Synchrony earnings declined in the third quarter of 2026 despite record third-quarter purchase volume and lower credit losses. The consumer lender reported net earnings of $892 million, or $2.68 per diluted share, on October 20, down from approximately $1.1 billion, or $2.86 per share, a year earlier. Higher credit-loss provisions and operating expenses outweighed growth in net interest income.
Key Takeaways
- Purchase volume rose 8% to $49.7 billion, but loan receivables grew a slower 3%.
- Net charge-offs declined to 4.79%, although a shift from reserve releases to a reserve build increased provisions.
- Management expects about $9.50 in full-year diluted EPS, at the high end of its original outlook.
Table of Contents
- Synchrony earnings pressured by provisions and expenses
- Record spending translates into slower loan growth
- Credit measures improve as capital returns continue
- Full-year outlook targets about $9.50 per share
- Conclusion
Synchrony earnings pressured by provisions and expenses
Synchrony’s third-quarter results announcement showed net earnings fell 17% year over year. Net interest income increased 2% to $4.8 billion, supported by higher average loan receivables and lower funding costs, but that improvement was insufficient to offset higher charges elsewhere.
The provision for credit losses rose $120 million to $1.3 billion. The key difference was reserve accounting: Synchrony built reserves by $30 million in the quarter, compared with a $152 million release a year earlier. Lower net charge-offs partly offset that change. Improving realized credit losses therefore did not translate into a lower provision expense.
Other expense increased 10% to $1.4 billion, reflecting higher operational losses, technology investments and marketing spending. The efficiency ratio rose to 35.9% from 32.6%. Retailer share arrangements also increased 7% to $1.1 billion, reflecting program performance, while higher loyalty costs reduced other income.
| Item | Details |
|---|---|
| Deposits | $83.0 billion, up 4% year over year; 83% of total funding. |
| Liquid assets | $19.5 billion, representing 15.9% of total assets. |
| Estimated CET1 capital ratio | 12.9%, compared with a recast 14.3% a year earlier. |
| Average active accounts | 68.3 million, flat year over year. |
Record spending translates into slower loan growth
Purchase volume reached $49.7 billion, the highest third-quarter level in company history, with growth across all five sales platforms. Diversified & Value led with 13% growth, followed by Home & Auto at 9%, Lifestyle at 6%, Digital at 5%, and Health & Wellness at 3%.
Ending loan receivables increased 3% to $103.3 billion, trailing the growth in spending. The payment rate was 16.9%, about 60 basis points above a year earlier. Higher customer payments limit how much new purchasing activity remains on the balance sheet as outstanding loans.
Net interest margin declined 12 basis points year over year to 15.50%. Lower funding costs provided support, but lower loan and liquidity-portfolio yields offset that benefit. Co-branded card spending grew 23% and represented roughly 53% of total spending.
Credit measures improve as capital returns continue
The net charge-off rate declined to 4.79% from 5.16% a year earlier. Loans at least 30 days past due represented 4.34% of ending receivables, down from 4.39%, while the share at least 90 days past due fell to 2.06% from 2.12%.
Allowance coverage stood at 10.01% of loan receivables, compared with 10.09% in the second quarter and 10.35% a year earlier.
Synchrony returned $1.2 billion to shareholders during the quarter, including $1.1 billion in share repurchases and $110 million in common dividends. Approximately $4.6 billion remained under its repurchase authorization at September 30, 2026.
Full-year outlook targets about $9.50 per share
Chief Financial Officer Brian Wenzel said Synchrony expects approximately $9.50 in diluted earnings per share for 2026, the high end of its original $9.10–$9.50 range. Management also expects mid-single-digit growth in year-end loan receivables and full-year net charge-offs below 5.5%.
The outlook assumes a stable macroeconomic environment. Management expects purchase-volume growth to remain strong and payment rates to stay elevated, with fourth-quarter other expense dollars generally in line with the third quarter.
Wenzel declined to provide formal 2027 guidance. He described loan growth, the maturation of new portfolios, operating leverage and capital returns as factors that could support double-digit EPS growth next year, rather than issuing a confirmed earnings target.
Conclusion
The fourth-quarter results will show whether continued spending growth and lower funding costs can support Synchrony’s approximately $9.50 full-year EPS outlook. Reserve needs and operating expenses remain important offsets to the improvement in credit performance.
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