:max_bytes(150000):strip_icc()/GettyImages-1537951013-b9050c50aa5b4e3bbd07e2ca88770bed.jpg?w=780&resize=780,470&ssl=1 "Synchrony Financial Stock Sinks as Charge-Offs Surge")
Key Takeaways
- Synchrony Financial’s earnings and revenue came up short of forecasts on higher costs and less-than-expected net interest income.
- The online bank’s net charge-offs as a percentage of total average loan receivables jumped.
- Net interest income rose 3%, but short of Visible Alpha estimates.
Synchrony Financial (SYF) shares tumbled 7% Tuesday morning as the online bank’s results missed estimates on increased credit expenses and weak net interest income.
The financial firm reported fourth-quarter earnings per share (EPS) of $1.91, with revenue rising almost 4% year-over-year to $3.80 billion. Both were short of analysts’ forecasts compiled by Visible Alpha.
Net charge-offs as a percentage of total average loan receivables came in at 6.45%, 87 basis points (bps) above 2023, and 96 bps greater than the average of the fourth quarters in 2017 through 2019.
Net interest income was up 3% to $4.59 billion, boosted by higher interest rates and loan fees. However, analysts surveyed by Visible Alpha were looking for $4.61 billion.
CFO Brian Wenzel said that the company’s “credit actions between mid-2023 through early 2024 continued to impact our new account and purchase volume growth during the fourth quarter.”
Despite today’s losses, shares of Synchrony Financial have added two-thirds of their value in the past year.
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