Synchrony Financial
SYF · NYSE
Next quarter
Reports Oct 21, 2026.
Consensus is $2.38 EPS for Sep 2026 across 6 estimates, ranging $2.25 to $2.53.
SYF Jun 2026
- 24.52%
- +0.83%
- $2.08
- $2.59
- —
- —
Reported results
- $885.00M
- $2.59
Highlights
- EPS beat: Second-quarter diluted EPS was $2.59, 24.5% above the $2.08 consensus, versus $2.27 in Q1 2026 and $2.50 in Q2 2025.
- Net earnings: Net earnings were $885 million, up from $805 million sequentially but down 8.5% from $967 million a year earlier.
- Funding benefit: Net interest income increased 1.9% year over year to $4.61 billion as interest expense fell 8.5% to $975 million; net interest margin was 15.08%, up from 14.78%.
- Credit costs: Net charge-offs declined 3.3% to $1.36 billion, with the annualized charge-off rate improving to 5.43% from 5.70%; over-30-day delinquencies were 4.16%, down 2 basis points.
- Loan growth: Purchase volume rose 8.1% to $49.8 billion and period-end loan receivables increased 2.4% to $102.2 billion, despite higher payment rates and normal seasonal paydowns.
- Portfolio mix: Digital purchase volume grew 9.2% to $14.9 billion and Diversified & Value rose 11.7% to $17.2 billion; Home & Auto volume increased 5.8% to $12.1 billion.
- Expense pressure: Other expense increased 6.9% to $1.33 billion, driven by higher operational losses and technology investment costs; the efficiency ratio worsened to 35.8% from 34.1%.
- Capital return: Synchrony repurchased $850 million of common stock in the quarter and had $5.7 billion remaining under its authorization; the quarterly common dividend will rise to $0.34 from $0.30 in Q3.
- Lowe's addition: The company completed the acquisition of $0.7 billion of Lowe's commercial co-branded card receivables in April, contributing to higher commercial balances and Home & Auto activity.
Analysis
Synchrony Financial delivered a strong earnings beat in the June 2026 quarter, with diluted EPS of $2.59 versus the $2.08 consensus. EPS rose from $2.27 in Q1 2026 and was 3.6% above $2.50 in Q2 2025, helped by a substantially lower share count following aggressive repurchases. Net earnings of $885 million increased 9.9% sequentially but declined 8.5% year over year, while net earnings available to common stockholders fell 8.7% to $864 million year over year.
The print was defined by improving funding economics and credit performance, offset by higher operating and partner-related costs. Net interest income rose 1.9% to $4.61 billion as the cost of interest-bearing liabilities fell to 3.96% from 4.35%, lifting net interest margin to 15.08%. Purchase volume grew 8.1% to $49.8 billion and loans rose 2.4% to $102.2 billion, led by Digital and Diversified & Value. Net charge-offs fell to $1.36 billion, although provision expense still increased 4.8% to $1.20 billion because the reserve release was smaller than a year ago. Retailer share arrangements rose 3.5% to $1.03 billion and other expense increased 6.9% to $1.33 billion, limiting pre-tax earnings, which fell 5.6% to $1.19 billion.
Earnings and funding
Lower funding costs were the central earnings support in the quarter. Net interest income increased $87 million year over year to $4.61 billion, even as total interest income was essentially flat at $5.58 billion. Interest expense declined $90 million to $975 million, primarily because lower benchmark rates reduced the cost of deposits and other borrowings. The average cost of interest-bearing liabilities fell to 3.96% from 4.35%, while average loan receivables rose 1.5% to $100.7 billion. Net interest margin improved to 15.08% from 14.78%, though it declined from 15.50% in Q1 2026.
- Sequential recovery: Earnings before taxes increased to $1.19 billion from $1.05 billion in Q1, while net earnings rose to $885 million from $805 million.
- Share-count benefit: Fully diluted weighted-average shares fell to 334.1 million from 369.9 million a year earlier, helping EPS grow despite lower net earnings.
Credit performance
Credit metrics improved year over year and compared with year-end, supporting a more favorable loss trajectory. Net charge-offs declined $47 million to $1.36 billion, and the annualized charge-off rate fell 27 basis points to 5.43%. Management said it expects the full-year 2026 charge-off rate to be below its long-term 5.5%-6.0% target range. Provision expense nevertheless rose $55 million to $1.20 billion because the quarter included a $163 million reserve release, versus $265 million in Q2 2025.
- Delinquencies: Loans more than 30 days past due were 4.16% of receivables, down from 4.18% a year earlier and 4.49% at December 31, 2025; 90-plus-day delinquencies were 2.01%, versus 2.06% a year earlier.
- Reserve position: The allowance for credit losses was $10.3 billion, down from $10.6 billion a year earlier, and coverage declined to 10.09% from 10.59%.
Volume and loan growth
Synchrony expanded balances despite the normal seasonal reduction in receivables during the first half of the year. Purchase volume increased 8.1% to $49.8 billion, driven by partner expansion and higher spend per average active account. Period-end loan receivables rose 2.4% to $102.2 billion, although balances were down 1.5% from December 2025 as customers paid down balances at higher rates.
- Digital: Purchase volume increased 9.2% to $14.9 billion, average active accounts rose 1.4% to 20.7 million, and period-end receivables grew 4.4% to $29.0 billion.
- Diversified & Value: Purchase volume rose 11.7% to $17.2 billion, average active accounts increased 3.5% to 20.2 million, and receivables grew 6.5% to $20.8 billion.
- Home & Auto: Volume increased 5.8% to $12.1 billion, while receivables were broadly flat at $30.4 billion and average active accounts declined 2.5% to 17.4 million.
- Lowe's portfolio: The April acquisition of $0.7 billion of commercial co-branded receivables lifted commercial balances to $2.7 billion, up 35.4% year over year.
Costs and other income
Operating leverage remained a constraint on the quarter. Other expense increased $86 million, or 6.9%, to $1.33 billion, principally reflecting higher operational losses and technology investment costs. The efficiency ratio worsened to 35.8% from 34.1% a year earlier. Retailer share arrangements also increased $35 million, or 3.5%, to $1.03 billion, reflecting program performance, product and pricing changes, and higher purchase volume.
- Other income: Other income rose 16.1% to $137 million, including a $30 million gain from exchanging Visa Class B-2 common stock for Visa Class C stock.
- Loyalty costs: Loyalty program costs increased to $436 million from $360 million, partially offsetting higher interchange and protection product revenue.
Capital and liquidity
Synchrony continued to return capital while maintaining substantial funding flexibility. Deposits were $82.8 billion at quarter-end, representing 83% of total funding sources, and total liquid assets were $19.8 billion. The company issued $500 million of Series C preferred stock in June and ended the quarter with preliminary total risk-based capital of 16.9% and a common equity Tier 1 ratio of 13.2%.
- Repurchases: Common-stock repurchases totaled $850 million in Q2, bringing six-month repurchases to $1.75 billion; the remaining authorization was $5.7 billion.
- Dividend: The company declared and paid $0.30 per common share in the quarter and approved an increase to $0.34 per share beginning in Q3 2026.
- Liquidity access: In addition to $19.8 billion of liquid assets, Synchrony reported $2.6 billion of undrawn securitization capacity and $13.1 billion of available Federal Reserve discount-window borrowing capacity.
