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Letter from
Brian Doubles

President and
Chief Executive Officer

DEAR SYNCHRONY STAKEHOLDERS,

In 2021, Synchrony delivered record purchase volume and record net earnings.

We managed the company through the ongoing pandemic while building for the future.

We launched new partner programs and extended existing ones.

We created new digital products and capabilities.

And we built out our product suite and distribution channels through strategic partnerships and investments.

We did all this so Synchrony’s products and capabilities could reach and serve more consumers. Consumers who increasingly want simplicity and choice in how they purchase and pay for the things that matter to them. Synchrony is delivering.

Synchrony also continued our investments and commitments to our culture and people through progressive, industry-leading compensation and benefits, maximum work-life flexibility, Agile methodologies and substantive action around equity, diversity and inclusion.

These investments pay off in an engaged workforce that drive innovation and great service to our partners and customers. I am proud to say we were once again recognized on Fortune’s “100 Best Companies to Work For®” list for 2022 by Great Place to Work,® one of the many accolades for our business, people and culture.

We accomplished all of this, guided by our long-term strategy to:

This strategy is the right one for Synchrony because it enables us to do what we do best: building the relationships, developing the solutions and advancing the technologies that are creating the future of commerce.

I want to thank Synchrony’s 18,000-plus employees, as well as our Board of Directors, partners, customers and shareholders. Through the support of all our stakeholders, we were able to overcome challenges, take advantage of opportunities and deliver strong financial results in 2021, all while setting the company up for continued prosperity in the long term.

SYNCHRONY’S 2021 PERFORMANCE

In 2021, we executed on our strategy and delivered strong financial results.

We delivered nearly 25 million new account originations, record purchase volume of $166 billion, a 19% increase in spend per active account and record net earnings of $4.2 billion.

In addition, we operated with a very strong balance sheet; our liquid assets as a percentage of total assets were 13.6%, and our CET1 capital ratio was 15.6%. From 2020 to 2021, our reserve coverage dropped from 12.5% to 10.8%, and our net charge-off rate went from 4.6% to 2.9%.

Our bank continues to be an important funding mechanism with total deposits of $62.3 billion, accounting for 81% of Synchrony’s funding.

Synchrony’s record financial results for 2021 are attributed to our deep partnership model, superb underwriting capabilities, improved consumer spending and strong credit performance. Our focus on driving sustainable growth at appropriate risk-adjusted returns, coupled with the scalability of our technology platform and continued cost discipline, allowed us to achieve strong returns while continuing to invest for the future and returning $3.4 billion to shareholders.

ORGANIZING OUR COMPANY
FOR CONTINUED GROWTH

Our 2021 financial results show a healthy, well-managed, diversified business that is expanding through the continuing pandemic.

To achieve these results and build for the future, we positioned the company to more effectively go after the more than $5 trillion of consumer spend across the many industries we operate in today.

Last year, we expanded our sales platforms from three to five—Digital, Health & Wellness, Home & Auto, Diversified & Value, and Lifestyle— to align to industry verticals and better serve our partners and their customers’ evolving expectations. Through these platforms, we can better scale our products and digital capabilities while deploying Synchrony’s deep industry and domain expertise and consumer financing know-how to meet our partners’ needs.

ORGANIZING OUR COMPANY FOR CONTINUED GROWTH FOR SYNCHRONY AND OUR PARTNERS

In 2021, we positioned our company to more effectively go after the more than $5 trillion of consumer spend across the many industries we operate in today. Our five platforms enable Synchrony to better scale our products and digital capabilities while deploying Synchrony’s deep industry and domain expertise and consumer financing know-how to meet our partners’ needs.

DIGITAL

Enables our digital-first partners to deepen consumer engagement and extend digital relationships into in-person commerce.

HEALTH & WELLNESS

Provides comprehensive healthcare financing and payments solutions through a network of providers and partners for those seeking health- and-wellness care for themselves, their families and their pets.

HOME & AUTO

Works with partners to offer flexible financing options to customers, whether they want to realize their dreams or need value and utility to stay on the go.

DIVERSIFIED & VALUE

Helps large retail partners deliver everyday value to consumers shopping for daily needs or important life moments, in-store or online.

LIFESTYLE

Partners with a diverse set of merchants to extend the passion for their brands and products to the customer, offering seamless financing while building a relationship grounded in special experiences across multiple generations.

Sample partners across Synchrony’s five platforms

Across these platforms, we signed 36 new partners and renewed 38 existing ones, such as long-term partners American Eagle, Ashley HomeStore and the TJX Companies. We continued to grow our digital platform, which grew 25% year to year in purchase volume and 6% year to year in receivables across digital partners such as Amazon, PayPal (including Venmo) and Verizon. Reflecting our deep partner relationship and commitment to Agile innovation, we also expanded our work with PayPal beyond financing through the PayPal Savings program, which went live for consumers in early 2022. This savings program provides consumers access to a competitive high-yield interest rate and encourages the development of healthy savings habits. Additionally, our collaboration on marketing innovations has driven strong value for both our cardholders and partners, including purchase volume growth in partner programs such as those we have with Sam’s Club and TJX, among others.

Our expansion in the vast and rapidly growing health-and-wellness market continued in 2021. We partnered with Walgreens to launch the first-of-its-kind myWalgreens credit card program, featuring two industry-first retail health-and-wellness credit cards that reward customers for their personalized well-being purchases at more than 9,000 locations and online. We acquired Allegro Credit, a consumer finance provider that is now part of our Health & Wellness platform, to further accelerate our leadership in audiology and dental financing. We’ve signed 20 health system partners since moving into the health systems space in 2019, with seven new ones in 2021. These partners are using Synchrony’s products to help patients pay for the care they need.

We also continued to broaden our reach from “vet to pet,” including through Synchrony’s acquisition of Pets Best in 2019, which gave us an entry point into the fast-growing pet insurance market. In the three years since acquiring Pets Best, we have significantly grown the business, quadrupling the number of pets we cover to more than 500,000 today.

Synchrony also excelled in our Home & Auto platform, which had $43 billion in purchase volume and $27 billion in receivables—up 14% and 3% year to year, respectively. The increase demonstrates the effectiveness of our three-pillar Home & Auto growth strategy of integrating more deeply with current partners while growing the networks and exploring adjacent markets, like smart home and rideshare.

BROADEST RANGE OF FINANCING OPTIONS POWERED BY SCALABLE TECH OFFERS CONSUMERS FLEXIBILITY AND CHOICE

Synchrony has more than 200 Agile build teams that provide the broadest portfolio of financing products across our partner portfolios, offering consumers the right financing option at the right time in the channel of their choosing.

Payment
Integrations

Client
Wallet

Third-Party
Wallet

QR Code

POS

APIs

Revolving

PLCC

PLCC

Co-Brand

CO-
BRAND

Dual Card

DUAL
CARD

Secured

SECURED

Network

NETWORK

Synchrony Mastercard

SYNCHRONY
MASTERCARD

Business

Business Revolving

BUSINESS
REVOLVING

Commercial Account

COMMERCIAL
ACCOUNT

Installments

SetPay Logo

INSTALLMENTS
& BNPL

Secured

SECURED

Allergo Credit Logo

INSTALLMENTS
& LEASING

Growth
Adjacencies

Pets Best Logo

PET
INSURANCE

GiftNow Logo

GIFTNOW

Care Credit Logo

HEALTH
SYSTEMS

Common
Platforms

Digital
Acquisitions

Native
Plug-In

Digital
Servicing

Rewards

Digital
Marketing

BRINGING OUR CAPABILITIES TO MARKET FASTER; SCALING TO MORE CONSUMERS

To bring Synchrony’s products and capabilities to market faster and scale them more seamlessly, we combined our data, marketing and product teams into our new Growth Organization last year. We also merged our Technology and Operations teams to fuel digital innovation, drive operational excellence and efficiency, and improve customer service across our contact centers.

These moves are supported by our long-term investments in our company.

For example, since our 2014 IPO, Synchrony has invested nearly $5 billion in our digital and technology capabilities, in areas such as analytics, AI, cloud, customer experience and data. Today, we have more than 200 Agile build teams that provide the broadest portfolio of financing products, offering consumers the right financing option at the right time in the channel of their choosing.

In 2021, we continued to expand this digitally enabled product suite:

  • We offer a wide range of “buy now, pay later” (BNPL) options that provide more choice and flexibility for the consumer while driving sales and growth for partners:

    • Our BNPL installment product, SetPay, enables customers to take out a loan for the exact amount of a one-time purchase, then pay it off over time through equal monthly payments. Terms are three months or longer with order values typically above $500— and sometimes significantly higher.

    • To broaden our SetPay offering, and in the spirit of flexibility and choice, we introduced SetPay pay in 4, Synchrony’s short-term BNPL product for smaller purchases of $40–$500, which allows for four equal, interest-free payments made over six weeks.

    • Our revolving BNPL offering allows consumers a way to make a new BNPL purchase in equal payments without having to open an account by connecting it with an existing revolving credit card account. This gives consumers an easy way to make repeat purchases and drives higher engagement and loyalty for partners.

  • Approximately 65%1 of our total payments and 55% of our total applications came through our digital channels, as we continued to drive advancements in our digital capabilities. These include:

    • SyPI, our Synchrony plug-in that integrates with our partners’ retail apps. It has been upgraded with several new features, including digital wallet provisioning and enhancements to push notifications and e-bill. Collectively, the availability of these features contributed to a 40% increase in unique visitors in 2021 and 56% growth in the number of payments we receive in SyPI.

    • Our Prequalification preapproval engine, which helped drive 5.6 million requests and more than 1.3 million new customer accounts in 2021.

    • Direct to Device applications for providing in-store contactless engagement with customers.

    • dApply, which reduces the number of fields required for a customer to open an account, and QR Codes that allow consumers to apply for credit as well as pay, all by scanning a code on their own device.

DIGITAL CONTINUES AS A CHANNEL
OF CHOICE FOR CONSUMERS

Consumers continue to shift to the digital channel,
and Synchrony’s innovative technology is serving their needs.

~65%

DIGITAL PAYMENTS*
*4Q21 Percentage of
Total Payments

~55%

DIGITAL
APPLICATIONS

~35%

MOBILE CHANNEL
APPLICATIONS

~40%

ONLINE SALES†
†Excluding Health & Wellness

We’ve also made collaborating with startups and other innovative companies a priority. Our Synchrony Ventures team backs early-stage entrepreneurs who help us better serve our customers and complement our own innovations. We invest in startups that offer seamless experiences, user-centered design and a deep, intuitive understanding of the customers they aim to serve. For example, last year we acquired a minority stake in Skipify, which allows shoppers to purchase directly from blog posts, reviews, product links and emails, eliminating the multiple screens and clicks often associated with online shopping to provide a much better customer experience.

We’re also excited about the expansion of Synchrony products and capabilities through new distribution channels, particularly third-party digital platforms that reach large and small merchants, hospitals, healthcare providers and more. We signed partnerships with Clover and Epic Systems, expanding our reach to consumers. Merchants using Clover point-of-sale terminals can add Synchrony services to accept private-label card payments as well as new applications for credit through their Clover terminals and apps. Working with Epic Systems, we have made our CareCredit patient financing available in the Epic App Orchard. The app allows health systems and providers to offer patients flexible, convenient and easy payment options.

LIVING OUR VALUES, ENHANCING OUR CULTURE

I am proud that we have evolved our company from a consumer lending business into a digitally powered financial ecosystem that is driving great experiences and choices for customers—and value and growth for our partners and Synchrony. I’m equally proud of our culture and company, especially of the team we have built to help execute our strategy.

Synchrony is a great place to work because we have great people who believe in and live our values:

We are honest, passionate, caring, responsible, bold and driven. These values underpin the innovations we create and the trust we build with our partners and customers.

Our clients feel it, too, as evidenced by our deep and long-lasting business relationships. We have fostered a culture where employees are empowered to do their best work—taking smart risks, trying new things and iterating rapidly on the way to success. The kind of work that was front and center in 2021.

Our people stay—and thrive—at Synchrony because they can do innovative work and because we have made work more flexible. We’ve adapted it to their lives. For example, we no longer wait for the annual cycle to roll out new benefits; instead, we move fast, testing and learning and adapting as we go. Since the start of the pandemic, we’ve introduced new wellness offerings and new learning, compensation, rewards and other programs. We launched flexibility for all, providing Synchrony employees the opportunity to work remotely full-time, coming in when business needs require, or in a hybrid fashion for those who want to come into the office a few days a week.

We’ve also reinvented our approach to attracting new talent to Synchrony. Nearly all open jobs can be based anywhere we do business. This change, combined with our progressive approach to flexibility, has helped expand our applicant pools by more than 25% as compared with the pre-pandemic period.

Last year, we established a $20 per hour minimum wage in the U.S. for our contact center associates, and we paid them their highest bonus ever in recognition of our results and their outstanding service to our partners and customers in 2021.

Firm in our belief that every Synchrony employee deserves respect, support and the opportunity to achieve their full potential, we accelerated our actions around equity, diversity and inclusion. Our goal is to achieve measurable results across all areas of our business and communities with a focus in three areas: culture, growth and investment, and citizenship.

I am proud to say we are making progress in all three areas. For example, in 2021, Synchrony increased representation of Black and Hispanic employees at the vice president level and higher in the U.S. We also increased the number of diverse suppliers participating in requests for proposals by 300% year to year. We partnered with the Synchrony Foundation through our Education as an Equalizer program, investing $50 million in helping underrepresented groups acquire the skills they need to earn college degrees or certificates to advance their careers. We also joined OneTen, a coalition of leading and former CEOs and companies that will train, hire and advance 1 million Black individuals into family-sustaining American jobs over the next decade. These are just a few of the examples of progress we are making (you can read more on pages 10 and 11). We also know we have continuing work to do and remain committed to keeping equity, diversity and inclusion (ED&I) as a strategic priority for our business.

We’ve proven that investing in our people and our communities creates engaged, innovative employees, and a faster, nimbler Synchrony. It is our belief that this formula allows us to better serve our partners and customers, and ultimately drive growth for our partners, shareholders and Synchrony, too.

A LOOK TO THE FUTURE: 2022 AND BEYOND

Proud of all we accomplished in 2021, I’m confident about the road ahead. We’ve created an enterprise that can succeed in good times and in challenging ones because it is built on a very strong foundation based on 90 years of experience. Our ability to quickly adapt has allowed us to transform our business to meet fast-changing partner and consumer needs.

We’re well positioned to outperform over the long term as we continue to win new partners and renew existing ones; further diversify our programs, products and the markets we operate in; and provide consumers the broadest range of choice with the most comprehensive, integrated product set in the industry. Our team is flexible, agile and adaptable—anticipating new customer needs and driving innovations for seamless, digital-first experiences. We did it in 2021, and we will do it again in 2022 and beyond.

We believe, with our great team, we’ll deliver on our long-term strategy and continue to generate sustainable growth at attractive returns, unlocking even greater value for our stakeholders.

Our results to date show how we have strengthened our position as the trusted partner of choice as a leading financial service provider for retailers, merchants, providers and consumers alike.

That is an enduring competitive advantage.
That is Synchrony.

BRIAN DOUBLES
President and CEO