Synchrony Financial announced third quarter 2015 net earnings of $574 million, or $0.69 per diluted share.
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Net interest income increased $224 million, or 8%, to $3.1 billion, driven by strong loan receivables growth, partially offset by higher interest expense driven by growth, funding issued to increase liquidity, and funding mix. Net interest income after retailer share arrangements increased 9%.
Total platform revenue increased $221 million, or 9%. Provision for loan losses increased $27 million to $702 million largely due to loan receivables growth, partially offset by asset quality improvement.
Other income decreased $12 million to $84 million, driven by higher loyalty and rewards costs associated with program initiatives, partially offset by an increase in interchange revenue.
Other expense increased $115 million to $843 million, primarily driven by investments in growth and infrastructure build in preparation for separation from the General Electric Company (GE), and included expenses for the completion of the EMV card rollout for active Dual Card accounts.
Net earnings totaled $574 million for the quarter compared to $548 million in the third quarter of 2014.
Period-end loan receivables growth remained strong at 12%, primarily driven by purchase volume growth of 12% and average active account growth of 4%, and included the acquisition of the BP portfolio during the second quarter of 2015.
Deposits grew to $41 billion, up $8 billion, or 24%, from the third quarter of 2014, and comprised 63% of funding compared to 54% last year.
The Company’s balance sheet remained strong with total liquidity (liquid assets and undrawn securitization capacity) at $22 billion, or 28% of total assets.
The estimated Common Equity Tier 1 ratio under Basel III subject to transition provisions was 17.5% and the estimated fully phased-in Common Equity Tier 1 ratio under Basel III was 16.6%.
Return on assets was 2.9% and return on equity was 19.2%.
Net interest margin declined 114 basis points to 15.97% primarily due to the impact from the significant increase in liquidity.
Efficiency ratio was 34.2%, and included expenses associated with the completion of the EMV card rollout for active Dual Card accounts. ■