Bread Financial Holdings Inc at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : So let's just jump right into it. Maybe just give us a mark-to-market on the third quarter. Any updates on the P&L trends we should expect in the third quarter?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. That's helpful update. And you touched on this a little bit and maybe just expand on a little more the trends in big big ticket and discretionary spend. You saw in the third quarter.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Okay, helpful. And then based on the trends you're seeing or what can you say about the health of the consumer? We had a worse than expected unemployment rate in July. Have you seen any signs of that kind of manifest itself in the in borrower behavior there?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. So that's on the near term. On the long-term you retreated your long term charge-off guidance, 6%, fiscal year '24 is expected to be above 8%. So maybe just talk about the drivers of getting down there into the time line.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. If you look at your vintage performance, any color you can kind of provide on how the more recent vintages like 2023 are performing relative to 2021 and 2022 and even pre-pandemic.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. Makes sense. And maybe just turning to the reserve rate in the last quarter, at 12.2% and you're expecting to exit the year lower versus 2023. But yet the reserve rate rates still going to be noticeably higher than still day one, that's 9.3%. So how should we think about the medium term target? And do charge-offs need to hit 6% before you drift back down into that range for the ratio?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. As a follow-up to that, is there a level of the unemployment rate that your reserve ratio currently contemplates?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. Maybe turning to loan growth, you're targeting low to mid-single-digit growth in the medium term and mid to high single digit growth longer term. Maybe just talk about what products or verticals that's driving that outlook.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : That's helpful. Maybe just switching gears and turning to weight fees. What's the update on that and more importantly, the revenue impact, I think the last guide you gave was the decline of 20%. That also assumes an October first implementation date, which looks highly unlikely at least to me. So maybe just talk about the update there.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. So on that topic of mitigants, any update there as to and kind of what you've implemented so far and what's kind of left in the pipeline the rollout?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. It sounds like it's a complicated process. Yes, you had to say like what inning are you in with respect to implementing the actual numeric. We're getting the all the partners onboard?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. That's helpful. And maybe just touch on the customer response added this stuff you have come to implemented. Have you noticed any change or early changes in customer behavior or whether it's in response to higher APRs or paper statement fees?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : That's helpful. In terms of the actual kind of incremental revenue you expect to generate from your mitigants, I mean, is there any kind of framework you can give to help investors size the impact of mitigants. Ultimately, obviously, you had your close peer put out an actual range. Is there any framework to kind of help investors get to a certain number?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Okay. Fair enough. Switching gears and maybe just talking about partnerships. We recently announced the Saks partnership with HP, with BMPL option. Maybe just talk about the market for both co-brand and private label partnerships. What are you seeing there with respect to competition?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. To look at your credit sales by category is about 51% co-brands, 44% private label. Guess what looks more attractive longer term for growth? Is there -- Are you trying to tilt it one way or the other?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. And what are you seeing from new entrants, we've seen some newer entrants like in print pickup, some retail relationships or can you say about those entrants?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : I am switching gears beginning on the capital allocation and Brad made strides in balance sheet management paying down parent company debt, increasing deposits and improving overall capital ratios. Can you maybe just talk about your near term and intermediate term priorities?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. That helpful CT ones, about 13.8% last quarter. You mentioned the 65 basis points in the last season phasing and then obviously moving pieces around regulatory. So at what point should investors start thinking about a buyback? How do we think about that?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. On your Investor Day, you had up on highlighted your ability to underwrite deeper in the nonprime space, which has led to high risk-adjusted returns. Maybe just talk about your what you feel your competitive advantages in that area that allows you to do that.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Got it. We have about nine minutes left. I'll just queue up the one audience response question we have. So the question is over the next year, would you expect your position in bread to one increase two decrease or three stay the same?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Yes. Was it actually fairly evenly split, 35% increase, 31% decrease and 35% stay the same. Any comments?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Okay. So we have nine minutes left. I'll just open it up to the audience for questions. If there are any we have one up in the front second row? Unidentified Participant I think of your retail partnerships as being kind of smaller, very diversified now being a partnership could you go out, I mean, on the one hand and a lot of potential revenue on the table, if you win a much bigger partnership on the other hand, and it kind of was always risk with kind of concentration in a small number of bigger partners. So how do you how do you think about that?

Question: Terry Ma - Barclays Capital, Inc. - Analyst : If I can ask what's going on with the Walmart partnership, I mean, it ended badly with Synchrony and then it admittedly with Cap One. I mean, is it still -- I think it's still open. You're partnered with anybody yet that right.

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Yes, few minutes for the last question over there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 1:45PM, BFH.N - Bread Financial Holdings Inc at Barclays Global Financial Services Conference Unidentified Participant Thank you. (inaudible)

Question: Terry Ma - Barclays Capital, Inc. - Analyst : Great. Anymore questions. So we'll wrap it up there.