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Sep 30, 2022
Bread Financial Q3 2022 Earnings Report
Bread Financial's third quarter results reflected progress towards 2022 financial targets, driven by double-digit loan growth and a PPNR increase.
Key Takeaways
Bread Financial reported a net income of $134 million, or $2.69 per diluted share, for the third quarter of 2022. Total revenue was $979 million, up 15% year-over-year. The company highlighted double-digit loan growth and a 17% increase in pretax pre-provision earnings (PPNR). Credit metrics normalization continued with a delinquency rate of 5.7% and a net loss rate of 5.0%.
Announced a new long-term credit card relationship with World Market.
Partnered with Marqeta to enhance in-store virtual payment solutions.
Renewed relationship with Buckle, a valued brand partner.
Completed the AAA portfolio conversion, achieving target of greater than $2 billion in loan balances from new partner signings in 2022.
Bread Financial
Bread Financial
Forward Guidance
Bread Financial expects moderation in the consumer payment rate throughout the remainder of 2022 and anticipates further interest rate increases by the Federal Reserve to result in a nominal benefit to total net interest income. They reiterate their expectation for low-double-digit growth in full year 2022 average credit card and other loans relative to 2021 and anticipate total revenue growth for 2022 to align with average loan growth, with slight upside from improved full year net interest margin versus 2021. They expect a net loss rate at the high end of their previously communicated low-to-mid 5% range for 2022 and continue to expect their full year normalized effective tax rate to be in the range of 25% to 26%.
Positive Outlook
- Expects moderation in the consumer payment rate throughout the remainder of 2022.
- Anticipates further interest rate increases by the Federal Reserve to result in a nominal benefit to total net interest income.
- Reiterates expectation for low-double-digit growth in full year 2022 average credit card and other loans relative to 2021.
- Anticipates total revenue growth for 2022 to align with average loan growth, with slight upside from improved full year net interest margin versus 2021.
- Continues to expect full year normalized effective tax rate to be in the range of 25% to 26%.
Challenges Ahead
- Outlook continues to assume a moderation in the consumer payment rate throughout the remainder of 2022.
- Expects further interest rate increases by the Federal Reserve.
- Expects a sequential increase in total expenses in the fourth quarter.
- Expects a net loss rate at the high end of the previously communicated low-to-mid 5% range for 2022.
- There is quarter-over-quarter volatility due to the timing of various discrete items.