Synchrony Financial Stock Sinks as Charge-Offs Surge

Key Takeaways

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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