April 21 (Reuters) – Synchrony Financial reported a rise in first-quarter profit on Tuesday, as the lender was helped by resilient consumer spending at the start of the year.
Consumer spending remained strong in the first couple of months of the year, underpinned by higher-income households. A Commerce Department report had highlighted strong footing for the economy before the U.S.-Israeli war on Iran.
But the war pushed up gasoline prices in March and stoked fresh inflation worries.
A strong spending environment helps companies such as Synchrony Financial — which earns revenue off the co-branded credit cards and other products it issues and services.
Net interest income — the difference between what a lender earns on loans and pays on deposits — rose 4% to $4.6 billion in the first quarter for the consumer lender.
Credit card interest rates in the U.S. are significantly higher than those on mortgages or auto loans, helping card issuers earn strong interest income.
U.S. President Donald Trump’s proposal in January to put a one-year cap of 10% on credit card interest rates had drawn strong criticism from the banking industry, including from Synchrony Financial CEO Brian Doubles.
Synchrony’s provisions for credit losses fell by $156 million to $1.3 billion in the first quarter, driven by lower net charge-offs.
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.
Synchrony’s net income rose to $805 million, or $2.27 per share, in the three months ended March 31, compared with $757 million, or $1.89 per share, a year earlier.
Shares of the company, which announced a new buyback program of up to $6.5 billion, were up marginally in trading before the bell.
(Reporting by Pritam Biswas in Bengaluru; Editing by Sahal Muhammed)
