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DATE

Tuesday, April 21, 2026 at 8:00 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Brian Doubles
  • Executive Vice President and Chief Financial Officer — Brian Wenzel
  • Senior Vice President of Investor Relations — Kathryn Miller

TAKEAWAYS

  • Purchase Volume -- $43 billion, a record for the first quarter, up 6% year over year, with all five platforms showing spend-per-account growth and co-branded/dual cards comprising 51% of total purchase volume (up 20%).
  • Segment Trends -- Diversified & Value purchase volume rose 9%, Digital climbed 8%, Lifestyle increased 7%, Health & Wellness up 3%, and Home & Auto remained flat as gains in Furniture and Electronics offset declines in home improvement spend and average active accounts.
  • Loan Receivables -- Ending loan receivables were flat at $100 billion overall; sequentially increased by approximately $477 million, due to higher purchase volume offset by elevated payment rates.
  • Payment Rate -- Payment rate reached 16.3%, up approximately 50 basis points year over year and 110 basis points over the pre-pandemic average, mainly reflecting shifts in portfolio mix, product mix, and higher average tax refunds.
  • Net Interest Income -- Net interest income increased 4% to $4.6 billion as higher interest and fees combined with an 11% decrease in interest expense; net interest margin rose 76 basis points to 15.5%.
  • Net Charge-Off Rate -- Net charge-off rate was 5.42%, a decrease of 96 basis points from 6.38%, as both 30-plus and 90-plus delinquency rates were generally in line with the prior year.
  • Provision for Credit Losses -- Decreased by $156 million to $1.3 billion, driven chiefly by a $242 million reduction in net charge-offs, partially offset by a $97 million prior-year reserve release.
  • Efficiency Ratio -- Efficiency ratio increased to 35.6%, up approximately 220 basis points, resulting from higher expenses and rising RSAs.
  • Capital Ratios -- CET1 ended at 12.7%, Tier 1 at 13.9%, and total capital at 16%, each down about 50 basis points; allowance for credit losses as a percent of loan receivables declined 45 basis points year over year to 10.42%.
  • Shareholder Returns -- Returned $1 billion in the quarter ($900 million in share repurchases, $104 million in dividends); Board authorized a new open-ended share repurchase program of up to $6.5 billion.
  • Partner and Product Developments -- Added or renewed over 15 partners, including Indian Motorcycle, Harbor Freight, Miracle Ear, and expanded CareCredit distribution through Planet DDS and partnerships with FIGO and Embrace Pet Insurance.
  • Guidance and Outlook -- Maintains earnings guidance of $9.10–$9.50 diluted EPS and expects ending loan receivables to grow mid-single-digits by year-end, with net charge-offs forecasted below 5.5% for the full year.

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RISKS

  • Other expense increased 6% to $1.3 billion, attributed to ongoing technology investments and higher operational losses, with management calling out operational losses as "idiosyncratic in the first quarter" but still impacting expense growth.
  • Efficiency ratio rose by approximately 220 basis points year over year, reflecting expense pressure from investments and the impact of partner program performance, which may weigh on future operating leverage.

SUMMARY

The call revealed that Synchrony Financial (SYF 0.15%) delivered record purchase volume and solid margin expansion amid rising payment rates and healthy credit performance. The core portfolio benefited from increased co-branded card adoption and new partnerships, while capital distributions accelerated through significant buybacks and a new, open-ended share repurchase authorization. Deposit mix management and the company’s response to evolving payment and spend trends highlight both proactive financial discipline and future growth drivers in receivables and net interest income.

  • Management expects sequential acceleration in receivables growth through the second half, supported by program additions like OnePay, Bob’s Discount Furniture, RH, and new Lowe’s commercial co-brand receivables.
  • Payment rate increases were linked to both shifts in product portfolio—specifically a higher share of super-prime customers and fewer promotional financing accounts—and seasonal impacts from tax refunds.
  • Direct deposit funding rose by $3.1 billion and broker deposits declined by $3.7 billion, signaling an ongoing focus on stable, lower-cost funding sources.
  • Leadership indicated that AI and agentic commerce are current investment priorities, with early efficiency gains materializing through both technology adoption and stabilized headcount since 2023.
  • Active account trends are expected to invert to growth by mid-year, following strong 15% new account originations in the quarter.
  • Management commented that regulatory changes under the Basel III proposal could increase CET1 by 125–150 basis points if adopted as currently written, providing potential incremental capital flexibility.

INDUSTRY GLOSSARY

  • RSAs: Revenue sharing arrangements—program payments made to partners based on portfolio performance including charge-off and income metrics.
  • PPPCs: Portfolio and Product Pricing Changes—alterations in pricing structure or product terms, typically impacting interest and fee income.
  • Agentic Commerce: Commerce processes driven by autonomous AI agents managing product discovery, selection, and purchase on behalf of consumers, impacting point-of-sale financing integration.
  • CareCredit: Synchrony Financial's healthcare-focused financing solution, offered in dental, audiology, and veterinary care settings with broad U.S. acceptance.
  • Open-to-Buy: Credit line available for cardholders to make new purchases, referenced in regulatory capital calculations and risk-weighting.

Full Conference Call Transcript

Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Please standby. Your program is about to begin. Good morning, and welcome to the Synchrony Financial First Quarter 2026 Earnings Conference Call. Please refer to the company's Investor Relations site for access to the earnings materials. Please be advised that today's conference call is being recorded. Currently, all callers have been placed in a listen-only mode. The call will open for your questions following the conclusion of management's prepared remarks. I will now turn the call over to Kathryn Miller, Senior Vice President of Investor Relations.

Kathryn Miller: Thank you, and good morning, everyone. Welcome to our quarterly earnings conference call. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules, and presentation are available on our website, synchronyfinancial.com. This information can be accessed by going to the Investor Relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty, and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website.

During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. On the call this morning are Brian Doubles, Synchrony Financial’s President and Chief Executive Officer, and Brian Wenzel, Executive Vice President and Chief Financial Officer. I will now turn the call over to Brian Doubles.

Brian Doubles: Thanks, Katherine, and good morning, everyone. Synchrony Financial started the year with strong momentum and delivered first quarter financial results that included record first quarter purchase volume of $43 billion, reflecting the enduring appeal of Synchrony Financial’s multiproduct suite. Customers engaged across our diversified portfolio, contributing to continued sequential improvement in average active account trends, higher spend per account across all five platforms, and 6% growth in total portfolio purchase volume compared to last year. At the platform level, Diversified & Value purchase volume grew 9%, primarily reflecting the impact of partner expansion. Digital platform purchase volume increased 8%, driven by strong customer response to enhanced product offerings and refreshed value propositions.

Purchase volume in Lifestyle increased 7%, primarily driven by other apparel and goods and luxury, partially offset by lower average active accounts. Health & Wellness purchase volume was 3% higher, primarily reflecting growth in Pet and Audiology. And purchase volume in Home & Auto was flat, generally reflecting partner expansion in Furniture and Electronics, offset by selective spend in home improvement and lower average active accounts. Synchrony Financial’s co-branded credit cards, including our dual cards, accounted for 51% of our total purchase volume in the first quarter, increasing 20% versus last year, driven by product upgrades, higher broad-based spend, and enhanced utility across these card programs.

The mix of discretionary spend within our out-of-partner portfolio increased during the first quarter, making this the third consecutive quarter of year-over-year improvement. Additionally, the rate of discretionary spend growth continued to accelerate, outpacing nondiscretionary spend growth—also for the third consecutive quarter—and even during the month of March when fuel prices began to rise. This discretionary spend strength came in particular from categories like retail, entertainment, and electronics. And while spending on fuel was up significantly during March in our nondiscretionary spend, total portfolio spend-per-account growth remained strong as consumers navigated the higher costs. Meanwhile, payment rate increased approximately 50 basis points compared to last year.

Collectively, we believe these spend and payment trends are a testament to the efficacy of our prior credit actions and consistent credit discipline, as well as resilient consumer health supported by some early benefit from increased tax refunds and lower tax withholdings. Synchrony Financial continued to execute across our key strategic priorities during the first quarter, adding or renewing more than 15 partners, including Indian Motorcycle, Harbor Freight, and Miracle Ear. We renewed our partnership with Indian Motorcycle, America's first motorcycle company founded in 1901, to offer flexible financing solutions through their nationwide dealer network.

We also extended our relationship with Harbor Freight, America's number one tool store with nearly 1,600 locations nationwide, to provide private label credit card financing with the option of 5% back or zero-interest equal payment installment loans. And our program with Miracle Ear enables patients to pay for hearing devices and related services over time, leveraging practice management software that optimizes the financing experience for both consumers and staff. Synchrony Financial also continued to broaden distribution of CareCredit financing during the first quarter through our expanded strategic partnerships with Planet DDS.

As the preferred patient financing solution across all Planet DDS practice management platforms, CareCredit will be integrated across more than 2,500 Cloud9 orthodontic practices and more than 15,000 Denticon dental practices to improve patient access to treatment, also supporting practice growth, operational efficiency, and better patient outcomes. And we are also delivering streamlined CareCredit experiences for pet families through our new partnership with both FIGO and Embrace Pet Insurance. Today, consumers can use CareCredit at approximately 85% of U.S. vet locations, and now approved pet insurance claims can be reimbursed directly as a credit to the consumer's CareCredit account after they pay for their pet care using their CareCredit card.

These partnerships extend CareCredit's pet insurance reimbursement ecosystem to more than 1.7 million insured pets and underscore the larger opportunity we have through our strategic partnership with Independence Pet Holdings. Together, we are making it easier for consumers to pay for and manage the cost of pet care. And lastly, we continued to enhance the utility of CareCredit by broadening its acceptance for eligible health and wellness purchases on walmart.com, complementing CareCredit's longstanding acceptance in-store across Walmart and Sam's Club locations nationwide.

In addition to currently eligible health and wellness purchases, CareCredit cardholders can now use their card to make purchases across a wider selection of in-store and online product categories, including medical supplies and equipment, fitness products, and sleep essentials. This expanded collaboration with Walmart will enable us to empower more consumers with financial flexibility to purchase health and wellness products and services whenever and however the need arises.

And as we look to the remainder of the year ahead, Synchrony Financial is positioned to drive our momentum further as we grow our existing partner programs and win new ones, diversify our programs, products, and markets to reach and serve more consumers and more businesses across the country, and power best-in-class experiences for all those we serve. And I am proud to say that we are doing all of this while also earning the privilege of being ranked as the number one best company to work for in the U.S. by Fortune Magazine and Great Place to Work in 2026.

Together, all of our incredible people at Synchrony Financial have built a high-trust culture that makes us faster, bolder, and better for the customers and partners who count on us every single day. With that, I will turn the call over to Brian to discuss our financial performance in greater detail.

Brian Wenzel: Thanks, Brian, and good morning, everyone. Synchrony Financial’s first quarter financial performance delivered record first quarter purchase volume, a positive inflection in loan receivables growth, strong credit performance, and higher return on average assets and tangible common equity compared to last year. These results reflected Synchrony Financial’s disciplined execution as we focus on delivering consistent risk-adjusted returns amid evolving market conditions. Turning to our performance in more detail, Synchrony Financial generated $43 billion of purchase volume, a first quarter record and a 6% increase compared to last year.

Ending loan receivables were flat at $100 billion, though we did achieve a positive inflection in ending loan receivables with an increase of approximately $477 million at the end of the first quarter. This reflected the impact of higher purchase volume, generally offset by the effects of elevated payment rates. The payment rate of 16.3% was approximately 50 basis points higher than last year and approximately 110 basis points above the pre-pandemic first quarter average, primarily reflecting shifts in portfolio and product mix as well as the impacts of new portfolio seasoning, our previous credit actions, and higher average tax refunds.

Net interest income increased 4% to $4.6 billion, primarily driven by the combination of higher interest and fees and lower interest expense. Interest and fees increased 2%, primarily driven by the impact of our PPPCs, partially offset by lower benchmark rates. Interest expense decreased 11%, primarily due to lower benchmark rates.

Our first quarter net interest margin increased 76 basis points versus last year to 15.5%, reflecting three key drivers: one, a 47 basis point increase in our loan receivables yield was partially driven by the impact of our PPPCs and contributed approximately 39 basis points to our net interest margin; two, a 44 basis point decline in our total interest-bearing liabilities cost, which reflected the impact of lower benchmark rates, contributed approximately 35 basis points to our net interest margin; and three, a 76 basis point increase in the mix of loan receivables as a percent of interest-earning assets versus last year, which contributed approximately 14 basis points to our net interest margin.

These improvements were partially offset by a 69 basis point reduction in our liquidity portfolio yield, which reduced our net interest margin by 12 basis points. The decline was generally driven by lower benchmark rates. Turning to the remainder of our P&L, RSAs of $1.1 billion, or 4.31% of average loan receivables in the first quarter, increased $175 million versus the prior year, primarily reflecting program performance, which included lower net charge-offs and the impact of our PPPCs. Provision for credit losses decreased $156 million to $1.3 billion, primarily driven by a $242 million decrease in net charge-offs, partially offset by a $97 million reserve release in the prior year.

Other expense increased 6% to $1.3 billion, primarily driven by the costs related to technology investments and higher operational losses. The first quarter efficiency ratio was 35.6%, approximately 220 basis points higher than last year, resulting from higher overall expenses and the impact of higher RSAs as program performance improved. To summarize Synchrony Financial’s first quarter results, we generated net earnings of [inaudible] or $2.27 per diluted share, a return on average assets of 2.7%, a return on tangible common equity of 24.5%, and an 8% increase in tangible book value per share.

Shifting focus to our key credit trends, our portfolio's mix of below mid payers remained well below pre-pandemic levels across all credit cohorts during the first quarter, with the non-prime population outperforming relative to other credit cohorts since 2023. We believe this continued trend in non-prime is reflective of our previous credit actions. We also continue to see normalization in the prime and super-prime cohorts, with some gradual shifting in the mix from above-minimum to minimum payments. At quarter end, both our 30-plus and 90-plus delinquency rates were generally in line with the prior year, and our net charge-off rate was 5.42% in the first quarter, a decrease of 96 basis points from 6.38% in the prior year.

Collectively, these payment and credit trends underscore the efficacy of our previous credit actions and ongoing credit management strategies, as well as the resilience of our customers and portfolio amid an uncertain environment. Finally, our allowance for credit losses as a percent of loan receivables was 10.42%, which increased approximately 36 basis points from 10.06% in the fourth quarter, in line with our seasonal trends, and decreased 45 basis points from 10.87% in the first quarter of 2025. Turning to funding, capital, and liquidity, Synchrony Financial grew our direct deposits by $3.1 billion and reduced broker deposits by $3.7 billion compared to last year.

During the first quarter, we issued $750 million of senior unsecured debt at our tightest five-year credit spread to date and a final coupon of 4.95%, and a $500 million three-year secured public bond from the Synchrony Card Issuance Trust with a final coupon of 4.22%. As of March 31, deposits represented 83% of our total funding, with secured debt representing 9% and unsecured debt representing 8%. Total liquid assets decreased 4% to $22.8 billion and represented 18.8% of total assets, 72 basis points lower than last year.

Now focusing on our capital ratios, Synchrony Financial ended the quarter with a CET1 ratio of 12.7%, a Tier 1 capital ratio of 13.9%, and a total capital ratio of 16%, each of which declined by approximately 50 basis points versus the prior year. Our Tier 1 capital plus reserve ratio decreased to 24.1% compared to 25.1% last year. Synchrony Financial returned $1 billion to shareholders during the first quarter, including $900 million in share repurchases and $104 million in common stock dividends.

In addition, our Board of Directors approved a new share repurchase program of up to $6.5 billion of the company's common stock, which commenced in the second quarter of 2026 and, unchanged from our prior share repurchase programs, does not have an expiration date. The new share repurchase program replaces the company's prior program, which was scheduled to expire on 06/30/2026 and had approximately $300 million remaining. The pace and amount of share repurchases are flexible and will be executed from time to time, subject to various factors, including capital levels, financial performance, market conditions, and legal and regulatory requirements, in accordance with our capital plans. Finally, I would like to discuss our outlook.

We continue to expect accelerated growth in purchase volume and average active accounts, without any further broad-based credit refinements, as we move through the year. Outcomes should more than offset the impact of elevated payment rates to drive mid-single-digit growth in ending loan receivables by year end. The rate of receivables growth should follow seasonality and accelerate as we move into the back half of the year. This will be driven by growth in our core portfolio as well as a combination of both recently launched and similar OnePay, Bob’s Discount Furniture, RH, and approximately $725 million of Lowe's commercial co-brand loan receivables, which was added in early April.

Net interest income is expected to grow in 2026 as a result of higher loan receivables, the impact of PPPCs continuing to build, and reductions in our funding liabilities cost. These trends will partially offset the lower late fee incidence. We expect delinquency and losses to follow normal seasonality through the year, with net charge-offs peaking in the second quarter. We expect our net charge-offs to be less than 5.5% for the full year, and we remain focused on our disciplined approach to underwriting our business.

As program performance strengthens due to higher net interest income and lower losses compared to last year, we continue to expect RSAs to increase but remain within our long-term range of 4% to 4.5% of average receivables. Lastly, we remain focused on operating expense discipline, while also investing in the long-term potential of our business. As a result, we continue to expect other expense growth to trend in line with loan receivables. Putting all these elements together, Synchrony Financial remains on track to deliver between $9.10 and $9.50 in diluted earnings per share, while also executing across key strategic priorities to deliver consistent risk-adjusted growth and strong capital generation.

We are well positioned to return excess capital in an aggressive but prudent way. With that, I will turn the call back over to Brian.

Brian Doubles: Thanks, Brian. Before I turn the call over to Q&A, I would like to leave you with three key takeaways from today's discussion. First, the consumer remains resilient and the foundation of our portfolio is strong. Our consistent underwriting discipline, credit management strategies, and portfolio performance have positioned us well for both the near and long term. Second, Synchrony Financial’s investments are driving across our business and for the millions of consumers and hundreds of thousands of small and midsized businesses we serve across the country. And third, because of the results we deliver, Synchrony Financial is generating growth at strong risk-adjusted returns and robust capital, positioning us well to drive considerable long-term value for our stakeholders.

With that, I will turn the call back to Katherine to open the Q&A.

Kathryn Miller: That concludes our prepared remarks. We will now open the call for questions. So that we can accommodate as many of you as possible, I would like to ask the participants to please limit yourself to one primary and one follow-up question. If you have additional questions, the Investor Relations team will be available after the call. Operator, please start the Q&A session.

Operator: Thank you. We will take our first question from Terry Ma with Barclays. Please go ahead.

Terry Ma: Hi, thank you. Good morning. I just wanted to start off with the loan growth guide of mid-single digits. Can you maybe just give a little bit more color on what you are seeing in account acquisitions and borrower behavior to give you confidence in that second-half acceleration?

Brian Wenzel: Yes. Thanks for the question, Terry. As we look at the first quarter and how we exited, you saw a clear acceleration of our purchase volume to a record high for the first quarter, 6% year over year. So we have seen that acceleration. Positively, payment rates are up from a credit perspective, up 50 basis points. Some of that in the first quarter was a result of higher income tax refunds, which impacted the quarter by 14 basis points. But we feel good about the purchase line coming through, and we feel good about some of the discretionary purchases that we see as we go through.

As you step out into the quarters, again, what we are going to start to see is some of the acquisition—whether it is Walmart, OnePay, Lowe's commercial—begin to build into the portfolio as we move into the back half of the year. We saw strong new account originations of 15% in the first quarter of this year. So we see positive momentum as we exited out of the first quarter. For the first couple of weeks in April, we have seen that to be consistent with how we exited, to maybe slightly stronger from a purchase volume standpoint. So we feel good that the consumer is engaging with our products and wanting our products as we move forward.

Terry Ma: Got it. That is helpful. And then on the payment rate of 16.3% this quarter and it being over 100 basis points above your pre-pandemic average, has your product mix shift driven a permanent resetting of that payment rate higher? If that is the case, what does that mean for your long-term loss expectations and loan growth? Thank you.

Brian Wenzel: Yes. Thanks again, Terry. So I do not think it is permanently resetting. I think what you look at are two fundamental elements that have happened over the last couple of years, which have been driven by our credit actions. Number one, we have higher credit quality into the portfolio, particularly into the higher super-prime versus what we normally have. So non-prime has gone down, which has a higher revolve rate, number one. Number two, you see a mix in the portfolio as people pulled back in discretionary purchases the last couple of years, particularly in the Home & Auto space and Lifestyle.

When you have those larger promotional purchases, those payment rates are generally sub-10%, probably around 8% or 9%. So when you remix the portfolio and the percent of promotional financings are down, you artificially bring the payment rate up. That, plus the acceleration of new accounts here in the last year or so—they tend to pay off at a slightly higher level. So it is more a phenomenon of a shift inside the portfolio as it relates to credit actions and to the return to growth.

Operator: Thank you. We will take our next question from Ryan Nash with Goldman Sachs.

Ryan Nash: Good morning, everyone.

Brian Wenzel: Hey, Ryan. Good morning, Ryan.

Ryan Nash: Brian, maybe to start on the EPS guide of $9.10 to $9.50. Can you maybe just help us with how some of the moving pieces have shifted? It is clear credit is better with the guide below 5.50%. But what else would you say has shifted, given obviously we have seen rates moving, and where do you think we are tracking within the range after a quarter? Thank you, and I have a follow-up.

Brian Wenzel: Yes. Thanks, Ryan. So again, I think you started with net charge-offs. I think as we guided at the start of the year that our loss rate would be in line with our long-term target range—now it is slightly below. So there is a little bit of favorability. You do have some payment rate pressure that we saw in the first quarter. But if you take a step back and say, okay, how do you think about the range for a second and how do you move towards the higher end of the range? There are clearly a couple of things that can play into that equation.

Number one, will you see a slowing in the payment rate, which will increase revolve rate, particularly on existing accounts? That will drive more revenue towards your number one. Two, on the delinquency formation and performance of delinquencies—will that continue to improve or stay steady? If it improves, most certainly, you have a little bit of headwind from late fees, but most certainly you will get potentially reserve release and net charge-off benefits. Both of those two items have an RSA offset to them. So again, we are not guiding inside the range, but clearly there are cases where you can get to the higher end of the range.

Even if the payment rate stays higher and charge-offs stay where they are from our first quarter exit, you then see yourself towards the middle or lower end of the range. So again, I think we see pathways both ways. The question you are going to have to answer is what happens in the macro environment. The consumer has been incredibly resilient, both from a purchasing behavior pattern and a payment behavior pattern. So, again, we will have to watch the uncertainty as it relates to the geopolitical risks that exist today.

Ryan Nash: Got you. And then in terms of the buyback, how do we think about pacing of the $6.5 billion, which is open-ended? Do you think it will be done differently than under the prior process? And maybe just touch upon what are your expectations for capital relief under the Basel proposal and how do you think about standardized versus ERB, which I am assuming is more onerous on your business?

Brian Wenzel: Yes. To parse that question, when you think about the $6.5 billion—again, being open-ended—we do not give quarterly cadence. What I would sit back and say is if you look back at the recent history and look at that cadence, that is probably what we will end up doing. That is all dependent upon how the business performs, the macroeconomic environment, legal and regulatory considerations, our capital plans, etcetera—there are a bunch of caveats there. But again, looking back at history probably gives you a cadence on how we step out under this plan, which again was designed to align us, now that we have a stress capital buffer of 250 basis points, with our Category IV peers.

With regard to your question on the Basel III proposal, under the standardized approach, it is favorable to Synchrony Financial. We appreciate the Fed's thoughtfulness of reproposing the rules here and their ability and willingness to listen to industry participants with regard to that rule. When you look at the standardized approach, we clearly get a benefit on the retail exposures around the risk weighting of assets, and only a small negative as it goes to the AOCI inclusion into that. If the rule was adopted exactly as it is with no changes, you would see our RWAs go down and our capital get relief of 125 to 150 basis points.

If you step out and look at the enhanced risk-based approach, that is a little bit more mixed. You do get more risk weighting with trading assets benefit. You are now going to introduce a capital charge for the open-to-buy in the portfolio, which treats all those open-to-buys the same way. You are going to introduce operational risk into the equation, and then you have an impact on the DTA, which, when you combine all those effects, is a net negative for us if the rule is adopted exactly as is.

But I think we continue to study the rule, and I think we will provide comments, as will industry participants, in ways in which you can eliminate some of the double counts—particularly on the operational risk—and maybe be a little bit more thoughtful on the open-to-buy and how that is converted to a risk-weighted asset.

Operator: Thank you. We will go next to Sanjay Sakhrani with KBW. Please go ahead.

Sanjay Sakhrani: Maybe, Brian Wenzel, if we could just follow up on the earnings guide. When we look at credit doing better and loan growth still remaining the same, and EPS remaining stable, is it that your expectation on yield has changed in some way lower? Or maybe you could just flip that because it would seem like you are moving towards the higher end of the range with the credit coming in better.

Brian Wenzel: Yes. Thanks for the question, Sanjay. Again, I think if you go back to what I said back in January, and I have said coming through here, our guidance was around in line with the 5.5% to 6%. Really, we were trying to give a position of stability as it relates to the charge-off guidance. I think as you look at it now being less than 5.5%, I do not think there is a material difference in the way in which we thought about credit in January and the way we think about credit today. So I think you may be overweighting that change relative to our guide.

Sanjay Sakhrani: Got it. Thank you. And then maybe just more of an elaboration on the health of the consumer. I am just trying to think about the geopolitical events that are happening, the impact on fuel prices. You guys talked a little bit about—Brian Doubles, you talked about—you are seeing early benefits of tax refunds. I am curious if you could list how those are impacting the consumer. Where are we with the tax refunds? Is there more to come in the second quarter? Maybe you can help us think about the assumptions you are making and where we are. Thanks.

Brian Doubles: Yes. I will start on that one, Sanjay. Look, I think the consumer is still in pretty good shape. It has been very consistent over the past few quarters—seeing signs of strength when you look at spending patterns. Credit continues to outperform our expectations. I think the macro environment is still pretty constructive: strong labor market; you do have the higher tax refunds—we can get into that in a little bit—and you have some watch items. We are watching inflation very closely, higher gas prices, other factors that I think are creating some uncertainty out there with consumers. But they really seem to be looking past it at this point. We do not see it impacting spend.

You saw spend for us accelerate really nicely this quarter. And you look at the platforms—D&V was up 9%, Digital was up 8%, Lifestyle up 7%. That is indicative of, one, our product suite, but also a pretty healthy, resilient consumer. So there is a lot of what I would call noise out there right now and things that we are watching and tracking really carefully. But at this point, whether you are looking at spend patterns or you are looking at credit performance in early stage or late stage, everything points to a pretty resilient consumer. Brian, do you want to add on tax refunds?

Brian Wenzel: Yes. Let me add some color both on tax and then on gas, Sanjay. First, on tax refunds—tax refunds are slightly lower than our expectations. The low end of the range for us we thought would be around $500; they are coming in around $350. And while it has not had a material effect on our book, it most certainly impacted payment rate—we lag payment rate to the refunds—and there is about a 14 basis point impact in the quarter from higher payment rate related to tax refunds.

You hit on a good point where the next couple of weeks you tend to see a little bit higher refunds as people file closer to the April 15 deadline, so that refund amount could creep up a little bit. But we did not see any real change in purchasing behavior pattern week on week. When I look at the depository side of the business, we saw lower inflows and lower outflows, but that trend week on week with returns has mirrored the last three years. So I think when we look at refunds, there has not been a material impact on the business.

When you look at gas prices, if you look at the average transaction value for gas in March, it is up 17% sequentially February to March and 10% year over year, but we have not seen any change in the frequency. It is actually up slightly, to be honest with you, year over year on frequency of gas purchases, and we have not seen any pullback as it relates to gas. So at this point, I think the consumer is probably annoyed, but they have not changed their behavioral patterns today as it relates to that spending.

Operator: Thank you. We will go next to Darrin Peller with Wolfe Research. Please go ahead.

Darrin Peller: Could we just start on expenses? Given that it grew 8% on an adjusted basis in the first quarter and your guidance appears to imply expense growth decelerates throughout the year even as receivables growth improves, how much of that is due to upfront investment in new program adds rolling off, or any other color on expense would be great?

Brian Wenzel: Yes. Thanks, Darren. Good morning. On expense, there are two items I would point you to inside the quarter. Number one is slightly higher information technology expense. There are two components in there. One is the association fees that we pay to Mastercard and Visa. On a volume basis, with volume being up, particularly in the co-brand space, we see slightly higher expense. That should continue on for the year. And then you have some information technology investments that we are making, whether it is cloud and the like. Again, that will probably continue on.

The other item that you see up is in the “other,” which relates to some operational losses, which I think is a little bit more idiosyncratic in the first quarter and should reduce as we move forward. So again, when you think about the run rate of expense dollars, they are probably about the same, but you get a step-up as assets come through and get some leverage in the back half of the year.

Darrin Peller: Okay. That is helpful. And for my follow-up, I want to touch on AI and agentic for a moment. Maybe give us color on incremental investments you have been making around both the AI side and efficiencies in the business. I know your FTEs have been effectively flat since 2023. Any early signs of where you might be able to create more efficiencies? And then on the agentic side, incremental investments being made over the past couple of quarters to ensure that your placement and choice at the point of sale stays as high as it should be for Synchrony Financial and its merchant partners?

Brian Doubles: Yes, it is a great question. I will start with the second piece because I actually think this is the more important of the two, which is around agentic commerce. It is a big area of focus for us. I think we are moving very quickly here. We have, hopefully, first-mover advantage. And like you said, this is going to fundamentally change how consumers discover new products, how they research, read reviews, and ultimately purchase. It is still early. We are working with all the top companies to ensure that as that purchasing path changes, our financing offers and our products are embedded in that experience.

There is still a lot that is unknown in terms of how this could play out. One scenario, which is probably the most prevalent right now, is that when a consumer researches a product inside of the AI platform, to complete the purchase, it will still go back to the merchant site. We are already embedded there. So that is the easier of the two use cases. I think the second one, which is bound to happen at some point, is that the purchase actually gets completed inside of the AI platform. And that is where, as you indicated, it is really important that we are in there—our financing options are present in that checkout process.

The good news is our partners have a huge incentive to make sure that is the case. So as they are talking to all of the AI companies about how this is going to work, they are pulling us in and saying, okay, it is imperative that Synchrony Financial’s cards—our cards with them—are present and an option for the consumer to purchase because they want to make sure those transactions run on our rails, that the value proposition is protected, that the consumer benefits, and it feels very similar to if they were purchasing on the merchant site.

On the GenAI—or what I would call more the productivity and efficiency piece—we have been on this for well over a year at this point. Big opportunity for us. You referenced holding headcount flat. I think the bigger benefit, frankly, in the near term is just speed to market. We are using this. Our coders are using it. Ninety percent of the professional workforce is using it across all functions, across all platforms. And they are getting real economies of scale.

The early returns are this is going to help us be a lot faster and a lot more efficient, but also free up and redeploy our resources to things that are more challenging, more strategic, and frankly more fun to work on. So I am very optimistic about how we are operating here. I think we are off and running. I think there are big benefits in the future.

Operator: Thank you. We will take our next question from Rick Shane with JPMorgan. Please go ahead.

Rick Shane: Hey, guys. Thanks for taking my questions. You mentioned strength in luxury and discretionary, and also mentioned a 17% increase at the pump on a ticket basis. To follow on Sanjay’s question, can you help us understand spending and credit performance right now based on both income level and score—realizing that they are different? Are you seeing divergence in the portfolio based upon borrower category?

Brian Wenzel: Yes. Thanks for the question, Rick. When you go back, one of the key things we talked about on this call has been payment rate. When you look at payment rate by credit cohort, you see strength coming at 700-plus—that is up the largest as you look at that piece of it. The next group is then the non-prime—that is up—and then the middle at 650 to 720 and 720 to 780 is performing about equally. So again, you see the top end continuing to pull up, which goes back to the mix shift I indicated earlier on the call.

When you look at it by behavioral pattern—between minimum pay and statement pay—and then by cohort and whether people are paying min pay or full pay, again, the bottom end is holding firm with regard to that min pay. Where you see more min pay happening is in the prime segment, between 650 and 780. So again, I think we see the middle moving a little bit here, but the high end is continuing to pull through. Generationally, generations in that high-end cohort are continuing to pull the spend but with slightly higher payment rates, particularly at the high end of the portfolio.

Operator: Thank you. We will go next to Mihir Bhatia with UBS. Please go ahead.

Mihir Bhatia: Hi, thanks. I will start with average accounts. They have been declining for six quarters here. I think some of that is a deliberate byproduct of your previous credit restrictions. Two-part question: Are you seeing any shifts in consumer engagement with programs? And relatedly, we have seen a bit of an increase in loyalty costs. Is that you readjusting programs to drive a bit more volume, or is it Walmart and some of the other co-brand programs picking up speed and the loyalty costs following?

Brian Wenzel: Yes. Thanks, Mihir, for the question. On active accounts, the first part of your question, that is generally just lagging the loan receivables. You should see that invert. We have accelerated new accounts and they begin to engage into the portfolio. So again, it trails a little bit, but you will see that inversion happen probably in the middle part of this year. On the loyalty question, a couple of things. One, we have enhanced certain value propositions last year on some of the cards—drives a slightly higher loyalty cost.

And then, to a large degree, when you launch new programs, you are going to see higher loyalty costs as some of the most engaged people take up that product, and they tend to spend in-store, which has a higher value proposition for our partners and merchants than it does in the world. That is just a byproduct of how the portfolio seasons when you add those new accounts. Having 15% new account growth will drive a little bit more of that in-store value proposition versus world as you launch. But again, when you look at co-branded volume being up 20%, you are going to drive more loyalty costs, which is really a good thing.

Transactions frequency is up, so our customers are engaging with the product and engaging in a bigger way year over year.

Mihir Bhatia: Got it. Thank you. And to follow up, on buybacks, what factors impact the level of buyback? Is CET1 a binding constraint, or are there other considerations we should keep in mind like rating agency requirements?

Brian Wenzel: Yes. CET1 is not the binding constraint for us. Obviously, the only thing left in the stack that we have to fully develop is Tier 1—so a little bit more preferred to do. That is not a binding constraint today. We still have plenty of room relative to our targets. There are multiple factors—yes, you hit on rating agencies and our regulators. But we start with how the business is performing, what the visibility to our business performance is, what we see as RWA growth as we move through. Then we look into factors around the regulatory environment and our capital plan.

As we step through those things, that is when we set the cadence along with our capital plan and the Board. We are going to be aggressive but prudent. I think you would appreciate that we cannot drop 100 basis points right away or go right down to the target. Regulators and most certainly rating agencies would not be comfortable with that. But we have shown measured discipline. You see that on the chart in the earnings deck on Page 3, where we have been accelerating capital return to shareholders. And when you go to the capital ratio page on Page 9, you see the earnings generation power of the business generating year over year 350 basis points of CET1.

We are driving towards that target, and we will use an appropriate cadence to get there in an aggressive but prudent way.

Operator: Thank you. We will go next to Erika Najarian from UBS. Please go ahead.

Erika Najarian: Hi, good morning. My first question is on Basel III Endgame. Based on the RSA math under Basel III that you gave us, Brian, that would essentially take your CET1 from 12.7% closer to 14%, if I am hearing you right, on the 120 to 150 basis points. As you think about having a higher level of CET1 relative to that 11% minimum, is that going to be biased towards buybacks or more aggressive portfolio acquisition? And on pacing—over the past three quarters, your buyback average has been about $900 million per quarter, which would suggest you would go through this current authorization in under two years. What drove that $900 million pacing?

And as receivables growth improves, is that an immediate offset to that buyback pacing?

Brian Wenzel: Thanks, Erika. With regard to what happens ultimately with Basel III, to be honest, we do not know what the final rule will look like. To the extent that rule gets implemented the way it is today, we would most certainly have a discussion with the Board with regard to our capital levels and what we do with that incremental capital. We have shown over time we can either invest that capital in acquisitions such as Ally Lending and Allegro and other things, or we can return it back to shareholders. But that is a decision for the future—we have not engaged the Board on that today.

We are currently studying the evaluation of the rule, seeing the positives and negatives, and where it may need to be adjusted where we may comment, either with industry or by ourselves. On the cadence and pacing, again, I look at a slightly longer horizon, where we see opportunities and where we saw the business perform—to the earnings power of the business. If the market shifts or we allocate more to RWAs, we will adjust that pattern. We will be aggressive but prudent. If you look back over the past history, you will get a better read versus a quarter or two.

Erika Najarian: And just my second follow-up. Is there reserve release in the guide, or is there reserve release only at the mid to high point of the EPS guide?

Brian Wenzel: Yes, so let us make sure we are clear, Erika. I was trying to lay out ways in which you can get to the high end. We have not given any view on whether we will be releasing reserves or not. If I take a step back, credit has been a strength for us. I think we have been a leader in the industry. Our performance has been terrific. Now the question becomes the macro. We have qualitative overlays that sit there and prepare us if the macro environment gets worse.

I have consistently said that if the environment continues to play out the way we think, there is a little bit more of a downward bias, but I am not necessarily sure I would plan on that today. We continue to evaluate the environment and step out quarter by quarter, but again, we have not provided guidance. I was only trying to give some of the previous analysts a way to think about the range and where you can end up inside the range.

Operator: Thank you. We will take our next question from Mark DeVries with Deutsche Bank. Please go ahead.

Mark DeVries: Yes, thanks. Could you comment on how the pipeline for new program acquisitions or signings looks relative to recent history, and how meaningful those opportunities could be for growth over the next year? And, if possible, how big an opportunity you think the new RH program could be?

Brian Doubles: Yes. We continue to have a very active pipeline—a combination of new startup de novo programs, which we are really excited about, and some existing programs. I would say the existing programs that are coming to market in the next year or two are in the mid-sized range—nothing really that significant in terms of portfolios we would acquire. But we have a great track record of buying portfolios, winning programs, and then driving a lot of penetration and seeing really good growth there.

Across all five of our platforms, it is a very robust pipeline—traditional programs, but also a nice pipeline of opportunities in what I would consider nontraditional opportunities, whether it is ISVs inside of Health & Wellness or Home & Auto in the more fragmented space. The good news, too, is we are seeing pretty good price discipline in the market. That continues to be the case and has been consistent for the last two or three years. There are always some pockets of irrational behavior, but generally, I think the industry is pricing in the right way for this environment, and we are winning the programs that we want to win. We are very excited about RH.

It is a great franchise, and we think we will be able to drive a lot more penetration and really grow that program.

Operator: Thank you. We will go next to Moshe Orenbuch from TD Cowen. Please go ahead.

Moshe Orenbuch: Maybe to follow up—four out of your five verticals all had growth, some of them pretty strong growth in purchase volumes, and Home & Auto was flat, although with down 6% accounts, I guess had okay growth per account. Could you drill into that a little bit—what went on there from an account perspective? Are there things that you are doing to restart account growth in some of those programs? Obviously, you have some new programs, but that existing base is about 30% of your receivables—if you could talk about the plans there a little.

Brian Wenzel: Yes. Thanks, Moshe, for the question. When you think about the Home & Auto platform, this is a large portion of our promotional financing business. Those average active accounts—when consumers are engaging in those discretionary purchases—have a tendency to stick. Again, as we have said, they have been a little bit more challenged, particularly in the home specialty space, with regard to making those bigger ticket purchases. So that has impacted more of the average account growth.

You have seen a positive trajectory in Home receivables, but you have a fairly broad mix inside that sales platform—everywhere from do-it-yourself at Lowe's to home furnishings, to furniture—and then Auto, which has a very different dynamic relative to the average transaction and frequency of purchase. So it is more about the mix inside the Home & Auto platform and the named-delivered strategy that we have. We are moving into an important part of the year for that vertical as you begin to see more things around the home—whether they are home projects and specialty, and most certainly in do-it-yourself—that tend to see a little bit more volume acceleration.

That, with the launch of a couple of new programs—BOB’S and RH—hopefully will create a tailwind for that platform.

Moshe Orenbuch: Thanks. And as a follow-up, you had mentioned not just the impact of tax refunds, but the benefits going forward of lower withholdings. Could you talk about that and whether that has been a driver in your credit and spend outlook?

Brian Wenzel: Yes. That is a great question, Moshe, and it is probably harder to discern. You can look at the flow of dollars into the economy at a stimulus level relative to the refunds themselves because they are lumpy. As you begin to see this flow come through throughout the year, it is harder to pull that piece apart. What I would say is if you looked at our purchase volume going through the quarter, it has been relatively consistent—absent the two storms we saw in January and early February. It has been pretty consistent with regard to growth.

Now, that is a combination—part of that is withholding, part of it is income tax refunds—but really it is the consumer and some of the discretionary purchases and rotation that Brian talked about in the prepared remarks pulling through. If I look at the first three weeks of April, we continue to see that strength come through. I am not sure I can isolate—or anyone can really isolate—the withholding piece. It must have some effect inside the overall consumer spending behavioral patterns. One thing I would say—even inside of April—the last three weekends have been the three strongest weekends of the year, and most certainly ahead of last year's pace.

So we are encouraged about the consumer, their resilience, and their willingness to engage with our products.

Operator: Thank you. At this time, we have time for one final question. We will take our final question from Saul Martinez with HSBC. Please go ahead.

Saul Martinez: Great. Thank you for squeezing me in here. I wanted to go back to expenses. I know for 2026 you are expecting expenses to track loan growth. But beyond 2026, can you comment on your ability to deliver operating leverage as you exit 2026 and into 2027 as top-line growth accelerates? How do you weigh investment needs—you talked about AI and agentic earlier—versus the ability and willingness to let revenue flow down to the bottom line?

Brian Wenzel: Yes. Thanks for the question. Our intended way in which we want to run the company is we do not want to be adding headcount right now. We want to drive productivity through the tools that Brian talked about. When you think about simpler things like engineering, but also how we drive AI into all aspects of our business to drive a flat headcount environment and get leverage—and drive the operating leverage when you look at NII growth relative to OpEx growth. Where we want to increase our spending inside OpEx is around some of the technology that creates a differentiator for us and gives us first-mover advantage, particularly when Brian talks about things like AI.

We want to be disciplined on the core costs—bring our core operating cost-to-serve down for the consumer—but then continue that investment for the medium to long term in technology, whether it is cloud or AI or other things of that nature. So again, we are trying to drive that operating leverage of having NII grow faster than operating expenses.

Saul Martinez: Okay, great. That is helpful. Then maybe just a follow-up on the consumer. It seems like there is a bit of a divergence between really strong credit trends and high payment rates persisting, but you also mentioned minimum payments having gone up in the super-prime and maybe the higher end of the prime market. Is that just a normalization from historically low levels?

Brian Wenzel: Yes. I do not believe it is necessarily a divergence. I think it is the way customers engage with how they pay. A lot of times you see people engage in auto payments and they set it for minimum payments versus setting it for a full statement payment and then make the option to make incremental payments. So it is not really a divergence. If you take it up a level, what we are trying to articulate is that we see strength in the consumer—from a spending behavior pattern and from a payment behavior pattern—and it is flowing through, which has a little bit of a drag on NII, but clear strength in maintaining credit.

Now we sit in April and we have a good portion of the year covered. That is a good base for us to continue to deliver through what is an evolving macroeconomic environment. So I think it is relatively consistent, and we are pleased with the performance of the consumer inside of our products.

Operator: This concludes Synchrony Financial’s earnings conference call. You may disconnect your line at this time. Have a wonderful day. Thank you.