Bread Financial Holdings, Inc. Reports Strong Third Quarter Results

Bread Financial Holdings, Inc., a leading financial services company, has released its financial results for the third quarter of 2025. The company’s performance highlights its resilience and ability to navigate the current economic landscape.

Overview of Financial Performance

Bread Financial reported total net interest and non-interest income of $971 million for the third quarter of 2025, a slight decrease of 1% compared to the same period in the prior year. This was driven by a 3% decrease in total interest income, primarily due to lower billed late fees and lower average credit card and other loan balances, partially offset by lower reversals of finance charges and late fees.

The company’s net interest margin remained flat year-over-year at 18.8%, but improved sequentially from the second quarter of 2025. This was due to the ongoing implementation of pricing actions, such as increases to annual percentage rates, which helped offset the impact of lower billed late fees and a shift in product mix towards co-brand cards.

Non-interest income decreased by $7 million, or 14%, compared to the third quarter of 2024. This was driven by increased costs associated with brand partner retailer share arrangements and a decrease in merchant discount fees due to lower “big ticket” credit sales, partially offset by the company’s implemented pricing actions, including paper statement fees.

The Provision for credit losses decreased by $70 million, or 19%, compared to the third quarter of 2024, driven by a $28 million reserve release and lower net principal losses. The company’s Allowance for credit losses decreased as of September 30, 2025, compared to December 31, 2024, due to a lower credit card and other loans balance and improved credit metrics.

Total non-interest expenses decreased by $98 million, or 17%, year-over-year, primarily driven by a $93 million decrease in Other expenses, which included a $96 million impact in the prior year from the company’s repurchased debt.

The Provision for income taxes decreased by $29 million, or 77%, due to a discrete tax benefit during the current year period and larger nondeductible items in the prior year.

Liquidity and Capital Resources

Bread Financial maintains a strong focus on liquidity and capital management. The company’s primary sources of liquidity include cash generated from operating activities, its bank credit facility, issuances of debt securities, financings through its securitization programs, and deposits with its banks.

During the third quarter of 2025, the company completed several financing-related transactions, including the issuance of $400 million in aggregate principal amount of 8.375% Fixed-Rate Reset Subordinated Notes due 2035, the redemption of the remaining $100 million in aggregate principal amount of its 7.000% Senior Notes due 2026, and the repurchase of $31 million in aggregate principal amount of its 9.750% Senior Notes due 2029 and $0.1 million in aggregate principal amount of its 8.375% Fixed-Rate Reset Subordinated Notes due 2035.

As of September 30, 2025, Bread Financial’s Common equity tier 1 capital ratio was 14.0%, up from 13.3% in the third quarter of 2024, driven by net earnings over the period, partially offset by the effects from its repurchased shares and debt securities. The company’s direct-to-consumer deposits increased 9% to $8.2 billion as of September 30, 2025, representing 47% of its total funding, up from 41% a year ago.

Outlook and Key Trends

Bread Financial’s 2025 financial outlook reflects continued consumer resiliency, inflation remaining above the Federal Reserve Board’s target rate, and a slowing, yet stable labor market. The company expects interest rate decreases by the Federal Reserve Board, which it anticipates will result in slight net interest margin compression.

For 2025 compared to 2024, the company expects total net interest and non-interest income, excluding any gain on portfolio sale, to be relatively flat as its implemented pricing actions are offset by factors such as interest rate decreases, continued shift in risk mix, and product mix changes.

Bread Financial expects to generate positive operating leverage in 2025, excluding any gain on portfolio sale and the pretax impacts from its repurchased debt. The company’s 2025 financial outlook assumes a full-year net principal loss rate ranging from 7.8% to 7.9%, driven by continued consumer resiliency, disciplined credit management, and risk and product mix shifts.

The company remains confident in its ability to achieve its 2025 financial outlook and will continue to successfully execute its strategic objectives and operational excellence efforts, positioning it to deliver strong returns and create sustainable, long-term value for its shareholders.

Analysis and Key Takeaways

Bread Financial’s third quarter results demonstrate its ability to navigate the current economic environment and maintain a strong financial position. The company’s diversified product mix, with growth in co-brand and proprietary credit cards, as well as its installment lending products, has helped offset the impact of lower delinquencies and billed late fees.

The company’s focus on operational efficiency and disciplined expense management has also contributed to its positive performance, as evidenced by the significant decrease in total non-interest expenses. Bread Financial’s proactive approach to liquidity and capital management, including the recent debt transactions and share repurchases, further strengthens its balance sheet and financial flexibility.

Looking ahead, the company’s cautious outlook, reflecting the potential impact of interest rate changes and macroeconomic uncertainties, underscores its prudent risk management. Bread Financial’s ability to adapt its strategies and product offerings to changing market conditions positions it well to continue delivering value to its customers and shareholders.

Overall, Bread Financial’s third quarter results highlight its resilience, financial discipline, and commitment to long-term growth and sustainability. The company’s performance reinforces its status as a leading player in the financial services industry, well-equipped to navigate the evolving economic landscape.