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    SYF
    Earnings call· Mar 2026(Q1 FY26)

    Synchrony Financial Q1 FY26 earnings call SYF

    Apr 21, 2026 Source

    Executive summary

    Synchrony Financial Q1 FY26 — Record Purchase Volume and Strong Credit Performance

    Synchrony Financial delivered strong Q1 FY26 results, marked by record purchase volume and positive loan receivables growth inflection, supported by resilient consumer health and disciplined credit management. The company is focused on strategic investments in technology and partner expansion, while navigating elevated payment rates and geopolitical uncertainties. Management remains confident in achieving its full-year EPS guidance, underpinned by robust capital generation and aggressive, prudent capital returns.

    Highlights

    5

    • Record first quarter purchase volume of $43 billion, reflecting a 6% increase year-over-year.

    • Net interest margin increased 76 basis points year-over-year to 15.5%.

    • Net charge-off rate decreased 96 basis points year-over-year to 5.42%.

    • Return on tangible common equity of 24.5% and an 8% increase in tangible book value per share.

    • Board approved a new, open-ended share repurchase program of up to $6.5 billion.

    Concerns

    3

    • Other expense increased 6% to $1.3 billion, primarily driven by technology investments and higher operational losses.

    • Efficiency ratio increased 220 basis points year-over-year to 35.6%.

    • Total liquid assets decreased 4% to $22.8 billion, representing 18.8% of total assets.

    Guidance & targets

    5
    CategoryTargetConfidence
    Diluted earnings per share
    $9.10 and $9.50
    high materiality
    High
    Ending loan receivables growth
    mid-single-digit growth
    high materiality
    High
    Net charge-off rate
    less than 5.5%
    high materiality
    High
    Other expense growth
    trend in line with loan receivables
    medium materiality
    Medium
    RSAs as percent of average receivables
    remain within our long-term range of 4% to 4.5%
    medium materiality
    High

    Operational metrics

    35
    Total purchase volume
    $43 billion6% increase YoY
    Q1 FY26

    Record first quarter purchase volume.

    Ending loan receivables
    $100 billionflat YoY
    Q1 FY26

    Achieved positive inflection with approximately $477 million increase sequentially.

    Net interest income
    $4.6 billion4% increase YoY
    Q1 FY26

    Primarily driven by higher interest and fees and lower interest expense.

    Net interest margin
    15.5%76 bps increase YoY
    Q1 FY26

    Reflecting three key drivers and partial offset from liquidity portfolio yield.

    RSAs
    $1.1 billion$175 million increase YoY
    Q1 FY26

    Reflecting program performance, lower net charge-offs, and the impact of PPPCs.

    Provision for credit losses
    $1.3 billion$156 million decrease YoY
    Q1 FY26

    Primarily driven by a $242 million decrease in net charge-offs, partially offset by a $97 million reserve release in the prior year.

    Other expense
    $1.3 billion6% increase YoY
    Q1 FY26

    Primarily driven by costs related to technology investments and higher operational losses.

    Efficiency ratio
    35.6%220 bps higher YoY
    Q1 FY26

    Resulted from higher overall expenses and the impact of higher RSA as program performance improved.

    Net earnings
    $805 million
    Q1 FY26

    N/A

    Diluted EPS
    $2.27
    Q1 FY26

    N/A

    Return on average assets
    2.7%
    Q1 FY26

    N/A

    Return on tangible common equity
    24.5%
    Q1 FY26

    N/A

    Tangible book value per share growth
    8%YoY
    Q1 FY26

    N/A

    Direct deposits growth
    $3.1 billionYoY
    Q1 FY26

    N/A

    Broker deposits reduction
    $3.7 billionYoY
    Q1 FY26

    N/A

    Senior unsecured debt issuance
    $750 million
    Q1 FY26

    Issued at tightest 5-year credit spread to date.

    Secured public bond issuance
    $500 million
    Q1 FY26

    Issued from the Synchrony Card Issuance Trust.

    Total liquid assets
    $22.8 billion4% decrease YoY
    Q1 FY26

    72 basis points lower than last year.

    CET1 ratio
    12.7%50 bps decrease YoY
    Q1 FY26

    N/A

    Tier 1 capital ratio
    13.9%50 bps decrease YoY
    Q1 FY26

    N/A

    Total capital ratio
    16%50 bps decrease YoY
    Q1 FY26

    N/A

    Tier 1 capital plus reserve ratio
    24.1%100 bps decrease YoY
    Q1 FY26

    Compared to 25.1% last year.

    Share repurchases
    $900 million
    Q1 FY26

    Part of $1 billion returned to shareholders.

    Common stock dividends
    $104 million
    Q1 FY26

    Part of $1 billion returned to shareholders.

    Diversified and Value purchase volume growth
    9%YoY
    Q1 FY26

    Primarily reflecting the impact of partner expansion.

    Digital platform purchase volume growth
    8%YoY
    Q1 FY26

    Driven by strong customer response to enhanced product offerings and refresh value propositions.

    Lifestyle purchase volume growth
    7%YoY
    Q1 FY26

    Primarily driven by other apparel and goods and luxury, partially offset by lower average active accounts.

    Health & Wellness purchase volume growth
    3%YoY
    Q1 FY26

    Primarily reflecting growth in Pet & Audiology.

    Home & Auto purchase volume growth
    flatYoY
    Q1 FY26

    Generally reflecting partner expansion in furniture and electronics offset by selective spend in home improvement and lower average active accounts.

    Discretionary spend growth
    acceleratingoutpacing nondiscretionary spend growth
    Q1 FY26

    Third consecutive quarter of year-on-year improvement, particularly from categories like retail, entertainment and electronics.

    New account originations
    15%YoY
    Q1 FY26

    N/A

    Average transaction value for gas
    17%sequentially February to March
    March

    Up 10% year-over-year.

    Frequency of gas purchases
    up slightlyYoY
    Q1 FY26

    N/A

    Basel III Endgame capital relief (standardized approach)
    125 to 150
    N/A

    Expected reduction in RWAs and capital relief if the rule is adopted exactly as is, without changes.

    Tax refund impact on payment rate
    14
    Q1 FY26

    Impact in the quarter from higher payment rate related to tax refunds.

    Industry KPIs

    12
    MetricValueDetails
    Funding mix83%%
    Payment rate16.3%%
    Delinquencies—
    Capital returns$1 billionUSD
    Credit quality mix—
    Net charge off rate5.42%%
    Loans card receivables$100 billionUSD
    Provision reserve rate10.42%%
    Rewards engagement costs—
    New accounts card acquisitions15%%
    Billed business purchase volume$43 billionUSD
    Net interest margin yield on receivables15.5%%

    Deals & partnerships

    11
    Indian MotorcycleRenewed partnership to offer flexible financing solutions

    Through their nationwide dealer network.

    Harbor FreightExtended relationship to provide private label credit card financing

    Offers option of 5% back or 0 interest equal payment installment loans across more than 1,600 locations nationwide.

    Miracle EarProgram to enable patients to pay for hearing devices and related services over time

    Leverages practice management software that optimizes the financing experience for both consumers and staff.

    Planet DDSExpanded strategic partnership for CareCredit financing

    CareCredit integrated across more than 2,500 Cloud 9 orthodontic practices and more than 15,000 Denticon dental practices as the preferred patient financing solution.

    FigoNew partnership for CareCredit pet insurance reimbursement

    Delivering streamlined CareCredit experiences for pet families; approved pet insurance claims can be reimbursed directly as a credit to the consumer's CareCredit account.

    Embrace Pet InsuranceNew partnership for CareCredit pet insurance reimbursement

    Delivering streamlined CareCredit experiences for pet families; approved pet insurance claims can be reimbursed directly as a credit to the consumer's CareCredit account.

    WalmartExpanded collaboration for CareCredit acceptance

    Broadened acceptance for eligible health and wellness purchases on walmart.com and a wider selection of in-store and online product categories.

    Walmart OnePayRecently launched program

    Expected to drive loan receivables growth in the back half of the year.

    Bob's Discount FurnitureSoon-to-be launched program

    Expected to drive loan receivables growth in the back half of the year.

    RHSoon-to-be launched program

    Expected to drive loan receivables growth in the back half of the year; a great franchise with potential for increased penetration and growth.

    Commercial co-brand loan receivablesAcquisition of commercial co-brand loan receivables$725 million

    Added in early April, expected to drive loan receivables growth in the back half of the year.

    Risks & headwinds

    4
    Geopolitical risk

    N/A

    Inflation and higher gas pricesQ1 FY26

    Gas prices up 17% sequentially (Feb to March), up 10% YoY

    Mitigation: Consumers are navigating higher costs, but spending patterns have not been impacted yet.

    Payment rate pressureQ1 FY26

    N/A

    Mitigation: Partially offsetting net interest income growth.

    Operational lossesQ1 FY26

    Contributed to 6% increase in other expense

    Mitigation: Expected to reduce as the year moves forward.

    What to watch in Q2 FY26

    5

    Loan receivables growth

    H2 FY26
    Currentflat at $100 billion, with positive inflection of $477 million increase in Q1
    TargetMid-single-digit growth by year-end, accelerating in H2

    Why it matters

    Verifying the acceleration of loan receivables growth is key to the company's full-year outlook and revenue generation.

    The rate of receivables growth should follow seasonality and accelerate as we move into the back half of the year. This will be driven by growth in our core portfolio as well as a combination of both recently launched and soon-to-be launched programs, including Walmart OnePay, Bob's Discount Furniture, RH and approximately $725 million of those commercial co-brand loan receivables, which was added in early April.

    Q&A highlights

    5

    What gives confidence in mid-single-digit loan growth by year-end, especially with H2 acceleration, given current account acquisitions and borrower behavior?

    Management cited record Q1 purchase volume (6% YoY), strong new account originations (15% in Q1), and positive momentum continuing into April. They expect new programs like Walmart OnePay and Lowe's commercial to build into the portfolio in H2.

    “We saw a strong new account originations of 15% in the first quarter of this year. So we see positive momentum as we exited out of the first quarter. For the first couple of weeks in April, we've seen that to be consistent with how we exited to maybe slightly stronger from a purchase volume standpoint.”

    asked by Terry Ma · answered by Brian Wenzel

    2 min read6 chapters

    Detailed Narrative

    01

    Consumer Resilience and Spending Trends

    Synchrony observed continued consumer resilience with record first-quarter purchase volume of $43 billion, a 6% increase year-over-year. Discretionary spend growth accelerated for the third consecutive quarter, outpacing non-discretionary spend, even as fuel prices rose in March. Payment rates increased approximately 50 basis points year-over-year, reflecting effective credit actions, portfolio mix shifts, and higher tax refunds. The consumer is engaging with products, with the last three weekends in April being the strongest of the year.

    02

    Strategic Partnerships and CareCredit Expansion

    The company added or renewed over 15 partners, including Indian Motorcycle, Harbor Freight, and Miracle Ear. CareCredit expanded its distribution through partnerships with Planet DDS, Figo, and Embrace Pet Insurance, integrating into over 17,500 dental/orthodontic practices and extending pet insurance reimbursement to 1.7 million insured pets. Expanded collaboration with Walmart also broadened CareCredit acceptance for health and wellness purchases, complementing its long-standing in-store acceptance.

    03

    Credit Performance and Portfolio Health

    Synchrony's credit performance remained strong, with the net charge-off rate decreasing 96 basis points year-over-year to 5.42%. Delinquency rates (30+ and 90+) were generally in line with the prior year. The portfolio's mix of below-minimum payers remained well below pre-pandemic levels across all credit cohorts, with nonprime outperforming relative to other cohorts since late 2023. The allowance for credit loss as a percent of loan receivables was 10.42%.

    04

    Capital Management and Shareholder Returns

    Synchrony returned $1 billion to shareholders in Q1, including $900 million in share repurchases and $104 million in dividends. A new, open-ended share repurchase program of up to $6.5 billion was approved, replacing the prior program. The company's CET1 ratio stood at 12.7%, with strong earnings generation contributing 350 basis points of CET1 year-over-year, demonstrating a disciplined approach to capital allocation.

    05

    Basel III Endgame Impact

    Management indicated that under the standardized approach, the Basel III Endgame proposal would be favorable to Synchrony, potentially reducing RWAs and providing 125 to 150 basis points of capital relief. However, the enhanced risk-based approach is seen as more mixed, with potential for a net negative impact due to new capital charges for open-to-buy, operating risk, and deferred tax assets. The company is studying the rule and will provide comments.

    06

    Technology and AI Investments

    Synchrony is making significant investments in technology, including cloud infrastructure and AI, which contributed to a 6% increase in other expenses. The company is leveraging AI for productivity and efficiency across its workforce and actively engaging with AI companies to embed its financing offers into emerging 'Agentic commerce' platforms, ensuring its products are present in future purchasing paths and driving speed to market.

    AI-generated summary of the company’s earnings call. Not investment advice.