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    SYF
    Earnings call· Jun 2026(Q2 FY26)

    Synchrony Financial SYF

    Jul 21, 2026 Source

    Executive summary

    Synchrony Financial Q2 FY26 — Strong Purchase Volume and Account Growth

    Synchrony Financial delivered strong Q2 FY26 results, marked by record purchase volume and positive inflection in active account growth, driven by resilient consumer spending and new program performance. While net interest margin saw a sequential decline due to seasonal factors and lower late fees, management expects it to build in the second half, alongside continued loan receivable growth and disciplined credit performance, supporting an increased full-year EPS outlook.

    Highlights

    5

    • Purchase volume grew 8% YoY to an all-time high of almost $50 billion.

    • Ending loan receivables grew 2% to $102 billion, with mid-single-digit growth expected by year-end.

    • Net interest margin increased 30 basis points YoY to 15.08%.

    • Generated net earnings of $885 million or $2.59 per diluted share.

    • Returned $950 million to shareholders, including $850 million in share repurchases and $100 million in common stock dividends.

    Concerns

    4

    • Net interest margin decreased 42 basis points QoQ, primarily due to lower assessed late fees and decline in loan receivables mix.

    • Other expense increased 7% YoY to $1.3 billion, driven by higher operational losses and technology investments.

    • Efficiency ratio increased 170 basis points YoY to 35.8%.

    • Operational losses were elevated, with over $20 million covered directly through RSA this quarter.

    Guidance & targets

    8
    CategoryTargetConfidence
    Ending loan receivables growth
    mid-single-digit growth
    high materiality
    High
    Net interest income growth
    grow
    high materiality
    High
    Net charge-off rate
    less than 5.5%
    high materiality
    High
    RSAs as a percent of average receivables
    remain within our long-term target range of 4% to 4.5%
    medium materiality
    High
    Other expense dollars
    relatively consistent with the first half
    medium materiality
    Medium
    Diluted earnings per share
    $9.25 and $9.50
    high materiality
    High
    CET1 ratio target
    11%
    high materiality
    High
    Charge-off rate underwriting target
    between 5.5% and 6%
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Diversified Value
    Led growth across sales platforms, driven by broad utility and strong value from partners like TJX and Sam's, and the introduction of new programs like Walmart OnePay.
    Purchase Volume: 12% increase
    		—12% increase——
    Digital
    Reflected strong performance across partners with broad diversified offerings and highly engaged customers, including Amazon and PayPal.
    Purchase Volume: 9% growth
    		—9% growth——
    Home & Auto
    Growth driven by the performance of new programs. Encouraged by green shoots, with furniture up nicely and home specialty up mid-single digits.
    Purchase Volume: 6% increase
    		—6% increase——
    Lifestyle
    Higher spend primarily driven by the performance of new programs and strength in other apparel and goods, as well as the luxury category.
    Purchase Volume: 6% increase
    		—6% increase——
    Health & Wellness
    Primarily reflecting growth in Pet. Dental, previously a headwind, turned positive during the quarter.
    Purchase Volume: 2% growth
    		—2% growth——
    Co-branded cards (Consumer and Commercial Dual Cards)
    Driven by a combination of new programs, product upgrades, higher broad-based spend, and enhanced utility across card programs.
    Percent of total purchase volume: 52%Purchase Volume: 23% increase
    		—23% increase——

    Operational metrics

    31
    Net earnings
    $885 million
    Q2 FY26

    Reported net earnings for the quarter.

    Return on average assets (ROAA)
    2.9%
    Q2 FY26

    Reported return on average assets.

    Return on tangible common equity (ROTCE)
    25.2%
    Q2 FY26

    Reported return on tangible common equity.

    Tangible book value per share growth
    8%
    Q2 FY26

    Increase in tangible book value per share.

    Payment rate
    17%70 bps higher YoY
    Q2 FY26

    Elevated payment rate compared to prior year and pre-pandemic levels.

    Net interest income
    $4.6 billion2% increase YoY
    Q2 FY26

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

    Net interest margin (NIM) YoY drivers
    30 bps increaseYoY
    Q2 FY26

    Detailed drivers of the year-over-year net interest margin change.

    Net interest margin (NIM) QoQ drivers
    42 bps decreaseQoQ
    Q2 FY26

    Detailed drivers of the sequential net interest margin change.

    RSAs
    $1 billionincreased $35 million YoY
    Q2 FY26

    Reflecting program performance and higher purchase volume.

    Provision for credit losses
    $1.2 billionincreased $55 million YoY
    Q2 FY26

    Driven by a smaller reserve release and partially offset by a decrease in net charge-offs.

    Other income
    $137 millionincreased $19 million YoY
    Q2 FY26

    Primarily reflecting a gain on Visa B-2 Shares, partially offset by higher loyalty costs.

    Other expense
    $1.3 billionincreased 7% YoY
    Q2 FY26

    Primarily driven by higher operational losses and technology investments.

    Efficiency ratio
    35.8%170 bps higher YoY
    Q2 FY26

    Resulted from higher overall expenses and the impact of higher RSA.

    Allowance for credit losses as percent of loan receivables
    10.9%decreased 50 bps YoY
    Q2 FY26

    Reflects changes in credit outlook and portfolio composition.

    Direct deposits growth
    $2.9 billionYoY
    Q2 FY26

    Growth in direct deposits.

    Broker deposits reduction
    $2.4 billionYoY
    Q2 FY26

    Reduction in broker deposits.

    Deposits as percent of total funding
    83%
    Q2 FY26

    Represents the primary source of funding.

    Secured debt as percent of total funding
    9%
    Q2 FY26

    Component of total funding mix.

    Unsecured debt as percent of total funding
    8%
    Q2 FY26

    Component of total funding mix.

    Total liquid assets
    $19.8 billiondecreased 9% YoY
    Q2 FY26

    Reflects the company's liquidity position.

    Preferred stock issuance
    $500 million
    Q2 FY26

    Issued preferred stock, completing the capital stack.

    CET1 ratio
    13.2%100 bps reduction YoY
    Q2 FY26

    Reflects capital strength, impacted by reclassification of capitalized software costs.

    Tier 1 capital ratio
    14.9%50 bps reduction YoY
    Q2 FY26

    Reported Tier 1 capital ratio.

    Total capital ratio
    16.9%60 bps reduction YoY
    Q2 FY26

    Reported total capital ratio.

    Tier 1 capital plus reserves ratio
    24.7%100 bps reduction YoY
    Q2 FY26

    Reported Tier 1 capital plus reserves ratio.

    Share repurchases
    $850 million
    Q2 FY26

    Amount of share repurchases executed during the quarter.

    Common stock dividends
    $100 million
    Q2 FY26

    Amount of common stock dividends paid during the quarter.

    Total capital returned to shareholders
    $950 million
    Q2 FY26

    Combined share repurchases and common stock dividends.

    Remaining share repurchase authorization
    $5.7 billion
    Q2 FY26

    Remaining amount under the share repurchase authorization.

    New accounts generated
    5.1 million
    Q2 FY26

    Strong new account growth, contributing to average active account inflection.

    Dividend increase
    13%
    Q2 FY26

    Dividend increase announced, taking effect this quarter.

    Industry KPIs

    13
    MetricValueDetails
    Fee revenue—
    Funding mix83%%
    Payment rate17%%
    Delinquencies—
    Capital returns$950 millionUSD
    Credit quality mix—
    Net charge off rate5.43%%
    Loans card receivables$102 billionUSD
    Provision reserve rate$1.2 billionUSD
    Rewards engagement costs10%%
    New accounts card acquisitions5.1 millioncount
    Billed business purchase volume$50 billionUSD
    Net interest margin yield on receivables15.08%%

    Product announcements

    2
    ProductTypeDetails
    DICK'S Sporting Goods credit card programupdate
    MyLowe's Pro Rewards American Express Card portfolioexpansion

    Deals & partnerships

    5
    Suzuki MotorRenewal of 17-year partnership to deliver secured installment financing solutions through over 700 dealers nationwide.

    Extended partnership for secured installment financing.

    AmerivetRenewed relationship, positioning CareCredit as their exclusive financing partner through a seamless single application waterfall solution for over 200 veterinary clinics.

    CareCredit becomes exclusive financing partner for Amerivet's network of veterinary clinics.

    Roto-RooterMultiyear agreement to expand how customers pay for central home repairs and ongoing home care, offering multiproduct capabilities with revolving and installment financing options.multiyear

    New agreement to provide financing options for plumbing and water cleanup services.

    DICK'S Sporting GoodsRefreshed credit card program, building on a 20-year partnership, now featuring everyday 10% back in scorecard rewards.

    Program refresh to drive greater value, financing flexibility, and convenience for consumers.

    Lowe'sAcquisition of the MyLowe's Pro Rewards American Express Card portfolio, becoming the issuer.

    Completed acquisition in April, aiming for a cohesive customer experience with simpler applications, digital servicing, and more utility and value.

    Risks & headwinds

    3
    Net interest margin compressionQ2 FY26

    NIM decreased 42 basis points QoQ

    Mitigation: Management expects NIM to build sequentially in H2 FY26 due to ALR step-out, abating late fee impacts, and continued PPPC build.

    Elevated operational lossesQ2 FY26

    Other expense increased 7% YoY to $1.3 billion, driven by higher operational losses. Over $20 million of operational losses covered directly by RSA this quarter.

    Mitigation: Expect operational losses to flatten out and trend downward in the back half of the year.

    Potential regulatory action on late fees/APRs

    Discussed, not quantified

    Mitigation: Staying very close to developments; no formalized action at this point. Management believes price controls generally have serious unintended consequences, such as restricting credit.

    What to watch in Q3 FY26

    5

    Net Interest Margin (NIM) trajectory

    H2 FY26
    Current15.08% (Q2 FY26), decreased 42 bps QoQ
    TargetSequential build

    Why it matters

    NIM is a key profitability driver, and its recovery is crucial for full-year EPS guidance.

    net interest margin was really at the lowest point here in the second quarter, that's going to begin to build.

    Q&A highlights

    5

    Why does H2 EPS imply downside relative to Street expectations, and what are the drivers for NII and credit? Also, what are the drivers for NIM building in H2, and will elevated payment rates impede margin expansion?

    Brian Wenzel explained that external models might have spread reserve coverage ratio changes differently across quarters, leading to perceived H2 downside. He noted that the reserve rate likely won't moderate much, with more growth-driven provisions. NIM was at its lowest in Q2 and will build in H2 due to ALR step-out, abating late fee impacts, and continued PPPC build. He clarified that 85% of the 73 bps payment rate increase was due to new portfolios (Walmart, Bobs) and promo mix, not underlying trends.

    “I think when you look externally and what people have modeled, right, when you think about the reserve coverage ratio, I think the ending point how they got there was a little bit more peanut buttered across quarters, right?”

    asked by Ryan Nash · answered by Brian Wenzel

    2 min read6 chapters

    Detailed Narrative

    01

    Consumer Spending & Product Utility

    Consumer behavior remains resilient, supported by increased tax refunds and lower tax withholdings, driving strong demand for Synchrony's products. Discretionary spend was consistent or higher across customer cohorts despite elevated steel prices, with strength in entertainment, retail, and electronics. This trend reflects the value and utility delivered by Synchrony's products, enabling financial flexibility for various life moments.

    02

    Partner Expansion & Renewals

    Synchrony added or renewed over 15 partners in Q2 FY26, including Suzuki Motor, Amerivet, and Roto-Rooter, expanding its reach in auto, pet care, and home repair. The renewed partnership with DICK'S Sporting Goods features enhanced rewards, and the acquisition of the MyLowe's Pro Rewards American Express Card portfolio complements existing offerings for contractors, extending purchasing power beyond Lowe's.

    03

    Credit Performance & Discipline

    The company maintained credit discipline, with 30-plus and 90-plus delinquency rates at quarter-end generally in line with the prior year. The net charge-off rate decreased 27 basis points YoY to 5.43%, and the allowance for credit losses as a percent of loan receivables decreased sequentially to 10.9% from 10.42% in Q1 FY26, reflecting solid credit trends.

    04

    Funding & Capital Strength

    Synchrony's funding, capital, and liquidity ratios remain strong. Direct deposits grew by $2.9 billion YoY, representing 83% of total funding. The company issued $500 million of preferred stock with a 7.25% dividend. The CET1 ratio stood at 13.2%, benefiting from an 80 basis point increase due to a reclassification of capitalized software costs, providing more room for capital deployment.

    05

    AI Strategy & Investment

    Synchrony views AI as a significant opportunity to transform operations, increase capacity, and drive productivity across all functions. The company is actively investing in AI tools, with 90% of exempt employees using them, and is seeing efficiency gains and improved speed to market. While token costs are not currently material, management is developing frameworks to manage AI costs as investments, focusing on return on investment.

    06

    Walmart Program Performance

    The Walmart OnePay program is Synchrony's fastest-growing program historically across multiple metrics, driven by a strong value proposition and high engagement from Walmart Plus members. Over half of the accounts are Walmart Plus members, indicating strong loyalty and purchasing behavior. This program is expected to become a top 5 program for Synchrony, supported by Walmart's digital placement.

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