Synchrony Financial Posts Strong Q2 Earnings, Exceeds Estimates

Synchrony Financial reported a strong second-quarter performance for fiscal 2024 with net interest income reaching $4.405 billion, surpassing expectations of $4.287 billion. The 7% year-over-year increase in net interest income was attributed to higher interest and fees on loans, although offset partially by an uptick in interest expense from elevated benchmark rates and interest-bearing liabilities. The company’s net revenue also saw a notable boost of 12.7% to $3.712 billion during the quarter.

Despite a 48 basis point decline in net interest margin to 14.46%, Synchrony Financial witnessed an 8% rise in loan receivables to $102.3 billion. However, purchase volume experienced a marginal 1% decrease to $46.8 billion. The quarter highlighted a 10% increase in interest and fees on loans, totaling $5.3 billion, primarily driven by higher average loan receivables. Additionally, average active accounts grew by 2%, while deposits surged by 10% year over year to $83.1 billion.

Synchrony Financial’s shareholder returns remained robust, with $400 million returned to shareholders through $300 million in share repurchases and $100 million in common stock dividends. The company reported a 13% year-over-year increase in net earnings to $643 million, translating to an EPS of $1.55, surpassing the consensus of $1.36. Looking ahead, Synchrony is optimistic, expecting an EPS range of $7.60 to $7.80 for fiscal 2024, compared to the $7.25 consensus, factoring in various upcoming developments impacting the business.