Brian J. Wenzel
Executive Vice President, Chief Financial Officer at Synchrony Financial
Thanks, Brian, and good morning, everyone. Synchrony's second quarter results continue to demonstrate the resilience of our differentiated business model through an evolving environment. While consumers are managing their cash flows and consumption, and the impact of our credit actions are beginning this [Phonetic] season, we remain focused on driving sustainable, risk-adjusted growth.
Turning to our financial performance. Ending loan receivables grew 7.9% to $102 billion in the second quarter, benefiting from an approximately 80 basis-point decrease in the payment rate and reflecting growth across each of our sales platforms. Net revenue increased 13% to $3.7 billion, reflecting higher interest and fees, lower RSA and an increase in other income. Net interest income increased 7% to $4.4 billion as interest and fees grew 10%, primarily reflecting growth in average loan receivables.
Our loan receivable yield grew 14 basis points, benefiting from product repricing actions and lower payment rate, partially offset by the higher reversals as our net charge-offs increased. RSAs of $810 million in the second quarter were 3.21% of average loan receivables, down $77 million versus the prior year, driven by higher net charge-offs, partially offset by higher net interest income. And the increase in other income primarily reflected a $51 million gain related to the exchange of our Visa B-1 shares as well as initial fee-related impact of our product, pricing and policy changes, or PPPCs. These benefits were partially offset by the impact of the Pets Best disposition.
Provision for credit losses increased to $1.7 billion, reflecting higher net charge-offs and a $70 million reserve build. Other expenses grew 1% to $1.2 billion, which was driven by technology investments, preparatory expenses related to the Late Fee rule change and servicing costs related to newly acquired businesses, partially offset by the operational losses and cost discipline resulting from lower employee and marketing costs. The preparatory expenses related to the Late Fee rule changes reflected $23 million of incremental costs related to both the execution of our PPPCs, and the implementation of the rule itself, should it become effective. Even with these incremental costs, Synchrony's efficiency ratio was 31.7% for the second quarter, an improvement of approximately 380 basis points versus last year.
In sum, Synchrony generated net earnings of $643 million or $1.55 per diluted share. This produced a return on average assets of 2.2% and a return on tangible common equity of 20.2%.
Next, I'll cover our key credit trends on Slide 9. At quarter-end, our 30-plus delinquency rate was 4.47% versus 3.84% in the prior year and 19 basis points above our historical average from the second quarters of 2017 to 2019. Our 90-plus delinquency rate was 2.19% versus 1.77% last year and 18 basis points above our historical average from the second quarters of 2017 to 2019. And our net charge-off rate was 6.42% in the second quarter compared to 4.75% in the prior year and 62 basis points above our historical average from the second quarters of 2017 to 2019.
Our allowance for credit losses as a percent of loan receivables was 10.74%, up 2 basis points from 10.72% in the first quarter. The reserve build in the quarter primarily reflected loan receivable growth.
As shown on Slide 10, the credit actions we've taken thus far are improving our delinquency trajectory as the rate of year-over-year growth continues to decelerate. We will continue to closely monitor our portfolio performance and the credit trends for the broader industry, given our shared consumer, and we will take additional credit actions as necessary. While these actions are reducing new account and purchase volume growth in the short term, we expect it will strengthen our portfolio's positioning as we exit 2024, and support our ability to deliver our targeted risk-adjusted returns over the long term.
Turning to Slide 11. Synchrony's funding, capital and liquidity remain a source of strength. We grew our direct deposits in the quarter as consumers responded to our strong offerings, while reducing our brokered deposits. Deposits represented 84% of our total funding at quarter-end, and our secured and unsecured debt each represented 8% of total funding. Total liquid assets and undrawn credit facilities were $23 billion, up $3.6 billion from last year and represented 19.1% of total assets, up 124 basis points from last year.
Moving on to our capital ratios. As a reminder, we elected to take the benefit of the CECL transition rules issued by the joint federal banking agencies. Synchrony will make a final transitional adjustment to our regulatory capital metrics of approximately 50 basis points in January 2025. The impact of CECL has already been recognized in our income statement and balance sheet. Under CECL transition rules, we ended the second quarter with a CET1 ratio of 12.6%, 20 basis points lower than last year's 12.8%. Our Tier 1 capital ratio was 13.8%, 20 basis points above last year. Our total capital ratio increased 10 basis points to 15.8%. And our Tier 1 capital plus reserves ratio, on a fully phased-in basis, increased to 23.9% compared to 22.8% last year.
During the second quarter, we returned $400 million to shareholders, consisting of $300 million of share repurchases and $100 million of common stock dividends. As of quarter-end, we had $1 billion remaining of our share repurchase authorization for the period ending June 30, 2025.
Synchrony remains well-positioned to return capital to shareholders as guided by our business performance, market conditions, regulatory restrictions and subject to our capital plan. Combining those results, Synchrony delivered a second quarter performance largely within our expectations. We remain focused on taking appropriate actions to prepare our business for years to come, including our ability to deliver our long-term target loss rate between 5.5% and 6.0%, and average return assets of at least 2.5% on average over time. We've been closely monitoring our performance and taking prudent credit actions in support of these objectives.
And in preparation for the pending new rule on Late Fees and our desire to offset the impact on our business as soon as possible, Synchrony has completed the first phase of our PPPCs. Most of these actions will begin to go into effect in the second-half of 2024, and we'll continue to track their financial and operational impact on our customers, partners and portfolio to determine, alongside our partners, whether any refinements to our strategies are warranted to achieve our shared objective.
As a reminder, specifically related to the framework around the pending Late Fee rules and our PPPCs, there continues to be uncertainty regarding the timing and outcome of Late Fee-related litigation that was filed in March, the potential changes in consumer behavior that could occur as a result of Late Fee rule changes, and any potential changes in consumer behavior in response to the PPPCs we implement as a result of the new rule. Outcomes and actual performance related to these uncertainties could impact our outlook.
With that framework, let's turn to the outlook for the second-half of 2024. We expect the consumer to continue to manage their cash flows and consumption, which, when combined with our credit actions, should result in a flat to low-single-digit decline in purchase volume. We continue to expect payment rates to moderate, which, when combined with our purchase volume expectations, should contribute to more moderate loan receivable growth in the second-half. Excluding the impact of Late Fee rule implementation, we expect net interest income and other income to progressively grow in the third and fourth quarters as our PPPCs take effect.
From a credit perspective, delinquencies should continue to trend in line with or better than seasonality. We expect our net charge-off rate to be lower in the second-half of this year than the first-half. Our reserve coverage ratio at the end of 2024 is expected to be generally in line with our year-end 2023 reserve rate. RSA will continue to align with program and Company performance. And finally, we expect other expenses to trend in line with the first-half average on a dollar basis.
When you combine these factors and include the impact of Late Fee rule, assuming an implementation date of October 1, 2024, along with the various offsets from the implementation of our PPPCs and the $1.96 per share gain on the sale of our Pets Best business in 1Q '24, Synchrony expects to deliver fully diluted earnings per share between $7.60 and $7.80 for the full year. This consolidated and updated EPS range is in the upper-end of our prior guidance and reflects Synchrony's dedication of delivering optimized outcomes for our many stakeholders, including strong risk-adjusted return for our shareholders.
I will now turn the call back over to Brian for his closing thoughts.
