Beat and 📈: TU and OMF Shine as COF Manages a "Noisy" Quarter
Positive earnings reports show healthy credit trends, yet the broader market reveals that banks are tightening standards and focusing more on high-spending customers.
Hey Toaster Readers,
Earnings season is in full swing, painting a fascinating, yet complex, picture of the credit landscape. On the one hand, players like TransUnion and OneMain delivered impressive "beat and raise" quarters, with TransUnion even fueling the competition against FICO by championing VantageScore.
On the other hand, things are getting complicated. Capital One's first quarter with Discover was predictably noisy. Banks are getting much pickier about who gets new plastic (hint: they want the "heavier spenders"), and Synchrony is tempering its growth expectations despite renewing its huge partnership with Amazon. And just as the banks are getting more selective, the rewards game is getting more confusing. The Atlantic is even calling out the madness, highlighting the Chase Sapphire Reserve's new $795 annual fee and the "analysis paralysis" it causes.
Now let’s get to the news this week!
TransUnion Q2 Beat and Raise; Company Is Accelerating Innovation, Winning New Business Across the Enterprise
TransUnion, the global information and insights company, delivered a strong Q2, beating expectations with good growth in its U.S. Financial Services arm. The division grew 17.1% year-over-year, with a notable acceleration in non-mortgage activity to 11% growth. This was fueled by FinTechs returning to the lending market, which boosted Consumer Lending revenue by 18%. The Auto vertical also hit the gas with a 19% revenue jump, driven by strong product sales from offerings like FactorTrust and better pricing on data and scores. In a move that separates it from peers, TransUnion is actively championing VantageScore adoption. CEO Chris Cartwright urged the market to "encourage competition," stating it "leads to sharpening the pencil on price." This pro-competition stance comes amid what appears to be ongoing "friction" with credit scoring leader FICO. [TU Investor Presentation]
J.P. Morgan Markets
TransUnion Investor Presentation
OneMain Reports Strong Q2
OneMain posted a strong Q2 beat-and-raise quarter. The company reported adjusted earnings of $1.45 per share, cruising past analyst estimates of around $1.23. Credit trends looked particularly healthy, with net charge-offs improving to 7.57% and 30+ day delinquencies falling year-over-year. Business is growing, with managed receivables up 7% to $25.2 billion and consumer loan originations climbing 9% to $3.9 billion. Feeling confident, management updated its full-year guidance, now expecting revenue growth at the "high end" of its 6-8% range and tightening its forecast for net charge-offs. The company offers its BrightWay and BrightWay+ cards through a third-party bank partner and then purchases the receivable balances. Described as a "Digital-first offering that rewards good credit behavior", the portfolio showed strong momentum with 11% quarter-over-quarter growth in receivables. Total receivables reached $752 million by the end of Q2, a significant jump from $466 million a year prior. OneMain also added 127,000 new accounts during the quarter. This growth is supported by a "Highly rated app with strong customer engagement and usage metrics [OneMain]
Capital One’s Noisy Q2, Management believes the Consumer Remains Strong
Capital One's first quarter post-acquisition was a bit noisy, but promising, showing a net loss of $4.3 billion primarily due to the massive integration of Discover Financial Services. The financial services and credit card giant incurred a substantial $8 billion provision expense for the newly acquired loans, which created "significant noise" in the quarterly results. When you look past the one-time acquisition costs, however, the company reported a solid adjusted diluted EPS of $5.48, a 35% increase from the previous quarter. The Discover merger, which closed on May 18th, is already making its mark by boosting total net revenue by 31% year-over-year to $12.5 billion. While the company is on track to deliver the expected synergies, management did note that integration costs are now expected to be "higher" than the initial $2.8 billion estimate. Despite this, credit metrics for the legacy Capital One portfolio improved, and the company's capital position remains strong. CEO Richard Fairbank expressed optimism, stating they are "as excited as ever" about the future of the combined entity. [J.P. Morgan, Capital One]
JP Morgan Equity Research
Synchrony Beats Forecast, Tempers Growth Expectations
Synchrony Financial had a bit of a mixed bag for its second-quarter earnings, beating profit expectations while dialing back its outlook for the year. The consumer financial services company, which powers credit cards for major retailers, reported adjusted earnings of $2.50 per share, surpassing analyst estimates by setting aside less cash for potential loan losses. While profits looked good, Synchrony trimmed its forecasts for both loan growth and net revenue for the rest of 2025, now expecting loan receivables to be "flat" for the year. The good news is that credit quality appears to be healthy, with both delinquencies and net charge-offs improving compared to last year. Management seems pretty upbeat, saying the consumer is in good shape and that credit is performing better than they anticipated. The company also locked in some major deals, renewing its long-standing partnership with Amazon and announcing a new team-up with OnePay to launch a new card program at Walmart this fall. It seems even with a little uncertainty, they're still playing to win. [Synchrony]
Banks Are Getting Pickier About Whom They Want as Credit-Card Customers
Thinking about getting a new credit card? You might find the velvet rope is up unless you're a big spender. Major banks are making it tougher for some to get new plastic, with new account openings across four major lenders dropping 5% in the second quarter. Lenders like JPMorgan Chase, Citigroup, and American Express are now chasing wealthier clients, revamping premium cards, and targeting consumers with high credit scores. In fact, more than 87% of recent card offers were "prescreened," meaning they were only sent to people who already met certain credit criteria. Capital One's CEO confirmed the fastest growth is with "heavier spenders," even opening a luxury airport lounge for its premium cardholders. This strategy makes sense for the banks, as high-spending customers are more lucrative and less likely to default. While this is great news for some, other consumers are facing rising balances as interest rates climb. For now, delinquencies are stable, but banks are keeping a close eye on "significant risks" in the economy. [WSJ]
The Problem With Rewards Credit Cards
You know credit card rewards have gotten out of hand when The Atlantic's culture section covers it, and Chase is giving us a masterclass in the madness. While the issuer rolls out "perplexing billboards," it's also hiking the annual fee on its fancy Sapphire Reserve card by "nearly 45 percent" to $795. This comes as customer frustration boils over. In 2023, the CFPB received 1,200 complaints from users whose rewards were "devalued, denied, disappeared, or fine-printed to oblivion". The whole game has become so complicated that it leads to "analysis paralysis," where figuring out how to use your points feels like such a "job" that you just... don't. The expert advice? "Earn and burn 'em if you got 'em, because points are not a long-term investment and can be devalued whenever the card company feels like it. [The Atlantic]
We can’t help but call out that the article linked to the Chase Sapphire subreddit, noting the ever-increasing size of credit cards in their ads.
And this is why we love the internet.
In Other News
(Fundraising) Viva Finance lands $220m to expand access to credit across the US FinTech Futures
(Earnings) How Ally's strong quarter got complicated by tariffs American Banker
(SEO) Google Reorganizes Search Results Into ‘Web Guide’ Google
(Cards) Rakuten Picks Credit Startup Imprint for Co-Branded Card PYMNTS
(Cards) Discover Is a Done Deal as Capital One Targets ‘Digital Experiences’ PYMNTS
(Cards) Lucrative Alaska Airlines Premium Credit Card Launches August 2025 One Mile at a Time
(Cards) Rakuten And Amex Launch New Credit Card With Up To 10% Cash Back Forbes
(Cards) Amex CEO brushes off Citi, Chase premium plays American Banker
(Macro) RBC partners with US tech lab to pursue AI-led fintech research Wealth Professional
(Tech) LendingClub: Mobile App Features Drive Member Engagement and Loan Issuance PYMNTS
(Embedded Lending) Synchrony and Dental Intelligence Join to Simplify Financing and Marketing Synchrony
(Macro) Third Straight Conference Board Drop Flags Recession Risk for Credit Portfolios PYMNTS
(EWA) EarnIn Launches Technology Enabling Workers to Access Earnings Continuously PYMNTS
(Partnerships) Retail Edge Drove Walmart, Amazon and PayPal BNPL Deals, Says Synchrony CFO PYMNTS
(Partnerships) American Airlines and Mastercard renew partnership for even more rewarding travel experiences Mastercard
(Partnerships) Credit card startup Imprint beats big banks for Rakuten co-brand deal NBC New York
(BNPL) 43% of Consumers Bail on Purchases Without BNPL Option PYMNTS
(BNPL) Synchrony wades into BNPL with Amazon American Banker
(BNPL) Fintech Affirm and New Look Vision Group to Provide Flexible Payments Options across Eyewear Retailers in Canada Crowdfund Insider
(Open Banking) JPMorgan Chase CEO Jamie Dimon Defends Plans to Charge Fintech Firms Fees for Customer Data As Stakeholders Voice Opposition The Daily Hodl
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