(Reuters) -Consumer lender Synchrony Financial on Wednesday reported a rise in third-quarter profit, helped by higher interest income as customers spent more on online purchases.
The company’s net interest income — the difference between what a lender earns on loans and pays on deposits — rose 2.4% to $4.72 billion.
Despite higher borrowing costs and broad tariffs, consumers are continuing to make payments and avoiding a sharp deterioration in credit health.
Credit card interest rates in the U.S. are significantly higher than those on mortgages or auto loans, helping card issuers sustain strong interest income across the industry.
Synchrony’s provision for credit losses fell 28.2%, or $451 million, in the third quarter, driven by lower net charge-offs and a reserve release of $152 million compared with a build of $44 million in the prior year.
Provisions are funds set aside by lenders to cover potential loan losses, serving as a key buffer against defaults and an indicator of how they view future credit risk.
The lender’s purchase volume – the total dollar amount of transactions after deducting discounts and returns – rose 2% in the quarter, as customers spent more freely.
Its net interest margin, which measures the profitability of lending operations, increased 58 basis points to 15.6% in the quarter.
Synchrony’s net income rose to $1.08 billion, or $2.86 per share, in the three months ended September 30, compared with $789 million, or $1.94 per share, a year earlier.
Shares of the Stamford, Connecticut-based company rose 1.57% to $73.98 in premarket trading. Stock is up about 12.1% this year.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Tasim Zahid)
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