- Key insights: Discretionary spending was up and consumer credit showed no signs of cracking in the first quarter of 2026.
- What’s at stake: The war in Iran is pressuring gas prices and consumer sentiment while the unemployment rate has held steady at around 4.3% for nearly a year.
- Forward look: The credit card issuer improved its 2026 net charge-off outlook to less than 5.5%. Last quarter, the company said it expected charge-offs to be in the 5.5% to 6% range.
Consumers showed no signs of cracking in the first quarter, at least according to Synchrony Financial’s balance sheet.
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Purchase volume hit a record, and discretionary spending logged an uptick while consumer credit health improved for the quarter ended March 31. Those results came against the backdrop of a
“The consumer has continued to be incredibly resilient. They actually made a little bit more discretionary purchases… than non-discretionary,” Synchrony Chief Financial Officer Brian Wenzel told American Banker. “They have some confidence in order to spend, and you can see that in the accelerated purchase volume — gasoline has not deterred them.”
Revenue came in at $3.7 billion, a decrease of 3.3% year over year. Net income landed at $80 million, or $2.27 per diluted share, an increase of 6.5%. That’s ahead of analysts estimates of $754.9 million, or $2.16 per diluted share.
Purchase volume jumped 16% year over year to a record $43 billion, while loan growth remained flat at $100.1 billion. Tepid loan growth was largely due to a higher repayment rate, thanks to a higher concentration of prime customers, tax season and a lower promotional balance, which historically has a lower repayment rate. Deposits were down 1% to $82.9 billion.
Tax season, so far, has come in “below expectations,” Wenzel said. “We expected a refund, probably at the lower end of $500. We see $350. The consumers generally have paid down debt with that, not dramatically, so it has not had a meaningful impact on our business, but they’ve remained disciplined.”
Consumer credit health largely showed improvements in the quarter. Thirty-plus day delinquencies ticked up 2 basis points year over year to 4.52%, and 90-plus day delinquencies dropped 1 basis point to 2.28%. And net charge-offs improved 96 basis points to 5.42%.
“The macro environment is still pretty constructive,” Synchrony President and CEO Brian Doubles said on a call with analysts Tuesday morning. “You have some watch items. We’re watching inflation very closely, higher gas prices, [and] other factors that are creating some uncertainty out there with consumers. But they really seem to be looking past it at this point.”
Improved credit led to a 10.5% decrease in provisions for loan losses to $1.3 billion, and updated guidance that reflected a lower outlook for net charge-offs this year. The company now expects charge-offs to come in at less than 5.5%. Last quarter, the company said it expected charge-offs to be in the 5.5% to 6% range. The lender’s Tier 1 capital ratio was 13.9%, down from 14.4% a year ago.
Strong credit performance was the headline of the quarter, according to Jefferies analysts. Synchrony has been
Still, loan growth was about 50 basis points higher than TD Cowen analysts expected.
“Overall, we view the print as moderately positive, given the improved guidance on losses that continue to demonstrate strong credit performance at SYF, as well as growth now coming back,” TD Cowen analysts said in a research note.