How do we get back to that long-term growth framework of 7%-10%, maintain the losses, and then through strong capital, delivering back double-digit EPS growth? That's what I think we want. Yeah. yeah The first thing, again, I'll start with some things that people don't tend to focus on. the first thing again i'll start with some things that people don't tend to focus on If you go back to since 2021, so exiting out of the pandemic, our average growth rate's 7%. if you go back to since 2021 so exiting out of the pandemic our average growth rate's 7% Our average ROA is high 2s to 3. our average roa is high 2s to 3 ROTCE is 25%+. rotce is 25%+ That's pretty good performance in the last several years. that's pretty good performance in the last several years I think as we look forward, our goal is, listen, how do we get back to, again, with an uncertain environment today, but hopefully the environment becomes more certain. i think as we look forward our goal is listen how do we get back to again with an uncertain environment today but hopefully the environment becomes more certain How do we get back to that long-term growth framework of 7%-10%, maintain the losses, and then through strong capital, delivering back double-digit EPS growth? how do we get back to that long-term growth framework of 7%-10% maintain the losses and then through strong capital delivering back double-digit eps growth That's what I think we want. that's what i think we want The investment thesis here in the company is going to be, and always has been, I want to be a higher growth, not necessarily to the top, but a couple times GDP. I want to be the best-in-class ROA, right? I want to have stability. You see that with the RSA. Couple that with strong capital generation, that's why you invest in this company. We've been around for 100 years. We continue to evolve. We have probably some of the best digital assets that will produce hopefully double-digit earnings growth. The investment thesis here in the company is going to be, and always has been, I want to be a higher growth, not necessarily to the top, but a couple times GDP. the investment thesis here in the company is going to be and always has been i want to be a higher growth not necessarily to the top but a couple times gdp I want to be the best-in-class ROA, right? i want to be the best-in-class roa right I want to have stability. i want to have stability You see that with the RSA. you see that with the rsa Couple that with strong capital generation, that's why you invest in this company. couple that with strong capital generation that's why you invest in this company We've been around for 100 years. we've been around for 100 years We continue to evolve. we continue to evolve We have probably some of the best digital assets that will produce hopefully double-digit earnings growth. we have probably some of the best digital assets that will produce hopefully double-digit earnings growth

Speaker 2: All right. Well, with that's our last question. Thank you, Brian. Appreciate you joining us today. All right. all right Well, with that's our last question. well with that's our last question Thank you, Brian. thank you brian Appreciate you joining us today. appreciate you joining us today

Speaker 1: Great. Jeffrey, good luck with your conference, and thanks for the invitation. Great. great Jeffrey, good luck with your conference, and thanks for the invitation. jeffrey good luck with your conference and thanks for the invitation

Speaker 2: Appreciate it. Thank you. Appreciate it. appreciate it Thank you. thank you