Alliance Data Systems(US:BFH)2025-10-23 11:13Financial Performance - Net income for Q3 2025 was $188 million, with earnings per diluted share of $3.96, reflecting a favorable discrete tax item of $38 million[7]. - Adjusted net income for Q3 2025 was $191 million, compared to $93 million in Q3 2024, representing a significant increase of 105% year-over-year[68]. - The company reported a net income of $188 million for Q3 2025, compared to $2 million in Q3 2024, marking a substantial increase[68]. - Net income for Q3 2023 was $173 million, with earnings per diluted share at $3.46[47]. - The return on average assets rose significantly to 3.4% in Q3 25 from 0.1% in Q3 2024, showcasing improved profitability[43]. - The return on average equity for Q3 2023 was 24.8%, reflecting strong profitability[45]. - Adjusted earnings per diluted share for Q3 2025 were $4.02, compared to $1.83 in Q3 2024, reflecting a growth of approximately 120% year-over-year[68]. Credit and Delinquency Metrics - The delinquency rate improved to 6.0%, down from 6.4% in Q3 2024, while the net loss rate decreased to 7.4% from 7.8%[13]. - The delinquency rate improved to 6.0% in 3Q25 from 6.4% in 3Q24, indicating better credit performance[43]. - The net loss rate for 2025 is expected to improve to between 7.8% and 7.9%, down from 8.2% in 2024, due to resilient consumer behavior and effective credit management actions[26]. - Provision for credit losses for YTD 2025 was $869 million, down from $980 million in YTD 2024, indicating a decrease of about 11%[69]. - Delinquency rates peaked at 6.5% in 4Q21, with a 15-year average rate of approximately 4.9%[53]. - Net loss rates peaked at 8.9% in 4Q10, with a 15-year average rate of around 5.9%[53]. Capital and Equity - The CET1 capital ratio improved to 14.0% in Q3 2025, up from 13.3% in Q3 2024[20]. - Tangible book value per common share increased by $8.88, or 19%, year-over-year, reaching $56.36[7]. - Tangible book value per common share increased by 19% to $56.36 in 3Q25 from $47.48 in 3Q24[43]. - Tangible common equity over tangible assets (TCE/TA) is utilized to assess capital adequacy, with TCE for Q3 2025 at $2,594 million[69]. - Common equity tier 1 capital ratio for the total company was 12.9% in 3Q23, projected to decrease to 12.0% by 1Q25[50]. - Total risk-based capital ratio for the total company was 14.2% in 3Q23, expected to rise to 15.5% by 1Q25[50]. - Tangible common equity to tangible assets ratio was 10.0% in 3Q23, projected to reach 12.4% by 3Q25[50]. - Average tangible common equity for Q3 2025 was $2,607 million, an increase from $2,566 million in Q3 2024, showing a growth of approximately 2%[69]. Operational Efficiency - Total non-interest expenses decreased by $98 million, or 17%, primarily due to the prior year impact from repurchased debt[13]. - Total non-interest expenses decreased by 17% compared to 3Q24, reflecting strategic adjustments in employee compensation and benefits[34]. - Total non-interest expenses for Q3 2025 were $476 million, down from $574 million in Q3 2024, reflecting a decrease of approximately 17% year-over-year[68]. - The efficiency ratio improved to 49.0% in 3Q25, down from 58.4% in 3Q24, indicating enhanced operational efficiency[43]. - The efficiency ratio for Q3 2023 was 48.7%, indicating operational efficiency[45]. Revenue and Sales - Credit sales amounted to $6.8 billion, an increase of $0.3 billion or 5%, driven by new partner growth and increased general-purpose spending[13]. - Revenue for 2025, excluding any gain on portfolio sale, is expected to remain flat at $3,827 million, impacted by pricing changes and interest rate reductions by the Federal Reserve[26]. - Credit sales for Q3 2023 were $6,668 million, showing a year-over-year decline of 13%[45]. - Average credit card and other loans decreased by 8% year-over-year to $17,540 million in Q3 2023[45]. - Net interest income for Q3 2023 was $1,082 million, with total interest income at $1,301 million[47]. - The net interest margin for Q3 2025 is projected to be 18.8%[49]. Deposits - Direct-to-consumer deposits reached $8.2 billion, marking a 9% year-over-year increase and representing 47% of average total funding[7]. - End-of-period direct-to-consumer deposits increased by 9% to $8,188 million in 3Q25 compared to $7,483 million in 3Q24[43]. - End-of-period direct-to-consumer deposits increased by 18% year-over-year, reaching $6,098 million in Q3 2023[45]. Shareholder Returns - A quarterly cash dividend of $0.23 per common share was declared, representing a 10% increase from the prior quarter[7]. - The company announced a $200 million increase to its share repurchase authorization, bringing the total available for repurchases to $340 million[7]. Strategic Focus - The company plans to focus on responsible growth and disciplined capital allocation to manage macroeconomic and regulatory challenges in 2025[30]. - The company emphasizes the importance of forward-looking statements regarding future financial performance and market conditions[63]. - Non-GAAP financial measures are used to provide additional clarity in understanding operational results and trends[66].