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Bread Financial Q1 2025 Earnings Report
Bread Financial reported a 5% increase in income from continuing operations, reaching $142 million, driven by improved credit and disciplined expense management.
Key Takeaways
Bread Financial announced its first quarter 2025 financial results, reporting net income of $138 million and diluted EPS of $2.78. The company saw a 5% increase in income from continuing operations, reaching $142 million, primarily due to improved credit and disciplined expense management. Average loans decreased by 2%, while tangible book value per common share increased by 6% to $48.92.
Income from continuing operations increased 5% to $142 million, driven by improved credit and disciplined expense management.
Average loans decreased 2% to $18.2 billion, influenced by the macroeconomic environment, lower consumer spending, and tighter underwriting standards.
Tangible book value per common share increased 6% to $48.92.
The common equity tier 1 capital ratio decreased 60 basis points to 12.0%, impacted by the last CECL phase-in adjustment.
Bread Financial
Bread Financial
Forward Guidance
Bread Financial's 2025 outlook has been adjusted to reflect slower expected retail sales growth and slightly higher inflation, while anticipating flat to slightly down average loan growth and flat to slightly up total revenue. The company expects a net loss rate in the 8.0% to 8.2% range and a normalized effective tax rate of 25% to 26%.
Positive Outlook
- The CFPB's late fee rule being vacated is expected to benefit the industry.
- Reduced regulatory environment is anticipated to be favorable.
- Efficiencies gained from ongoing operational excellence initiatives are expected to generate nominal positive operating leverage.
- The company is well-positioned to generate additional capital and deliver strong returns.
- New partner signings, including Crypto.com, diversify industry verticals and strengthen partnerships.
Challenges Ahead
- Slower expected retail sales growth is anticipated.
- Slightly higher inflation is expected.
- Greater anticipated economic uncertainty means preparedness for a wide range of scenarios.
- Interest rate decreases by the Federal Reserve will pressure total net interest income.
- Risks associated with tariffs, trade policies, and inflation may adversely impact consumer strength.