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Sep 30, 2023
Bread Financial Q3 2023 Earnings Report
Bread Financial reported Q3 2023 results, demonstrating financial resilience amidst consumer spending moderation and credit tightening.
Key Takeaways
Bread Financial reported a 5% increase in revenue and a 28% increase in net income compared to the third quarter of 2022. The company's results reflect prudent growth and expense discipline, with PPNR growing year-over-year for the tenth consecutive quarter. The company is proactively developing plans to address potential changes in regulation related to credit card late fees.
Revenue increased by 5% year-over-year, driven by higher finance charge yields and non-interest income.
Net income increased by 28% compared to the third quarter of 2022.
Common equity tier 1 capital ratio increased by 140 basis points to 12.9%.
The company completed an authorized $35 million share repurchase plan.
Bread Financial
Bread Financial
Forward Guidance
Bread Financial updated its full year 2023 outlook to reflect slower sales growth as a result of ongoing strategic credit tightening and moderating consumer spending, both of which pressure loan growth and the net loss rate.
Positive Outlook
- The outlook assumes continued pressure from compounded inflation.
- The outlook assumes interest rate increases, if any, by the Federal Reserve will result in a nominal benefit to total net interest income.
- Total revenue growth for 2023, excluding the gain on portfolio sale, is anticipated to be slightly above average loan growth.
- Full year net interest margin is expected to be similar to that of 2022.
- The company remains focused on disciplined expense management as they adjust the pace and timing of investments to align with revenue and growth outlook.
Challenges Ahead
- Slower sales growth is expected due to ongoing strategic credit tightening and moderating consumer spending.
- These factors are expected to pressure loan growth.
- These factors are expected to pressure the net loss rate.
- The macroeconomic landscape is expected to be more challenging.
- The company updated its expectation of a net loss rate to the mid 7% range for 2023.