Synchrony Financial: Consumer Lending May Meltdown If Unemployment Continues To Rise

Summary

Synchrony Financial faces risks from declining consumer credit and a potential economic recession, which should slow loan originations and may increase defaults.
Despite slightly elevated delinquency rates, Synchrony's high interest rates provide a cushion, but its high loan-to-deposit ratio and unsecured loans pose risks.
Consumer borrowing and spending are slowing, and low personal savings could potentially increase demand for credit and long-term default risks.
I am bearish on SYF due to its exposure to negative economic headwinds, which I expect will increase its delinquencies over the coming year.

J. Michael Jones

A key theme to my outlook is the decline in consumer credit lending associated with potential recession risk. After being calm for most of the 2010s, consumer lending activity soared after 2020 as households grappled with higher costs

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