Synchrony Financial (SYF) has kicked off the new year with a strong performance, exceeding analysts’ expectations for the third quarter. The company reported net interest income of $4.609 billion, surpassing the consensus estimate of $4.491 billion. This impressive growth of 5.7% year-over-year (YoY) was driven by higher interest and fees on loans, offset by increased interest expense due to rising benchmark rates and higher interest-bearing liabilities.
Overall, Synchrony’s revenue picture remains bright, with net revenue surging 9.8% to $3.814 billion. However, the net interest margin did experience a slight dip, declining 32 basis points to 15.04%. Despite this, the company saw strong growth in its loan portfolio, with period-end loan receivables climbing 4% to $102.2 billion. However, purchase volume experienced a 4% decline to $45 billion.
Synchrony’s commitment to driving growth is evident in its continued expansion of partnerships. During the quarter, the company added or renewed over 15 programs, including a notable extension of its partnership with Dick’s Sporting Goods, which aims to enhance athlete rewards and digital services. Furthermore, Synchrony launched a new payment system integrating CareCredit and Pets Best for insurance claim reimbursement, further strengthening its position in the healthcare and pet insurance markets.
The company’s strong financial performance was reflected in its bottom line. Net earnings increased 29% YoY to $789 million, translating to an earnings per share (EPS) of $1.94, comfortably exceeding the consensus estimate of $1.81. Synchrony’s return on assets also rose 30 basis points to 2.6%, while the efficiency ratio declined 200 basis points to 31.2%, highlighting the company’s improved operational efficiency.
Looking ahead, Synchrony remains optimistic about its growth trajectory. The company has raised its full-year 2024 earnings outlook, now expecting EPS of $8.45 – $8.55, up from the prior guidance of $7.60 – $7.80. This revised outlook assumes no implementation of late fee rules in 2024.
The positive results and optimistic outlook have been met with enthusiasm by investors. SYF shares are trading higher by 4.90% at $55.90 in premarket trading, signaling investor confidence in the company’s continued success.