Welcome to the Synchrony Financial Fourth Quarter 2021 Earnings Conference Call. My name is Brandon and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Kathryn Miller. And Kathryn, you may begin.

Thank you and good morning everyone. Welcome to our quarterly earnings conference call. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules and presentation are available on our website synchronyfinancial.com. This information can be accessed by going to the Investor Relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. On the call this morning are Brian Doubles, Synchrony's President and Chief Executive Officer and Brian Wenzel, Executive Vice President and Chief Financial Officer. I will now turn the call over to Brian Doubles.

Thanks Kathryn and good morning, everyone. We are really proud of our Synchrony team and the strong level of execution that enabled us to close the year out with such strong results, including several company records. Our core strategy to drive sustainable growth at attractive risk adjusted returns is founded on three primary objectives. First grow our existing partner programs and win new partners. Second diversify our programs, products and markets. And third, deliver best-in-class customer experiences. During 2021, we added 36 partners and renewed another 38. We're excited about the prospects in both our existing portfolio and new partner pipeline to power, innovative financing experiences and serve the ever changing needs of our customers. As you know, we are constantly seeking opportunities to extend our leadership position and much of that will continue to be driven by the ongoing diversification and expansion of our distribution channels. To that end, we acquired Allegro Credit at the beginning of the year, a leading provider of point of sale consumer audiology products. This acquisition allowed us to deepen our foothold in the health and wellness space, reaching more providers and customers and empowering them with an expanded suite of financing products and services. We also announced our strategic partnership with Clover, which will enable us to deliver our innovative products and experiences to more merchants and customers. As a reminder, our integration with Clover will enable small businesses to access Synchrony financing products and services, and accept private label credit card payments via the Clover point-of-sale and business management platform. In addition, Synchrony continued to expand our two main consumer-facing marketplaces, mysynchrony.com and carecredit.com during the year. These marketplaces are broad and deep networks that provide consumers with a one-stop shop to find and shop with merchant partners and providers as well…

Thanks, Brian, and good morning, everyone. Synchrony delivered another quarter of strong financial results, reflecting our differentiated business model and the strong partner and customer value propositions, which have been made possible as we execute on our strategic priorities. Our net earnings were $813 million or $1.48 per diluted share. We generated a return on average assets of 3.4% and a return on tangible common equity of 28.7%. These strong net earnings and returns demonstrate the power and efficiency of our digitally enabled model, combined with the compelling value of our financial products and services we offer through our ecosystem. Not only were we able to support the strong seasonal customer-end with our diverse range of products, but we were able to do so while maintaining cost discipline and strong risk-adjusted returns. We achieved record purchase volume of $47 million in the fourth quarter, an increase of 18% compared to both last year and 2019, excluding Walmart. Purchase volume was up double digits across four of our five platforms demonstrating clear broad-based strength through the range of diverse industry verticals we serve. Purchase volume per account also increased during the quarter, up 13% compared to last year and 22% compared to the fourth quarter of 2019, excluding Walmart. Dual and co-branded cards accounted for 42% of the purchase volume in the fourth quarter and increased 30% from the prior year. On a loan receivable basis, including the loans receivable held for sale, dual and co-branded cards accounted for 25% of the portfolio and increased 10% from the prior year. Average active accounts increased 5% compared to last year and new accounts increased 20%, totaling more than 7 million new accounts in the fourth quarter and almost 25 million new accounts originated for the year. As you may recall, we reached…

Thanks, Brian. I could not be more proud of the Synchrony team and all that we have achieved this year for our partners, customers and stakeholders. Whether it’s been through investments in our digital innovations, strategic partner integrations, expansion into new distribution channels or the addition of new product offerings, Synchrony has continued to evolve and enhance the ways in which we connect our partners and customers through our financial ecosystem. This has positioned us as a leader in the digital commerce revolution with very exciting opportunities ahead of us. We will continue to win new partners and renew existing ones. And at the same time, we’ll further diversify our programs, products and the markets we operate in. And of course, underpinning it all is our laser-like focus on our integrated product set and providing that best-in-class customer experience that drives value, loyalty and superior outcomes for our partners and customers. Synchrony will continue to outperform over the long term, as we provide our partners and customers with the power of choice. As we deliver on our key strategic priorities, we will continue to drive consistent growth at attractive returns and unlock even greater value for our stakeholders. And with that, I’ll turn the call back to Kathryn to open the Q&A.

That concludes our prepared remarks. We will now begin the Q&A session so that we can accommodate as many of you as possible. I’d like to ask the participants to please limit yourself to one primary and one follow-up question. If you have additional questions, the Investor Relations team will be available after the call. Operator, please start the Q&A session.

Thank you. [Operator Instructions] From KBW, we have Sanjay Sakhrani. Please go ahead.

Thanks. Good morning.

Hi, Sanjay.

I guess have a question for both. Hey, how's it going? A question for both Brian, on loan growth. I know payment rates are sort of weighing against the underlying loan growth expectations. But your long-term targets are sort of high single digits, low double digits. Some of your peers are at their average, if not above their average. Maybe you could talk about what’s driving sort of the weakness relative to your long-term expectations? And – or do you expect 2022 to get there? Thanks.

Yes. Sanjay, maybe I’ll start and then ask Brian to comment. I would say, look, generally, we feel really good about the operating environment right now. We feel really good about where the consumer is. Last year was a record year in terms of purchase volume on our products. And if you look at that, one of the things that’s really encouraging is if you look at that by demographic, a lot of that is actually driven by Millennials and Gen Z. Sales on our accounts with Millennials and Gen Z were up 42% compared to 2019. And if you look at Baby Boomers, that was up only 6%. So as you think about that mix shift, our products are definitely very attractive to that younger demographic. We also generated 25 million new accounts for the full year. So we actually feel really good about the growth prospects. And as you said, the thing that’s a little bit difficult to call right now is the payment rate. But I think if we see payment rates just normalize a bit, they don’t need to go all the way back to pre-pandemic levels. If they just normalize a little bit here in 2022, we could definitely see loan growth in the high single digits for the full year. I don’t know, Brian, if you’d add anything to that?

Yes. What I – the color I’d add, Sanjay, is that when you look across purchase volume across all our segments, we’re seeing strength in all the platforms. So that diversification is pulling through. And I think when there’s a comparison to some of our peers, what gets lost here is the resiliency in our business, right? We do not have as much volume decline as others or asset decline as others last year. So we are being more consistent with that. And listen, I definitely agree. As we entered into 2022, we came off a record purchase volume. I think as we think about the first month of the quarter, we’re seeing a strong mid-teens growth in purchase volume as that continues. And we do see – and I’m sure we’ll talk later in the call on payment rates, we are seeing some moderation. So I do think you can see that high single digits. And in certain scenarios, we have one scenario that says you can get me in double digits with regard to loan growth. So we feel really good about the model and where we’re entering 2022.

The last thing I’ll add, Sanjay, just if you look at that across the platforms, it’s pretty broad-based. Purchase volume digital was up 22%. D&V [ph] up 26%. We got a ton of room to grow in health and wellness, their sales were up 14% in the fourth quarter. So again, pretty broad-based growth, and it’s nice to have turned the corner with all of our platforms having positive receivable growth year-over-year in the fourth quarter.

Okay. That’s wonderful. Maybe another revenue driver you guys sort of talk about the NIM, Brian Wenzel. And I know there’s a lot of liquidity and all this other stuff that affects that metric. But as we think about the yield, I see that last bullet says higher interest and fees offset by higher reversals. Is that one for one? Or do we expect the yield to improve over the course of this year?

Yes. The way I would think about it, Sanjay, is as you see the payment rate decline, you’re going to see the yield go up on the book, right? The reversals that come ultimately will be with the charge-offs, which will trail that and it’s not one for one. It never has been. The impact on the NIM this year, it is benefiting from reversals, but not necessarily the key driver behind it. So it trails and it won’t be one for one.

From Credit Suisse, we have Moshe Orenbuch.

Great. Thanks. Brian Wenzel, I guess, you talked about the normalization of the efficiency ratio. In this environment, investors are paying a lot more attention to expenses and costs. And you said that you’d be driven by the revenue that has been kind of deferred, lost, suppressed. Can you talk about how you think about how large that is an over period of time that comes back?

Yes. Great question, Moshe. First of all, I want to start with the expenses. We’re up – when you strip out the impairment and discrete items that we elected to execute based upon some gains we had in the quarter, our expenses are up 5% year-over-year. And if you think about that, just to start, a lot of it is employee-driven, right. We increased our hourly wage to employees. We also had some onetime adjustments relative to some critical roles in the organization when you think about data scientists, technology, et cetera. So the base in the run rate as we see going forward is pretty stable. And as I said in my prepared remarks, first of all, we don’t have to inject a lot of money into this in order to drive our growth. So the expense base, as we step through each of the quarters, will be relatively consistent. As you think about the efficiency ratio, clearly, the revenue and the yield is lower than we anticipated. So I think over the course of that, call it, the revenue normalization between 2022 and 2023, you will see come back and we see a pathway back to that 32%, 33%. But right now, we’re managing hopefully tightly to the dollar amount as we step through. Again, it’s mainly volume oriented now with more active accounts and higher volume that go through the associations or networks.

So I guess just to be clear, your cost base is going to be closer to fixed as volume expands and maybe credit normalization causes the RSA to actually benefit revenue over the course of the next several quarters, is that what we should be thinking?

I would say on a dollar basis that would generally be true. I think what we’re going to drive is there will be an increase in the variable components of that, but we’ll drive productivity to offset that and keep the expense base relatively flat. So I wouldn’t say there’s a shift to be fixed. It’s we’re going to drive productivity and get operating leverage.

Right. We’re acting like fixed and fixed, yes. I got it. Okay. Thanks very much.

Thanks, Moshe. Have a good day.

From Goldman Sachs, we have Ryan Nash. Please go ahead.

Hey, good morning guys. Good morning, Kathryn.

Hi, Ryan.

Good morning, Ryan.

Brian, maybe as a follow-up to Moshe’s question. If I look at the expense guidance, I adjust for the $75 million. I think it points to about 7% to 8% expense growth. So I just wanted to clarify, for 2022, is the expectation that you’re going to generate positive operating leverage? Can you maybe put some parameters around how to think about expenses relative to the revenue backdrop? And then more specifically, the slides talk about you reinvesting the $130 million from the gain, is that included in the expense outlook? And should we view that as a onetime step up? Or will it remain in the run rate? And I have a follow-up.

Yes. So thanks for the question, Ryan. Let me deal with the latter part of your question. The $130 million and any potential offsets we have will not be in the run rate. They will be onetime. So when we actually make those decisions, and that could be a wide ranging effect. That could deal with some of our fixed costs and again, continuing to adjust for the way in which we work. There could be some investments in marketing programs, and we’ll highlight those, but it should not go into the run rate of the business and would be additive to what we have here on the page. I think generally, when you think about the expense base, we are going to generate positive operating leverage, and that’s the way the model was set up. So that as we think about the expenses this year, our view would be that we would have greater growth relative to the assets and the revenue. So we do believe we’re going to get operating leverage. We’re going to manage the positive operating leverage throughout as we step through 2022.

Got it. Thanks. And if I can ask a follow-up question. On credit, losses are obviously at very, very low levels. And we’ve seen a little bit of increases in delinquencies and charge-offs. So I was wondering, can you maybe talk about any noticeable trends you’re seeing across the portfolio? Are you seeing any more normalization in the near prime relative to the prime? And then second, Brian, just to clarify, the allowance at 10.76 versus 10% Day 1 CECL, although I recognize that 4Q is seasonally low. You mentioned it being asset driven. So is Day 1 CECL still the eventual destination? And maybe can you just give us some color on how to think about the trajectory of the reserve over time? Thank you.

Yes. So let me – I’m probably going to give you a longer answer on credit, Ryan, because I do think it’s important to get this background. To specifically answer your question, we have not seen anything discernible in our results, and I’ll explain to you where we come out. But there’s nothing that we see that says this is performing worse than our expectations. I think we understand there’s a lot of concern about what the term credit normalization means and how fast that comes and the ranging damage. I want to give you a framework. First, we talked about, earlier in the call, in my prepared remarks, about the delinquency being 60 basis points better and 30 basis points better than previous periods when you exclude the held for sale. So the delinquency formation of how that will give you lost content for the first half of the year is in great shape. I think, Ryan, when we look at the vintage performances, both on a cumulative basis and a coincident basis and look at it from 2018 forward in these six-month kind of tranche views, each of the vintages from 2018 through 2020 have improved. And we see no deterioration in those vintages as we sit here at the end of 2021. When you look at 2021, both 2020 and 2021 are significantly better than all of the pre-pandemic vintages, significantly better. When we look at 2021 specifically, that’s a little bit worse than 2020 because we took some credit refinements. We don’t believe we have added incremental risk in, but slightly worse performance. But again, significantly better than pre pandemic. I then think you have to think about three other factors, Ryan, as you think about credit. The first is our credit strategy and multiproduct strategy.…

From Citi, we have Arren Cyganovich. Please go ahead.

Thank you. On the NIM outlook there, I was wondering when you look at the guidance there on the kind of two each levels, which is, I guess, around $15.60, I would have expected that to rise a bit more with the rate increases we’re seeing. How many rate increases do you expect for the year? And what are some of the other aspects that are keeping that somewhat lower?

Yes. So with regard to expectations for rate increases, we have three rate increases is our current view. Obviously, the market, I think, depending upon the day, may be different than that. But you got to remember, in our portfolio, less than 50% of our receivables are variable rate. And then when you factor in the transactors, it’s I think less than 30%. So we’re not going to be highly subject to, I’d say, NIM movements. There could be 20, 30 basis points potentially as it relates to NIM. But to be honest with you, it’s not a significant driver. And at the end of the day, we intend to run our book really on a rate neutral scenario. We’re slightly asset sensitive, but not a lot.

Okay. Got it. And then helpful the discussion of our expense base, but a contrary revenue item, the loyalty program cost kind of picked up a decent amount in the fourth quarter, I guess, likely from, I guess, the sales volume you had there. But what’s the outlook on your loyalty program cuts ahead?

Yes. Great question. Brian and I look at this. That’s not necessarily a bad thing. It really means that our customers are engaging with our products and driving volume. So you’re right, it is volume-driven, number one. And you can see that in our dual card volume, our co-branded volume. Our new programs are contributing to some of that rise. And then the final thing is, obviously, value proposition changes where we refresh value props to drive volume factor in there. The other important element that sometimes gets lost is this is a program expense where approximately 80% of this is shared back through the RSA. So we don’t bear the burden. And I think, again, going back to the unique model, we don’t have to inject a lot of marketing to drive growth. We don’t have to inject a lot in the loyalty. And then our partners are sharing both in the marketing expenses and the loyalty. So there’s a natural buffer in the RSA. So again, a lot of it’s offset in RSA, and it’s generally a good thing that rising means our customers are engaging with our products.

From Morgan Stanley, we have Betsy Graseck. Please go ahead.

Hey, thanks so much. A couple of questions here. First on just expenses to tie that up a little bit. I know you’ve got the longer-term guide on expense ratio out there from your Investor Day last year, 32%, 33%. Is that something we should be expecting you would be targeting over the next one year or two? Or is that more like a 2024, 2025 kind of time frame?

Yes. First of all, good morning, Betsy, I would not consider that a 2022 related metric. We’re in a transitory year relative to the revenue. So I think you begin to look at that when you move into 2023 and how the revenue really develops. Again, we’re going to control the expense dollars. We can control that. The actual output of that has a denominator that’s a little bit less controlled, given the payment rate – elevation and payment rate.

Okay. And then the other question just on expenses has to do with the investment spend you're making. You've got the $130 million gain and then you're going to be investing that. And from the commentary, it sounds like you're talking about making those investments like during the second, third and fourth quarter next year. Is that a fair read of what you're telling us?

Yes. So I would look at the investment being primarily in the second and third quarter. That's where we'd like to have it in there to get the leverage effect of it. Obviously, it will depend upon the types of actions. And again, I think there will be a combination of actions that both had tried to reduce the fixed cost of the business as well as incremental investments really to drive the growth side of the business. So Brian and I will review that with the team and set our plans out and hopefully be able to give you an update at our first quarter earnings call in April.

It's fair to say we're not going to make any investments that don't have a really good payback or a really good return use of those dollars.

Are you talking more about like marketing or investments in the programs as opposed to technology? Is that...

It's going to be a combination of things. It will be and potentially could be – we'll look at some of the fixed costs that we have in the business relative to facilities. It could be refreshes of certain programs where we may reissue cards and do things like that, campaigns like that. It could be in technology where we may try to accelerate and continue the acceleration of our digital capability. So it's a combination, but Brian hit on it. We're going to go through a review and the best projects with the best payback and IRs will ultimately win.

It's usually two lifts, Betsy that we look at. One is to drive long-term efficiency in the business and the other one is to drive growth, right? Both, let's have great paybacks. We have a really disciplined process around how we evaluate those investments, and we'll obviously run that same play this year.

From Wells Fargo, we have Don Fandetti. Please go ahead.

Hi, good morning. It seems like the CFPB has been talking a little bit more about cards recently. Can you provide your updated thoughts on the regulatory environment? And secondarily, how is the pipeline for new partners and portfolios?

Yes. Don, so look, I'd say the regulatory environment has been fairly stable. Obviously, we saw the CFPB's request for information regarding fees. First, I'd just say that we always strive to be very transparent in terms of our disclosures with our consumers. We really don't have a lot of fees other than late fees. As you know, those are already governed and calculated by the CFPB. We're completely compliant with that and their guidance on late fees today. So we'll obviously stay close to that, but nothing more to report really at this point.

And then I would say, generally, the pipeline is strong across all five of our platforms, a lot of nice new program opportunities in the pipeline that we're looking at, a lot of opportunities to partner on new distribution channels that we're excited about, so a pretty strong pipeline. I would say there's not a lot of large existing programs out there right now. A lot of them have been locked up, but some really exciting new program opportunities out there. So we're excited about that.

Thanks Brian.

Thanks.

From Piper Sandler, we have Kevin Barker. Please go ahead.

Thank you and just a follow-up on that question. Your late fees are relatively high compared to the industry just given the amount of accounts you have. So it naturally would be higher. If the CFPB were to do anything or there was any regulatory changes, do you feel like you have the flexibility to adjust your model to continue to generate similar type revenue trends, just given your relationships with other merchants?

Well, so just the first thing I would say, I mean, we don't disclose the aggregate amount of late fees, but the late fee dollar amount that we charge on accounts is, again, regulated by the CFPB and very consistent across all of the general purpose card players out there. And look, if something were to change on that front, we could price for it in other ways and protect our revenue and our margin. But look, I think we just got to stay close to this, as I said. And I don't know, Brian, if you'd add anything.

Yes. The way I think about it Kevin, is when we look at it average late fee for incident, and being that we're in the safe harbor with the CFPB, it shouldn't be any real difference between us and I'd say industry participants. I think if you go back historically, under the CARD Act, our revenue when CARD Act changes went into place, essentially remained the same. We went back to partners and we worked that. So I think historically, we've had and run the play where if the environment shifts with regard to how the revenue may or may not be impacted, we'll work with our partners to, again, provide the value to our customers to them and their return an appropriate risk-adjusted return.

Okay. Thank you for taking my question.

Thanks.

From Jefferies, we have John Hecht.

Hey, good morning. Thanks very much for talking my questions.

How are you John?

How are you guys? You talked about the RSA, but just thinking – like RSA, the relationship to rising delinquencies or charge-offs, what's the timing there? And is it kind of basis point for basis point? And then also, how do loyalty program costs kind of influenced the RSA just trying to kind of think about those moving parts within that?

Sure. So if you think about delinquency John, delinquency should yield higher revolve and higher late fees that flows generally immediately through the RSA. The same things with charge-offs. So when they happen, it goes to media. There's no lag, no delay. Loyalty is the exact same way, it flows through in the period of which have been counted. So to the extent that you see higher interest and fee yield that will flow through, giving upward bias to the RSA charge-offs will give you the downward bias and then either marketing or loyalty depending upon which program expense line comes through, that will also provide immediate downward bias through the RSA.

Okay. So in that same time period, we should think about the fluctuation?

Correct. The only thing that really fundamentally works more on a lag would be reserves, John.

Okay. And then follow-up – second question on a different topic is. You had Clover go into play last year, you developed SetPay, new partners, Venmo, Verizon, maybe can you comment on kind of the contribution this year of those new partners and products?

Yes. I mean a lot of really exciting growth opportunities in front of us for 2022, John. You hit on a bunch of them. I would say Venmo and Verizon are doing extraordinarily well, both quantitatively and qualitatively. The feedback that I get on the Venmo experience is just off the charts, the feedback that we get on the Verizon value prop and how much you're able to save. And the fact that, that card is definitely acting like a top of wallet card, which is exactly what we intended. We couldn't be more pleased with the performance of both of those. We also launched Walgreens, as you know, it's still very early there, but I think we've got a customer experience, very integrated, both in-store, online, mobile, et cetera. And then Pay-in-4, obviously, it's still very early, but we've got a really good pipeline of partners that we'll be integrating this year. In addition to individual partner integrations, we're also looking at broader distribution opportunities in health and wellness. We're going to be turning this on in that, in dermatology in the first quarter. We think just given the ticket size there, it's a product that will really resonate. The providers are excited about it. So just a lot to focus on for the team, this is definitely a year of execution. I think we've got the product set that we want. We made a lot of progress on distribution channels and now it's just getting those products out there as much as we can. So they're available to consumers, and we're laser-like focused on the customer experience. I mean at the end of the day, that's what's winning out there, and you just can't invest enough and making sure that you can make it really easy to apply for our products, really easy to service and really easy to buy. So that's where we're focused, but a lot of exciting things for 2022.

From Barclays, we have Mark DeVries. Please go ahead.

Thank you. A question for you on the credit guidance, there's been a lot of investor focus on just kind of the pace and magnitude of normalization. With that context, I just wanted to clarify, when you say peak expected in Q4 that what you're referring to is just that's kind of your seasonal peak for 2022. It's not your assumption of when you normalize. And if that's the case, how are you kind of thinking about kind of the pace and magnitude of normalization we'll see?

First of all good morning, Mark. When you talk about normalization of delinquencies, that really is going to happen kind of post peak of losses, and we've kind of indicated the peak of charge-offs will be in the first quarter, maybe early second quarter of 2023. So it would happen – normalization happens on delinquencies after that. We expect it to rise. Now I think you have to start out with where we start the year at and how that's going to build, we're at low levels. We haven't seen anything, but it will begin to rise as we step through 2022, which, again, we think is going to be closely aligned with how payment rate will begin to change. If payment rate remains elevated for longer period, delinquencies will be slower to rise. So I think that's – it's all going to hinge on that payment rate behavior pattern. And I outlined a little bit in our prepared remarks how we see some movement in there. And I think as payment rate has changed, the one thing that we started to notice in some of our cohorts is that on a unit basis, we see migration back for some cohorts of accounts back to 2019 levels. What's happening is that we have another cohort of accounts that have increased spending and increased payments. And so on a dollar basis at the top of the house, it looks like payment rate is not slowing down for certain pieces. For some pieces of our portfolio, it is clearly migrating back to 2018. When that happens more in total for the portfolio, you'll see delinquency trends, I think, move with it.

Okay. Great. And just on the pace of normalization. If you think about kind of the macro assumptions that you made about a stable to improving macro and it contained pandemic, kind of how are you thinking about – without economic stress, how quickly delinquencies could normalize?

Well, typically, vintages take about 18 months to begin to season from a delinquency perspective. So again, being that we started some credit refinements in the first quarter this year, you would begin to see some of that flowing through in the latter part of this year, so the third or fourth quarter, mainly the fourth. So you'll begin to see that absent any changes in the macroeconomic environment. Just the simple fact that we've unwinding things and begun to induce what we would call smart growth with regard to some of our CLIs and upgrade activities inside our dual cards and private label book.

We have time for one final question from Wolfe Research, we have Bill Carcache. Please go ahead.

Hi, good morning. Brian Doubles, I believe you said that even if payment rates normalize just a little bit, you could see high single-digit loan growth. Can you give a little bit more color on mean by a little bit? Could that be 50% of 2019 levels? And Brian Wenzel, you said there's a scenario where loan growth could be double digit. Could you expand a little bit more on what that scenario looks like?

Yes. So look, Bill, I would say we certainly don't need payment rates to come all the way back to pre-pandemic levels to post high-single-digit loan growth. I mean a modest improvement and just a slight reversion to the mean. And I'm not going to give you basis points here, but would put us in that high-single-digits for the full year, I don't know, Brian, if you want to add anything to that?

Yes. What I'd say, Bill, is our planning process this year, we had multiple scenarios that we ran and we ran it on varying degrees of how the payment rate evolves. So there is a scenario where the payment rate slows down quicker. And in that scenario, given the timing lag on purchase line, you will see potentially under that scenario a higher rate of growth when it comes to loan receivables. So it really is going to hinge-off of, I think the important part is what is that payment rate doing and the trend of the payment rate throughout the entire portfolio as we step through 2022, which will give you the range of outcomes. But again, when we're printing a mid-teens type of purchase volume growth, it doesn't take a lot on the payment rate in order to impact the sequential loan growth that we're seeing.

And Brian hit on this earlier. I mean, we are seeing some positive developments in terms of the payment rate in terms of fewer people paying in full. And so I think there's some indication that there will be some reversion to the mean in 2022. It's hard to call exactly when and how much. But again, if you look at the purchase volume across the platforms, we feel really good, closing out a record year last year and as you look across all platforms we see broad-based growth in purchase volume. And we did have every one of our platforms in the fourth quarter, had positive receivables growth. So it's a pretty good setup as you look to 2022.

Yes, that's really helpful. I guess expanding on some of your earlier comments and sort of thinking about the interplay between that normalization in payment rates and credit, are you at all concerned over the risk of credit normalizing faster than payment rates and alternatively, based on what you're seeing in credit? Could there actually an opposite scenario where receivables growth leads credit on the normalization side?

Absolutely to the latter part, we could see loan growth going faster than credit normalization. It may be able to say. They're more likely than not, they're going to move in sync. We do not generally see a scenario where credit normalization happens and you have elevated payment rates, the way we have. That would be highly unusual and probably not something we've ever seen before.

Thank you. And ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.