Jeff Adelson: Hey, good morning. Thanks for taking my questions. Last year you ended up seeing your loan growth come in about the initial expectations of that kind of initial 8% to 10%. I guess I’m wondering if you think there’s maybe some potential upside or a similar setup this year? And then more specifically, could you talk a little bit more about the specific drivers that you see getting you to the low end versus the high end of the range there in that 6% to 8% in terms of payment rate, consumer spend, new account growth, and maybe even how additive you think that this installment opportunity could be to your growth? It seems like you’re maybe leaning in a little bit more here with the acquisition and the pre-qualification launch this year.
Brian Wenzel: Yeah, when I look at the growth rate, Jeff, what gets you to the lower end of the range is a couple of things potentially, right? A softer consumer, right? The macroeconomic environment softens up, number one. Number two, payment rate remains more elevated than we anticipate. You’ll be at the low — could be at the lower end of that range. If we — if the credit actions we’ve taken deliver more of a sales impact than we expect, again, it’s not material in whole, that could put you lower than range. Conversely, as you think about the high end of the range, if payment rates decline faster than we think, number one. If you see the economy maybe be a little bit more robust than what we’re seeing on — we gave you GDP growth rate there, but the economy’s a little more robust, and we see spending elevate.
You can see some more there. With regard to, well, certainly the home specialty, that’s been a vertical inside of Home & Auto that has grown nicely for us, will continue to grow nicely for us. It’s really not going to move the company average, so it’s a nice acquisition. The acquisition itself is not necessarily generally going to be material enough to move a lot of the underlying metrics. You’ll get the pop day one and most certainly it will grow as we create the synergies between our home specialty platform and what’s a very attractive Ally Lending point of sale platform. So the combination will grow a little bit faster, but it shouldn’t move the overall needle of the company.
Jeff Adelson: Got it. And just to follow up on the new expense ratio guide, I know in the past you’ve given more of a quarterly dollar amount. It seems like you might be implying a pretty very low single digit type expense growth next year. Is that right and where do you think you’re kind of gaining some efficiencies from here? Is it on marketing, lower comp, et cetera?
Brian Wenzel: Yeah, so first of all, on the switch to really efficiency ratio, Jeff, if you recall a number of years ago, we were actually on efficiency ratio and that’s what we guided long term. We pivot during the pandemic because of the implications to revenue, because of the payment rate dislocation that we saw. So we’re trying to be more helpful to investors and analysts by going to dollars. Now we’re just really migrating back to where we should be from an efficiency ratio standpoint and where the industry generally operates, number one. With regard to the expense dollars, if I look at controllable dollars, so if I take operational losses out, we can control them, but take that out for one second, and you remove marketing, which is more contractual for us based upon volume.
We are growing expense at a slower rate. So we’re getting operating leverage inside the company. We need several investments as you saw in our notable items, both on a voluntary early retirement program as well as some smaller but again, meaningful impacts to our facilities that will drive a benefit in 2024. So I think from a controllable expense standpoint, they’re going to be — you’re going to see operating levers when it comes to that. With regard to operational losses, we’ve invested in some incremental tools that have there some new strategies. So we expect that growth rate to really flatten out as we move ‘23 to ‘24.
Jeff Adelson: Great. Thank you.
Brian Wenzel: Thanks, Jeff. Have a good day.
Operator: Our next question comes from John Pancari with Evercore ISI.
John Pancari: Good morning. Just have a couple of follow-ups on the late fee topic. I guess in terms of the offsets, can you just remind us what is likely to be the most material mechanism in offsetting the impact of the late fees? Is it incremental fees or the underlying interest rates that you’re dialing in? And then, secondly, how — can you talk about the competition for negotiating the offsets that you indicated are in place? Is it, how heavy is it in terms of competition? Are there competitors out there willing to eat the cost? And could you possibly see any relationships move as a result of this?
Brian Doubles: Yeah, let me start with the second one first. I think we’re all on a level playing field here in terms of the new late fee proposal. So as we’re in there trying to, whether it’s a renewal or new business, the impact is the same. I think it all comes down to what is the issuers required rate of return, what are the things that are important to them. So I don’t see it changing the competitive dynamic much because it impacts us all equally. It really depends on the type of portfolio, what’s important to the partner, the sharing, the alignment, all the things I talked about. So I don’t think it will have — I don’t see it having a big impact there. And particularly at the point at which we have some clarity here around a final rule, then I think it becomes even clearer in terms of what to bake in. And, Brian, why don’t you talk a little bit about the APRs and fees?
Brian Wenzel: Yeah. So, obviously, John, we have a set of pricing strategy changes that will come through, some of which come through with a faster cadence in 2024, which will be fee oriented as well as some policy orientation. And then there will be APR increases that build with some of which you’ll see in 2024 if the rule gets issued and then build into 2025. So we’ll be back if the rule does get issued. We’ll come back and probably provide a little bit more color with regard to how to think about that in the context of 2024. Some of these will have a bigger short-term impact, some of them will have a bigger long-term impact. And so, we’ll be in a position to provide a little more clarity when we have a final rule and we start to roll out some of these actions.
John Pancari: Got it. Okay, great. Thank you. And then, secondly, just around your purchase volume, I appreciate the color you gave in terms of the drivers between the different verticals. Overall, as we’re looking at 2024, what’s your expectation for total card purchase volume or overall purchase volume as you look at the full year versus 2023, and the same for overall account growth? Thanks.
Brian Wenzel: Yeah, so I’d say, we’re not specifically guiding, John, on purchase volume. Obviously you’ve seen the rate of asset growth decline from 2023 to 2024, there was some impact last year really around that asset growth of — stemming from payment rates decline, which again, we don’t think it will have as big an impact in 2024. So I think you’re going to see something generally consistent with probably last year. I mean, a good benchmark is sit back and say, we do see GDP at 1.7%. We grow multiple of that. So again, probably generally consistent with the last year. You’ve got to remember, too, our purchase volume at $185 billion for 2023 was a record high for this company. So we are facing a difficult comp as we move into 2024. But again, we’re proud of the sales platforms and the differentiation and diversification that’s inside of those platforms.
