Bread Financial™ Provides Performance Update for June 2024

Rhea-AI Summary

Bread Financial Holdings (NYSE: BFH) has released its performance update for June 2024. The company, which specializes in payment, lending, and saving solutions, reported key metrics for its credit card and other loan portfolios. As of June 30, 2024, the end-of-period credit card and other loans stood at $17,743 million. The average credit card and other loans showed a 1% year-over-year increase for both the month and three months ended June 30, 2024.

The net loss rate for June 2024 was 8.4%, with net principal losses of $122 million. For the three-month period, the net loss rate was slightly higher at 8.6%. The delinquency rate as of June 30, 2024, increased to 6.0% from 5.5% a year earlier, with 30 days+ delinquencies reaching $979 million.

Positive

• 1% year-over-year increase in average credit card and other loans
• Revised calculation method for average credit card and other loans to align with industry practice

Negative

• Net loss rate of 8.4% for June 2024 and 8.6% for the three-month period
• Delinquency rate increased to 6.0% from 5.5% year-over-year
• 30 days+ delinquencies rose to $979 million from $926 million year-over-year

Financial Analyst

As a financial analyst examining Bread Financial's June 2024 performance update, several key points stand out. The company's net loss rate of 8.4% for June and 8.6% for the quarter ending June 30 are concerning figures. These rates suggest a significant portion of loans are not being repaid, which could impact the company's profitability and financial health.

The delinquency rate has increased from 5.5% in June 2023 to 6.0% in June 2024. This 0.5% increase year-over-year indicates a growing number of borrowers falling behind on payments, potentially signaling economic stress among consumers or issues with the company's underwriting practices.

On a positive note, the average credit card and other loans have shown a 1% year-over-year growth. While modest, this growth suggests the company is still expanding its loan portfolio, albeit at a slow pace in a challenging economic environment.

The revision in calculating average credit card and other loans to incorporate daily balances is a move towards industry best practices. This change should provide a more accurate representation of the company's loan portfolio performance.

Overall, the increasing delinquency and high net loss rates are red flags for investors, potentially indicating increased credit risk and possible future write-offs. These metrics will be important to monitor in the coming months to assess Bread Financial's risk management and overall financial health.

Credit Risk Specialist

From a credit risk perspective, Bread Financial's June 2024 performance raises significant concerns. The net loss rate of 8.4% for June is alarmingly high, indicating substantial credit losses. This rate, coupled with the 8.6% loss rate for the quarter, suggests that the company's credit models or underwriting standards may need reevaluation.

The increase in the delinquency rate from 5.5% to 6.0% year-over-year is another red flag. This uptick could be an early indicator of further deterioration in the loan portfolio's quality. If this trend continues, it could lead to higher loss rates in the future, potentially impacting the company's profitability and capital position.

The 1% growth in average credit card and other loans is minimal and might reflect a more cautious lending approach in response to the increasing credit risk. However, this conservative growth strategy may not be sufficient to offset the rising losses if the credit quality continues to deteriorate.

It's important for Bread Financial to address these credit quality issues promptly. This may involve tightening lending criteria, improving collection practices, or implementing more robust risk assessment models. The company's ability to manage and mitigate these credit risks will be critical for its long-term financial stability and investor confidence.

COLUMBUS, Ohio, July 25, 2024 (GLOBE NEWSWIRE) -- 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 June 30, 2024				For the three months ended June 30, 2024
	(dollars in millions)
End-of-period credit card and other loans	$	17,743			$	17,743
Average credit card and other loans (1)	$	17,766			$	17,872
Year-over-year change in average credit card and other loans (1)		1	%			1	%
Net principal losses	$	122			$	382
Net loss rate		8.4	%			8.6	%

	As of June 30, 2024				As of June 30, 2023
	(dollars in millions)
30 days + delinquencies – principal	$	979			$	926
Period ended credit card and other loans – principal	$	16,344			$	16,728
Delinquency rate		6.0	%			5.5	%

__________________________________________________________________________

(1)

Beginning in January 2024, we revised the calculation of Average credit card and other loans to more closely align with industry practice by incorporating an average daily balance. Prior to 2024, Average credit card and other loans represent the average balance of the loans at the beginning and end of each month, averaged over the periods indicated. Consequentially, the calculations for Year-over-year change in average credit card and other loans were also impacted.

About Bread Financial^™
Bread Financial^™ (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^™ American Express^® Credit Card and Bread Savings^™ products. 

Headquartered in Columbus, Ohio, Bread Financial is powered by its approximately 7,000 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/X 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, higher interest rates, labor market conditions, recessionary pressures or a concern over a prolonged economic slowdown, and the related impact on consumer spending behavior, payments, debt levels, 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, the Consumer Financial Protection Bureau (CFPB) has issued a final rule that, 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 have taken or may in the future take in anticipation of, or in response to, the final rule, may potentially adversely impact us over the long term; we cannot provide any assurance as to the effective date of the rule, the result of any pending or future challenges or other litigation relating to the rule, or our ability to mitigate or offset the impact of the 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.

Contacts 
Brian Vereb — Investor Relations 
Brian.Vereb@breadfinancial.com 

Susan Haugen — Investor Relations 
Susan.Haugen@breadfinancial.com 

Rachel Stultz — Media 
Rachel.Stultz@breadfinancial.com 

FAQ

What was Bread Financial's (BFH) net loss rate for June 2024?

Bread Financial's net loss rate for June 2024 was 8.4%.

How did Bread Financial's (BFH) average credit card and other loans change year-over-year in June 2024?

Bread Financial's average credit card and other loans increased by 1% year-over-year in June 2024.

What was the delinquency rate for Bread Financial (BFH) as of June 30, 2024?

The delinquency rate for Bread Financial was 6.0% as of June 30, 2024.

How much were Bread Financial's (BFH) 30 days+ delinquencies as of June 30, 2024?

Bread Financial's 30 days+ delinquencies were $979 million as of June 30, 2024.