REFILE-Synchrony Financial's quarterly profit surges on lower rainy-day fund, higher interest income

July 22 (Reuters) - Synchrony Financial SYF.N on Tuesday reported a 52% jump in second-quarter profit, as the consumer lender set aside less money to cover potential defaults and elevated rates boosted its interest income.

Consumers have been resilient despite high interest rates and inflation, with many managing to meet debt obligations and avoid sharp deterioration in credit health.

Credit card interest rates in the U.S. are significantly higher than those for mortgages or auto loans, which helped card issuers across the industry maintain interest income.

Synchrony's quarterly net interest income - the difference between how much a lender earns from loans and pays out on deposits - rose 3% to $4.52 billion.

Its net interest margin, which measures the profitability of lending operations, increased 32 basis points to 14.78% in the three months ended June 30.

Provision for credit losses decreased by $545 million to $1.1 billion during the second quarter, helped by a reserve release of $265 million, compared with a build of $70 million in the prior year.

Provisions are funds set aside by lenders to cover potential loan losses, serving as a key buffer against defaults and an indicator of how they view future credit risk.

While overall credit health was stable, many consumers - especially those in lower-income brackets - are pulling back on discretionary spending as persistent inflation and high borrowing costs strain household budgets.

Synchrony's quarterly purchase volume - a measure of customer spending - fell 2%.

Its revenue came in at $3.65 billion in the second quarter, compared with $3.71 billion a year ago. Meanwhile, net income available to common shareholders surged 52% to $946 million.

The bank's second-quarter profit came in at $2.50 on a per-share basis, up from $1.55 a year earlier.