Synchrony Financial earns interest and fees by financing purchases at retailers, online merchants, and healthcare providers. In the second quarter of 2026, purchases financed by the company rose 8.1%, but net profit fell 8.5% to $885 million. Cheaper funding was outweighed by higher partner payments, operating costs and taxes, and less help from reducing reserves for expected unpaid loans. The next test is whether expanding programs can build lending income faster than their costs.
Analysis period: April–June 2026, with January–June comparisons where indicated. Information cutoff: July 23, 2026.
Source: Synchrony’s second-quarter 2026 Form 10-Q, pp. 10–17 and 33. Percentage changes above are calculated from reported amounts.
1. Faster spending met slower loan growth and higher costs
More purchases did not produce a similar increase in interest and fees. Synchrony financed $49.827 billion of purchases during the quarter, up from $46.084 billion a year earlier. Average active accounts increased only 0.4%, so most of the spending increase came from more dollars spent per account, together with changes in the mix of programs.
When customers repay quickly, less remains outstanding for Synchrony to earn interest on. Customers’ higher payment rates helped contain credit risk but also limited the amount remaining on loan. Average loans rose just 1.5%, and interest and fees on loans increased 1.0%. Management’s earnings presentation reported a customer payment rate of 17.0%, approximately 0.7 percentage points above the prior-year quarter.
Sources: Second-quarter 2026 Form 10-Q, pp. 12–15; July 21, 2026 earnings presentation, slide 6, including its payment-rate definition.
The following comparison separates the quarter from the first half. Net interest income is the interest and fees Synchrony earns minus interest paid to depositors and lenders. The credit-loss provision is the expense used to cover expected unpaid loans.
| Consolidated results, USD millions except EPS | Q2 2025 | Q2 2026 | First half 2025 | First half 2026 |
|---|---|---|---|---|
| Interest and fees on loans | 5,328 | 5,380 | 10,640 | 10,793 |
| Total interest income | 5,586 | 5,583 | 11,136 | 11,186 |
| Interest expense | 1,065 | 975 | 2,151 | 1,943 |
| Net interest income | 4,521 | 4,608 | 8,985 | 9,243 |
| Payments under retailer share arrangements | 992 | 1,027 | 1,887 | 2,097 |
| Credit-loss provision | 1,146 | 1,201 | 2,637 | 2,536 |
| Other income, after loyalty costs | 118 | 137 | 267 | 270 |
| Operating expenses, reported as “other expense” | 1,245 | 1,331 | 2,488 | 2,647 |
| Pretax profit | 1,256 | 1,186 | 2,240 | 2,233 |
| Net profit | 967 | 885 | 1,724 | 1,690 |
| Diluted EPS, USD per common share | 2.50 | 2.59 | 4.38 | 4.85 |
Source: Second-quarter 2026 Form 10-Q, consolidated earnings statement, p. 33. Costs and partner payments are shown as positive deductions.
Cheaper deposits were the main support for quarterly income. Deposit interest expense fell by $88 million, accounting for nearly all of the $90 million reduction in total funding expense. That more than offset lower income on cash and securities. The net interest margin—the annualized interest income left after funding costs, divided by average interest-earning assets—rose from 14.78% to 15.08%. The loan yield itself fell from 21.54% to 21.43%, as lower benchmark rates and fewer assessed late fees outweighed benefits from pricing and product changes.
Costs then took much of that improvement. Operating expenses rose $86 million, including a $44 million increase in fraud-related operational losses and a $33 million increase in information-processing costs. Those two changes explain about 90% of the increase. Fraud losses reached $78 million, compared with $34 million; they are separate from the unpaid-loan losses discussed next.
The tax comparison also worked against Synchrony. Its quarterly tax rate rose from 23.0% to 25.4%, principally because the prior year included a benefit from increasing the recorded value of future tax savings after state tax rates rose. Tax expense rose $12 million despite lower pretax profit. Meanwhile, current-quarter other income included a $30 million pretax gain from exchanging Visa shares. That gain helped the reported result but did not reverse the decline.
The first half gives the same business message with a different credit-cost pattern. Funding became cheaper and the credit-loss provision fell, but partner payments and operating expenses increased. Pretax profit was almost unchanged, and net profit fell 2.0%. Higher EPS therefore needs a separate explanation: a smaller share count, addressed in section 6.
Source: Second-quarter 2026 Form 10-Q, pp. 13–17, 33 and Note 14, p. 60. The Visa amount is a pretax gain; no after-tax adjusted profit is presented here.
2. Credit improved, but recoveries explain most of the quarterly gain
The lower net loan-loss rate is supported by the accounts, but it does not capture every loss affecting profit. Synchrony’s net charge-off rate fell to 5.43% from 5.70% a year earlier. A charge-off removes loan principal the company judges uncollectible; recoveries are money subsequently collected on previously written-off loans.
The longer comparison shows improvement from 2024’s higher losses, rather than an uninterrupted decline across all years.
| Consolidated credit measure | Q2 2023 | Q2 2024 | Q2 2025 | Q2 2026 |
|---|---|---|---|---|
| Annualized net charge-offs / average loans | 4.75% | 6.42% | 5.70% | 5.43% |
| Loans at least 30 days past due / loans at June 30 | 3.84% | 4.47% | 4.18% | 4.16% |
Sources: Second-quarter 2024 Form 10-Q, results highlights, pp. 12–13; second-quarter 2026 Form 10-Q, pp. 12 and 21–22. The 2023 delinquency figure is calculated as 4.47% less the disclosed 0.63-percentage-point increase in 2024. Quarterly charge-off rates are annualized; delinquency rates are point-in-time balances.
The latest dollar comparison is more restrained than the falling rate alone suggests. Gross principal charge-offs were almost unchanged at $1.798 billion, against $1.799 billion. Recoveries rose from $388 million to $434 million. Thus, $46 million of the $47 million reduction in quarterly net charge-offs came from collecting previously written-off loans. The somewhat larger average loan balance also helped lower the rate.
There is broader improvement across the first half: gross charge-offs fell $192 million and recoveries increased $97 million. Management attributes the lower allowance to credit trends reflecting earlier credit actions and elevated customer payments, as well as its economic outlook. Loans newly modified for borrowers in financial difficulty also declined, to $1.160 billion from $1.289 billion in the first half. These are useful signs that the improvement extends beyond a single quarterly ratio.
Two limits matter. First, installment loans moved in the opposite direction: their quarterly net charge-off rate rose to 7.28% from 5.43%, even as that loan book shrank. They represented only 5.1% of ending loans, but the deterioration deserves attention. Second, Synchrony excludes fraud losses and reversals of accrued interest and fees from principal charge-offs. Credit-card interest reversed on written-off accrued receivables increased to $609 million from $578 million. Lower principal losses therefore did not mean every cost of failed or fraudulent transactions declined.
Source: Second-quarter 2026 Form 10-Q, pp. 21–22 and Note 4, pp. 43–49; fraud treatment also appears in Note 14, p. 60.
The quarterly credit-loss expense nevertheless increased because Synchrony received less benefit from reducing its reserves for expected future losses. The release was $163 million, compared with $265 million a year earlier. Losing $102 million of that benefit more than offset the $47 million improvement in net charge-offs, leaving the provision $55 million higher.
The allowance—the balance-sheet estimate of future losses—ended June at $10.312 billion. It declined by $130 million from December. That balance also includes a transfer associated with a purchased portfolio, so it is not the same measure as the reserve release in earnings. The calculation notes reconcile both measures.
This distinction matters for future profit. Better borrower performance can reduce losses, but the earnings benefit also depends on how much reserve support is already built into the comparison. The allowance-to-loan ratio alone cannot answer that question.
Source: Second-quarter 2026 Form 10-Q, p. 16 and Notes 4 and 14, pp. 44 and 60.
3. New partnerships expand reach, while rewards and revenue sharing carry a cost
Digital and everyday-value programs supplied most of the additional spending. Together, Digital and Diversified & Value contributed approximately 82% of the company’s $3.743 billion quarterly purchase-volume increase. These platforms include Amazon and PayPal, and OnePay, Sam’s Club and TJX, respectively.
| Sales platform, USD millions | Purchase volume Q2 2025 | Purchase volume Q2 2026 | Loan interest and fees Q2 2025 | Loan interest and fees Q2 2026 |
|---|---|---|---|---|
| Home & Auto | 11,459 | 12,120 | 1,395 | 1,394 |
| Digital | 13,647 | 14,897 | 1,576 | 1,604 |
| Diversified & Value | 15,393 | 17,200 | 1,159 | 1,177 |
| Health & Wellness | 4,007 | 4,092 | 923 | 948 |
| Lifestyle | 1,432 | 1,518 | 261 | 256 |
Source: Second-quarter 2026 Form 10-Q, platform descriptions and analysis, pp. 7 and 18–20. These are sales platforms within one consolidated business segment, not separately reported profit centers. Corp, Other is excluded from this table.
The OnePay card program at Walmart illustrates the strategy: reach customers during everyday shopping and make the card accessible inside a payment app. Synchrony’s annual filing confirms the September 2025 launch. But exclusivity applies to that credit-card program. Klarna separately secured the OnePay installment-loan program at Walmart. The agreements show that winning one retailer relationship still leaves competition between different ways of financing the same purchase.
Sources: OnePay and Synchrony announcement, June 9, 2025; Synchrony’s 2025 Form 10-K, “Diversified & Value”; Klarna’s OnePay announcement, March 17, 2025.
Synchrony also acquired approximately $700 million of Lowe’s commercial card loans in April. The expanded American Express card can be used outside Lowe’s. Management described its purpose as simpler applications, better digital servicing, and flexible financing for professional customers. This adds an existing loan portfolio and a route to more business spending.
The early platform results are mixed. Home & Auto purchase volume rose 5.8%, but loan interest and fees were flat because lower average loans offset a higher yield. Its active accounts declined 2.5%. The acquisition supported the platform; the results do not establish a broad recovery in household spending on home projects.
Sources: Synchrony’s Lowe’s announcement, April 30, 2026; second-quarter 2026 Form 10-Q, pp. 11 and 18 and Note 4, p. 44.
Elsewhere, Health & Wellness benefited from pet-related spending, while cosmetic spending weakened; fewer active accounts partly offset higher spending per account. Lifestyle grew purchases but earned less loan income. The platform table therefore points to uneven growth, not a uniform consumer rebound. Purchase volume measures dollars charged after returns, not the number of goods or services bought.
The cost of supporting this growth is visible in two different lines. Loyalty costs rose $76 million, while fees received for card transactions—interchange revenue—increased $32 million. The gap between those two lines widened by $44 million. It is not a standalone measure of rewards profitability: cards also earn interest, and program agreements share economics with partners.
Under retailer share arrangements, Synchrony generally pays partners a portion of program earnings above negotiated thresholds. Management says these agreements encourage partners to promote its financing. They can soften weaker program results, but contract formulas need not track every actual cost. In the latest quarter, better program performance and higher spending increased these payments by $35 million. The commercial benefit is access to customers; the financial tradeoff is sharing part of the improvement with the retailer.
Sources: Second-quarter 2026 Form 10-Q, pp. 12 and 16–20; 2025 Form 10-K, “Retailer Share Arrangements.”
Partner concentration remains material. The five largest programs supplied 54% of 2025 loan interest and fees and 52% of year-end loans. Their scheduled contract expirations ranged from 2030 to 2035, reducing immediate renewal pressure. That supports continuity, while leaving earnings exposed to a relatively small group’s performance and contract economics.
Source: 2025 Form 10-K, “Our Partners” and “Business Trends and Conditions.”
4. Cash increased, but part was reserved for financing obligations
Synchrony built liquidity—cash and assets readily usable to meet payments—while investing more in securities and loans. Total assets rose $2.835 billion from December. Cash and securities increased, while gross loans declined as seasonal repayments, higher payment rates, and charge-offs outweighed additions to the loan balance.
| Consolidated assets, USD millions | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Cash and equivalents | 14,973 | 16,193 |
| Debt securities | 2,348 | 4,365 |
| Loans after credit-loss allowance | 93,366 | 91,896 |
| Goodwill | 1,363 | 1,363 |
| Intangible assets, net | 104 | 152 |
| Other assets | 6,941 | 7,961 |
| Total assets | 119,095 | 121,930 |
Source: Second-quarter 2026 Form 10-Q, consolidated financial position, p. 35, and loan discussion, p. 21. December amounts use the filing’s revised presentation.
Almost all the increase in other assets came from restricted cash, which rose by $1.003 billion. Much of it sits in trusts that hold pools of loans and borrow against them. It must first serve those trusts’ obligations. The filing also identifies $1 billion of securitized debt repaid in July. This cash belongs in the cash-flow reconciliation, but it is not interchangeable with cash available for any corporate purpose.
The increase in securities was concentrated in U.S. government and federal agency debt. Synchrony holds its debt securities for liquidity or community-reinvestment purposes. These investments enlarged the pool of assets the company can use to meet payments.
The property comparison also needs care. Synchrony moved internal-use software from intangible assets into premises and equipment and restated December accordingly. On that consistent basis, premises and equipment declined to $1.217 billion from $1.248 billion. First-half software additions were $178 million, while software amortization—the allocation of previously incurred costs to current expenses—was $203 million. Reclassification did not itself create a new investment or an impairment. Goodwill remained unchanged.
Source: Second-quarter 2026 Form 10-Q, Notes 2–3, pp. 40–42, and Notes 5–8, pp. 50–53.
The cash-flow statement explains how the larger liquidity holdings were funded.
| Consolidated cash flows, USD millions | First half 2025 | First half 2026 |
|---|---|---|
| Opening cash, including restricted amounts | 14,755 | 15,017 |
| Operating cash inflow | 4,760 | 4,603 |
| Investing cash inflow / (outflow) | 1,362 | (3,663) |
| Financing cash inflow / (outflow) | (698) | 1,283 |
| Increase in total cash | 5,424 | 2,223 |
| Closing cash, including restricted amounts | 20,179 | 17,240 |
| Closing restricted cash included above | 722 | 1,047 |
Source: Second-quarter 2026 Form 10-Q, consolidated cash flows, p. 38. Parentheses indicate cash outflows.
Operating cash exceeded profit partly because the statement adds back the $2.536 billion credit-loss provision. That expense reduces profit without being a current cash payment. Customer lending and principal collections appear in investing cash flows. Operating cash therefore needs to be read alongside those lending flows, rather than treated as cash freely available for distribution.
Collection timing also mattered. Interest and fees recorded but not yet collected used $238 million of cash, compared with $65 million a year earlier. Together with other movements in operating assets and liabilities, this helped reduce operating cash despite broadly similar first-half profit.
Investing used $3.663 billion: net securities purchases accounted for $2.030 billion, acquired loans for $809 million, net lending for $436 million, and other investing activities for $388 million. A loan balance can decline while lending still uses cash because writing off an unpaid loan reduces the balance without producing a cash collection.
Financing supplied another $1.283 billion. Deposit inflows, debt issuance and preferred-stock issuance together provided $3.396 billion. Treasury-share purchases, dividends and other financing uses consumed $2.113 billion. Cash outside the restricted category increased by $1.220 billion; the remaining $1.003 billion of the total increase was restricted. The resulting position is more liquid, but part of the increase came from new funding obligations.
Source: Second-quarter 2026 Form 10-Q, p. 38 and Note 5, p. 50. All cash allocations above are calculated from the statement’s reported categories.
5. Deposit renewals are the largest near-term funding task
The funding cushion is substantial, while deposit renewal prices remain important to profit. Deposits totaled $82.806 billion, up from $81.144 billion at December, and represented about 83% of funding. Most were direct deposits; brokered deposits were approximately $6.1 billion. Estimated uninsured deposits were $7.1 billion, or about 8.6% of total deposits.
The deposit base supported lower funding costs, but many term deposits must be renewed. Certificates of deposit, which promise customers repayment at a stated maturity, totaled $46.787 billion. Approximately 86% mature during the remainder of 2026 or in 2027. Those maturities provide an opportunity to replace older rates, but customers can choose competing savings products. Debt issued by the lending trusts is called securitized borrowing.
| Funding obligations, USD millions | Amount | Relevant maturity period |
|---|---|---|
| Certificates of deposit | 18,919 | Remainder of 2026 |
| Certificates of deposit | 21,517 | Calendar 2027 |
| Securitized borrowing principal | 3,850 | Less than one year from June 30, 2026 |
| Parent senior unsecured notes | 500 | August 2026 |
| Bank and parent senior unsecured notes | 1,600 | August and December 2027 |
Source: Second-quarter 2026 Form 10-Q, pp. 23–26 and Notes 7–8, pp. 52–53. These rows use different, explicitly stated maturity windows and should not be treated as one annual total. The securitized amount includes the $1 billion repaid in July.
Synchrony reported a $19.8 billion liquidity portfolio, up from $16.6 billion in December. It also had $13.1 billion of borrowing capacity at the Federal Reserve discount window, based on pledged assets, and approximately $2.6 billion of undrawn securitization capacity. Only $2.1 billion of the latter was committed. These are additional funding sources, not cash already on hand.
Borrowings increased to $16.432 billion from $15.182 billion. Senior unsecured notes are bonds without pledged collateral; subordinated notes rank behind senior debt for repayment. The company issued $750 million of senior notes in February, with a 4.947% fixed rate until February 2031 and a floating rate thereafter until maturity in February 2032. The entire senior and subordinated note portfolio had a 5.05% weighted-average contractual rate at June 30. Securitized borrowings had a 4.76% weighted-average rate. Renewing deposits cheaply remains more influential than any one bond issue because deposits provide most of the funding.
The company reported compliance with its debt covenants and no credit-facility default. Securitizations nevertheless have early-repayment triggers: a triggered trust could restrict future issuance and require cash to repay investors sooner. None had triggered at June 30. In addition, bank liquidity is not automatically available to the parent; distributions from Synchrony Bank remain subject to regulatory constraints.
Lower interest rates also do not benefit every part of the balance sheet equally. In the company’s June 30 sensitivity model, an immediate one-percentage-point rate decrease reduced forecast net interest income over the following twelve months by $114 million; an equivalent increase added $39 million. That model is not a forecast of rate changes. It shows why the latest funding-cost savings should not simply be repeated indefinitely in a business projection.
Source: Second-quarter 2026 Form 10-Q, pp. 25–28, Note 8, p. 53, and Item 3, p. 62.
6. Buybacks lifted EPS while common capital declined
Per-share earnings increased because profit was divided among fewer shares. Quarterly earnings available to common shareholders fell from $946 million to $864 million. Diluted average shares fell faster, from 379.1 million to 334.1 million, a decline of 11.9%. That explains how diluted EPS rose 3.6% to $2.59 despite lower total profit. First-half EPS similarly rose 10.7% while net profit fell 2.0%.
Synchrony repurchased 24.2 million shares for $1.750 billion under its public programs during the first half. Returning capital through repurchases reduces the common share count; dividends provide a direct cash distribution. Both uses compete with retaining capital for lending and unexpected losses. The new $6.5 billion authorization had $5.650 billion remaining at June 30, with no expiration date and a flexible execution schedule. It is permission to repurchase, not a fixed payment obligation.
Outstanding common shares fell from approximately 347 million to 325 million. Issued shares remained approximately 834 million because the company held repurchased shares in treasury; the statements do not show them being retired. Share deliveries under compensation arrangements partly offset treasury purchases, and stock awards added 2.8 million shares to the quarterly diluted-share calculation.
Source: Second-quarter 2026 Form 10-Q, pp. 28–29, 35 and 37, Note 11, p. 58, and repurchase table, p. 63.
Total equity increased, but that headline hides a change in its composition. A new preferred-stock issue supplied $494 million after issuance costs. Preferred shares rank ahead of common shares for dividends and liquidation payments. Equity attributable to common shareholders, calculated by subtracting preferred stock from total equity, declined by $363 million.
| Consolidated capital, USD millions except ratios | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Total accounting equity | 16,766 | 16,897 |
| Preferred stock carrying amount | 1,222 | 1,716 |
| Common accounting equity, calculated | 15,544 | 15,181 |
| Common equity Tier 1 regulatory capital | 14,290 | 13,900 |
| Common equity Tier 1 ratio | 13.5% | 13.2% |
Source: Second-quarter 2026 Form 10-Q, pp. 29 and 35 and Note 10, pp. 56–57. December regulatory amounts are the recast comparators in this filing.
Common equity Tier 1 is the core common-shareholder capital regulators count against assets adjusted for their risk. Repurchases and dividends used more capital than current earnings replenished. Even after that decline, the 13.2% ratio remained well above the 4.5% minimum plus the 2.5-percentage-point stress capital buffer. That comparison measures a regulatory cushion; it does not identify all of it as available for distribution.
The $500 million face-value Series C preferred issue adds another continuing use of cash. At its initial 7.25% rate, a full year of declared dividends would total $36.25 million, beginning with payments scheduled from August 2026. The stock has no mandatory maturity and its dividends require board declaration and do not accumulate as amounts owed if omitted. It strengthens broader capital measures, while future preferred dividends reduce earnings available to common shareholders.
Sources: Second-quarter 2026 Form 10-Q, pp. 28–30 and Notes 10–12, pp. 56–58. The annual preferred dividend amount is a calculation, not a forecast of declared payments.
7. Profit growth now depends on both lending and cost control
Management’s growth plan requires loan balances to catch up with spending while expenses stabilize. Its July outlook called for mid-single-digit year-end loan growth, net charge-offs below 5.5%, and second-half operating expenses relatively consistent with the first half. It expected customer payment rates to remain elevated. The baseline assumed a stable economy and inflation, no regulatory or legislative changes, and no additional broad credit or pricing changes.
For the business, that is a specific combination: new and expanding programs must add enough balances to overcome faster repayments, while operating costs stop rising at the first-half pace. Stable second-half expenses would mean roughly the same $2.65 billion total as the first half, while a larger earning loan book could add income. The quarter shows why both conditions matter: spending growth by itself has not covered the extra costs.
Source: July 21, 2026 earnings presentation, slide 10; second-quarter 2026 Form 10-Q, p. 33. Approximately $2.65 billion is the rounded first-half expense base, not separately issued dollar guidance.
The clearest operational challenge is fraud. Its expense increased materially in both the quarter and first half, and better consumer repayment does not solve that problem. Technology spending may support better service and operations, but the filing does not quantify a future saving that can be credited against today’s expense. The immediate evidence to judge progress is whether fraud losses and processing costs stabilize as the loan portfolio grows.
Regulation also affects how much capital Synchrony must retain. The filing describes proposals that could reduce capital required against certain consumer loans, while counting more changes in the market value of bonds still held by the company. Those changes could make the regulatory capital balance more sensitive to market prices. The proposals remained pending at the information cutoff.
Legal exposures are less quantifiable. Management described estimable reasonably possible losses, above any accruals or where none had been recorded, as immaterial. It could not estimate every matter, and the disclosed assessment is not a maximum-loss figure. Tax savings claimed or expected on returns but not recognized in the financial statements rose to $237 million from $218 million while federal and state reviews continued. These disclosures do not establish an imminent large loss, but they leave some uncertainty around future legal costs and taxes.
Source: Second-quarter 2026 Form 10-Q, regulatory discussion, p. 31, and Notes 13–15, pp. 59–61.
8. Conclusion: expansion has yet to lift total profit
Synchrony is financing more spending and has substantial funding capacity, but its latest expansion has not yet raised total profit. New programs and stronger digital and everyday-value spending support future loan growth. Lower funding costs and improved first-half credit performance give the company room to pursue that growth.
The constraint is the amount left after paying for it. Faster customer repayment limits interest-bearing balances; rewards and partner agreements share away some of the benefit; fraud and technology expenses have risen. Buybacks improved EPS, while reducing common capital that could otherwise support loans or absorb losses.
A stronger business result would combine growing loan balances with stable or lower loss and operating costs after partner payments. If those conditions emerge, Synchrony can turn its wider distribution into higher total earnings. If spending continues to rise without that improvement, the company can become busier without becoming more profitable.
Reporting basis:
This analysis covers Synchrony Financial and its consolidated subsidiaries, including Synchrony Bank and consolidated securitization entities, under U.S. GAAP. The selected unaudited Form 10-Q covers the quarter ended June 30, 2026 and was filed July 23, 2026, accession 0001601712-26-000033, CIK 0001601712. Quarterly comparisons cover April 1–June 30; first-half comparisons cover January 1–June 30. Balance-sheet comparisons use December 31, 2025 unless expressly compared with June 30, 2025.
The supplied complete filing text was the foundation. SEC company facts were checked against the selected accession, actual start and end dates, and units: dollars for financial amounts, dollars per share for EPS, and instant dates for balance-sheet items. Filing footnotes control where tagged facts require scope adjustments. The five sales platforms are not separate profit segments. No company-wide free-cash-flow measure or adjusted net-income series is constructed.
Sources: SEC filing index and filing date; SEC XBRL company facts; selected Form 10-Q, Notes 1–2 and 14.
Calculation notes:
Profit comparison. This table starts with the prior year's pretax profit and adds or subtracts each change. Positive amounts increase profit; negative amounts reduce it.
| Pretax profit reconciliation, USD millions | Q2, 2025 to 2026 | First half, 2025 to 2026 |
|---|---|---|
| Prior-year pretax profit | 1,256 | 2,240 |
| Higher net interest income | +87 | +258 |
| Higher partner payments | (35) | (210) |
| Change in credit-loss provision | (55) | +101 |
| Higher other income | +19 | +3 |
| Higher operating expenses | (86) | (159) |
| Current-year pretax profit | 1,186 | 2,233 |
Quarterly tax expense increased USD 12 million, taking the net-profit decline from USD 70 million before tax to USD 82 million after tax. Growth rates use the earlier comparable period as the denominator. Digital's additional USD 1,250 million of purchases plus Diversified & Value's additional USD 1,807 million equal 81.7% of the company's USD 3,743 million increase.
Source: Selected Form 10-Q, pp. 12 and 33.
Loan allowance reconciliation. The table checks the reserve attached to loans on the balance sheet. It separates that reserve from provisions for credit commitments recorded elsewhere.
| Loan-loss allowance movement, USD millions | Q2 2025 | Q2 2026 | First half 2025 | First half 2026 |
|---|---|---|---|---|
| Opening loan allowance | 10,828 | 10,428 | 10,929 | 10,442 |
| Provision added to the loan allowance | 1,147 | 1,201 | 2,634 | 2,533 |
| Gross principal charge-offs | (1,799) | (1,798) | (3,766) | (3,574) |
| Recoveries of previously charged-off principal | 388 | 434 | 767 | 864 |
| Other allowance movements | 0 | 47 | 0 | 47 |
| Closing loan allowance | 10,564 | 10,312 | 10,564 | 10,312 |
In each first half, the provision in the earnings statement was USD 3 million higher than the loan-table provision because it included credit exposures recorded in other liabilities. In Q2 2025, it was USD 1 million lower; in Q2 2026 the two provisions matched.
For the first half of 2026, net charge-offs of USD 2,710 million less the total earnings-statement provision of USD 2,536 million give the reported reserve release of USD 174 million. The loan allowance declined USD 130 million: its loan-only provision was USD 177 million below net charge-offs, and the other movement added USD 47 million.
The June allowance of USD 10,312 million divided by loans of USD 102,208 million gives 10.09%. December's allowance of USD 10,442 million divided by loans of USD 103,808 million gives 10.06%. The ratio rose slightly even though the dollar allowance declined, because loans also declined.
The allowance estimates losses over the remaining life of existing loans. Synchrony uses a twelve-month economic forecast, then blends back to historical loss experience over six months. Its estimate therefore reflects both observed repayment behavior and assumptions about future conditions.
Source: Selected Form 10-Q, Note 4, p. 44, and Note 14, p. 60. The USD 47 million movement primarily transfers a purchased-portfolio allowance previously recorded in other liabilities; it is not an additional current-period expense.
Balance-sheet check. In USD millions, June liabilities reconcile as deposits of 82,806 + borrowings of 16,432 + accrued and other liabilities of 5,795 = 105,033. Adding equity of 16,897 gives assets of 121,930. December liabilities of 102,329 + equity of 16,766 = assets of 119,095. Other liabilities declined USD 208 million. They include merchant payments for financing that Synchrony has not yet recorded as income; these deferred merchant discounts fell from approximately USD 1,800 million to USD 1,700 million. Such operating balances are distinct from interest-bearing borrowings. The annual filing also identifies leased offices and data centers, without a separate lease-maturity schedule.
Sources: Selected Form 10-Q, p. 35 and Note 4, p. 49; 2025 Form 10-K, “Properties.”
Cash check. The following reconciliation explains why operating cash differs from profit. The credit provision does not involve an immediate cash payment; other adjustments and collection or payment timing also affect the result.
| Operating cash reconciliation, USD millions | First half 2025 | First half 2026 |
|---|---|---|
| Net profit | 1,724 | 1,690 |
| Add back credit-loss provision | 2,637 | 2,536 |
| Other operating adjustments | 558 | 700 |
| Changes in operating assets and liabilities | (159) | (323) |
| Operating cash inflow | 4,760 | 4,603 |
For 2026, other operating adjustments comprise deferred taxes of USD 34 million, depreciation and amortization of USD 288 million, and other adjustments of USD 378 million. Timing changes comprise an additional USD 238 million tied up in interest and fees receivable, USD 37 million released from other assets, and USD 122 million used as accrued and other liabilities fell.
Opening cash of USD 15,017 million plus operating cash of USD 4,603 million, less investing uses of USD 3,663 million, plus financing cash of USD 1,283 million equals closing cash of USD 17,240 million. That closing amount includes USD 1,047 million of restricted cash. Loan acquisitions used USD 809 million of cash; the approximately USD 700 million announced for Lowe's describes acquired outstanding loans, rather than cash paid.
Source: Selected Form 10-Q, p. 38 and Notes 4 and 6, pp. 44 and 51.
Equity and repurchase check. This reconciliation includes all changes in total accounting equity during the first half.
| Total equity reconciliation, USD millions | First half 2026 |
|---|---|
| Opening equity | 16,766 |
| Net earnings | +1,690 |
| Preferred-stock issuance, net | +494 |
| Treasury-share purchases recorded in equity | (1,766) |
| Common and preferred dividends | (246) |
| Other comprehensive losses, after tax | (23) |
| Net stock-compensation-related equity entries | (18) |
| Closing equity | 16,897 |
Retained earnings are accumulated profits left in the company. They rose USD 1,370 million after current earnings of USD 1,690 million, dividends of USD 246 million and stock-compensation-related entries of USD 74 million. Additional paid-in capital fell USD 26 million.
The cost of shares held in treasury increased USD 1,684 million: purchases added USD 1,766 million, while compensation-related share deliveries removed USD 82 million. Other comprehensive losses—changes recorded directly in equity outside net profit—comprised USD 15 million on securities, USD 7 million from currency translation and USD 1 million from other items, all after tax.
The public repurchase program reported USD 1,750 million, the equity statement recorded USD 1,766 million of treasury purchases, and cash flows showed USD 1,778 million paid. They are retained on their respective reporting bases; the filing does not give a complete bridge among those totals. Cash dividends were USD 204 million common and USD 42 million preferred. The common-capital comparison uses the revised December regulatory figures in this 10-Q, avoiding a comparison with the older software presentation.
Source: Selected Form 10-Q, pp. 28–29 and 34–38 and Note 10, pp. 56–57.
This report is for general information and business analysis. It is not investment advice or a recommendation to trade any security.