Annual Report 2017 Synchrony Synchrony Annual Report 2017 Annual Report Ambitions live everywhere www.synchronyfinancial.com a a SYNCHRONY (NYSE: SYF) About Synchrony 777 Long Ridge Road Synchrony (NYSE: SYF) is a premier consumer financial services company delivering customized Stamford, CT 06902 financing programs across key industries including retail, health, auto, travel and home, along with award-winning consumer banking products. With more than $130 billion in sales financed GENERAL INQUIRIES and 74.5 million active accounts, Synchrony brings deep industry expertise, actionable data 866-419-4096 insights, innovative solutions and differentiated digital experiences to improve the success of INVESTOR INQUIRIES every business we serve and the quality of each life we touch. More information can be found 855-818-3056 at www.synchronyfinancial.com and through Twitter: @Synchrony. Margaret Keane What makes Synchrony unique is our long history of President and providing customized financing programs for our partners and exceptional Chief Executive Officer service for consumers, combined with our ambition to revolutionize payments and banking. We have a proven record of providing value to our partners and consumers through our significant experience, dedicated relationship teams, big data, loyalty programs and digital capabilities. Highlights for the year include: Loan Net Interest Receivables Income Efficiency Deposits Grew Increased Ratio* Grew 7% 30.3% $4.4B 11% * For Synchrony, Efficiency Ratio represents (i) other expense, divided by (ii) net interest income, after retailer share arrangements, plus other income. 1 Driving Business Growth exciting example in 2017 was our agreement with PayPal to meaningfully broaden and extend our In 2017, we delivered solid financial performance; strategic relationship. This expanded partnership some highlights include: is especially important because it deepens our • Net earnings of $1.9 billion and adjusted net reach within the rapidly growing mobile and earnings, excluding the impact of the Tax Cuts online payments channels. and Jobs Act of 2017, of $2.1 billion* We also continue to explore new opportunities to • Net interest income increased 11% to leverage our expertise and increase our product $15 billion offerings. In 2017, we successfully expanded our • Loan receivables grew more than 7% to reach in travel and entertainment and the auto $82 billion marketplace by launching co-branded programs • Purchase volume increased 5%, with with Cathay Pacific and Nissan and Infiniti. $132 billion in sales financed • Total deposits grew 9% to $56 billion Extending the utility of our cards is another key focus • Dividend increased to $0.56 per share area, broadening where our cards are accepted • Announced $1.64 billion share repurchase so that consumers can use them more frequently. program This is especially important in our CareCredit and Payment Solutions sales platforms where we have We achieved these results through organic growth, been working to encourage more repeat purchases. new deals and the renewal of key partnerships. In 2017, we announced the rollout of our new Our focus on big data and innovation is driving CareCredit Dual Card™. This product combines robust consumer value propositions and world- the promotional credit capabilities of the core class digital experiences, which allow our partners CareCredit product with the added convenience to differentiate themselves. of being able to use the card anywhere and earn We continue to pursue new opportunities to expand points for those purchases. We further expanded our business, particularly in areas where we the CareCredit network with our acquisition of the see outsized opportunity. One significant and Citi Health Card portfolio. 2 * Adjusted net earnings is a non-GAAP measure. For further information regarding non-GAAP measures and a reconciliation to net earnings, please refer to Synchrony’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Form 10-K”). In Payment Solutions, we launched the Synchrony Car Care network. Members now have the convenience of one card to pay for and finance comprehensive auto care at more than 30,000 service and parts locations, as well as buy fuel at more than 185,000 fuel stations nationwide. Similarly, we launched the Synchrony HOME credit card network, with acceptance at more than 10,000 retail locations. Both networks will offer enhanced digital tools to allow users to easily locate nearby network partners, track expenses, manage their accounts and access cardholder-only offers. These expansions and extensions complement our core businesses while giving us a strong base from which to grow in key markets such as the home, health and auto industries. In addition, we continue to invest in our banking platform as retail deposits remain an important funding source for our business and we continue to broaden our products and servicing options. In 2017, Synchrony Bank grew deposits more than $4 billion, or 9%, to $56 billion. Expanding Our Digital Capabilities We invest heavily in leading-edge mobile and online capabilities to enable new products and programs Our Strategic to drive growth, reduce fraud and enhance customer service. Priorities: As we help our partners anticipate and deliver the experiences and tools consumers want, we are n Grow our business through driving innovation through acquisitions, strategic our three sales platforms investments and a growing number of tech-savvy forward thinkers. n Expand robust data, Early in 2017, we acquired GPShopper, an analytics and digital innovative developer of mobile applications that capabilities provide a full suite of commerce, engagement and analytic tools. With GPShopper, we are n Position business for expanding our mobile engagement capabilities, long-term growth while improving the functionality and ease of use for mobile users and our partners. Investments n like this help us stay ahead of the ever-changing Operate with a strong intersection of physical and digital commerce balance sheet and in retail. financial profile Through Synchrony Ventures, we look for and invest in early-stage companies that n Leverage strong capital provide differentiated, emerging technology position and products. We are focused on companies in areas of strategic importance, including enhancing customer experience, fraud detection and identity authentication. 3 During 2017, we expanded our in-house innovation capabilities. We now have four Innovation Stations — cross-functional teams focused on digital, data analytics and enterprise operations — to test new ideas and technologies, solve client problems and improve speed to market through agile development of new products. Leveraging Big Data and Artificial Intelligence We have also invested in a dynamic big data environment. We have more than 170 dedicated data analytics professionals who are using disparate data sources, advanced artificial intelligence (AI) and machine learning techniques to give us a more holistic view of our consumers, drive higher engagement and deliver a better experience. We have access to approximately 70% of SKU or category level data on the more than one billion transactions that are processed on our network, compared to less than 50% on transactions just three years ago. This is important as we increasingly partner with retailers to leverage this information to grow their programs. Customer service is an area where we are leveraging data, AI and machine * learning to improve customer experiences. For example, predictive data analytics allow us to deliver targeted payment options in our voice response system to anticipate how specific consumers might like to pay. This reduces cycle time, decreases calls to our associates and improves the overall experience. We have combined experience from our long history of service excellence with the latest AI technology to introduce Sydney, our 24/7 Intelligent Virtual Assistant. Sydney is trained to understand customer inquiries and adapts to work across various channels. Sydney will continue to transform our customer service in 2018. Ambitions Live Everywhere In 2017 we introduced a new creative campaign called “Ambitions Live Everywhere” to highlight how we empower people and businesses, including our employees and communities, to realize their own unique ambitions. Our people are our most valuable asset. We’re passionate about attracting the most qualified, diverse and driven talent. We have a responsibility to nurture and develop our employees every day so they feel challenged, valued and fulfilled. We are proud to have been recognized as a Fortune 100 Best Companies to Work For in 2018, placing at #44, a Fortune Best Workplace for Diversity (Top 50), a 2017 Working Mother Top 100 Best Company, and we scored 100% on both the 2017 Disability Equality Index (DEI) and the Human Rights Campaign Corporate Equality Index (CEI). 4 * FORTUNE and FORTUNE 100 Best Companies to Work For are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 1, 2018. ©2018 Time Inc. Used under license. FORTUNE and Time Inc. are not affiliated with and do not endorse products and services of Synchrony Financial. Part of helping our employees feel fulfilled is the utility of our cards and work with our partners engaging them in our local communities. Our to deliver innovative ideas and attractive value Families that Work corporate citizenship platform propositions to drive usage. focuses on today’s working