Synchrony Financial Q4 Earnings Call Highlights

Synchrony Financial NYSE: SYF reported what management described as a strong finish to 2025, highlighting record fourth-quarter purchase volume, improving credit trends, and continued investment in product and digital capabilities while returning significant capital to shareholders.

Fourth-quarter results and operating trends

Synchrony posted fourth-quarter net earnings of $751 million, or $2.04 per diluted share, which included a $0.14 restructuring charge tied to a voluntary employee early retirement program. The company reported return on average assets of 2.5% and return on tangible common equity of 21.8%. Management said tangible book value per share increased 9% in the quarter.

For the full year, Synchrony delivered $3.6 billion in net earnings, or $9.28 per diluted share, with return on average assets of 3.0% and return on tangible common equity of 25.8%.

Purchase volume reached a fourth-quarter record of $49 billion, up 3% year over year, which executives said reflected strengthening spend per account and improving trends across most platforms. Management said Synchrony connected nearly 70 million customers to partners during the quarter and generated more than $182 billion of sales for partners, merchants, and providers in 2025, while adding more than 20 million new accounts.

Platform performance and mix

Management described broad-based improvement in transaction behavior, noting average transaction values increased about 30 basis points versus last year and average transaction frequency rose about 3.7% across all credit cohorts. Synchrony also said it continued to see year-over-year improvement in discretionary spend within out-of-partner purchase volume, citing categories such as electronics, entertainment, and travel.

• Digital purchase volume increased 6%, driven by higher spend per account and customer response to enhanced offerings.
• Diversified and Value purchase volume grew 4%, primarily reflecting partner expansion.
• Health & Wellness purchase volume rose 4%, with growth in pet and audiology partially offset by lower cosmetic spend.
• Lifestyle purchase volume increased 3%, reflecting higher spend per account offset by lower average active accounts.
• Home & Auto purchase volume declined 2%, which management attributed to selective home improvement spend and lower average active accounts, partially offset by higher spend per account.

Synchrony’s dual and co-brand cards represented 50% of total purchase volume in the quarter and increased 16% year over year, driven by product upgrades and broader utility.

Net interest margin, expenses, and credit

Ending loan receivables decreased 1% to $104 billion in the fourth quarter, which management attributed to higher payment rates, lower average active accounts, and softer purchase volume earlier in the year. The payment rate rose about 45 basis points year over year to 16.3% and was approximately 155 basis points above the pre-pandemic fourth-quarter average.

Net revenue of $3.8 billion was flat year over year, as higher net interest income was offset by higher retailer share arrangements (RSAs). Net interest income increased 4% to $4.8 billion, and the company’s net interest margin increased 82 basis points to 15.83%. Management attributed the margin expansion mainly to higher loan receivables yield (including impacts from product, pricing, and policy changes), lower interest-bearing liabilities costs, and a higher mix of loan receivables within interest-earning assets, partially offset by lower liquidity portfolio yield tied to benchmark rates.

RSAs totaled $1.1 billion, or 4.3% of average loan receivables, up $175 million from the prior year, which executives said primarily reflected stronger program performance. Provision for credit losses decreased $119 million to $1.4 billion, driven by a $294 million decrease in net charge-offs, partially offset by a $76 million reserve build compared with a $100 million reserve release in the prior year.

Other expenses increased 10% to $1.4 billion, reflecting higher employee costs and technology investments, including a $67 million restructuring charge. The efficiency ratio was 36.9%, about 360 basis points higher than last year; excluding the restructuring charge, management said the efficiency ratio would have been about 180 basis points lower.

Credit metrics improved year over year, with management noting delinquency and net charge-off rates below historical averages for fourth quarters from 2017 to 2019:

• 30+ day delinquency: 4.49% (down from 4.70%)
• 90+ day delinquency: 2.17% (down from 2.40%)
• Net charge-off rate: 5.37% (down from 6.45%)

The allowance for credit losses was 10.06% of loan receivables at quarter-end, down from 10.35% in the third quarter and 10.44% in the prior-year quarter. The CFO said the reserve outlook would depend on delinquency formation and the macro environment, noting the company’s baseline assumptions include a year-end 2026 unemployment rate of 4.8%.

Funding, capital returns, and partner activity

Synchrony said deposits represented 84% of total funding at year-end, with secured debt at 9% and unsecured debt at 7%. The company grew direct deposits by $2.9 billion year over year while reducing broker deposits by $3.8 billion. During the fourth quarter, Synchrony issued a $750 million three-year secured public bond with a final coupon of 4.06%, which management called its tightest benchmark-adjusted spread in seven years.

Capital ratios declined about 70 basis points year over year, ending the quarter with a CET1 ratio of 12.6%, Tier 1 capital ratio of 13.8%, and total capital ratio of 15.8%. Synchrony returned $1.1 billion to shareholders in the fourth quarter, including $952 million in share repurchases and $106 million in dividends. For the full year, the company returned $3.3 billion, including $2.9 billion in repurchases and $427 million in dividends.

On strategy, management emphasized partner growth and renewals, saying the company added or renewed more than 25 partners in the quarter and more than 75 over the year. Executives highlighted a new exclusive multi-year agreement with Bob’s Discount Furniture (launch expected mid-year) and a renewal with Polaris. Synchrony also discussed expanding relationships with merchant and practice management platforms, including a partnership with Weave in Health & Wellness, and noted the planned acquisition of Versatile Credit to accelerate a multi-source financing strategy.

Management also pointed to continued growth in its multiproduct approach. Synchrony said its Pay Later offering is now available to more than 6,200 merchants, and stated that offering Pay Later alongside revolving products has driven at least a 10% average increase in sales based on company data. Executives said Pay Later has been incremental, with no observed cannibalization of existing private label and co-brand programs.

2026 outlook and key themes from Q&A

For 2026, Synchrony provided an EPS outlook of $9.10 to $9.50, based on baseline assumptions including 2% GDP growth, 4.8% year-end unemployment, a 3.25% year-end Fed funds rate, and deposit betas of about 65%. The company expects mid-single-digit ending receivables growth, with growth accelerating in the back half of the year as newer programs expand and the Lowe’s Commercial Co-Brand program transfers to Synchrony’s portfolio in the second quarter.

Management said it expects the net charge-off rate to be in line with its long-term target of 5.5% to 6%, and expects net interest income to grow as pricing actions continue to build and funding costs decline, partially offset by lower late fee incidence and other factors.

During the Q&A, executives said the Walmart program launched in September and is “the fastest-growing program” the company has ever launched, supported by a value proposition that includes 5% cash back for Walmart+ members at Walmart and 1.5% back elsewhere. Management also discussed the potential impact of proposed APR caps, arguing that price controls would reduce credit availability, particularly for lower-income consumers, and could harm merchants that rely heavily on credit programs.

On guidance, the CFO said the company shifted to providing an EPS range to help investors focus on the overall earnings outcome amid variability in how models are built from line-item guidance, while also flagging that growth investments—such as Walmart One Pay, Lowe’s Commercial Co-Brand, Versatile Credit, and technology initiatives—can influence multiple P&L lines as portfolios season.

About Synchrony Financial NYSE: SYF

Synchrony Financial NYSE: SYF is a consumer financial services company that specializes in providing point-of-sale financing and private-label, co-branded and branded credit card programs. The company serves as a payments and lending partner to retailers, digital merchants and service providers, offering consumer financing solutions designed to drive customer engagement and sales. Synchrony also operates a direct bank that offers deposit products, including savings accounts and certificates of deposit, which support its funding and customer-facing product suite.

Its core product set includes private-label and co-branded credit cards, general-purpose credit cards, installment loan programs and promotional financing options that are integrated into merchants’ checkout experiences.

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