Synchrony Financial Sinks on Drop in Net Interest Income

Synchrony Financial sinks after the credit card services company reports mixed fourth-quarter results.
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Shares of Synchrony Financial (SYF) - Get Report were sinking 9.8% to $32.65 Friday after the credit card services company reported mixed fourth-quarter results.

The Stamford, Connecticut-based company reported earnings of $731 million, or $1.15 a share, compared with $783 million, or $1.09, a year earlier. Adjusted earnings for the latest quarter came to $1.10 a share, beating analysts' estimates of $1.07.

Provision for loan losses totaled $1.1 billion, missing calls for $1.25 billion. Revenue totaled $3.1 billion, short of Wall Street's estimate for $3.15 billion.

Net interest income fell 7.3% to $4.03 billion and was related to the Walmart consumer portfolio sale.

In November 2018, Walmart  (WMT) - Get Report filed a lawsuit against the bank that alleged it breached the terms of their long-running credit-card deal. The world's largest retailer was seeking damages of at least $800 million. Synchrony called the suit “baseless." In January 2019, Walmart agreed to drop the lawsuit.

Deposits were $65.1 billion, up 2% from the year-ago quarter. Provision for loan loss fell 24% year over year to $1.1 billion primarily driven by lower core reserve build and reduction in net charge-offs.

Purchase volume was flat at $40.2 billion, but up 7% on a core basis.

“2019 marked another year of significant transformation for Synchrony," CEO Margaret Keane said in a statement.

In other news, Synchrony and Verizon Communications (VZ) - Get Report announced on Thursday a partnership where they will launch the first credit card designed specifically for Verizon customers.

Discover Financial DFS, meanwhile, was also declining Friday after posting mixed fourth quarter, leading multiple analysts to lower the stock's rating.