Synchrony grows in third quarter

STAMFORD — Synchrony, the country’s largest provider of private-label and storebrand credit cards, reported rising revenues and a spike in profits Tuesday for the past quarter, as it saw signs of a recovery in consumers’ finances that it expects to carry into the holiday shopping season.

Third-quarter revenues for the Stamfordbased company totaled about $3.7 billion, up 6 percent year over year. Profits amounted to $1.1 billion, surging from $313 million a year ago. The massive growth on the bottom line reflected a plunge of $1.2 billion, or decrease of 98 percent, in the provision for loan losses that was largely driven by improving consumer finances as well as a $247 million reduction related to the upcoming sale of its portfolio for Gap Inc.

“The results exceeded our expectations,” Brian Wenzel, Synchrony’s executive vice president and chief financial officer, said in an interview. “We feel very good about how we exited the quarter and optimistic about the fourth quarter. Consumer health continues to be very strong.”

Among other significant indicators, Synchrony recorded a quarterly average of about 67 million active accounts, up 5 percent from a year ago. Customers’ purchase volume rose 16 percent to nearly $42 billion. The core “loan receivables” balance of loans owed by customers amounted to about $76 billion — up 2 percent from last year.

“We saw over 6 million new accounts get added this quarter and 17.5 million new accounts (added) year-to-date – and that’s causing active accounts to be up 5 percent,” Wenzel said. “It’s really about being able to meet the customers, whether they’re going into a store or going online.”

In another sign of healthier consumer finances, the net charge-off rate, which refers to debts the company does not expect to recoup, decreased to 2.2 percent from 4.4 percent a year ago.

Among major transactions in the third quarter, Synchrony launched a Walgreens credit card, announced a savings program with PayPal and renewed nine programs, including partnerships with the Container Store and Rite Aid.

Despite economic challenges such as supply-chain disruptions that have persisted during the pandemic, Wenzel said the company remains optimistic about the holiday retail season.

“With the savings they’ve accumulated during the pandemic — whether it was stimulus programs or lower discretionary spending such as lower spending on vacations — they (consumers) have accumulated wealth,” Wenzel said. “The consumer has the capability to go out and spend. And consumer confidence is generally strong, so people are feeling much better about where the pandemic is and where they are.”

Following the earnings release, Synchrony shares closed Tuesday at $52.36, up nearly 3 percent from Monday. They have hit a 52week high of $52.49 and a 52-week low of around $24.47.

Synchrony, the No. 187 company on this year’s Fortune 500 list, is headquartered at 777 Long Ridge Road in Stamford, near the Merritt Parkway’s Exit 34. The company employs a total of 16,500 people.