Bread Financial Reports Q1 2025 Results with Mixed Income Metrics and Strategic Growth Initiatives

Bread Financial Holdings, Inc. reported its financial results for the first quarter of 2025, revealing total net interest and non-interest income of $970 million, a decrease of 2% from $991 million in the same period last year. The company experienced a 1% increase in credit sales, reaching $6.1 billion, driven by higher general-purpose spending. However, average credit card and other loans fell by 2% to $18.2 billion, attributed to a challenging macroeconomic environment and strategic credit tightening. The net interest margin decreased to 18.1% from 18.7% year-over-year, primarily due to lower late fees and a shift in product mix towards co-brand cards.

In terms of profitability, Bread Financial reported income from continuing operations of $142 million, up 5% from $135 million a year earlier. The net income for the quarter was $138 million, reflecting a 3% increase compared to $134 million in the prior year. The company’s diluted earnings per share rose to $2.78, up from $2.70, indicating a positive trend in profitability despite the overall decline in income metrics. The provision for credit losses decreased to $296 million from $321 million, reflecting a reserve release and improved credit quality metrics.

Strategically, Bread Financial has continued to diversify its product offerings, particularly through the expansion of co-brand credit card programs, which have shown higher credit sales per account and improved credit risk profiles. The company also completed a $400 million subordinated notes offering, enhancing its capital structure and increasing its total risk-based capital ratio to 15.5%. Additionally, the company initiated a stock repurchase program, completing the buyback of 3.2 million shares for $150 million, which is expected to optimize capital ratios and provide flexibility for future growth.

Operationally, Bread Financial reported a 13% increase in direct-to-consumer deposits, totaling $7.9 billion, which now represent 43% of total funding. The company’s delinquency rate remained stable at 5.9%, while the net principal loss rate improved to 8.2% from 8.5% year-over-year. The company continues to monitor regulatory developments, particularly regarding the Consumer Financial Protection Bureau's late fee rule, which was recently vacated, potentially benefiting the company’s revenue from late fees.

Looking ahead, Bread Financial has adjusted its 2025 financial outlook, anticipating flat to slightly lower average credit card and other loans compared to 2024, amid expected economic volatility and inflationary pressures. The company expects total net interest and non-interest income to be flat to slightly higher, driven by implemented pricing actions, while maintaining a focus on responsible growth and disciplined capital allocation.