Synchrony Financial Sees Resilient Spending, Reaffirms Receivables Growth Outlook

Synchrony Financial Sees Resilient Spending, Reaffirms Receivables Growth Outlook

Consumer spending remains resilient: Synchrony reported high-single-digit purchase-volume growth early in the third quarter, with super-prime and prime customers leading. Some larger-ticket categories, including outdoor, furniture, and health and wellness, remain under pressure.

Credit performance is stable but expected to mature: Delinquency entry rates remain better than 2018–19 levels, though losses are expected to rise as newer accounts season. Synchrony continues to selectively expand credit and is operating slightly below its long-term 5.5%–6% net charge-off framework.

Growth outlook reaffirmed: The company remains confident in achieving mid-single-digit receivables growth by year-end, supported by Walmart, Lowe’s, digital partnerships, and other expanded relationships. Longer term, Synchrony continues to target 7%–10% through-cycle growth and expects improved operating leverage beginning in 2027.

Synchrony Financial NYSE: SYF Chief Financial Officer Brian Wenzel said the company was seeing high-single-digit purchase-volume growth roughly 2.5 months into the third quarter, consistent with the approximately 8% growth reported during the second quarter. Speaking at an investor event, Wenzel said spending remained resilient across consumer credit cohorts despite affordability pressures and higher gasoline prices. Super-prime consumers continued to lead growth, while prime customers showed improved strength and non-prime customers trailed modestly but without presenting a concern, he said.

Consumers also continued to make discretionary purchases, though Wenzel noted pressure in certain larger-ticket categories, including outdoor and lifestyle, health and wellness services such as dental and cosmetics, and portions of the furniture market. He said the timing of Labor Day shifted some sales activity into September.

Wenzel characterized Synchrony’s consumer credit performance as a strength, citing delinquency entry rates that are better than 2018 and 2019 levels. Early- and late-stage delinquency trends have remained consistent, although he said five-cycle delinquency was “probably a little bit weaker.”

The company expects losses to rise as newer originations mature, including the Walmart portfolio and accounts generated after Synchrony broadened its credit aperture beginning in the third quarter of the prior year. Still, Wenzel said Synchrony remains comfortable with its underwriting position and expects to originate more than 20 million new accounts this year.

Synchrony’s long-term framework calls for net charge-offs of 5.5% to 6%, while Wenzel said the company is currently operating slightly below the lower end of that range. He said the company continues to widen credit selectively in individual products, channels and verticals where performance supports it, rather than making broad-based changes.

On reserves, Wenzel said the company’s allowance rate was hovering around 10%, compared with approximately 9.7% at the introduction of the CECL accounting standard before the pandemic. He said there could be downward bias in the reserve rate over the medium term, but the company is monitoring macroeconomic risks, Federal Reserve policy, inflation and geopolitical developments.

Wenzel said Synchrony remained confident in its expectation for mid-single-digit receivables growth by year-end, despite receivables being up 2.8% year over year based on the company’s latest monthly r...