Core Insights - Bread Financial Holdings, Inc. (BFH) reported a fourth-quarter operating income of $2.07 per share, significantly exceeding the Zacks Consensus Estimate by 417.5% and showing a year-over-year increase of 406% [1] - Revenues rose 5.3% year over year to $975 million, surpassing the consensus estimate by 3.62% [1] - The strong performance was attributed to pricing changes, although it was partially offset by lower billed late fees and higher retailer share arrangements [1] Financial Performance - Credit sales reached $8.1 billion, marking a 2% year-over-year increase, driven by new partner growth and increased general-purpose spending [2] - Average loans decreased by 1% to $18 billion, while end-of-period loans declined by 0.5% to $18.8 billion due to higher payment rates and elevated gross losses [2] - Total interest income increased by 2% to $1.2 billion, beating the Zacks Consensus Estimate by 1.9% but missing the internal model estimate by 0.4% [3] - Net interest margin improved by 110 basis points to 18.9%, compared to the Zacks Consensus Estimate of 18% [3] - Total non-interest expenses decreased by 5% to $500 million, influenced by the impact of repurchased debt [3] - The delinquency rate improved to 5.8%, down from 5.9% year over year [3] Loss and Earnings Metrics - The net loss rate improved by 60 basis points year over year to 7.4% [4] - Pre-tax pre-provision earnings increased by 7% year over year to $420 million [4] - Adjusted PPNR, a non-GAAP financial measure, rose by 19% year over year to $475 million [4] Capital and Shareholder Returns - Cash and cash equivalents at the end of the fourth quarter were $3.6 billion, a decrease of 2% from the previous year-end [5] - Tangible book value increased by 23% year over year to $57.57 per share [5] - Return on average equity rose by 530 basis points year over year to 6.2% [5] - The board of directors raised the dividend by 10% to 23 cents per share, payable on March 16, 2026 [6] - BFH repurchased $120 million, or 1.9 million shares, during the fourth quarter, with $240 million remaining under share repurchase authorization at the end of 2026 [6] Full-Year Performance - For the full year 2025, BFH reported an operating income of $12.09 per share, exceeding the Zacks Consensus Estimate by 87.1% and increasing by 57% year over year [9] - Total operating revenues for the year were $3.8 billion, in line with the Zacks Consensus Estimate, with a year-over-year increase of 0.2% [9] - Credit sales for the full year reached $27.8 billion, up 3% year over year [9] 2026 Outlook - BFH anticipates that interest rate cuts by the Federal Reserve may modestly pressure total net interest income [10] - The company expects total revenue growth in the low single digits compared to full-year 2025, aligning with average loan growth [10] - The net loss rate is projected to be between 7.2% and 7.4%, with improvements expected due to consumer resilience and effective credit management [10] - The normalized effective tax rate for the full year is expected to be in the range of 25% to 27% [11]

Core Insights - Bread Financial Holdings (BFH) reported an operating income of $3.14 per share for Q2 2025, exceeding the Zacks Consensus Estimate by 69.7% and reflecting an 18% year-over-year improvement [1][8] Revenue Performance - Revenues decreased by 1.1% year over year to $929 million, primarily due to lower finance charges and late fees from a reduced average prime rate, lower delinquencies, and a shift in risk and product mix [2][8] - The revenue figure missed the consensus estimate by 0.9% [2] Credit Sales and Loans - Credit sales increased by 4% to $6.8 billion, driven by new partner growth and increased general-purpose spending, surpassing the estimate of $6.6 billion [2][8] - Average loans decreased by 1% to $17.7 billion, attributed to the macroeconomic environment affecting consumer spending and tighter underwriting standards [3] Interest Income and Margins - Total interest income fell by 3% to $1.2 billion, aligning with estimates [3] - Net interest margin contracted by 30 basis points to 17.7%, slightly better than the Zacks Consensus Estimate of 17.4% [3] Expenses and Earnings - Total non-interest expenses rose by 3% to $481 million, driven by debt extinguishment costs [4] - Pre-tax pre-provision earnings decreased by 5% year over year to $448 million due to lower net interest income [4] Financial Position - As of June 30, 2025, cash and cash equivalents increased by 14.4% to $4.2 billion [5] - Long-term debt rose by 28.7% to $1.3 billion compared to the end of 2024 [5] - Tangible book value per share was $52.21, up 7% year over year [5] - Return on average equity was 17.5%, expanding by 80 basis points year over year [5] Share Repurchase - In April, BFH repurchased 1.1 million shares, completing a $150 million share repurchase program [6] Future Guidance - Management estimates average receivables to be flat to slightly down from 2024, with total revenues expected to remain flat year over year [9] - The net loss rate is guided to be in the range of 7.8-7.9% [9]