Bread Financial Provides Performance Update For February 2024
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The reported increase in Bread Financial Holdings' net loss rate from 7.8% to 8.9% year-over-year represents a significant deterioration in credit quality, which could raise concerns among investors about the company's credit risk management and future profitability. This uptick in losses may be indicative of a broader trend in consumer credit behavior or a specific issue within the company's portfolio. The accompanying rise in the delinquency rate from 6.0% to 6.7% further supports the possibility of an increasing number of borrowers struggling to make timely payments.
It is crucial to consider the context of these figures, such as the economic environment, as higher delinquency and loss rates could be symptomatic of an economic downturn affecting consumers' ability to pay off debts. Stakeholders should monitor subsequent reports to determine if this is an aberration or part of a longer-term trend. The revision of the calculation method for average loans to align with industry practices adds complexity to the analysis, making historical comparisons less straightforward and potentially obscuring underlying trends.
Understanding the year-over-year change in average credit card and other loans, which shows a 6% decrease, is essential for assessing market dynamics and consumer behavior. This decline could signal a shift in consumer spending habits, possibly due to economic factors or competition in the credit market. As Bread Financial Holdings operates in a highly competitive sector, it is important to analyze how their product offerings and customer engagement strategies are performing in retaining and attracting customers.
Additionally, the fluctuation in loan averages and loss rates could affect the company's market positioning and stock performance. Investors may react to these financial indicators by re-evaluating the company's risk profile and adjusting their investment strategies accordingly. The impact on the stock market will largely depend on whether these figures are perceived as part of an industry-wide issue or specific to the company's operations.
The provided financial metrics can serve as a microcosm of the broader economic climate. An increase in net loss and delinquency rates could be reflective of economic stress, such as rising unemployment or inflation, impacting consumers' financial stability. The data from Bread Financial Holdings could therefore be extrapolated to gauge consumer confidence and spending power, which are critical indicators for economic health.
From a macroeconomic perspective, if these trends are observed across multiple financial institutions, they may suggest a need for policy intervention to stabilize credit markets and prevent a potential credit crunch. The effects of such trends can ripple through the economy, affecting consumer spending, business investment and overall economic growth.
COLUMBUS, Ohio, March 13, 2024 (GLOBE NEWSWIRE) -- Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, provided a performance update. The following tables present the Company’s net loss rate and delinquency rate for the periods indicated.
| For the month ended February 29, 2024 | For the month ended February 28, 2023 | ||||||
| (dollars in millions) | |||||||
| End-of-period credit card and other loans | $ | 18,391 | $ | 18,113 | |||
| Average credit card and other loans(1) | $ | 18,541 | $ | 19,809 | |||
| Year-over-year change in average credit card and other loans | (6 | %) | 20 | % | |||
| Net principal losses(1)(2) | $ | 131 | $ | 128 | |||
| Net loss rate(1)(2) | 8.9 | % | 7.8 | % | |||
| As of February 29, 2024 | As of February 28, 2023 | ||||||
| (dollars in millions) | |||||||
| 30 days + delinquencies – principal(2) | $ | 1,130 | $ | 1,012 | |||
| Period ended credit card and other loans – principal | $ | 16,962 | $ | 16,911 | |||
| Delinquency rate(2) | 6.7 | % | 6.0 | % | |||
| (1) | Beginning in January 2024 we revised the calculation of Average credit card and other loans to more closely align with industry practice by incorporating an average daily balance. Prior to 2024 Average credit card and other loans represents the average balance of the loans at the beginning and end of each month, averaged over the periods indicated. Consequentially, the calculations for Year-over-year change in average credit card and other loans and Net loss rate also differ for the periods presented. |
| (2) | As previously communicated, the month ended February 28, 2023 Net principal losses, Net loss rate, 30 days + delinquencies - principal and Delinquency rate were impacted by the transition of our credit card processing services in June 2022. |
About Bread Financial
Bread FinancialTM (NYSE: BFH) is a tech-forward financial services company providing simple, personalized payment, lending and saving solutions. The company creates opportunities for its customers and partners through digitally enabled choices that offer ease, empowerment, financial flexibility and exceptional customer experiences. Driven by a digital-first approach, data insights and white-label technology, Bread Financial delivers growth for its partners through a comprehensive suite of payment solutions that includes private-label and co-brand credit cards and Bread Pay™ buy now, pay later products. Bread Financial also offers direct-to-consumer products that give customers more access, choice and freedom through its branded Bread CashbackTM American Express® Credit Card and Bread SavingsTM products.
Headquartered in Columbus, Ohio, Bread Financial is powered by its 7,500+ global associates and is committed to sustainable business practices. To learn more about Bread Financial, visit breadfinancial.com or follow us on Facebook, LinkedIn, Twitter and Instagram.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, future financial performance and outlook, future dividend declarations, and future economic conditions.
We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Accordingly, our actual results could differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. Factors that could cause the outcomes to differ materially include, but are not limited to, the following: macroeconomic conditions, including market conditions, inflation, rising interest rates, unemployment levels and the increased probability of a recession, and the related impact on consumer payment rates, savings rates and other behavior; global political and public health events and conditions, including ongoing wars and military conflicts; future credit performance, including the level of future delinquency and write-off rates; the loss of, or reduction in demand from, significant brand partners or customers in the highly competitive markets in which we compete; the concentration of our business in U.S. consumer credit; inaccuracies in the models and estimates on which we rely, including the amount of our Allowance for credit losses and our credit risk management models; the inability to realize the intended benefits of acquisitions, dispositions and other strategic initiatives; our level of indebtedness and ability to access financial or capital markets; pending and future legislation, regulation, supervisory guidance, and regulatory and legal actions, including, but not limited to, those related to financial regulatory reform and consumer financial services practices, as well as any such actions with respect to late fees, interchange fees or other charges; impacts arising from or relating to the transition of our credit card processing services to third party service providers that we completed in 2022; failures or breaches in our operational or security systems, including as a result of cyberattacks, unanticipated impacts from technology modernization projects or otherwise; and any tax liability, disputes or other adverse impacts arising out of or relating to the spinoff of our former LoyaltyOne segment or the bankruptcy filings of Loyalty Ventures Inc. and certain of its subsidiaries. In addition, the CFPB recently issued a final rule that, absent a successful legal challenge, will place significant limits on credit card late fees, which would have a significant impact on our business and results of operations for at least the short term and, depending on the effectiveness of the mitigating actions that we may take in response to the final rule, potentially over the long term; we cannot provide any assurance as to the effective date of the rule, the result of any pending or future challenges or other litigation relating to the rule, or our ability to mitigate or offset the impact of the rule on our business and results of operations. The foregoing factors, along with other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements, are described in greater detail under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.
Contacts:
Brian Vereb — Investor Relations
Brian.Vereb@breadfinancial.com
Susan Haugen — Investor Relations
Susan.Haugen@breadfinancial.com
Rachel Stultz — Media
Rachel.Stultz@breadfinancial.com
FAQ
What is the net loss rate reported by Bread Financial Holdings, Inc. as of February 29, 2024?
What is the delinquency rate reported by Bread Financial Holdings, Inc. as of February 29, 2024?
How did the average credit card and other loans change year-over-year for Bread Financial Holdings, Inc.?
What impact did the transition of credit card processing services have on Bread Financial Holdings, Inc.'s financial metrics in June 2022?
How did Bread Financial Holdings, Inc. revise the calculation of Average credit card and other loans in January 2024?
