Synchrony Financial enjoyed strong loan growth in the second quarter, but gains in interest income were more than offset by a larger provision for losses.
As a result profits at the Stamford, Conn.-based lender fell by 10% to $489 million. Synchrony, which completed a spinoff from General Electric last year, issues credit cards in conjunction with retailers such as the Amazon and The Gap.
The second-quarter results at the $81.7 billion-asset Synchrony were generally in line with recent trends throughout the U.S. credit card industry: Loan portfolios are growing, and higher losses are expected to follow.
Last month shares in Synchrony fell by 13% in a single day after the firm said that it was expecting loan losses to rise over the next year. The firm reiterated that guidance during a conference call with analysts Friday.
The net chargeoff rate at Synchrony actually fell to 4.49%, from 4.63% in the same period a year earlier. But the percentage of loans that were at least 30 days late rose to 3.79% from 3.53%.
The company's provision for loan losses was $1.02 billion, up from $740 million in the year-earlier period.
The amount of money that consumers spent on Synchrony cards rose by 9% to $31.5 billion. Loan receivables increased by 11% to $68.3 billion. Net interest income climbed by 10% to $3.2 billion.