Bread Financial (BFH) Barclays 22nd Annual Global Financial Services Conference summary

Business performance and financial trends

• Sales remain soft due to macroeconomic pressures, with big-ticket and discretionary purchases down, impacting revenue.

• Third quarter expenses are rising from new partnerships and increased marketing, with further increases expected in the fourth quarter due to seasonal HR costs.

• A $380 million repurchase of convertible debt led to a $100 million one-time P&L charge in Q3, affecting the tax rate.

• Delinquencies remain stable due to credit actions, but loss rates are expected to rise from 8% in Q3 to 8.3% in Q4, with further seasonal pressure into next year.

• Reserve rate is stable near-term but expected to decline slightly by year-end, remaining above pre-CECL levels due to adverse scenario weighting.

Consumer and credit environment

• Inflation is easing slower than projected, with unemployment still at healthy levels but expected to rise modestly.

• Consumers are managing credit responsibly, though credit card debt is at record highs.

• Elevated delinquency and charge-off rates are expected to persist for several quarters, with a gradual improvement as wage growth outpaces inflation.

• Recent credit vintages are performing as expected due to tightened underwriting, but curing delinquencies remains challenging.

Strategic initiatives and growth outlook

• Medium-term loan growth is targeted at low- to mid-single digits, with longer-term growth in the mid- to high-single digits, driven by product diversification and improved consumer health.

• Expansion into travel, entertainment, and technology verticals is ongoing, with new partnerships such as AAA, NFL, HP, and Dell.

• Preference for general purpose and co-brand cards for diversification and lower risk, while private label cards serve as down-sell products.