Synchrony

Amid troubling news of tariffs and layoffs, dropping delinquencies offer a rare sign of consumer health.

Synchrony has a lower credit quality than most other bank sponsors of credit card securitization trusts in the U.S., but the average account balance is lower, too.

The declining credit quality included more borrowers with higher credit scores falling behind on their credit card payments. But executives said the increase remains within expectations as it continues seeing "very linear normalization" in credit.

Like other card issuers, the Stamford, Conn., company expects current trends — soft loan demand but strong credit quality — to reverse later this year as the economy emerges from the pandemic-induced recession.

Payment rates for auto lenders and credit card issuers have remained strong despite a spike in unemployment. Whether these trends continue into 2021 will depend largely on the actions of Congress and the pace of medical advances.

The CEOs of the credit card lenders Discover and Synchrony are urging Congress to come through with another round of government stimulus so that struggling households can continue paying their bills.

Since March, issuers have tightened their criteria for opening new accounts and closed millions of existing ones in hopes of avoiding waves of defaults.

The ratings firm also took negative action with respect to Ally, Synchrony, Discover, Sallie Mae and Navient, citing the impact that the coronavirus crisis is having on their revenues and profits.

Discover is the latest card lender to say it's reining in credit lines as the coronavirus pandemic leaves millions of Americans jobless and struggling to keep up on loans.

The lender behind the credit cards for Gap, J.C. Penney and other retailers took a large provision for loan losses and abandoned full-year earnings guidance as the nationwide shutdowns tied to the coronavirus pandemic have led to a sharp decline in spending on its cards.

After rising between 2016 and 2018, the card issuer's charge-off rates are now steady. The trend reflects both the impact of tighter underwriting standards and the continued resilience of U.S. consumers.

The notes are backed by receivables from private-label, dual-card originations by Synchrony via retail partners.

Measures of loan performance were generally better than expected at Ally, American Express, Synchrony and Sallie Mae. Their 1Q reports suggest that consumers remain able to meet their obligations despite a long run-up in debt.

Libor’s demise poses significant problems for outstanding floating-rate securities that are pegged to the benchmark; SFIG wants to make it easier to amend deals.

In selling its Walmart credit card portfolio to Capital One and extending a partnership with Sam’s Club that appeared to be in peril, Synchrony Financial avoids an expensive legal battle with the world’s largest retailer.

As part of the agreement with HSN, Synchrony has also extended its partnerships with HSN affiliates QVC and the e-commerce site Zulily.

Margaret Keane discussed Synchrony's investments in technology, including how the card issuer plans to use customer data to help retailers create targeted ads, during an appearance Tuesday in New York,

The Stamford, Conn., issuer of store credit cards has two potential options after the retail giant chose to partner with Capital One. But the decision over which path to take is out of its hands.

Dark clouds may not yet be on the horizon, but industry executives are sending the message to investors that they know a turn in the credit cycle is coming, and they are planning accordingly.

It’s not just weaker underwriting and higher household debt levels that are driving past-due rates to their highest levels in seven years.