The news: Synchrony’s net revenues increased 3.9% YoY in Q4 2024, per its earnings release.

Despite revenue growth, the issuer reported slowdowns across key card metrics.

• Synchrony’s purchase volume dropped 3% YoY.
• Average active accounts decreased 2% YoY.
• And new accounts fell 19% YoY, in part due to tightened lending standards.

Synchrony’s consumer financial health metrics were also a mixed bag.

• The 30-day delinquency rate was 4.70% in Q4, slightly down on the quarter (4.78%) and the year (4.74%).
• The net charge-off (NCO) rate was 6.45%, up from 6.06% in Q3 and 5.58% a year ago.

What’s happening: Net charge-offs typically lag delinquencies, so it’s unsurprising that the metric didn’t improve alongside delinquencies. But normalization is taking longer than Synchrony expected.

Synchrony forecast in Q4 2023 that NCOs would peak during the first half of 2024 before returning to pre-pandemic seasonal trends. That would have meant an NCO of 5.65%.

Why this matters: Synchrony’s earnings data offers insights into the state of private label and co-brand cards. And given private-label cards are often starter cards for consumers with thinner credit histories, it also offers insights into how that demographic is faring.

• Some of these consumers are struggling to pay off their balances due to private-label cards’ record-high interest rates.
• As of September 2024, the average retail credit card APR was 30.45%, per Bankrate.

Until rates come down, there likely won’t be a meaningful recovery for issuers like Synchrony.

Our take: Synchrony is starting off 2025 in recovery mode. Until more consumers can get a handle on their current debts, Synchrony likely won’t loosen lending standards, which is what it will take to reinvigorate card spend and active account growth.

But new card partnerships could give Synchrony a needed boost.

• Synchrony just renewed its long-standing partnership with Sam’s Club, which could lead to the issuer reigniting its card relationship with Walmart.
• And it’s reportedly in talks to take over the Apple Card from Goldman Sachs. This would bring in an influx of new volume for Synchrony—although the card program’s delinquency and default issues could hurt Synchrony’s metrics.

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