Synchrony's Provision Reversal Weighs on Third-Quarter Earnings

The Tip Desk · October 27, 2026 · 3 min read

Net earnings fell 17% to $892 million, or $2.68 a share, as a $30 million reserve build replaced a year-earlier $152 million release.

Synchrony Financial (SYF) reported third-quarter net earnings of $892 million, down 17% from $1.1 billion a year earlier. Diluted earnings per share fell 6.3% to $2.68 from $2.86.

The consumer financing company said the earnings drop tracked a $120 million, or 10%, increase in the provision for credit losses to $1.3 billion, driven by a $30 million reserve build versus a $152 million release in the year-ago quarter, partially offset by $62 million lower net charge-offs. Net charge-offs as a percentage of average loan receivables were 4.79%, down 37 basis points from 5.16% a year earlier. Loans 30+ days past due were 4.34% of period-end loan receivables and 90+ days past due were 2.06%. Chief Financial Officer Brian Wenzel said delinquency trends were consistent with typical seasonality and net charge-offs declined to a seasonal low.

Purchase volume rose 8% to $49.7 billion, a level the company described as a record for a third quarter, with growth across all five sales platforms. President and Chief Executive Officer Brian Doubles said spend increased across credit cohorts and generations, with the highest growth from Generation Z and Millennial customers, and that both discretionary and non-discretionary out-of-partner spend increased by double-digits. Versus the second quarter, purchase volume of $49.7 billion was essentially unchanged from $49.8 billion.

Period-end loan receivables increased 3% to $103.3 billion from a year earlier, continuing a rise from $102.2 billion in the second quarter. Average active accounts were flat at 68.3 million. Diversified & Value period-end loan receivables were up 8%, Digital up 3%, Home & Auto up 2%, Health & Wellness up 1%, and Lifestyle down 1%. Diversified & Value purchase volume increased 13%, Home & Auto 9%, Lifestyle 6%, Digital 5%, and Health & Wellness 3%.

Interest and fees on loans increased $81 million, or 1%, to $5.6 billion, primarily from growth in average loan receivables. Net interest income increased $89 million, or 2%, to $4.8 billion, from higher interest and fees and lower interest expense, partially offset by lower investment income. Net interest margin decreased 12 basis points year over year to 15.50% and rose 42 basis points from 15.08% in the second quarter. Retailer share arrangements increased $72 million, or 7%, to $1.1 billion, primarily reflecting program performance.

Other income decreased $22 million, or 17%, to $105 million, primarily from higher loyalty costs. Other expense increased $123 million, or 10%, to $1.4 billion, primarily from higher operational losses, technology investments and marketing expenses. The efficiency ratio increased 330 basis points to 35.9%. Return on assets decreased 70 basis points to 2.9% and return on equity decreased 410 basis points to 21.0%.

Deposits increased 4%, or $3.1 billion, to $83.0 billion and comprised 83% of funding. Total liquid assets were $19.5 billion, or 15.9% of total assets. The company returned $1.2 billion in capital, including $1.1 billion of share repurchases and $110 million of common stock dividends, leaving about $4.6 billion of remaining repurchase authorization. The estimated Common Equity Tier 1 ratio was 12.9% and the estimated Tier 1 Capital ratio was 14.5%.

The company added or renewed 10 partners in the quarter, including La-Z-Boy and Fender, and announced an OpenAI partnership combining agentic commerce collaboration with enterprise AI access.