Synchrony Financial Q1: Earnings Beat, Lower Purchase Volume, Active Accounts Decline And More
Synchrony Financial (NYSE:SYF) reported first-quarter FY25 revenue growth of 1.3% year-on-year to $4.46 billion, missing the analyst consensus estimate of $4.46 billion.
Net revenue decreased 22.5% Y/Y to $3.72 billion, while net interest margin improved 19 basis points to 14.74% in the quarter.
Period-end loan receivables declined 2% Y/Y to $99.6 billion, and purchase volume declined 4% Y/Y to $40.7 billion in the quarter.
Interest and fees on loans remained flat to the prior year at $5.3 billion as growth in loan receivables yield, primarily reflecting the impact of product, pricing, and policy changes (PPPCs), was offset by a combination of lower benchmark rates and lower late fee incidence.
Synchrony’s average active accounts declined 3% Y/Y to 69.3 million, and deposits fell 0.1% Y/Y to $83.4 billion in the quarter.
SYF returned $697 million in capital to shareholders, including $600 million of share repurchases and $97 million of common stock dividends.
Provision for credit losses was $1.5 billion, a decrease of $393 million driven by a reserve release of $97 million versus a reserve build of $299 million in the prior year.
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Net earnings decreased 41% Y/Y to $757 million. The company reported EPS of $1.89, beating the consensus estimate of $1.64.
Synchrony’s return on assets decreased by 190 basis points to 2.5% and the efficiency ratio improved 830 basis points to 33.4%.
The estimated Common Equity Tier 1 ratio was 13.2% compared to 12.6% in the prior year, and the estimated Tier 1 Capital ratio was 14.4% compared to 13.8% in the prior year.
During the quarter, Synchrony renewed or added more than 10 partners, including Ashley, Discount Tire, American Eagle, Sun Country, and Texas A&M Veterinary Hospital.
The company’s Board of Directors increased the quarterly cash dividend by 20% to $0.30 per share, payable on May 15, 2025 to holders of record at the close of business on May 5, 2025.
The Board also approved a share repurchase program of up to $2.5 billion, starting in the second quarter of 2025 and running through June 30, 2026.
Brian Doubles, Synchrony’s executive vice president and chief financial officer, stated, "During the quarter, Synchrony continued to leverage our core strengths – our proprietary data, our sophisticated credit underwriting, our diversified product suite and distribution channels, and our strong execution – to empower our approximately 70 million customers with prudent financial flexibility and enduring value, while also delivering loyalty and sales to the many partners, providers and small businesses that form the foundation of our economy.”
FY25 Outlook: Synchrony reaffirmed revenue guidance of $15.20 billion – $15.70 billion with an estimate of $18.73 billion.
Price Action: SYF shares are trading higher by 0.87% at $47.68 at last check on Tuesday.
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