Bread Financial™ Provides Performance Update for December 2023

Rhea-AI Summary

Bread Financial Holdings, Inc. (NYSE: BFH) provided a performance update, reporting a net loss rate of 8.2% and a delinquency rate of 6.5% for the month ended December 31, 2023. The company also disclosed a 9% year-over-year decrease in average credit card and other loans, as well as a $239 million decrease in period ended credit card and other loans - principal compared to December 31, 2022.

Insights

Financial Analyst

The reported net loss rate and delinquency rate by Bread Financial Holdings are critical metrics for assessing the company's credit risk management and overall financial health. A net loss rate of 8.2% for the month and 8.0% for the quarter, coupled with a year-over-year decline in average credit card and other loans, suggests a contraction in lending volume and potentially higher credit risk. This contraction could be indicative of a strategic shift or a response to macroeconomic conditions.

Furthermore, the increase in the delinquency rate from 5.5% to 6.5% year-over-year is notable. It may reflect a deterioration in the credit quality of borrowers or external economic pressures affecting customers' ability to repay debts. Stakeholders should monitor whether this trend continues as it may impact the company's provision for credit losses and ultimately affect profitability.

Economist

An uptick in delinquency rates can be a bellwether for broader economic issues. The increase from 5.5% to 6.5% in delinquencies may suggest that consumers are facing financial strain, possibly due to factors such as inflation, unemployment, or interest rate hikes. This could have implications for consumer spending patterns, which in turn could affect various sectors of the economy. Additionally, the decrease in loan volume could be a result of tighter lending standards or reduced consumer borrowing appetite, both of which can be reactions to economic uncertainty.

Market Research Analyst

Comparing the reported figures with industry norms is essential. If the net loss and delinquency rates are significantly higher than those of peers, it could suggest competitive disadvantages or operational inefficiencies at Bread Financial Holdings. Conversely, if these rates are in line with or better than the industry, it might indicate resilience despite challenging market conditions. It's also important to consider the impact of the transition in credit card processing services mentioned, as operational changes can temporarily distort financial metrics.

COLUMBUS, Ohio--(BUSINESS WIRE)-- Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, provided a performance update. The following tables present the Company’s net loss rate and delinquency rate for the periods indicated.

	For the month ended December 31, 2023				For the three months ended December 31, 2023
	(dollars in millions)
End-of-period credit card and other loans	$	19,333			$	19,333
Average credit card and other loans	$	18,665			$	18,267
Year-over-year change in average credit card and other loans		(9	%)			(8	%)
Net principal losses	$	128			$	367
Net loss rate		8.2	%			8.0	%

	As of December 31, 2023				As of December 31, 2022
	(dollars in millions)
30 days + delinquencies – principal (1)	$	1,163			$	1,112
Period ended credit card and other loans – principal	$	17,906			$	20,107
Delinquency rate (1)		6.5	%			5.5	%

________________________________________________
(1)	As previously communicated, the month ended December 31, 2022 30 days + delinquencies - principal and Delinquency rate were impacted by the transition of our credit card processing services in June 2022.

About Bread Financial

Bread Financial^TM (NYSE: BFH) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, Bread Financial delivers growth for its partners through a comprehensive suite of payment solutions that includes private label and co-brand credit cards and Bread Pay™ buy now, pay later products. Bread Financial also offers direct-to-consumer products that give customers more access, choice and freedom through its branded Bread Cashback^TM American Express^® Credit Card and Bread Savings^TM products.

Headquartered in Columbus, Ohio, Bread Financial is powered by its 7,500+ global associates and is committed to sustainable business practices. To learn more about Bread Financial, visit breadfinancial.com or follow us on Facebook, LinkedIn, Twitter and Instagram.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions.

We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, rising interest rates, unemployment levels and the increased probability of a recession, and the related impact on consumer payment rates, savings rates and other behavior; global political and public health events and conditions, including ongoing wars and military conflicts; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax liability, disputes or other adverse impacts arising out of or relating to the spinoff of our former LoyaltyOne segment or the bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. In addition, a final CFPB rule is anticipated in the coming months that, if adopted as proposed and absent a successful legal challenge, will place significant limits on credit card late fees, which would have a significant impact on our business and results of operations for at least the short term and, depending on the effectiveness of the mitigating actions that we may take in response to the final rule, potentially over the long term; we cannot provide any assurance as to when any such rule will be issued, the provisions or effective date of any such rule, the result of any challenges or other litigation relating to such rule, or our ability to mitigate or offset the impact of any such rule on our business and results of operations. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240125263280/en/

Brian Vereb — Investor Relations

Brian.Vereb@breadfinancial.com

Susan Haugen — Investor Relations

Susan.Haugen@breadfinancial.com

Rachel Stultz — Media

Rachel.Stultz@breadfinancial.com

Source: Bread Financial

FAQ

What is the ticker symbol for Bread Financial Holdings, Inc.?

The ticker symbol is BFH.

What were the net loss rate and delinquency rate for the month ended December 31, 2023?

The net loss rate was 8.2% and the delinquency rate was 6.5%.

What was the year-over-year change in average credit card and other loans?

There was a 9% decrease in average credit card and other loans.

What was the period ended credit card and other loans - principal as of December 31, 2023?

It was $17,906 million.

How were the delinquency rate and 30 days + delinquencies - principal impacted in December 2022?

They were impacted by the transition of credit card processing services in June 2022.