Synchrony Q3 2026 Profit Falls 17%; EPS Outlook Near $9.50

Synchrony Financial (NYSE: SYF) reported a 17% decline in third-quarter 2026 net earnings as higher operating costs, retailer payments and credit-loss provisions outweighed growth in loan receivables and purchase volume. Diluted earnings per share fell 6% to $2.68, while the company set its full-year outlook at approximately $9.50 per diluted share.

Net earnings totaled $892 million for the quarter ended September 30, down from $1.08 billion a year earlier. Net earnings available to common stockholders declined 18% to $864 million. Pre-tax earnings fell 17% to $1.18 billion.

The consumer-finance company generated $4.81 billion of net interest income, up 2% year over year. Interest and fees increased primarily because of growth in average loan receivables, while lower benchmark rates reduced interest expense by 3% and investment income by 11%.

Net interest margin narrowed by 12 basis points to 15.50%. Synchrony said lower funding costs were offset by reduced loan receivables and liquidity portfolio yields. The decline in loan yield primarily reflected fewer late fees because of improved credit performance.

Spending and receivables grow

Period-end loan receivables increased 3% to $103 billion, and purchase volume rose 8% to $50 billion. Average active accounts were unchanged at approximately 68 million. The payment rate increased about 60 basis points from the prior-year quarter to 16.9%.

Co-branded cards were a major source of growth, with receivables increasing 22% to $37.5 billion and purchase volume rising 23% to $26.4 billion.

Among Synchrony’s platforms, Diversified & Value posted the strongest gains, with loan receivables up 8% to $21.2 billion and purchase volume up 13% to $17.4 billion. Home & Auto purchase volume increased 9% to $12.1 billion, while receivables rose 2% to $30.9 billion.

Digital receivables grew 3% to $29.1 billion, accompanied by a 5% increase in purchase volume. Health & Wellness receivables rose 1% to $15.6 billion and purchase volume increased 3%. Lifestyle receivables declined 1% to $6.6 billion, although purchase volume grew 6%.

During the quarter, Synchrony introduced CareCredit Pay Later, which expands payment options through offer comparison and digital capabilities. It also refreshed the Venmo Credit Card rewards proposition with increased cash back on eligible social spending.

Credit performance improves, but provision rises

The net charge-off rate declined to 4.79% from 5.16% a year earlier. Despite the improvement, the provision for credit losses increased 10% to $1.27 billion. The increase primarily reflected a $30 million reserve build, compared with a $152 million reserve release in the prior-year period, partly offset by a $62 million reduction in net charge-offs.

Retailer share arrangements increased $72 million to $1.10 billion and represented 4.3% of average loan receivables. Synchrony attributed the increase primarily to program performance.

Other expenses climbed 10% to $1.37 billion, driven mainly by higher operational losses, technology investments and marketing spending. The efficiency ratio rose to 35.9% from 32.6%. Other income decreased 17% to $105 million.

Synchrony’s preliminary Common Equity Tier 1 capital ratio was 12.9% at quarter-end, compared with 14.3% a year earlier. Net earnings added to the ratio, while share repurchases, dividends and changes in risk-weighted assets reduced it. Tangible book value per share, a non-GAAP measure, increased to $42.79 from $40.28.

Total funding stood at $100 billion, with deposits representing 83%, secured funding 8% and unsecured funding 9%. Liquid assets totaled $19.5 billion, equivalent to 15.9% of total assets.

Full-year outlook

For full-year 2026, Synchrony expects diluted earnings per share of approximately $9.50, mid-single-digit growth in ending loan receivables and a net charge-off rate below 5.5%.

Management expects strong purchase-volume growth to continue and payment rates to remain elevated. Net interest income is expected to grow, reflecting the building impact of product, pricing and policy changes on interest and fees, as well as lower funding costs. Those factors are expected to be partly offset by lower late-fee incidence and acceleration in new accounts.

The company expects delinquency and net charge-off performance to remain relatively stable while following normal seasonal patterns. Retailer share arrangements as a percentage of average loan receivables are expected to remain within the 4.0% to 4.5% target range. Fourth-quarter other expenses are expected to be generally in line with the third quarter.

The outlook assumes a stable macroeconomic environment, no significant change in inflation, no additional broad-based credit refinements, no regulatory or legislative changes and no further modifications to product, pricing and policy actions. Synchrony identified economic conditions, interest rates, tariffs, regulatory constraints, partner concentration, cybersecurity, funding costs, credit performance and competition among the factors that could cause actual results to differ from its expectations.