Bread Financial (BFH) Goldman Sachs 2024 U.S. Financial Services Conference summary

Strategic focus and business updates

• Emphasis on responsible growth, product diversification, and quality partner additions to position for long-term growth as macroeconomic pressures ease.

• Ongoing investment in digital and technology capabilities, with nearly 30% of applications and $11B in spend through the mobile app last year, aiming to enhance products and customer experience.

• Expanded product suite now includes private label, co-brand, proprietary credit cards, and Bread Pay, improving credit risk and growth profile.

• Travel and entertainment is now the largest sales vertical at 32% of total credit sales, up from 10% in 2019; health and beauty sales have nearly doubled to 19% of total sales.

• Partner diversification expanded across specialty apparel, health and beauty, travel, jewelry, sporting goods, technology, home, and general retail.

Financial performance and risk management

• Risk-adjusted loan yield averaged 18.9% over the last four quarters, leading the industry by 380 basis points over the closest peer.

• Loan loss reserve rate at 12.2% in Q3 2024, maintained above day-one CECL rate due to macroeconomic uncertainty, up 620 basis points since year-end 2019.

• Common tier-one capital ratio increased 270 basis points since 2021 to 13.3% in Q3 2024, with a medium-term target of 14%.

• Maintained a strong pretax pre-provision earnings (PPNR) margin of ~11% through various economic scenarios.

• Credit mix quality improved, with risk scores above 660 reaching 57% in Q3 2024.

Balance sheet and shareholder value

• Parent-level debt reduced by 62% over three years; double leverage ratio achieved at 103%, below the 115% target.

• Tangible book value per share (TBVPS) grew at a 15% CAGR, rising by ~$16 over three years to $47.48 in Q3 2024.

• 85% of loans are secured through 2026, with nine of the ten largest programs secured through 2028, supporting portfolio stability.