Bread Financial Holdings Inc Q2 2025 Earnings Call Transcript

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

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hi, thank you for taking my question. I wanted to start maybe with just the health of the customer, particularly with an eye on credit sales and loan growth. I guess it sounds like you said the credit the health of the consumer is pretty stable, and you're seeing you saw 4% growth in credit sales. But maybe just talk a little bit about the monthly trends that you're seeing. Was that steady throughout the quarter? Any update on July? And then how does that 4% credit sales growth translate down to loan growth?

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. Just to be clear, sorry, on July, are you seeing an acceleration from the 4%? Is that I mean you said I just want to be clear on exactly what you said there.

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Okay. Maybe just turning then to capital plans and buybacks. Look, you have a healthy ROE. It doesn't sound like you're anticipating much loan growth, at least for the next couple of quarters. CET is in a good place. I understand you're doing stuff on the debt side, but maybe just talk a little bit about buybacks, how you're thinking about those? Any thoughts to go get authorization and do stuff there?

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it thank you for taking my questions thank you.

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Thank you. Good morning, Perry, maybe you could talk a little bit more about that slightly tempered top line view. I know you've got some cross wins here with better credit and that affects late fees, but you also have some of the mitigation impacts that would be rolling through over time. Could you just help us think about the progression of the top line, specifically NII over the next, whatever, 6 to 12 months?

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Okay. Maybe this is a question for both you and Ralph. Obviously, credit now, I think, going the right direction. You guys seem to have some control over it. The macro tariffs withstanding seems to be stable, if not improving some. Now that those factors, which have been headwinds are not the headwinds, how do you guys play offense from here? You talked a little bit about the excess capital position you have. Maybe a little bit if you could talk about the growth prospects, et cetera. How do we build how do we lean in and grow from here? thanks.

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Great, thanks very much. Perry, maybe you could put a little finer point on kind of the mix shift that you've been seeing with respect to kind of higher-end consumers and more general purpose spend. Has that had an impact on balance growth in addition to yield? Like what should we think about in terms of that? And are those consumers revolving on their balances? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 12:30PM, BFH.N - Q2 2025 Bread Financial Holdings Inc Earnings Call

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Got you. And maybe you talked a little bit about the effects of the late fee mitigants and the pricing. Could you maybe flesh that out a little more? Like where do you see yourselves in that? And how is that going to impact the margins kind of over the coming quarters? And any discussions with retail partners about either pulling them back or reinvesting them elsewhere, thoughts like that? thanks

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Got it, thanks very much.

Question: Terry Ma - Barclays Services Corp - Analyst : Hey, thank you. Good morning can you maybe just expand a little bit more in terms of what you need to see before you kind of unwind some of those tightening actions? Is it kind of more on the performance side or just more kind of macro driven?

Question: Terry Ma - Barclays Services Corp - Analyst : Got it. That's helpful. And then maybe just a follow-up on credit. You called out last quarter improving roll rates. I think you mentioned it was kind of broad-based across FICO cohorts. Has that continued? And then can you maybe just quantify how elevated those roll rates are relative to kind of what you expect to be kind of normalized? Thank you.

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : Hey, good morning. Thanks for taking the question. It's funny, we're all kind of asking about growth and my question is related as well. I was curious on what you guys can share in terms of the trends you're seeing in just the volume of gross applications that come through for specifically for both the co-brand and the private label, if you could kind of segment that out, that would be great. I know one of you guys mentioned your approval rate. And I'm not asking for an exact number, but can you kind of contextualize where you are today and maybe what that approval rate would have looked like in a more bullish environment. So I'm just trying to figure out like what the slack potential is in there. And then finally, as you think about new accounts that come on, what can you tell us in terms of like engagement? Are they using the card versus maybe previous cohorts? Any type of metric or color you could give there would be great. And I have one follow-up thankyou.

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : Got it. So, I appreciate the anecdote. It sounds like there's nothing like nothing hard you can tell us about those trends, which I guess is fine. I guess my next question, you mentioned your top 10 partners earlier, I think, in response to Sanjay's question. And is there a way to kind of frame your wallet share today with those partners and maybe what your longer-term stretch goal could be there? Like just to give us a sense of your penetration there and what you guys are driving to or how you would think about that longer term?thank you.

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Right okay thanks for the color. I appreciate It.

Question: Jeffrey Adelson - Morgan Stanley - Analyst : Hey, good morning, Ralph and Perry. Thanks for taking my questions. I wanted to just circle back on credit a bit. I know you'd called out the hurricane impacts for the quarter, about 30 basis points, I believe. And I think previously, you'd mentioned that June would be seeing the bulk of the impact. So if I kind of think about stripping that out, it seems like your charge-off trend for June was actually down quite a bit, maybe 100 basis points

Question: Jeffrey Adelson - Morgan Stanley - Analyst : Yeah, that makes sense. And if I could ask a question, Ralph, you mentioned partners focused on growth, not renewing, technologies, customer engagement. I'm curious, as BNPL come up more in the conversations lately? I know one of your peers has been introducing more of their pay later product. You've obviously had that acquisition several years ago. Is that coming up more? Or are there any sort of key features and focal points your partners are looking at? And then as a follow-up to that, I know you just highlighted the crypto win you had last quarter. Any other areas of focus you're having in new prospective client conversations by industry vertical? thanks.

Question: Bill Carcache - Wolfe Research LLC - Analyst : Thanks. Good morning, Ralph and Perry. Following up on the Caesars renewal and I guess, any perspective that could offer on future renewals. Can you give some color on whether it was a competitive process? How did the pricing actions that you've taken impact the renewal discussions? Are there any changes to your risk-adjusted returns that you anticipate under the new terms?

Question: Bill Carcache - Wolfe Research LLC - Analyst : Thanks Ralph and then separately, can you discuss what you're seeing when it comes to penetration of retail partner sales? Any trends you're seeing across different categories that stand out and sort of any notable efforts to drive that higher, particularly to the extent that we see you guys maybe expand your credit box, if macro conditions sort of support that, how does that look in terms of that penetration?

Question: Bill Carcache - Wolfe Research LLC - Analyst : That's helpful thank you.

Question: Ryan Shelley - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey guys, thanks for the question. I appreciate Mine is around the capital structure in today's debt tender. So offer out there for both the unsecured and the subnotes. The subnotes are relatively new issuance. I guess, could you give any color for the reasoning on going after the subnotes? And just general thoughts around the capital structure as we move forward here would be much appreciated. I know you mentioned potentially doing some preferreds before. So just how should debt investors specifically be thinking about this capital structure going forward? thank you.

Question: Ryan Shelley - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. Is it likely you mentioned the February call price is likely you wait until then to see exactly how this tender goes or just up in the air?

Question: Ryan Shelley - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Fair enough. Thanks for the question.