BFH — Bread Financial Holdings, Inc.

Summary of Bread Financial Holdings, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $181 million
• Diluted EPS: $4.15
• Revenue Growth: 5% year-over-year, totaling $48 million increase.
• Credit Sales: $6.5 billion, up 7% year-over-year.
• Loan Metrics: Average loans increased by 1% to $18.3 billion; end-of-period loans rose by 2% to $18.1 billion.
• Net Interest Margin: 19.3%, improved year-over-year and sequentially.
• Delinquency Rate: 5.59%, down 34 basis points year-over-year.
• Net Loss Rate: 7.33%, down 83 basis points year-over-year.
• Tangible Book Value per Share: Increased by 26% to $61.57.
• Direct-to-Consumer Deposits: Increased 10% year-over-year to $8.7 billion.

2. Strategic Updates and Business Highlights:

• Successful new partner launches, including Ford and Ethan Allen, contributing to credit sales growth.
• Expansion of product offerings, including Bread Pay installment loans for AAA, Dell, and Ford.
• Continued investment in digital and technology advancements, including AI, to enhance operational efficiency and risk management.
• Ongoing stock repurchase program, retiring 3.5 million shares (8% of outstanding shares).

3. Forward Guidance and Outlook:

• Full-year 2026 average loan growth expected to be low single digits, supported by stable partner base and new business launches.
• Total revenue growth anticipated to align with average loan growth.
• Net interest margin expected to be higher than in 2025, though growth may slow as most of the portfolio has repriced.
• Anticipated second-quarter expenses to be just under $500 million, reflecting ongoing investments in business growth.
• Confidence in achieving a net loss rate at the low end of the 7.2% to 7.4% targeted range for 2026.

4. Bad News, Challenges, or Points of Concern:

• Despite strong first-quarter results, guidance for loan and revenue growth is conservative, reflecting macroeconomic uncertainties.
• Potential headwinds from rising fuel prices affecting consumer spending behavior and sentiment.
• Noninterest income expected to decline in the second quarter by up to $40 million compared to Q1 due to higher retailer share arrangements.
• Ongoing concerns regarding the impact of economic dynamics, including inflation and consumer sentiment, on credit metrics and spending.

5. Notable Q&A Insights:

• Management expressed cautious optimism about loan growth, indicating that while Q1 was strong, they are monitoring macroeconomic conditions closely.
• Discussion on share repurchases highlighted that future buybacks will depend on capital generation and market conditions for preferred share issuance.
• The competitive landscape for new customers remains robust, particularly in the home and beauty verticals, with ongoing opportunities for new partnerships.
• Management noted that while tax refunds provided some support, consumers are prioritizing savings over debt repayment, which could impact future credit metrics.

Overall, Bread Financial Holdings demonstrated solid performance in Q1 2026, marked by strong credit sales and improving credit metrics, but remains cautious about future growth due to macroeconomic uncertainties.