Synchrony Financial NYSE: SYF Chief Financial Officer Brian Wenzel said the company was seeing high-single-digit purchase-volume growth roughly 2.5 months into the third quarter, consistent with the approximately 8% growth reported during the second quarter.
Speaking at an investor event, Wenzel said spending remained resilient across consumer credit cohorts despite affordability pressures and higher gasoline prices. Super-prime consumers continued to lead growth, while prime customers showed improved strength and non-prime customers trailed modestly but without presenting a concern, he said.
Consumers also continued to make discretionary purchases, though Wenzel noted pressure in certain larger-ticket categories, including outdoor and lifestyle, health and wellness services such as dental and cosmetics, and portions of the furniture market. He said the timing of Labor Day shifted some sales activity into September.
Credit Performance Remains a Focus
Wenzel characterized Synchrony’s consumer credit performance as a strength, citing delinquency entry rates that are better than 2018 and 2019 levels. Early- and late-stage delinquency trends have remained consistent, although he said five-cycle delinquency was “probably a little bit weaker.”
The company expects losses to rise as newer originations mature, including the Walmart portfolio and accounts generated after Synchrony broadened its credit aperture beginning in the third quarter of the prior year. Still, Wenzel said Synchrony remains comfortable with its underwriting position and expects to originate more than 20 million new accounts this year.
Synchrony’s long-term framework calls for net charge-offs of 5.5% to 6%, while Wenzel said the company is currently operating slightly below the lower end of that range. He said the company continues to widen credit selectively in individual products, channels and verticals where performance supports it, rather than making broad-based changes.
On reserves, Wenzel said the company’s allowance rate was hovering around 10%, compared with approximately 9.7% at the introduction of the CECL accounting standard before the pandemic. He said there could be downward bias in the reserve rate over the medium term, but the company is monitoring macroeconomic risks, Federal Reserve policy, inflation and geopolitical developments.
New Partnerships Support Loan Growth Expectations
Wenzel said Synchrony remained confident in its expectation for mid-single-digit receivables growth by year-end, despite receivables being up 2.8% year over year based on the company’s latest monthly report.
He cited contributions from newer and expanded relationships, including Walmart, Lowe’s commercial portfolio, Bob’s Discount Furniture, RH, Chico’s and J.Crew. Synchrony also recently relaunched its Pay Later product in the health and wellness category, which Wenzel said could help build momentum in that vertical.
Digital sales platforms, led by Amazon and PayPal, offer room for additional penetration growth, according to Wenzel. He said a refreshed value proposition for the PayPal card has generated momentum, while Amazon continues to grow. In diversified value, Walmart, TJX and Sam’s Club are expected to be important drivers.
Wenzel said home and auto activity, which was relatively flat earlier in the year, should turn positive in the second half. Health and wellness also is expected to turn positive, while lifestyle remains the most challenging platform because the outdoor industry continues to face pressure.
Over the long term, the company continues to target 7% to 10% growth through the cycle. Wenzel said the target is supported by penetration gains among highly engaged partner customers, growth that could run at roughly twice GDP, the company’s broad credit spectrum and diversification across sales platforms and verticals.
Walmart and Partner Economics
Wenzel declined to discuss specific profitability metrics for the Walmart program but described the current offering as more compelling than Synchrony’s earlier relationship with the retailer. He pointed to a competitive annual percentage rate, Walmart+ benefits and a value proposition that can provide 5% back for Walmart+ members.
He said Walmart’s digital expansion and loyal customer base make the partnership a potentially significant growth engine. Synchrony had just completed the program’s first 12 months of origination at the end of August.
Regarding the competitive environment, Wenzel said competition for large co-brand and private-label relationships varies by issuer and retailer. He identified Capital One as selective in pursuing partnerships and said Citi is in transition, potentially creating opportunities for Synchrony. He also noted that fintech competitors tend to concentrate on particular verticals such as health and wellness, home specialty and outdoor.
Most of Synchrony’s larger relationships extend between 2030 and 2035, Wenzel said, while the company has a smaller number of moderate-sized partnerships expiring before 2030. He said Synchrony focuses on maintaining partner relevance and fair economics rather than waiting for contract expiration dates.
Wenzel also emphasized the company’s retail sales agreement, or RSA, model, under which partner payments can rise when credit losses fall and decline when loyalty spending increases. He said the structure aligns Synchrony’s interests with those of its partners and contributes to the stability of its return-on-assets profile.
Technology, Capital and Longer-Term Earnings
Synchrony is investing in artificial intelligence, cloud technology and digital product capabilities, Wenzel said. AI applications include improving dispute resolution, streamlining merchant onboarding and preparing for agentic commerce. The company also is working to modernize operational technology and enable multiple product offers, including installment loans and dual-card products.
Wenzel said the company expects improved operating leverage beginning in 2027 as it emphasizes productivity and reallocates spending. He said headcount is expected to decline year over year, partly due to productivity initiatives and AI deployment.
The company recently issued $500 million of preferred stock, which Wenzel said completed its capital stack. With a common equity Tier 1 ratio above 13% at the end of the second quarter, Synchrony’s first capital preference is to support risk-weighted asset growth, followed by dividends, potential bolt-on acquisitions and share repurchases. He said the company aims to move its CET1 ratio closer to its external target of 11%.
Synchrony has not changed its long-term 16% net interest margin framework, Wenzel said. Lower revolving balances and elevated funding costs have pressured the metric, while its payment protection and credit programs have helped support it. He expects net interest margin to rise sequentially in the third and fourth quarters.
About Synchrony Financial (NYSE:SYF)
Synchrony Financial NYSE: SYF is a consumer financial services company that provides credit products and financing programs through partnerships with retailers, manufacturers, healthcare providers and other businesses. Its offerings are designed to help consumers finance purchases and manage spending across a range of industries.
The company's products include private-label and co-branded credit cards, promotional financing, installment loans and other consumer payment solutions. Synchrony also provides deposit products and other banking services through Synchrony Bank, including savings accounts, certificates of deposit and money market accounts.
Synchrony primarily serves consumers and business partners in the United States, including customers in retail, home, automotive, healthcare, specialty and other markets.
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