Bread Financial (NYSE:BFH) FY Conference Transcript

Summary of Bread Financial FY Conference Call (September 09, 2025) Company Overview - Company: Bread Financial (NYSE: BFH) - Industry: Consumer Finance Key Points Financial Performance and Shareholder Returns - Announced a $200 million share repurchase authorization, indicating confidence in returning value to shareholders and maturing capital plans [3][49] - Anticipated a discrete tax item that will benefit the quarter [3][4] - Revenue share increase expected to impact non-interest income, leading to lower non-interest income compared to the previous quarter [4] Sales and Loan Growth - Sales momentum continued but at a slower pace, with positive year-over-year growth [4] - Loan growth impacted by the previous acquisition of a $300 to $400 million portfolio from Saks, which has now lapsed [5] - Current guidance for loan growth is flat to slightly down year-over-year by year-end 2025, primarily due to improved payment rates [19] Credit Quality and Charge-Offs - Charge-offs improved to 7.9% in Q2, with expectations to land between 7.4% to 7.5% in Q3 and 7.8% to 7.9% for the full year [9][11] - Improvement in delinquency rates attributed to early credit actions and a shift in product mix towards co-brand products [9][10] - No material impact observed on borrowers with student loans, with similar delinquency rates for those with and without student loans [12][14] Capital Management - The CET1 ratio is approximately 13%, at the lower end of the medium-term guidance [49] - Focus on responsible growth, technology investment, debt repayment, and returning capital to shareholders [51] Product Mix and Growth Opportunities - Mid-term targets for loan growth remain in the mid-single digits, with long-term targets in the high single digits [23][24] - Diverse product offerings include private label credit cards, co-brand credit cards, installment loans, and buy now, pay later options [23][44] - Anticipated growth in installment loans and co-brand credit cards, with private label credit cards remaining a part of the portfolio [44] Competitive Landscape - Competition in the partnership space remains strong, with a focus on maintaining a full product suite to meet partner needs [35][36] - Renewed partnerships, such as with Caesars, and new partnerships like Crypto.com, are expected to drive growth [35][38][46] Regulatory Environment - Current administration viewed as more business-friendly, but state regulations remain a concern [55] Technology and AI Integration - Emphasis on being a fast follower in AI, focusing on practical applications to improve customer service and operational efficiency [56][58] Conclusion - Bread Financial is positioned for gradual improvement in credit quality and loan growth, with a strong focus on shareholder returns and product diversification. The company is navigating a competitive landscape while leveraging technology to enhance operations and customer experience.