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Synchrony Q3 Earnings Beat Estimates on Improved Purchase Volume
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Key Takeaways
Synchrony's Q3 EPS of $2.86 beat estimates by 28.8%, rising 47.4% year over year.
Net interest income grew 2.4% to $4.7B, aided by higher purchase volume and improved margins.
Reduced credit loss provisions and a better efficiency ratio supported Synchrony's strong quarter.
Synchrony Financial (SYF - Free Report) reported third-quarter 2025 adjusted earnings per share (EPS) of $2.86, which surpassed the Zacks Consensus Estimate by 28.8%. The bottom line gained 47.4% year over year.
Net interest income was $4.7 billion, which grew 2.4% year over year. It surpassed the consensus mark by 0.6%.
The strong quarterly results benefited from improved purchase volume, net interest margin, increased interest and fees on loans in sales platforms like Digital and Health & Wellness, and an improved efficiency ratio. Reduced provision for credit losses also contributed to the upside. However, the upside was partly offset by declining overall loan receivables and average active accounts.
Synchrony Financial Price, Consensus and EPS Surprise
Retailer share arrangements of Synchrony advanced 12% year over year to $1 billion in the quarter under review. Total loan receivables of $100.2 billion slipped 2% year over year and missed the Zacks Consensus Estimate of $100.3 billion.
Total deposits dipped 2% year over year to $79.9 billion and fell short of our estimate of $83 billion. Provision for credit losses was $1.1 billion, which tumbled 28.2% year over year on the back of a reserve release. The metric came in lower than our estimate of $1.5 billion.
Synchrony’s purchase volume rose 2.3% year over year to $46 billion, driven by improved consumer spending and credit actions. The figure beat our estimate of $44.5 billion.
Interest and fees on loans totaled $5.5 billion, which inched down 0.2% year over year and missed our estimate by 0.4%. The metric was aided by an expanding loan receivables portfolio, partly offset by a decline in benchmark rates and late fee incidence. Net interest margin improved 58 basis points (bps) year over year to 15.6% in the third quarter, slightly higher than the Zacks Consensus Estimate of 15.4%.
Average active accounts of 68.3 million slipped 3% year over year and missed the Zacks Consensus Estimate and our estimate of 68.8 million.
Total other expenses of SYF increased 5% year over year to $1.2 billion and beat our estimate by 3.9%. The efficiency ratio of 32.6% improved 140 bps year over year and surpassed the consensus mark of 32.1%.
Movement in Individual Sales Platforms
Home & Auto period-end loan receivables decreased 6.3% year over year in the third quarter. Purchase volume tumbled 1.4% year over year due to lower average active accounts and reduced consumer spending in Home Specialty. Interest and fees on loans declined 2.4% year over year.
Digital period-end loan receivables rose 1.5% year over year. Purchase volume increased 5.2% year over year, driven by a rise in spend per account and a strong response from customers to improved product offerings and refreshed value propositions. Interest and fees on loans rose 2.4% year over year.
Diversified & Value period-end loan receivables inched up 0.2% year over year in the quarter under review. Purchase volume rose 2.8% year over year, driven by impressive retailer performance and an increase in out-of-partner spend. Interest and fees on loans decreased 1.4% year over year.
Health & Wellness period-end loan receivables inched up 0.1% year over year. Purchase volume rose 2.8% year over year, driven by increased spend per account and growth in Pet and Audiology. Interest and fees on loans advanced 1.2% year over year.
Lifestyle period-end loan receivables decreased 2.7% year over year in the third quarter. Purchase volume fell 2.8% year over year due to reduced spending in Outdoor and Specialty and lower average active accounts. Interest and fees on loans fell 2.2% year over year.
Synchrony’s Financial Position (As of Sept. 30, 2025)
Synchrony exited the third quarter with cash and equivalents of $16.2 billion, which climbed from the 2024-end level of $14.7 billion.
Total assets of $117 billion decreased from the figure of $119.5 billion at 2024-end.
Total borrowings were $14.4 billion, down from the figure of $15.5 billion as of Dec. 31, 2024.
Total equity of $17.1 billion increased from the 2024-end figure of $16.6 billion.
SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $18.2 billion accounting for 15.6% of its total assets.
Return on assets increased 100 bps year over year to 3.6% in the third quarter. Return on equity was 25.1%, which improved 530 bps year over year.
Capital Deployment Update
Synchrony returned capital worth $861 million through share buybacks and paid common stock dividends of $110 million in the third quarter. In September, the company had approved an increase to its share repurchase authorization of $1 billion through June 30, 2026. As of Sept. 30, 2025, it had a leftover capacity of around $2.1 billion under its share buyback authorization for the period ending June 30, 2026.
Synchrony’s 2025 Guidance
Synchrony now anticipates remaining flat in period-end loan receivables. The company expects, consistent with improved credit performance, a shift in portfolio credit mix and the payment rate to be higher, which will affect purchase volume growth.
Net revenues are now expected to be between $15 billion and $15.1 billion, below the previously expected range of $15-$15.3 billion.
Management projects net charge-offs to be between 5.6% and 5.7% compared with the earlier guidance of 5.6-5.8% and to follow normal seasonal trends.
The efficiency ratio is now expected to stay between 33% and 33.5%, compared with the earlier guidance of 32-33%.
The Zacks Consensus Estimate for State Street’s current-year earnings of $9.99 per share has witnessed one upward revision in the past seven days against none in the opposite direction. State Street beat earnings estimates in each of the trailing four quarters, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $13.8 billion, implying 5.3% year-over-year growth.
The Zacks Consensus Estimate for United Fire Group’s current-year earnings of $3.03 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. United Fire Group beat earnings estimates in each of the trailing four quarters, with the average surprise being 111.5%. The consensus estimate for current-year revenues is pegged at $1.4 billion, calling for 9.5% year-over-year growth.
The Zacks Consensus Estimate for Janus Henderson Group’s current-year earnings is pegged at $3.73 per share and has witnessed one upward revision in the past seven days against no movement in the opposite direction. Janus Henderson Group beat earnings estimates in each of the trailing four quarters, with the average surprise being 10.5%. The consensus estimate for current-year revenues is pegged at $2.7 billion, calling for 8.9% year-over-year growth.
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Synchrony Q3 Earnings Beat Estimates on Improved Purchase Volume
Key Takeaways
Synchrony Financial (SYF - Free Report) reported third-quarter 2025 adjusted earnings per share (EPS) of $2.86, which surpassed the Zacks Consensus Estimate by 28.8%. The bottom line gained 47.4% year over year.
Net interest income was $4.7 billion, which grew 2.4% year over year. It surpassed the consensus mark by 0.6%.
The strong quarterly results benefited from improved purchase volume, net interest margin, increased interest and fees on loans in sales platforms like Digital and Health & Wellness, and an improved efficiency ratio. Reduced provision for credit losses also contributed to the upside. However, the upside was partly offset by declining overall loan receivables and average active accounts.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote
Synchrony’s Q3 Results in Detail
Retailer share arrangements of Synchrony advanced 12% year over year to $1 billion in the quarter under review. Total loan receivables of $100.2 billion slipped 2% year over year and missed the Zacks Consensus Estimate of $100.3 billion.
Total deposits dipped 2% year over year to $79.9 billion and fell short of our estimate of $83 billion. Provision for credit losses was $1.1 billion, which tumbled 28.2% year over year on the back of a reserve release. The metric came in lower than our estimate of $1.5 billion.
Synchrony’s purchase volume rose 2.3% year over year to $46 billion, driven by improved consumer spending and credit actions. The figure beat our estimate of $44.5 billion.
Interest and fees on loans totaled $5.5 billion, which inched down 0.2% year over year and missed our estimate by 0.4%. The metric was aided by an expanding loan receivables portfolio, partly offset by a decline in benchmark rates and late fee incidence. Net interest margin improved 58 basis points (bps) year over year to 15.6% in the third quarter, slightly higher than the Zacks Consensus Estimate of 15.4%.
Average active accounts of 68.3 million slipped 3% year over year and missed the Zacks Consensus Estimate and our estimate of 68.8 million.
Total other expenses of SYF increased 5% year over year to $1.2 billion and beat our estimate by 3.9%. The efficiency ratio of 32.6% improved 140 bps year over year and surpassed the consensus mark of 32.1%.
Movement in Individual Sales Platforms
Home & Auto period-end loan receivables decreased 6.3% year over year in the third quarter. Purchase volume tumbled 1.4% year over year due to lower average active accounts and reduced consumer spending in Home Specialty. Interest and fees on loans declined 2.4% year over year.
Digital period-end loan receivables rose 1.5% year over year. Purchase volume increased 5.2% year over year, driven by a rise in spend per account and a strong response from customers to improved product offerings and refreshed value propositions. Interest and fees on loans rose 2.4% year over year.
Diversified & Value period-end loan receivables inched up 0.2% year over year in the quarter under review. Purchase volume rose 2.8% year over year, driven by impressive retailer performance and an increase in out-of-partner spend. Interest and fees on loans decreased 1.4% year over year.
Health & Wellness period-end loan receivables inched up 0.1% year over year. Purchase volume rose 2.8% year over year, driven by increased spend per account and growth in Pet and Audiology. Interest and fees on loans advanced 1.2% year over year.
Lifestyle period-end loan receivables decreased 2.7% year over year in the third quarter. Purchase volume fell 2.8% year over year due to reduced spending in Outdoor and Specialty and lower average active accounts. Interest and fees on loans fell 2.2% year over year.
Synchrony’s Financial Position (As of Sept. 30, 2025)
Synchrony exited the third quarter with cash and equivalents of $16.2 billion, which climbed from the 2024-end level of $14.7 billion.
Total assets of $117 billion decreased from the figure of $119.5 billion at 2024-end.
Total borrowings were $14.4 billion, down from the figure of $15.5 billion as of Dec. 31, 2024.
Total equity of $17.1 billion increased from the 2024-end figure of $16.6 billion.
SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $18.2 billion accounting for 15.6% of its total assets.
Return on assets increased 100 bps year over year to 3.6% in the third quarter. Return on equity was 25.1%, which improved 530 bps year over year.
Capital Deployment Update
Synchrony returned capital worth $861 million through share buybacks and paid common stock dividends of $110 million in the third quarter. In September, the company had approved an increase to its share repurchase authorization of $1 billion through June 30, 2026. As of Sept. 30, 2025, it had a leftover capacity of around $2.1 billion under its share buyback authorization for the period ending June 30, 2026.
Synchrony’s 2025 Guidance
Synchrony now anticipates remaining flat in period-end loan receivables. The company expects, consistent with improved credit performance, a shift in portfolio credit mix and the payment rate to be higher, which will affect purchase volume growth.
Net revenues are now expected to be between $15 billion and $15.1 billion, below the previously expected range of $15-$15.3 billion.
Management projects net charge-offs to be between 5.6% and 5.7% compared with the earlier guidance of 5.6-5.8% and to follow normal seasonal trends.
The efficiency ratio is now expected to stay between 33% and 33.5%, compared with the earlier guidance of 32-33%.
SYF’s Zacks Rank & Key Picks
SYF currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are State Street Corporation (STT - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Janus Henderson Group plc (JHG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for State Street’s current-year earnings of $9.99 per share has witnessed one upward revision in the past seven days against none in the opposite direction. State Street beat earnings estimates in each of the trailing four quarters, with the average surprise being 6.6%. The consensus estimate for current-year revenues is pegged at $13.8 billion, implying 5.3% year-over-year growth.
The Zacks Consensus Estimate for United Fire Group’s current-year earnings of $3.03 per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. United Fire Group beat earnings estimates in each of the trailing four quarters, with the average surprise being 111.5%. The consensus estimate for current-year revenues is pegged at $1.4 billion, calling for 9.5% year-over-year growth.
The Zacks Consensus Estimate for Janus Henderson Group’s current-year earnings is pegged at $3.73 per share and has witnessed one upward revision in the past seven days against no movement in the opposite direction. Janus Henderson Group beat earnings estimates in each of the trailing four quarters, with the average surprise being 10.5%. The consensus estimate for current-year revenues is pegged at $2.7 billion, calling for 8.9% year-over-year growth.