Synchrony Financial (SYF) Q2 2024 earnings summary

Executive summary

• Net earnings rose 13% year-over-year to $643 million ($1.55 per diluted share), driven by core business growth, higher net interest income, and a significant after-tax gain from the Pets Best sale.

• Loan receivables increased 8% year-over-year to $102.3 billion, supported by lower payment rates and the Ally Lending acquisition.

• Average active accounts grew 2% to 71.0 million, with 5.1 million new accounts added and $47 billion in purchase volume.

• Efficiency ratio improved to 31.7%, a 380 bps improvement year-over-year, reflecting cost discipline.

• $400 million was returned to shareholders in Q2 ($300 million repurchases, $100 million dividends).

Financial highlights

• Net interest income grew 7% to $4.4 billion, with total interest income up 11% and net revenue up 13% to $3.7 billion.

• Net charge-off rate increased to 6.42% from 4.75% year-over-year, above historical averages.

• Provision for credit losses rose 22% to $1.7 billion, reflecting higher net charge-offs.

• Deposits reached $83.1 billion, representing 84% of total funding, with liquid assets and undrawn facilities at $23 billion.

• Allowance for credit losses at 10.74% of loan receivables.

Outlook and guidance

• Full-year 2024 EPS guidance raised to $7.60–$7.80, at the upper end of prior guidance, including impacts from late fee rule and PPPC changes.

• Expects net charge-off rate to be lower in H2 2024 than H1, with delinquency trends improving.

• Anticipates flat to low single-digit decline in purchase volume and moderating receivables growth in H2 2024.

• Reserve coverage ratio at year-end 2024 expected to be in line with year-end 2023.

• Other expenses expected to trend in line with H1 average.