What Synchrony Financial (SYF) Said on Its Q3 Earnings Call

Key Points

• Strong operating performance: Synchrony’s third-quarter net earnings reached $892 million, or $2.68 per diluted share, while purchase volume rose 8% year over year to nearly $50 billion. Loan receivables grew 3% to $103 billion, with growth recorded across all five sales platforms.
• Credit trends improved, but expenses increased: The net charge-off rate declined to 4.79%, while payment rates strengthened. However, other expenses rose 10% to $1.4 billion due to operational losses, technology investments and higher marketing costs, pressuring the efficiency ratio.
• Outlook and shareholder returns strengthened: Synchrony raised its full-year earnings outlook to approximately $9.50 per share and maintained expectations for mid-single-digit loan growth and net charge-offs below 5.5%. The company returned $1.2 billion to shareholders during the quarter, including $1.1 billion in share repurchases.

Synchrony Financial NYSE: SYF reported third-quarter net earnings of $892 million, or $2.68 per diluted share, as purchase volume reached nearly $50 billion and rose across each of the company’s five sales platforms.

The consumer finance company said total purchase volume increased 8% from a year earlier, marking its highest third-quarter level on record. Ending loan receivables grew 3% to $103 billion, while net interest income increased 2% to $4.8 billion.

Chief Executive Officer Brian Doubles said approximately 53% of third-quarter spending occurred through Synchrony’s co-branded cards, where purchase volume increased 23% year over year. Growth reflected new programs, product upgrades, higher broad-based spending and increased utility for cardholders, he said.

“Both discretionary and non-discretionary out-of-partner spend on our consumer co-brand cards grew by double digits,” Doubles said, citing electronics and entertainment in discretionary spending and gas stations and discount stores in non-discretionary categories.

Purchase Volume Growth Across Platforms

Synchrony reported purchase-volume increases in all five of its sales platforms. Diversified & Value spending rose 13%, driven primarily by partner expansion and higher gas prices. Home & Auto volume grew 9%, aided by new programs, select furniture retailers and higher gas prices.

• Lifestyle purchase volume increased 6%, reflecting strength in other apparel, luxury and new programs.
• Digital sales grew 5%, supported by customer engagement among partners with diversified offerings and refreshed value propositions.
• Health & Wellness purchase volume rose 3%, primarily due to growth in pet-related spending.

Doubles said spending growth was strongest among Gen Z and millennial customers, particularly in the Diversified & Value, Digital, and Home & Auto platforms. He said the company uses its PRISM underwriting and analytics platform, which incorporates more than 9,000 data variables in cash-flow underwriting, to extend purchase power to credit-ready customers.

During the quarter, Synchrony introduced CareCredit Pay Later, a rebranded installment-loan offering that is available alongside the CareCredit credit card. The product is now available at nearly 20,000 Health & Wellness locations, including dental, cosmetic, vision and audiology providers, according to the company.

Synchrony also refreshed the Venmo Credit Card value proposition with a feature that provides more cashback for cardholders who split purchases with friends on Venmo. The card provides daily cashback deposited directly into customers’ Venmo accounts.

Technology and Commerce Initiatives

The company highlighted several technology partnerships aimed at expanding financing access within digital commerce. Synchrony said its new Stripe integration will enable participating Health & Wellness providers and retailers using Stripe to offer CareCredit financing during online checkout.

It also announced an integration with veterinary practice-management software provider Vetspire to embed CareCredit financing within Vetspire’s platform. Vetspire is used by more than 1,000 veterinary hospitals and clinics nationally, and Synchrony said about 85% of those providers already accept CareCredit.

Doubles said the company launched a Synchrony ChatGPT plugin that enables consumers to discover Marketplace savings and offers within ChatGPT. Synchrony is also deploying OpenAI models, including GPT-6 Astra, and has joined the Personal Agent Protocol initiative led by Sierra and Meta as a design partner.

In response to questions about agentic commerce, Doubles said the company believes shopping agents could reduce friction for cardholders by allowing consumers to program preferred cards for purchases with specific merchants. He also said greater transparency around discounts, offers and rewards could benefit Synchrony’s products.

Credit Trends, Margins and Expenses

Chief Financial Officer Brian Wenzel said the company’s net charge-off rate declined 37 basis points from the prior year to 4.79%. Its 30-plus-day and 90-plus-day delinquency rates were in line with the previous year, while the allowance for credit losses stood at 10.01% of loan receivables, down from 10.35% a year earlier.

Wenzel said the payment rate was 16.9%, about 60 basis points above the prior year and about 180 basis points above the pre-pandemic third-quarter average. He attributed more than 90% of the year-over-year increase to portfolio mix, including new programs and lower promotional balances.

Net interest margin declined 12 basis points year over year to 15.5%, reflecting lower loan-receivable yield, lower liquidity portfolio yield and a smaller mix of loan receivables within interest-earning assets. Those factors were partly offset by lower funding costs. Sequentially, net interest margin increased 42 basis points.

Other expenses increased 10% to $1.4 billion, driven by higher operational losses, technology investments and marketing expenditures. The company’s efficiency ratio rose about 330 basis points year over year to 35.9%.

Wenzel said Synchrony had implemented more than 100 strategies to mitigate operational losses and expects those efforts to contribute to lower losses in 2027. He also said technology spending would remain elevated as the company invests in cloud capabilities, artificial intelligence, digital wallets and its pay-later product, though growth in those expenditures is expected to decelerate over time.

Outlook and Capital Returns

Synchrony raised its full-year outlook to approximately $9.50 in diluted earnings per share, the high end of its original guidance range. The company continues to expect year-end loan receivables to grow by mid-single digits, net interest income to increase and net charge-offs to remain below 5.5%.

The company expects retailer share agreements, or RSAs, to be higher for the full year but remain within its long-term target range of 4% to 4.5% of average receivables. Fourth-quarter other expense dollars are expected to be generally in line with the third quarter.

Synchrony returned $1.2 billion to shareholders during the quarter, including $1.1 billion in share repurchases and $110 million in common-stock dividends. Its common equity Tier 1 ratio ended the quarter at 12.9%, and the company had approximately $4.6 billion remaining under its share repurchase authorization.

Management said early holiday-season spending trends remained consistent with the pace seen at the end of the third quarter. Doubles and Wenzel said the company and its retail partners were cautiously optimistic about holiday demand, while preparing a schedule of promotions, discounts and offers.

About Synchrony Financial (NYSE:SYF)

Synchrony Financial NYSE: SYF is a consumer financial services company that provides private-label credit cards, co-branded credit cards and promotional financing programs. Its financing products are offered through retailers, manufacturers, healthcare providers and other businesses, helping consumers pay for purchases over time.

The company serves a range of industries, including digital commerce, home improvement, furniture, automotive, healthcare, jewelry, apparel, electronics and specialty retail.

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