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Synchrony sees 'plenty of room to grow' Amazon.com business

Synchrony Financial's outlook for loan receivables growth of between 7% and 9% in 2017 incorporates any impact from the recently heightened competition from JPMorgan Chase & Co. for Amazon.com Inc. purchase volume, company officials said Jan. 20.

Chase and Amazon.com recently introduced a new Amazon Prime Rewards Visa Signature Card that offers Amazon Prime members who obtain the card 5% cash back on all purchases made from the online retailer, which matches the level of rewards associated with the private-label Amazon.com cards issued by Synchrony Bank for Amazon Prime members.

"The two products have co-existed for a long period of time," said Synchrony Executive Vice President and CFO Brian Doubles in response to an analyst's question on the topic during a conference call to discuss the company's fourth-quarter 2016 results.

President and CEO Margaret Keane said she was not surprised that Amazon wanted to "match the value prop[ositions]" between the private-label and co-branded card products.

"We knew that that was going to happen," she said. "We still believe that given the growth of Amazon and our partnership with them that we have plenty of room to continue to grow. We see this as still a very big opportunity for us."

Doubles said the two programs tend to "appeal to different consumers," and added that he continues to expect the Synchrony product will continue its track record of having grown "very well over the years."

Synchrony's receivables growth outlook compares to the 11.8% rate of expansion it achieved in the full year 2016. The company also issued guidance calling for a net interest margin of between 15.75% and 16%, a net charge-off rate of between 4.75% and 5%, an efficiency ratio of about 32% and a return on assets of 2.5%-plus.

Keane said that leveraging Synchrony's strong capital position through organic growth, program acquisitions and start-up opportunities ranks among the company's 2017 strategic priorities. She said Synchrony would consider M&A that "helps us enhance our capabilities to support growth."

Doubles declined to comment on one such potential opportunity raised by an analyst during the call. The analyst suggested that Synchrony may have submitted the "cover bid" for the credit card business of Cabela's Inc. The specialty retailer recently warned that regulatory hurdles are likely to keep Capital One Financial Corp. from completing its acquisition of the business as planned during the first half of 2017.