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Synchrony Financial (SYF)·Q2 2025 Earnings Summary

Executive Summary

  • EPS of $2.50 beat consensus ($1.77*) driven by reserve release and lower net charge-offs; normalized net income of $967M also exceeded Street ($686M*) .
  • Net revenue declined 2% YoY to $3.647B as higher Retailer Share Arrangements (RSA) offset net interest income; NIM expanded 32 bps YoY to 14.78%, while efficiency ratio rose to 34.1% .
  • Guidance was mixed: net revenue lowered to $15.0–$15.3B, RSA raised to 3.95–4.10% of ALR, loss rate improved to 5.6–5.8%, efficiency ratio raised to 32–33%, and H2 NIM targeted at ~15.6% .
  • Credit trends improved: net charge-offs fell to 5.70% (–72 bps YoY), 30+ DQ decreased to 4.18%, CET1 ratio rose to 13.6%; management highlighted selective loosening of the credit aperture and new programs (Amazon Pay Later, Walmart/OnePay) as 2026 growth catalysts .

What Went Well and What Went Wrong

What Went Well

  • Credit outperformed: net charge-offs fell to 5.70% (–72 bps YoY); provision for credit losses decreased by $545M, including a $265M reserve release .
  • Strategic wins: renewed Amazon (launched Synchrony Pay Later), announced Walmart/OnePay credit program, and expanded PayPal Credit with a physical card .
  • Management confidence: “we are confident that our business is well-positioned to deliver… market‑leading returns for our shareholders” — Brian Doubles (CEO) .

What Went Wrong

  • Net revenue declined 2% YoY to $3.647B on higher RSAs (+22% YoY) reflecting improved program performance but pressuring net revenue .
  • Efficiency ratio worsened 240 bps to 34.1% on higher employee costs and Walmart/OnePay launch expenses; other expense rose 6% YoY to $1.245B .
  • Purchase volume fell 2% to $46.084B and period‑end receivables dipped 2.5% to $99.776B, reflecting selective consumer spend and prior credit actions .

Financial Results

Sequential Comparison (Q4 2024 → Q1 2025 → Q2 2025)

MetricQ4 2024Q1 2025Q2 2025
Net revenue ($USD Billions)$3.801 $3.718 $3.647
Diluted EPS ($)$1.91 $1.89 $2.50
Net interest margin (%)15.01% 14.74% 14.78%
Efficiency ratio (%)33.3% 33.4% 34.1%
Net charge-offs (%)6.45% 6.38% 5.70%

Year-over-Year (Q2 2024 → Q2 2025)

MetricQ2 2024Q2 2025
Net revenue ($USD Billions)$3.712 $3.647
Diluted EPS ($)$1.55 $2.50
Net interest margin (%)14.46% 14.78%
Efficiency ratio (%)31.7% 34.1%
Net charge-offs (%)6.42% 5.70%

Versus Wall Street Consensus (Q2 2025)

Values with asterisks are retrieved from S&P Global (see disclaimer below).

MetricActualConsensus
Diluted EPS ($)$2.50 $1.77*
Revenue ($USD Billions, operating income)$2.501 $3.687*
Net Income Normalized ($USD Millions)$967 $686*
EBIT ($USD Millions)$1,256 $2,510*

S&P Global disclaimer: Values retrieved from S&P Global.

Segment Breakdown (Platforms, Q2 2024 → Q2 2025)

PlatformLoan Receivables ($B) Q2’24Loan Receivables ($B) Q2’25Purchase Volume ($B) Q2’24Purchase Volume ($B) Q2’25Interest & Fees on Loans ($B) Q2’24Interest & Fees on Loans ($B) Q2’25
Home & Auto$32.6 $30.4 $12.4 $11.5 $1.4 $1.4
Digital$27.7 $27.8 $13.4 $13.6 $1.5 $1.6
Diversified & Value$19.5 $19.5 $15.3 $15.4 $1.2 $1.2
Health & Wellness$15.3 $15.3 $4.1 $4.0 $0.9 $0.9
Lifestyle$6.8 $6.7 $1.5 $1.4 $0.3 $0.3

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Purchase Volume ($USD Billions)$47.955 $40.720 $46.084
Period-end Loan Receivables ($USD Billions)$104.721 $99.608 $99.776
Payment Rate (%)—15.8% 16.3%
30+ DQ (%)4.70% 4.52% 4.18%
90+ DQ (%)2.40% 2.29% 2.06%
CET1 Ratio (%)13.3% 13.2% 13.6%
Capital Returned ($USD Millions)$197 $697 $614

Guidance Changes

MetricPeriodPrevious Guidance (1Q’25 Update)Current GuidanceChange
Period-end loan receivables growthFY 2025Low single digit growth Flat Lowered
Net revenue ($USD Billions)FY 2025$15.2–$15.7 $15.0–$15.3 Lowered
RSA as % of average loan receivablesFY 20253.70–3.85% 3.95–4.10% Raised
Net charge-offs (%)FY 20255.8–6.0% 5.6–5.8% Improved
Efficiency ratio (%)FY 202531.5–32.5% 32.0–33.0% Raised
Net interest margin (%)H2 2025—~15.6% New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Credit actions & apertureTightened in 2023–early 2024; credit normalization and improved DQ trends Selective loosening; health & wellness first; more in H2 as loss targets are met Improving
NIM trajectoryNIM ~15% in Q4’24; modest compression in Q1’25 Target ~15.6% in H2 via PPPCs, lower funding cost, asset mix shift Improving
RSA alignmentElevated RSA tied to program performance Raised RSA guide to 3.95–4.10% on improved loss outlook Increasing
Macro/tariffsBaseline outlook excluded tariff impacts; watchful stance Outlook excludes potential tariffs; step cautiously opening credit Neutral/cautious
AI/technologyOngoing digital investments Synchrony GPT; embedded OnePay/Walmart; GenAI for CX and growth Accelerating
Product strategyMulti-product expansion (e.g., JCPenney Pay Later) Amazon Pay Later launch; PayPal physical card; Walmart/OnePay Expanding

Management Commentary

  • Strategic positioning: “diversified portfolio… enabled us to engage with a broad cross‑section of America… innovate to deliver still greater customer experiences” — Brian Doubles (CEO) .
  • Credit discipline: “strengthening trends in delinquency, net charge-offs… our credit trends continued to outperform” — Brian Wenzel (CFO) .
  • Growth pipeline: Renewed Amazon with Pay Later, announced Walmart/OnePay general‑purpose & private‑label cards embedded in the OnePay app .
  • Capital return: Returned $614M in Q2; board authorization remains $2.0B repurchase capacity through Jun‑2026 .

Q&A Highlights

  • Credit aperture and growth: Management began selective loosening in health & wellness; sees additional room in H2 with growth benefits more visible in 2026 alongside Walmart/OnePay and Amazon Pay Later .
  • NIM guidance and drivers: H2 NIM ~15.6% expected from asset mix shift toward receivables, PPPC yield benefits, and lower deposit costs as CDs reprice; contingent on liquidity burn‑off .
  • Walmart/OnePay program: Fully embedded digital experience, general‑purpose (Mastercard) and private‑label cards; expected stronger value prop and lower loss content than prior Walmart program .
  • Capital allocation: Strong CET1 (13.6%); prioritizing RWA growth, dividend, and buybacks; cadence can be constrained by periods of non-public information .
  • Technology/AI: Internal “Synchrony GPT” and GenAI tools for customer service and top‑line growth; Walmart/OnePay showcases embedded API stack capabilities .

Estimates Context

  • EPS beat: $2.50 vs $1.77*; normalized net income beat: $967M vs $686M* .
  • Revenue (operating income) miss: $2.501B vs $3.687B*; EBIT miss: $1.256B vs $2.510B* .
  • Implications: Street may raise loss outlook assumptions (better NCOs) and RSA, but trim net revenue and efficiency expectations given higher RSAs and OpEx.
    S&P Global disclaimer: Values retrieved from S&P Global.

Key Takeaways for Investors

  • EPS beat and improved credit (NCOs/DQ) are the core positives; expect consensus to reflect higher RSA and lower loss ranges near the top of long‑term targets .
  • Mixed guidance: net revenue and efficiency ratio guide were lowered/raised respectively; monitor H2 NIM realization (~15.6%) and liquidity burn-down for confirmation .
  • Growth catalysts skew to 2026: Walmart/OnePay, Amazon Pay Later, PayPal physical card, and selective aperture reopening should drive receivables growth with disciplined ROA .
  • Capital strength enables buybacks/dividends; repurchase cadence may be lumpy due to informational windows but CET1 at 13.6% provides flexibility .
  • Near-term trading lens: Credit momentum and EPS beat supportive; revenue/efficiency headwinds and elevated RSAs temper enthusiasm—watch NIM trajectory and Q3 spend trends cited by management as early positives .
  • Medium-term thesis: Differentiated partner ecosystem and multi‑product strategy plus PPPCs/tech investments should sustain risk‑adjusted returns; execution on Walmart/OnePay and aperture normalization are key.