Synchrony Financial at Barclays Conference: Strategic Growth Amid Uncertainty

On Wednesday, 10 September 2025, Synchrony Financial (NYSE:SYF) participated in the Barclays 23rd Annual Global Financial Services Conference. The discussion, led by CFO Brian Wenzel, highlighted the company’s cautious optimism about consumer resilience, strategic partnerships, and credit trends. While Synchrony is confident in its financial health and growth strategies, it remains vigilant regarding macroeconomic uncertainties.

Key Takeaways

• Synchrony is optimistic about consumer resilience but remains cautious about macro uncertainties.
• The company is focusing on super-prime consumers, with elevated payment rates and stable delinquency rates.
• Strategic partnerships with Walmart and Amazon are central to growth, emphasizing digital integration.
• Loan growth guidance revised to flat year-over-year, with improved Net Interest Margin (NIM) expected.
• Capital allocation prioritizes organic growth, dividends, and share repurchases.

Financial Results

• Consumer spending trends positively in Q3, particularly in cosmetics, electronics, and clothing.
• Average transaction values and frequencies have increased compared to the first half of the year.
• Credit actions have shifted the consumer base towards super-prime, improving payment rates.
• Delinquency rates are stabilizing, consistent with pre-pandemic averages, and net charge-off rates remain within target.

Operational Updates

• The Walmart partnership is in early stages, with a full rollout expected by year-end.
• Amazon partnership renewal includes a new pay-later product.
• 98% of top partnerships are secured until 2027 or beyond, ensuring long-term stability.
• Loan growth is flat due to higher payment rates and a shift towards super-prime consumers.

Future Outlook

• NIM for the second half of the year is guided to be around 15.6%, with a long-term framework of 16%.
• Capital allocation focuses on organic RWA, dividend growth, and potential share repurchases.
• Long-term receivables growth is projected at 10%, with significant impact expected from Walmart by 2026-2027.
• Macroeconomic factors, including unemployment and interest rates, are closely monitored for their impact on consumer behavior.

Q&A Highlights

• Brian Wenzel noted that a neutral unemployment rate is around 4.5%, with no expected impact on the portfolio if it dips below this threshold.
• The company has made deliberate credit restrictions to maintain efficient loss rates.

Synchrony Financial’s strategic initiatives and partnerships position it well for future growth, despite ongoing market uncertainties. Readers are encouraged to refer to the full transcript for a detailed account of the conference call.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Terry Muck, Consumer Finance, Barclays: Alright. Good morning, everyone. Thank you for joining first presentation of the day. My name is Terry Muck. I’m a consumer finance here at Barclays.

I’m very pleased to have on stage Brian Wenzel, c o CFO of Synchrony Financial. So welcome, Brian.

Brian Wenzel, CFO, Synchrony Financial: Terry, thank you. Glad to be here today.

Terry Muck, Consumer Finance, Barclays: Great. Let’s jump right into it. Maybe we’ll start off with an update on the third quarter. How’s the consumer spend been trending so far this quarter? You had noted improving momentum in the second quarter on purchase volumes.

Has that persisted? And what sales platforms are you seeing the best growth in right now?

Brian Wenzel, CFO, Synchrony Financial: Yeah. Yeah. Thanks for the question, Terry. So when we look at what we said back in July, right, we saw some green shoots really in certain categories when I thought about world spend on our card, really in cosmetics, electronics, clothing. So we saw some positive.

The sales trend in the first couple weeks of July has was positive year over year, which you you’d expect a little bit from the lapping of some of the credit actions. As we have stepped through the court, let me give you some some perspective. We continue to see that momentum as we move through. Right? So which is positive.

When you think about the the transactions that are happening, our ATVs are actually up versus the first half of the year. Our average transaction frequency, which is up in the first half of year, is up, you know, a little bit more here in the third quarter. So on a on a ATV perspective and ATF perspective, we’re seeing, some some positive, some positive movement. When you kinda go down deeper, when you think about the five sales sales platforms, if you go back to the second quarter, right, we had three sales platforms that essentially were were flat to, slightly positive. Right?

When you think about, the digital platform, the diversified value values platform, and then when you think about health and wellness, they were flat to up. And really where you saw the pressure being down more significantly was in the home and auto and lifestyle, which are bigger ticket type businesses. As I think what you’d expect to see here in the in the third quarter is that same type of, profile where but but I think the three platforms that were were, flat to positive will be more positive, from that perspective. So I think they’re they’re gaining traction. And I think in the areas where we had negative comps in home and auto and lifestyle, they’ll be reduced as far as as their performance from a from a year over year fee perspective.

So I think you’re seeing that trend really kinda come through. Again, you know, I I think the one thing that’s kinda continue to think about for us is the mix of the portfolio. Right? Because what you are seeing is a little bit more super prime. Most certainly, the higher income individuals are pulling a little bit more than than I’d say some of them the non prime, you know, prime segment.

So they are leading the kind of spend charge. And given the mix from the credit actions, we we increased our our super prime percent to a 150 basis points, decreased our, non prime a 150 basis points. So that has, you know, as as we said in third quarter, that that will indicate really a more elevated payment rate given that and the shift a little bit out of the promo from coming out of those two segments. So that has continued to to persist, really, that the payment rate being elevated, which, again, we highlighted back in July as our expectations for the remainder of year. So all in all, you know, from a sales perspective, we actually are encouraged, with what we see and and and really positive for for our business.

Terry Muck, Consumer Finance, Barclays: Got it. That’s helpful color. So we kinda take a step back. How would you characterize health of the consumer? And any noticeable differences that you can maybe call out between the lower and the higher income consumer?

Brian Wenzel, CFO, Synchrony Financial: Yeah. The the consumer has been remarkably resilient. I I think that’s a term I, you know, I I’m sure. I’ve read all the transcripts. I’m sure that’s a term that every everyone has used.

Where they’re going about their lives, whether it’s, you know, you know, smaller increases from tariffs flying or falling through, slight increase in unemployment, which really hasn’t had any effect whatsoever. So they’re being relatively consistent with regard to that. You you know, payment rates, as we look at it, again, what what we’re encouraged by is the non prime payment rate is actually improving, which is which is really part of the credit actions that we see. You know, where we’ve kinda taken taken the position to try to control the net charge off rate. So I I think we’re encouraged by that.

I think we’re encouraged by the spending behavior pattern. I think they’re spending where they are. They’re spending a little bit more, I I say, in some of those discretionary bigger ticket purchases. Again, I I think they’re lapping some periods where we had probably a little bit more, fall off. So, again, the consumer’s hanging in there and and fairly resilient and across both generational and and I’d say, you know, income lines.

Terry Muck, Consumer Finance, Barclays: Got it. Maybe just briefly update, you know, any trends you’re seeing in consumers with student loans.

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, Terry, as we talked about before, we we have done a lot of work with with the the bureaus with regard to how do you look at student loans, who has student loans. All student loans are reported to the bureaus whether it’s delinquent or not. So we really look at the balance, we look at the trends. And when we take a step back and and pull out consumers that have student loans and and and and the cardholders that that do not have student loans.

When you look at those populations, we compare them to, like, populations with regard to credit attributes. When we look at that, the continued performance, at least through the early part of the quarter, had been consistent with, the regular portfolio. So we’re not seeing anything, in our portfolio that indicates those that have student loans or performing worse than others. And I just wanna, you know, clarify when I say earlier in the quarter, we just haven’t gotten the data yet But again, this has been a consistent trend throughout the year.

So I I would not expect it based upon its performance to to shift. But but again, it’s it’s something that we watch closely, but hasn’t been an impact, you know, on our cardholders.

Terry Muck, Consumer Finance, Barclays: Got it. That’s encouraging. Well, maybe what’s under credit, you obviously, excuse me, published a monthly update this morning. You’re welcome. Yeah.

As usual. Thank thank you. Thank you for pulling it up for us. Yeah. Thank you.

Delinquencies, you know, continue to trend down year over year. I think it’s, you know, nine consecutive months now. Charge offs, obviously, following that. Where do we stand on credit? And how much longer can we see the delinquency rate improve year over year?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know you know, so so this morning, we we reported, I’d say, what what looks to be kinda flat, delinquency rate when when, you know, if you went out another digit, we’re probably five basis points, you know, different. So so again, delinquency stabilized. And I think what we said is, you know, what what they what you should expect from delinquency should really be more seasonal trends, I think, as they come through. When I think about delinquency even of itself, when I go back to 30 plus and 90 plus, 30 plus is still performing again better than that 17 to 19 historical average.

I I I’d say low teens with regard to basis points improvement. And I think when you look at 90 plus, even though we didn’t report that today, you’re generally in the in the low single digits negative to flat. So so, again, I I think we’re back to that that period of time. 17 to 19 delinquencies are are fairly consistent. You know, the loss rate, you know, again, you know, given where delinquency were, I I think we’re somewhat predictable with with regard to where we’re gonna be.

And and, again, we’ve made the the very conscious choice to restrict credit, which has impacted sales. As majority of our sales decline has been credit oriented in order to get the loss rate to to get back into the more efficient five and a half to 6% long term part and through the cycle. So so we feel good about credit. We feel good about the performance. And and, again, what we’ve now done is is really kinda turned a little bit, you know, about how do we think about, you know, opening up a little bit and changing that credit aperture as we move forward.

Terry Muck, Consumer Finance, Barclays: Got it. And the guide for this year is 5.6 to 5.8% net charge off, which is well within your target underwriting range of five five to six. So, obviously, the guide looks good to me. How do you feel about that? And what does that mean for the reserve rate going forward?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, the the way I think about credit, you you know, you have eight months in. You only have five months left. So and the five months left are generally in delinquency. And if you look at delinquency rate, it actually sets up fairly nicely.

So I I say mathematically, people could do the math and try to figure out where you’re gonna be relative to to that guy. You you know, what gives me confidence, Terry, is, you you know, I look at a couple of things. One, the credit actions have had the desired effect. It’s creating a shift in the book, where we have a little bit more subprime, a little bit less nonprime. So I I think we’re positive about that.

When I look at delinquency, entry into delinquency still better than that pre pandemic period. So that’s positive. When I think about early stage collections, so two to four, and then late stage collections, five to seven before write off, You you know, two to four is fairly consistent, so it’s not deteriorating, maybe improving slightly, but I I call it consistent. When I look at the late stage collections, that is improving, which I think is a is a positive trend. So I I think when we look at positive entry rate and really, you know you know, pretty pretty good factors inside the roles of delinquency, I think we feel good about how credit is.

I I think when you take a step back, you know, the first thing when you bring up reserves, you know, we’re still in this really uncertain period of time. Right? You you have a a lot of noise relative to the employment market even though we don’t see it. And to be honest with you, you know, we think about more unemployment at a neutral rate of four and a half. So whether you move from four two to four three or four one to four two, it it doesn’t really have a discernible impact.

But there is a little bit of a a pressure in that market, most certainly given the current state of affairs relative to immigration policy, relative to what we’re doing on certain workers here in The United States. So that noise is out there. You have the tariffs which are partially in some of the prices that are in, but there’s probably more to go depending upon what what merchants and and producers you’re gonna do with those tariffs and and whether or where they actually ultimately settle. There’s a lot of legal ambiguity around that. So you have that hanging out there.

And then, clearly, you have a a ton of geopolitical risk. I mean, you look you wake up this morning with regard to, you know, what happened between Russia and Poland. There’s just a lot of uncertainty. So so so I I think as we think about it, we’re not necessarily in the clear, I I think, yet. We’re not overly concerned about it, but I think it’s one that’s clear.

I say that because as you think about the reserve, it it really is gonna have the the the indication to go lower. Right? As the loss rate has come come down, I think you’d see the reserve coverage come down. Right? And especially as we’ve kinda set up into 2026 and what that loss rate will be.

So so I expect it to have a negative negative being a downward bias relative to the rate that would occur here in

Terry Muck, Consumer Finance, Barclays: the back half of the year, the time in which we have to just see how how the macro environment plays out. But, I I would expect it to to come down on a rate basis if if if credit continues to perform the way it is. Got it. That’s helpful. So everything you just laid out with credit sounds pretty encouraging to me.

You mentioned you may open up the aperture a little bit. Maybe just expand on how you’re thinking about underwriting. It seems like you laid the groundwork for growth with the Amazon renewal and, obviously, the Walmart partnership. The launch expected to occur later this year. Can you maybe just walk through your thinking on kind of underwriting loan growth?

Brian Wenzel, CFO, Synchrony Financial: Yeah. Let me let me unpack that question a little bit. You know, if you if if you think about our credit posture for a second, I think we’ve always indicated you’re not gonna see some big aperture change over night. I I think we’d step into it. I talked about, you know, three phases.

That’s that’s that’s something, you know, more structurally how we think about it, stepping in incrementally. Back in July, we talked about we we did step into some, credit changes, right, with regard to to the portfolio, particularly in our health and wellness business and and one of our other more digital oriented portfolios that that the loss rate, you know, could could could sustain a a wider credit aperture. So we did that. We’re going through some analysis now. I expect us to do similar things in in certain other pockets, you know, pockets of the portfolio as we move forward to kind of step in.

Both the actions that we took in the remaining part of July and these actions won’t really have an effect on on 2025. They’re more setting up for 2026 from a gross perspective. So I I think we’re gonna be positive. You know, again, I think as you look out to ’26, even though we’re not giving guidance, you know, think about there’s gonna be incremental changes, and I’m not sure exactly when we can target. We’ll be back to, you know, the the pre tightening levels.

But we feel good about where we are from a credit standpoint. Well, certainly, we’re we’re happy from a new account standpoint. Active accounts are are are improving, so they’re less negative but improving. So I I think we feel good about, you know, where we are in credit and what we can do in front of us in order to optimize return. Most certainly, given some of the pricing actions, I think we can take some more some more relief on credit.

You know, we’re excited about what we’re doing both with, you know, Amazon and and Walmart. You know you know, Amazon, if I stop there, The renewal itself is is, again, part of what we do every day, trying to trying to, you know, deliver value for the Amazon consumers and really provide our you know, the right product suite for them. Again, our launch of pay later there, think, is is is pretty pretty neat when you think about how it’s in the checkout flow and most certainly will, over time, add to the the growth as as the consumer can choose either a private label product or the installment product. And again, I wanted to be clear, our installment product is not paying for. They are you know, six months and and longer type of pay later installment loans.

So, you know, good profile there. You know, we we worked a very long period of time with Amazon, so we know how that works. And then Walmart, you know, we are in the beginning phases of that launch, and and we’re excited about that. I I think, you know, the one opportunity I have here, and I’m sure you’ll probably delve a little bit deeper into Walmart, maybe in your questions. But but the opportunity here is we’re actually starting with a clean sheet of paper.

So we set the credit aperture there. So so what what’s good about that from a credit standpoint, is number one, that there’s a value proposition, that that is strong and resonates, which generally gives you a better consumer, that’s willing to take that card, adopt that card, and bring that card topper, you know, close to the top of the wallet. And then number two, the the the placement both in the in the in the fleet of stores as well as digitally and in the, the One Pay app, most certainly will drive better better credit. So, we’re anticipating that.

Terry Muck, Consumer Finance, Barclays: Got it. Maybe just dig deeper a little bit. Walmart, obviously, not the first time you guys have issued a Walmart card. I mean, you talked a little bit about what you’re doing differently this time. I think the launch is expected to occur, you know, later this year.

First time you had the Walmart portfolio was $10,000,000,000. How should investors think about the growth and sizing of the program over time along with any kind of financial metrics that you can give us?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You you know, first of all, we are really excited to partner with Walmart. I I think a lot of folks would would would question that, but but it is just the an iconic retailer that has a tremendous place. We’re excited to really work with One Pay. They they’ve done some innovative stuff inside the app, which I think will make for just a really great customer experience and it and done a lot with Walmart with regard to placement of where that card how that card’s accepted and used.

So so we’re excited about the parties. I mean, Walmart, even on their last earnings call, talked about the credit card, which tells you a little bit about the focus. So so I think about what’s different between twenty eighteen and now. Right? Number one, I’ll start with where I handed, you know, the the c c suite engagement of Walmart, you know, not only just talking about the earnings call, but but being involved in driving this as a value proposition to their loyal customers.

You know, number one, when you have that type of engagement, it generally resonates in performance throughout the organization. Number two, the value proposition is stronger, so I think it attracts, you know, a a broader array of customers. Most certainly customers higher on the credit spectrum, which I think helps us. Number three, the revenue of the card looks different than it did before. So so, well, certainly, it produces a greater, revenue stream in which you can provide that value proposition and deliver value to the consumers.

And, you know, four, I I think about, you know, the the tie in with Walmart Plus, which is a big initiative inside their company, but allows consumers to really take that that Plus program and accelerate the value that that kinda comes from it. Then And lastly, you know, we talked about credit. And and credit when you start with a clean sheet of paper, I I I would expect that you’d see, you know, as a portfolio matures, most certainly a lower loss content portfolio than the 10%, you know, loss content that we had pre pandemic. So I I think it sets up nicely. We’re excited to to work with both One Pay and Walmart on this.

We have begun early stages. When you think about a de novo program, it just doesn’t, you know, turn the light switch on. Well, certainly, there’s a lot of consumers that go through Walmart everyday or walmart.com everyday. So so we are in the ramp phases. So if you haven’t been to a Walmart, they actually are in the process of putting signage up.

The signage is terrific. And placement inside the the retailer is terrific both in the house, in the parking lot, on the end cap. So so really great. Not in all stores yet, but ramping. We’re ramping digitally with them.

So so we’re very encouraged about the progress and and how it’s rolling out. And again, we would expect and hope that we’d be at a full full full roll out before the end of the year. So so exciting news. Your question about how big this could be, I mean, most certainly, I I think I’ve said before, you you know, given the size and scale of Walmart, given the engagement, given the placement digitally in the store, you know, clearly, I I think we expect this could be a top 10 program. And and most certainly given that, given just the the sheer volume that Walmart does, this again could be a top five program.

But let let us get launched and and let us get get moving on it. That that said, Terry, I know there’s a lot of speculation. We are in ramp mode. I I would not expect any any meaningful impact on the growth rates in 2025 just because it’s so late. I mean, you think about, you you know, a $100,000,000,000 portfolio, you’re not gonna move the growth that significantly.

You know, we’ll be back in in a they provide a greater financial dimension in 2026, but one would expect that you would have a a more, you know, meaningful impact in in ’26 and ’27 with regard to how that program begins to mature.

Terry Muck, Consumer Finance, Barclays: Got it. That’s helpful. Maybe one follow-up. You mentioned the revenue stream or revenue yield is higher. What’s actually driving that this time around?

Brian Wenzel, CFO, Synchrony Financial: You you know, first of all, you know, the way the product construct works, we’re actually leading with dual card. But but the APR structure is is fundamentally different. I I think in the prior program back in ’18, there was always a view that you want lower rates as you’re trying to drive value every day to kinda fit into the brand. I think now, you know, with One Pay involved and others involved, there’s a more there there’s a broader perspective with regard to the rate you could charge, but delivering value back to the consumers through the value proposition. So so so I think it’s really the cut this the construct of the revenue pool itself is a little different to really afford a more generous value proposition, which again should drive a better a better consumer.

And and when you’re in the right placement digitally, when it’s easier for the consumer to to apply for the card, use the card, and this is where One Pay excels, we’re trying to help us do that and and then Walmart do that. That’s really where you can kinda get the acceleration and a good a good portfolio growth that that we both desire. Got it. That makes sense. Maybe just touch

Terry Muck, Consumer Finance, Barclays: on the competitive environment for partnerships. Can you remind us of some of your major partnerships? How long they’re tied up for? Yeah. And then where some of the areas are seeing additional opportunities right now.

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, listen, I I think competition can continues to be consistent with the past, which has been a little bit more aggressive. We see people who are continuing to stay in this market. It’s very attractive market in the retail space, but we continue to compete. And I think what we do is we went on our our digital capabilities, our ability to to demonstrate in this retail setting how we can execute through any cycle.

And that that resonates with merchant partners who want people who are there consistently whether times are good or times are bad. And most certainly, digitally, you know, we think our tools are are, you know, best in class, right, relative to the peers. That said, when we lose, we generally lose on price. And and I think we’re pretty open when when we particularly with new partners, when we talk about it, we’re not gonna be the lowest lowest priced option when it comes to some of the competition because we do believe we bring a broader sweep both of products. You know, we can bring you anything from a secured card to pay later to private label to dual card.

We can do consumer. We can do commercial. So we bring a broader array of things. So so in theory, the value that we bring and then when you think about our our advanced underwriting with Prism, we just think that that package, you know, deserves, you know, a different price. So we feel really good about that.

When you think about our existing partnerships, I I think we said back in July, 98% of our top 25 relationships are locked up between ’27, and beyond. So I so I think that we have a pretty good runway, and I think you think of our top five are are are, you know, beyond, twenty, thirty at this point. So, you know, we feel good about, you know, where we are. That said, we never take it for granted, and we continue to, to serve as old partners, those merchants, those providers every day, to to to continue to earn their business and and deliver really value for the consumers. But the competitive market is is is consistent, and, you know, we look to compete both on our capabilities and and what we can provide them.

Terry Muck, Consumer Finance, Barclays: Got it. Maybe we’ll shift to loan growth. You touched on it a little bit already. You had revised your full year guide from low single digits to flat year over year. Obviously, you have Walmart coming online, more of a contribution in ’26, but still some the guide might strike some as being slightly conservative.

What factors, should we be mindful of regarding the guide?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, again, I think when you look at purchase I in the first part, you know, we’re negative four percent first quarter, negative 2% second quarter. Again, I think we’ve indicated that that you should see a turn, here in the back half of the year. So that’s the first piece is is, you you know, how how did credit sales perform, purchase volume perform in throughout the year. The second thing which has been and we highlighted in the guide an elevated payment rate.

And and that’s really two factors driving that. Number one, the credit actions have shifted the credit composition of the portfolio where you see more super prime, which has a higher payment rate, a little bit less non prime, number one. And then number two, the mix in the portfolios. When when you think about home and auto and lifestyle, right, are are are are really, you know, installment promotional financing businesses, those two have have shrunk in assets about $2,000,000,000 because of that discretionary purchase. When you that has a generally lower payment rate.

So when you take that out, the mix shift is up. So you have a higher payment rate. We expect that to be elevated throughout the year. So, again, we don’t we don’t necessarily view it differently. It’s just really more the credit composition of the portfolio.

It’s a little bit better. So so a little bit less growth, but I think you’re gonna see a little bit better credit when it comes to that. I think as we begin to open that credit aperture, I think you think things will start to normalize a little bit. I don’t think it was intentional for us to sit back and say we want 150 basis points higher, you know, super prime. It was just more controlling through this period the loss content of the portfolio.

So, again, it’s more payment rate oriented and not necessarily anything that I’d say is structural or or something that we’re we’re concerned about. Obviously, we wanna grow, but we wanna grow in a in a a prudent manner. Got it. And then when

Terry Muck, Consumer Finance, Barclays: you think about your long term guide, you have put out a 10% receive receivables growth guide. What are some of the puts and takes there? And any kind of time frame to kinda get back there?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You you know, we historically have been in that mid to to high single digits growth rate. You know, you look at the pandemic years, we were double digits, but I think that was more a reaction of what happened in 2020. When I when I think about getting back there, it’s number one, you have to you have to, you know, adjust the crap you’re back to where we were pre pandemic, which, again, I I think we’ll get to over time. It’s just really how the market certainty kinda comes through.

I think when you think about the the the way in which you can get back to that 7%, if you have GDP kinda going at two to three times, you know, we’re gonna grow with the retailers. We’re gonna do do those things. So, you know, growing two x GDP, which we historically done, have not has not been much of a you know, shouldn’t be that much of a challenge. So you think about something that’s now in the the the mid single digits, and then you start to add penetration increases. And this is where we go back to where we’re investing strategically, most certainly health and wellness.

We’re in a lot of different verticals. We have a lot more that we can do in in that space, whether it’s in different verticals like fertility or other things. We’re just continuing to to engage with providers who only provide us limited volume. Right? So so that’s number one.

When you think about areas in which we’re trying to engage more fulsomely to capture volume, You know, I’ll highlight again in health and wellness business getting involved in the in the practice management software. So our our CareCredit card is accepted more broadly, is is a way in which you do that. Across the, you know, both health and wellness, home and auto and lifestyle. You know, what we’re doing in in the multi source finance, so we kinda get more into that waterfall. We launched that last year with the program.

I think you’ll continue to see us engage more more aggressively in that waterfall technology so we control the point of sale and where that competition is going. So we can be the the lender of choice, primary, or, if we can’t fulfill the sale, you know, how do we fulfill the sale for our merchants and our providers through secondary or tertiary lenders. So I think that ability to kinda drive it. Those types of things and investments really around that. And then lastly, I I think our our our strategic investment around our customer experience and and broadening out, you know, can we take some of our our partners and say, hey, listen, you know, can we offer a care credit card?

It doesn’t compete with them. So I think there’s things around our strategic initiatives that will, you know, that have the potential to accelerate the the growth rate. The horizon which we get back there, Terry, to be honest with you, is gonna be a little bit determined about how how how the overall macroeconomic just settles down. I mean, we’re at an you know, what we what we believe to be a slightly inflated interest rate environment, which is impacting consumers. You you do have inflation that that is impacting some.

You have tariffs. Once that noise settles down, I think we we can begin to get back to normal. But I I don’t think there’s anything in the portfolio that says we can’t. And, the two leading platforms for us are health and wellness and digital. Just have tremendous opportunity with regard to to market share.

Terry Muck, Consumer Finance, Barclays: Okay. That’s helpful color. Maybe let’s switch gears. You guided second half NIM to be approximately 15.6%. That compares to a first half NIM of sub 15%.

You had indicated some of the drivers were of improving margins or seasonality, growing PPPC impact, BD book repricing. I guess first question is how do you feel about that second half NIM guide today? And then maybe just any color you can give us on how to kind of quantify how much benefit each of those components actually drives to NIM?

Brian Wenzel, CFO, Synchrony Financial: Yeah. Yeah. You know, we obviously, were impacted in the first half of the year from a couple of different things. You know, you if delinquencies get better and losses get better, late fees kinda come down. You still have slightly higher charge offs first half like you’re gonna see in the second half in order to kinda get to the guide.

So some of the reversals were higher. And then when you think about it, you know, we had a large amount of CDs, that repriced really in the first half and mainly in the second quarter that you’re gonna see in the back half of the year. So so I think structurally, you know, there’s not necessarily as much a change in behavior patterns versus adjusting to where we are. I think we’re in an environment where we talked about delinquency being more seasonally based now. So I think your late fee component of of of NIM is gonna be relatively consistent.

We continue to build the the the interest side of the PPCCs. You know, we said we’re about 50% through the way, you know, as far as the second quarter this year. That goes to 35. So that’s gonna continue to grow. I think you get the benefit of that that CD repricing.

You know, we were pricing things that had a high 4% interest rate in in the second quarter. Again, you’re probably four and a half here in the third quarter, repricing down to something that’s low fours. So I I think that gives you a benefit with regard to it. And and then, you know, we had a lot of excess liquidity. We weren’t going to to restrict the deposit growth in order to manage an interest margin, mainly because the fact I was I was putting deposits out at at 4% or less and getting, you know, four forty from the Fed.

So it it it made EPS sense, maybe maybe her margin, but we had excess liquidity. We don’t really run the, you know, the company carrying such high liquidity. You know, that market is is is most really big competitive. So as that trails down and we start to grow here, I think you use some of that liquidity, which helps the percentage of ALR versus average earning assets. All those combined should give us that ability to produce in the back half year fifteen fifteen six plus.

So, again, you’ll see it on the interest yield line. You’ll see it on the Experian liability line, really kinda coming through. And then as well, the ALR mix, should be positive, in order to

Terry Muck, Consumer Finance, Barclays: get us there. Got it. As we look forward to ’26, any reason why NIM can’t continue to expand?

Brian Wenzel, CFO, Synchrony Financial: You know, listen, Terry. I I appreciate the question going to ’26. I like to get through the last two quarters of of of twenty five. But, again, structurally, what we said, you know, if you go you kinda go back to a long term framework where we said 16%, that was predicated on on a Fed funds rate probably around two and a half. It was it was more a more normalized payment rate.

So you need those two to get back to the base. And then in theory, you have the accelerant of the PPPCs which were put in place. So so we feel good about that. Some of it’s gonna be timing, but but again, PPVCs are gonna come in either way. How quickly the Fed fund rate and where it ultimately settles, whether it’s two and a half or, you know, is it gonna be north, you know, is to be determined.

So so again, we’ll be back in January to give you 26 in in more color.

Terry Muck, Consumer Finance, Barclays: So k. Fair enough. So you called out some modifications to the triple p c’s on the last earnings call. I think in aggregate, it had a $50,000,000 negative impact to revenue. Maybe just discuss why you wrote that back, and then how are other triple PC discussions with partners progressing?

Brian Wenzel, CFO, Synchrony Financial: Yeah. The adjustment to our PPPC’s were were fairly, I I’d say, narrow. Right? They were in in two buckets. In in the promotional financing business, there were two changes we made.

One, which was to add a promotional financing fee. And and that was not uncommon in the business, but we we increased it more significantly in in contemplation of the late fee rule going in. When you think about bigger ticket purchases, when you’re charging incremental 2% of the the total value, We didn’t wanna dissuade customers and and most certainly some of the industry had moved with us. So so we thought that it would be prudent to roll that back. And as we did that, what we did is we went to our partners in those spaces and said, hey.

Listen. In contemplation of doing this, we’d like you to change the portfolio, change duration, etcetera, which they’re always managing from a cost perspective being the type of promo. And then there’s an activation fee that was was somewhat nonmaterial that that we adjusted back to where it was at store. And then one partner from a brand perspective said, listen. We understand the impact from an RSA perspective.

We understand that it hasn’t really driven negative connotations, but we just we just prefer not to be in that situation. So from a brand perspective, so we we’re we’re gonna roll back that APR for that that partner. Other than that, I I think as we said, Terry, we’re not really in significant discussions with anyone to adjust that. I I think what you may see a little bit in ’26, again, as we continue to have dialogues with people, there could be some value prop refreshes. And the other thing that we invest in growth, given that the margin of the portfolio is better.

But but most certainly, I I think, you know, where we stand on the PPCs is is it’s been generally positive for the company, positive for our partners who are sharing, most certainly given tariffs and other things, it kinda helps them on on on the other side. So, you get, you know, nothing more coming, I think, this year, we expect. And then, again, we’ll we’ll revisit a little bit in ’26 with maybe with regards to some value proposition or other things. But, again, it shouldn’t be material. Got it.

Terry Muck, Consumer Finance, Barclays: That’s helpful. Just moving to capital, your CET one ratio is about 13.6%, improved year over year by about a 100 basis points. How are you thinking about capital allocation going forward, particularly as you start to grow the business again?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, first, Harry, we are we have been consistent, most certainly in in my tenure and and for my tenure. The capital priorities of the company have not changed. Right? Organic RWA, the dividend growth, and then you get into either share repurchases or inorganic opportunities.

I I think where we are from a capital standpoint today, is really the result of a slightly lower, you know, RWA growth, which which we talked about, you know, a little bit of length here. And then second, the earnings performance of the company being, you know, highly profitable, and the returns being, you know, high high twos in an ROA perspective, that threw off a lot of capital. That’s the beauty of this business. It throws off a lot of capital each year. We started giving in 20%.

We had a $2,000,000,000 ink we had $2,000,000,000 left at the end of the second quarter, and and we’re gonna continue execute to bring down capital. We realized we have surplus capital. It’s a strength for us. You know, I wanna be clear that the capital has not been in anticipation of anything inorganic, has not been anticipation of anything happening in the environment. That’s why we run stress test.

It’s just more a factor of RWA growth and the income profile of the business. And, you know, we always said we we can revisit if we wanted to to accelerate more of our purchases given the the performance of the business. The great thing about our business, and I’ll just end on this point, is it generates a lot of capital each year. So even if we’re to do something big, we can most certainly generate more capital. So we’re not afraid to bring the rate down.

It’s just more been a little bit more circumstances around that. So we would anticipate, you know, again, you know, trying to bring that capital ratio down closer to target.

Terry Muck, Consumer Finance, Barclays: Got it. Helpful. There’s about two or three minutes left. I’ll open it up to the audience for any q and a. One question here.

Brian Wenzel, CFO, Synchrony Financial: There is a bit of a disconnect right now between the unemployment situation and credit quality, certainly for you and also your peers. Unemployment is feeling weak, and yet when it

Terry Muck, Consumer Finance, Barclays: comes to credit metrics, you’re killing it. How do you account for that disconnect?

Brian Wenzel, CFO, Synchrony Financial: Yeah. You know, I mentioned earlier. So a neutral unemployment rate is probably around, in our view, around four and a half. So I would not expect movements below four and a half, whereas, again, four two to four three, four one to four three. It’s not gonna have any meaningful impact on our portfolio.

I can’t comment for others, but I I assume it’s probably similar, to be honest with you. And and you have to get underneath with regard to unemployment. What’s the drivers on unemployment? Whether it’s people actually losing their job, people coming out of the workforce participation rate. So so getting to that unemployment rate is really important when you look at the subcomponents.

And the subcomponents are generally positive. They’re not negative. Not like there’s mass layoffs and people are losing their jobs and, you know, so that’s number one. Number two, it does take time. If people lost their job, they go through severance, they go through unemployment, then they go through the struggle.

So there’s always a lag with regard to unemployment and unemployment claims. Once you get above four and a half, I think there’s a potential to have a greater impact on on or have a impact on on portfolios. And, you know, if you go from four or five to four or six, I’m not sure it’s that significant, but you’ll begin we’ll we’ll begin to see if, you know, if it’s four and a half or north.

Terry Muck, Consumer Finance, Barclays: K. I think we’re pretty much at time, and I’ll wrap it up there.

Brian Wenzel, CFO, Synchrony Financial: Terry, thank you for the opportunity, today, and and look forward to our conversation with investors. Yeah.

Terry Muck, Consumer Finance, Barclays: Thank you for coming. Thanks.

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