Synchrony Financial is the latest financial institution to delve further into buy now/pay later with an expanded partnership with Amazon.
The country's largest issuer of private-label credit cards renewed and expanded its 15-year partnership with the country's largest e-commerce retailer, agreeing to offer installment loans on carts over $50 to approved Amazon customers.
The addition of point-of-sale installment lending is part of Synchrony's multi-product strategy, Chief Financial Officer Brian Wenzel told American Banker on Tuesday.
"One of the things that we have been on a journey on, as we engage with that consumer, is giving them as many financing alternatives as we can," Wenzel said in an interview. "It's about finding the right product and going to the channel [where] the consumer wants to shop."
Stamford, Connecticut-based Synchrony provides four private-label credit cards to Amazon customers: a general credit card, a credit card with 5% cash back for Amazon Prime members and secured versions of both of those cards. The secured cards require a down payment and are designed to help consumers build their credit.
The pay-over-time installment loans will be offered at the point of sale and will bear interest, based on the consumer's creditworthiness, Wenzel said. Synchrony also provides pay-over-time installment lending to JCPenney customers.
Synchrony also touted deals with Walmart and PayPal as wins during the second quarter. In June, the credit-card specialist
In the quarter that ended on June 30, Synchrony's net revenue came in at $3.6 billion, a 1.6% year-over-year decline and just below analysts' estimates of $3.7 billion.
Net income far exceeded expectations, landing at $967 million, or $2.50 per diluted share, a 50.4% increase from the prior-year period. Analysts had expected net income of $686 million, or $1.79 per share, according to S&P CapitalIQ.
Net interest income increased 2.6% to $4.5 billion, and the company's net interest margin clocked in at 14.78%, an increase of 32 basis points compared with the same period a year earlier.
Profit-sharing costs with Synchrony's retail partners increased 22.5% to $992 million, largely due to lower chargeoffs and
Synchrony has been benefiting from the fees and increased interest rates it added to prepare for the credit card late fee rule, but the company said that some of those benefits will be winding down with select partners amid slowing consumer spending and loan growth.
During the second quarter, period-end loans outstanding dropped 2% from the same time last year to $99.8 billion, Synchrony said. Cardholders' purchase volume also decreased 2% — to $46.1 billion — while average deposits fell 1% to $82.3 billion.
Wenzel said that one partner sought a change with regard to annual percentage rates that Synchrony plans to implement in the second half of 2025, and the company also expects to roll back a fee on some of its promotional financing, as it seeks to get longer-term promotions.
Those two changes are expected to result in a $50 million downside to revenue on a non-recurring basis, Wenzel said. "We don't expect any other material changes this year," he added.
Consumers remained resilient in the quarter, with loans 30-plus days past due falling 29 basis points to 4.18% of receivables. Net charge-offs dropped to 5.7%, a 72-basis point decrease when compared with the same period last year. Provisions for credit losses dropped 32.2% to $1.1 billion, and the company's allowance for credit losses landed at 10.59% of its credit portfolio, compared with 10.74% a year earlier.
That performance marked an improvement from
Synchrony made two negative revisions to its guidance for all of 2025, plus one positive change.
The company said that it expects period-end loan balances for 2025 to be flat, down from its prior guidance of low-single digit percent growth. The company said the change reflected "credit actions and selective consumer behavior, slower purchase volumes, higher payment rates, and aligned with improved credit performance and a shift in the portfolio mix,"
The company also lowered its net revenue guidance, which it now expects to be between $15 billion and $15.3 billion, down from $15.2 billion to $15.7 billion. Net chargeoff guidance improved to 5.6%-5.8%, down from 5.8%-6% — thanks to credit actions and general seasonal trends in the second half of the year.
Broadly speaking, Synchrony's financial performance during the second quarter was neutral, TD Cowen analyst Moshe Orenbuch wrote in a research note Tuesday morning.
"The strong quarter was tempered by mostly lower guidance, though we believe most of the guide down is a result of loan growth running below prior expectation, which was somewhat known through the monthly data," Orenbuch said.
Shares in Synchrony Financial gained in early afternoon trading in New York, rising 1.35%, or 94 cents, to $70.37 as of 1:13 p.m.
