Bread Financial (BFH) Q3 2024 earnings summary

Executive summary

• Q3 2024 results reflect disciplined capital allocation, including the repurchase of $262–$263 million in convertible notes, and a focus on balance sheet strength, with adjusted net income of $93 million and adjusted diluted EPS of $1.83, excluding a $91 million post-tax impact from note repurchases.

• Tangible book value per share rose 12% year-over-year to $47.48, and the CET1 capital ratio increased 40 bps to 13.3%.

• Direct-to-consumer deposits grew 23% year-over-year to $7.5 billion, now 41% of total funding.

• Portfolio acquisition and launch of Saks Fifth Avenue and Hard Rock credit card programs contributed to new partner growth.

• Consumer spending patterns remained stable but cautious, with more frequent, smaller transactions and a shift toward non-discretionary purchases.

Financial highlights

• Q3 2024 revenue was $983 million to $1.0 billion, down 5% year-over-year, mainly due to lower late fees and merchant discount fees.

• Credit sales were $6.5 billion, down 3% year-over-year; average loans grew 1% to $17.8 billion.

• Adjusted non-interest expenses decreased 5% year-over-year, excluding the $96 million pre-tax impact from convertible note repurchase.

• Delinquency rate rose to 6.4% (from 6.3%), and net loss rate increased to 7.8% (from 6.9%) year-over-year.

• Return on average tangible common equity dropped to 0.5% from 34.3% in Q3 2023.

Outlook and guidance

• 2024 average loans expected to decline low single digits versus 2023, reflecting credit tightening and slower sales.

• Revenue and adjusted non-interest expenses projected to decrease low to mid-single digits; net interest margin expected to be lower than 2023.

• Net loss rate for 2024 anticipated in the low 8% range, with a slight Q4 reduction due to hurricane-related delinquency freezes.

• Normalized effective tax rate expected at 25–26% for 2024.

• Guidance excludes impact from the CFPB late fee rule due to ongoing litigation uncertainty.