April 24 (Reuters) - Consumer banking firm Synchrony

Financial's ( SYF ) first-quarter profit missed expectations on

Wednesday, as reserves tied to its acquisition of Ally

Financial's ( ALLY ) point-of-sale financing unit drove

provisions higher.

Synchrony bought the business in March, in order to expand

beyond its core products such as private label and co-branded

credit cards. But the company had to build reserves of $190

million for the loans it acquired as part of the deal, Synchrony

said.

Point-of-sale financing allows customers to pay for

purchases over a period of time. It is similar to buy now, pay

later loans but is typically used to finance bigger purchases

with longer repayment periods.

Shares of Synchrony fell 3.2% before the bell. They have

gained 12% this year as of their last close, compared with a

9.3% gain in the S&P 500 financials index.

In the quarter, net interest income - the difference between

interest earned on loans and paid out on deposits - grew 9% to

$4.41 billion, on the back of the Federal Reserve's rate hikes.

Profit more than doubled from last year. But excluding gains

from the sale of its Pets Best pet insurance business, Synchrony

earned $1.18 a share, lower than expectations of $1.35,

according to LSEG.

Provisions for credit losses were $1.88 billion, higher than

the $1.65 billion analysts had predicted.

The company returned $402 million of capital to shareholders

via stock repurchases and dividends.