Synchrony's third-quarter profit falls 17% from a year earlier to $892 million as its credit-loss provision rose 10%

Synchrony Financial reported third-quarter 2026 net earnings of $892 million, or $2.68 a diluted share, down from $1.1 billion, or $2.86 a share, a year earlier, as a larger credit-loss provision and higher operating costs offset a 2% gain in net interest income. Purchase volume rose 8% from a year earlier to $49.7 billion and loan receivables grew 3% to $103.3 billion.

Net earnings were $892 million, or $2.68 a diluted share, down from $1.1 billion, or $2.86, a year earlier. The decline was not a revenue problem: net interest income rose 2% from a year earlier and purchase volume reached $49.7 billion, up 8%. It was a credit and cost problem, and the share count is falling fast enough that the per-share drop was gentler than the earnings drop.

A larger provision and cost base leave profit 17% lower

Net earnings fell $185 million, or 17%, to $892 million from a year earlier. The bridge runs through credit and operating expense. The provision for credit losses rose $120 million, or 10%, to $1.3 billion, because Synchrony added $30 million to reserves this quarter against a $152 million reserve release a year earlier, partly offset by $62 million less in net charge-offs. Other expense increased $123 million, or 10%, to $1.4 billion, which the release attributes to higher operational losses, technology investments and marketing. Retailer share arrangements rose $72 million, or 7%, to $1.1 billion from a year earlier, moving more of the program economics to partners. Pre-tax earnings fell 17% from a year earlier.

Charge-offs improve even as the reserve is rebuilt

Net charge-offs were 4.79% of average loan receivables, down 37 basis points from 5.16%. Loans 30+ days past due slipped to 4.34% from 4.39%, and loans 90+ days past due to 2.06% from 2.12%. The allowance covered 10.01% of period-end loan receivables, against 10.09% at June 30 and 10.35% a year earlier, so the reserve build landed while the coverage ratio was still drifting lower. The payment rate was 16.9%, up about 60 basis points from a year earlier, which supports credit quality but removes balances that would otherwise earn interest.

Brian Wenzel, the chief financial officer, said "Credit performance remained strong during the quarter, with delinquency trends consistent with typical seasonality and net charge-offs declining to a seasonal low."

Cheaper funding lifts net interest income, late fees do not

Net interest margin was 15.50%, 12 basis points below 15.62% a year earlier. Interest expense fell 3%, or $32 million, from a year earlier as benchmark rates declined, and investment income fell 11%, or $24 million. The presentation attributes the margin compression to a lower loan receivables yield, which it links to lower late fee incidence as credit improved, plus a lower liquidity portfolio yield, partly offset by a 19-basis-point benefit from lower funding costs, with asset mix costing 5 basis points. The efficiency ratio rose 330 basis points to 35.9% from 32.6%, and the return on assets fell 70 basis points to 2.9%.

Buybacks outrun earnings and the CET1 cushion thins

Synchrony returned $1.2 billion to shareholders, including $1.1 billion of share repurchases and $110 million of common stock dividends, and had roughly $4.6 billion left on its repurchase authorization at September 30. The estimated Common Equity Tier 1 ratio fell to 12.9% from 14.3%, and the estimated Tier 1 ratio to 14.5% from 15.5%. Deposits rose 4%, or $3.1 billion, from a year earlier to $83.0 billion and comprised 83% of funding; total liquid assets were $19.5 billion, or 15.9% of total assets. Average active accounts were flat at 68.3 million, so growth came from balances per account and from purchase volume rather than from new customers.

An updated full-year outlook puts EPS at about $9.50 a share

The results presentation sets out an updated full-year 2026 outlook including diluted earnings per share of about $9.50, mid-single-digit growth in ending loan receivables and a net charge-off rate below 5.5%. It puts retailer share arrangements inside a 4.0% to 4.5% band of average loan receivables and expects fourth-quarter other expense roughly in line with the third quarter. Those assumptions exclude additional broad-based credit refinements and assume a stable macroeconomic environment. The next dated disclosures are the 8:00 a.m. Eastern conference call on October 20 and the Form 10-Q for the quarter ended September 30, 2026.

The filed materials present GAAP results, and the appendix reconciles three non-GAAP measures: tangible common equity, tangible book value per share and the Tier 1 capital plus credit loss reserve ratio. None of them yields an adjusted earnings or adjusted earnings-per-share figure, so there is nothing to set against the reported $2.68, and the exhibits carry no analyst estimate, so no beat or miss is claimed here.