's net interestmargin should be stable for the rest of 2016, even in the absence of further rateincreases from the Federal Open Market Committee.
Synchrony'sguidance in January included the benefit of another 50 basis points of rate increasesin the second half of the year, but that action looks less likely now, CFO BrianDoubles said during a conference call to discuss second-quarter .
The macroeconomicbackdrop in the U.S. is still healthy, Doubles said, though consumers are addingdebt.
"Theycontinue to take on more leverage, and while it appears to be modest and it lookslike the overall level is still pretty reasonable, and pretty responsible, it'ssomething we're watching carefully," he said.
That trend will contribute to a gradual increase in loan charge-offsover time apart from the typical rate of charge-offs that come as a loan vintageis seasoned, Doubles noted.
On June 14, Synchrony disclosed that it expected net charge-offsto be 20 basis points to 30 basis points higherfor the next 12 months than previous guidance indicated. The company's stock more than 13% that day.
The company will continue to build reserves based on growth aswell as net charge-off expectations, Doubles noted during the call.