Synchrony(US:SYF)2025-10-22 20:34Financial Performance - Net earnings increased to $1.1 billion for the three months ended September 30, 2025, up from $789 million in the same period of 2024, and to $2.8 billion for the nine months ended September 30, 2025, compared to $2.7 billion in 2024[45]. - Net earnings for Q3 2025 increased to $1,077 million, compared to $789 million in Q3 2024, representing a growth of 36.5%[184]. - Basic earnings per share for Q3 2025 was $2.89, up from $1.96 in Q3 2024, reflecting a 47.4% increase[182]. - Net earnings for the nine months ended September 30, 2025, were $2,801 million, compared to $2,725 million for the same period in 2024, reflecting a year-over-year increase of 2.8%[192]. Loan and Credit Products - The company's credit products include 61.7% under standard terms, 18.1% under deferred interest, and 12.6% under other promotional offers for credit cards, totaling 92.4%[31]. - The company offers three principal types of credit products: credit cards, commercial credit products, and consumer installment loans, with a focus on integrated payment solutions[30]. - Loan receivables decreased by 2.0% to $100.2 billion at September 30, 2025, from $102.2 billion at September 30, 2024, due to lower purchase volume and higher payment rates[45]. - Total loan receivables decreased by 4.3% to $100.2 billion at September 30, 2025, compared to $104.7 billion at December 31, 2024, due to lower purchase volume and higher payment rates[99]. Credit Quality and Losses - Provision for credit losses decreased by $451 million, or 28.2%, for the three months ended September 30, 2025, and by $1.4 billion, or 26.9%, for the nine months ended September 30, 2025[45]. - The net charge-off rate decreased to 5.16% for the three months ended September 30, 2025, down from 6.06% in the same period of 2024[51]. - The allowance for credit losses totaled $10.4 billion at September 30, 2025, down from $10.9 billion at December 31, 2024, due to a decrease in delinquent balances[107]. - The company experienced a significant reduction in the provision for credit losses, indicating improved credit quality and risk management[182]. Deposits and Funding - As of September 30, 2025, the company reported $100.2 billion in loan receivables and $79.9 billion in deposits, which accounted for 85% of total funding sources[20]. - Total deposits decreased by 2.7% to $79.9 billion at September 30, 2025, compared to December 31, 2024[47]. - Funding sources included an average balance of $80,442 million in deposits, accounting for 84.3% of total funding for the three months ended September 30, 2025[110]. - Direct deposits amounted to $73.7 billion, while brokered deposits were $6.2 billion, indicating a stable and diversified low-cost funding strategy[2]. Partnerships and Acquisitions - The company extended its program agreement with Amazon, with 22 of its 25 largest program agreements now expiring in 2027 or beyond, representing 98% of interest and fees on loans for 2024[39]. - The company acquired Ally Financial Inc.'s point of sale financing business for cash consideration of $2.0 billion, enhancing its presence in high-growth sectors such as home improvement and health and wellness[217]. - The company has added or renewed over 40 partners during the nine months ended September 30, 2025, enhancing its market presence[39]. Interest Income and Expenses - Net interest income rose by 2.4% to $4.7 billion for the three months ended September 30, 2025, and by 2.1% to $13.7 billion for the nine months ended September 30, 2025, primarily driven by lower interest expense[45]. - Interest income decreased by 0.9% to $4.720 billion for the three months ended September 30, 2025, and by 0.4% to $13.705 billion for the nine months ended September 30, 2025[64]. - Total interest expense for Q3 2025 was $1,011 million, down from $1,176 million in Q3 2024, a decrease of 14.0%[182]. Equity and Capital - Total equity increased to $17.041 billion for the three months ended September 30, 2025, from $15.815 billion in 2024[65]. - The company met all capital requirements to be deemed well-capitalized as of September 30, 2025, under the applicable U.S. Basel III capital rules[150]. - The common equity Tier 1 capital ratio increased to 13.7% at September 30, 2025, from 13.3% at December 31, 2024, primarily due to a reduction in risk-weighted assets[154]. Market and Economic Conditions - Seasonal fluctuations in purchase volume typically peak in late December, with loan receivables expected to decrease in the first and second quarters of the following year[41]. - The company anticipates an increase in delinquency rates during the third and fourth quarters due to lower customer payment rates, impacting net charge-off rates in the first half of the year[43]. - The company continues to monitor its liquidity closely in response to uncertain economic conditions[138].