Bread Financial Holdings Reports 11% Decline in Income and 61% Drop in Net Income for Fiscal Year 2024

Bread Financial Holdings, Inc. reported a decline in financial performance for the fiscal year ending December 31, 2024, with total net interest and non-interest income decreasing by 11% to $3.8 billion, compared to $4.3 billion in 2023. The company experienced a 7% drop in credit sales, totaling $27.0 billion, attributed to self-moderated consumer spending and strategic credit tightening. Average credit card and other loans decreased by 1% to $18.1 billion, while end-of-period loans fell by 2% to $18.9 billion. The net interest margin also declined to 18.3% from 19.5% in the previous year, primarily due to reduced late fees and increased funding costs.

In terms of profitability, Bread Financial's net income fell to $277 million, down 61% from $718 million in 2023. The decrease was influenced by a higher provision for credit losses, which rose to $1.4 billion from $1.2 billion in the prior year. The company reported net principal losses of $1.5 billion, slightly higher than the $1.4 billion recorded in 2023. Adjusted net income, which excludes the impact of repurchased convertible notes, was $381 million, a 47% decrease from the previous year.

Strategically, Bread Financial made significant moves in 2024, including the repurchase of $306 million in convertible notes, which contributed to a $107 million inducement expense. The company also expanded its direct-to-consumer deposits to $7.7 billion, representing a 19% increase year-over-year. Additionally, the company launched new credit card products and continued to strengthen its partnerships with major brands across various sectors, including travel, health, and retail.

Operationally, Bread Financial's customer engagement metrics showed a mixed performance. The delinquency rate improved to 5.9% from 6.5% in 2023, reflecting effective credit tightening measures. However, the net principal loss rate increased to 8.2%, up from 7.5% in the previous year. The company maintained a strong capital position, with a common equity tier 1 capital ratio of 12.4%, exceeding regulatory requirements.

Looking ahead, Bread Financial anticipates a stable economic environment for 2025, with expectations for flat average credit card and other loans. The company projects a modest increase in total net interest and non-interest income in the low single digits, while also preparing for potential impacts from regulatory changes regarding credit card late fees. The management remains focused on operational excellence and disciplined investment strategies to drive future growth.