Bread Financial (BFH) investor relations material

Executive summary

• Achieved strong Q2 growth in credit sales (up 11% year-over-year to $7.5 billion), loans, and direct-to-consumer deposits, with net income rising 5% year-over-year to $146 million and tangible book value per share up 22% to $63.66.

• Return on average tangible common equity reached 22.6%, and EPS was $3.55.

• Growth was broad-based, driven by co-brand partnerships, Bread Pay, Vivint, and new partners in home, travel, and sporting goods verticals.

• Direct-to-consumer deposits grew 16% year-over-year to $9.4 billion, now comprising 50% of funding.

• Shareholder value enhanced through $135 million preferred stock issuance and $241 million in common stock repurchases, retiring 7% of outstanding shares.

Financial highlights

• Revenue increased 7% year-over-year to $993 million, driven by loan growth, pricing changes, and higher interchange and merchant discount fees.

• Net income rose 5% year-over-year to $146 million, with diluted EPS at $3.55.

• Average loans increased 3% to $18.2 billion; end-of-period loans up 5% to $18.5 billion.

• Net interest margin improved to 18.5% year-over-year.

• Delinquency rate improved by 48 bps to 5.25%; net loss rate improved by 90 bps to 6.98%.

Outlook and guidance

• 2026 outlook projects low- to mid-single digit growth in average loans and revenue, with net loss rate guidance improved to 7.0%-7.1%.

• Net interest margin for 2026 anticipated to be flat to slightly higher than 2025.

• Positive operating leverage expected for 2026, excluding pre-tax impacts from debt repurchases.

• Effective tax rate for 2026 anticipated at 25% to 27%.

• Long-term ROTCE target remains mid-20%, with a clear path to achievement.