BFH Q3 Earnings & Revenues Beat Estimates, Credit Sales Rise Y/Y

Core Insights - Bread Financial Holdings (BFH) reported an operating income of $4.02 per share for Q3 2025, exceeding the Zacks Consensus Estimate by 90.5% and more than doubling year-over-year [1][8] - The quarterly performance was driven by increased credit sales and reduced non-interest expenses, although it faced challenges from lower average and end-of-period loans and interest income [1][8] Revenue Analysis - Revenues decreased by 1.2% year-over-year to $971 million, primarily due to lower billed late fees from reduced delinquencies and a $4 million gain on portfolio sale in 2024, partially offset by lower interest expenses and new pricing changes [2] - The top line still surpassed the consensus estimate by 0.2% [2] Credit Sales and Loans - Credit sales reached $6.8 billion, marking a 5% increase year-over-year, attributed to new partner growth and increased general-purpose spending [3] - Average loans decreased by 1% to $17.6 billion, while end-of-period loans fell by 2% to $17.7 billion due to higher payment rates and ongoing elevated gross losses [3] Interest Income and Margins - Total interest income declined by 3% to $1.2 billion, aligning with estimates [3] - The net interest margin remained stable at 18.8%, surpassing the Zacks Consensus Estimate of 18.2% [4] Expense Management - Total non-interest expenses decreased by 17%, influenced by the prior year's impact from repurchased debt [4] - The delinquency rate improved to 6% from 6.4% year-over-year, while the net loss rate improved by 40 basis points to 7.4% [4] Financial Metrics - Tangible book value increased by 19% year-over-year to $56.36 per share as of September 30, 2025 [5] - Return on average equity rose to 22.4%, expanding by 2,200 basis points year-over-year [5] Capital Deployment - The board of directors approved a 10% increase in the dividend to 23 cents per share, payable on December 12 to stockholders of record as of November 7 [6] - An additional $200 million was authorized for share repurchases, bringing the total available for repurchases to $340 million [6] Future Guidance - BFH anticipates average credit card and other loans to remain flat to slightly down from 2024, with total revenues expected to be relatively flat due to pricing changes [7] - The net loss rate is projected to be between 7.8% and 7.9%, with expectations of improvement driven by resilient consumer behavior and credit management actions [9]