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Synchrony Financial (NYSE:SYF) turned in second-quarter earnings that surpassed the average analyst estimate but fell sequentially and Y/Y as interest earned from borrowers increased, as too did its provision for credit losses.

Going forward, the credit card company expects delinquencies to reach pre-pandemic levels in the back half of the year, as "consumer behavior reverts to pre-pandemic norms" in the wake of rising borrowing costs, President and CEO Brian Doubles said in a statement.

It net charge-off rate, meantime, is now expected to come in at 4.75%-4.90%, vs. 4.75%-5.00% in the prior view. Still, net charge-off dollars are anticipated to keep rising through the year.

The company sees loan receivables growth for 2023 of over 10% or more, vs. 8%-10% in the prior guidance.

Also for the year, net interest margin is targeted at 15.00%-15.15% compared with the prior outlook of 15.00%-15.25%. All in, H2 NIM is expected to be in line with H1.

Q2 EPS of $1.32, surpassing the average analyst estimate of $1.25, slipped from $1.35 in the prior quarter and from $1.60 in the year-earlier quarter.

Net interest income rose to $4.12B from $4.05B in the quarter ended March 31, 2023, and from $3.80B in the quarter ended June 30, 2022.

Net interest margin, meantime, fell to 14.94% from 15.22% in Q1 and from 15.60% in Q2 2022.

Provision for credit losses came in at $1.38B, up from $1.29B in Q1 and $724M in Q2 2022.

Net charge-off rate was 4.75% in Q2, compared with 4.49% in Q1 and 2.73% a year ago.

Lending growth increased as loan receivables ended the quarter at $92.5B vs. $90.8B in Q1 and $83.4B in Q2 2022. Total deposits of $75.8B rose from $74.4B in Q1 and from $64.4B in Q2 2022.

Book value per share of $30.25 vs. $29.08 in Q1 and $25.95 in Q2 of last year.

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