Bread Financial Holdings Inc Q3 2025 Earnings Call Transcript

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

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Thank you. Good morning. It sounds like you're seeing constructive trends across the portfolio. And I'm sure you've heard of some of the concerns on some cracks we've seen in consumer credit across some lenders and subprime. I'm just curious, as you've looked across your portfolio, have you seen any signs of weakness? Obviously, it seems like things are trending in the right direction. And then maybe, Perry, just related to that, maybe just the progression of the reserve rate and the loss rate as we go forward if things are stable? Thanks.

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Please, I'd love to advance for that.

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Okay. That's great. That's encouraging. And I guess, like as a follow-up to that, I know there's this push and pull between loan growth and credit quality. But I'm just curious, as we think ahead, knowing what we know right now, do you envision loan growth picking up as we move into next year? And maybe you could just talk about the portfolio acquisition opportunities to the extent there are any.

Question: Sanjay Sakhrani - Keefe Bruyette & Woods Inc - Analyst : Thank you.

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Great. Thanks. Maybe to just follow up on that and Perry a little bit. In terms of clearly, there's things going on in terms of kind of still temporary moves in payment rate. But if you think about the new mix of your card base, is there like a way to think about the ranges of if you had 5% growth in spend volume, what that would mean in loan growth once that phenomenon is kind of fully kind of played out or what those normal gaps would be given we've got now a different kind of base, more of it being co-brand spending and the like.

Question: Moshe Orenbuch - Cowen and Company LLC - Analyst : Okay. Thanks. And maybe in terms of some of the commentary on the margin and the impacts of the pricing changes versus kind of lower-billed late fees. Just given the way you think about the kind of the credit improvement, I guess, is there a way to kind of dimensionalize how long it's going to take for until you no longer have that or that build length fee kind of bottoms out? And so that the pricing changes actually will start to increase faster and outweigh that? Kind of any way to kind of dimensionalize that thing.

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hi. Thank you for taking my question. I did want to -- just continuing this conversation around credit sales and loan growth. Maybe just -- how are you thinking about credit sales in 4Q and into 2026? I think you mentioned there was a little bit of moderation as you move through the quarter after a strong back-to-school season. So just trying to understand, do you think we're in a little bit of an air pocket right now before you get to holiday shopping? Or just how are you thinking about holiday shopping? What are you hearing from your retail partners? Thanks.

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. Thanks for that. That's helpful. When I think about the interchange revenues, a pretty big step up in that one -- in that line item this quarter. I think even if you look at it as a percent of credit sales. Could you maybe just talk about how you expect that line to trend? What are you expecting to happen? I suspect it's got to do with the RSAs and some of the big-ticket items. But just how should we be thinking about that line item from here going forward? What do you expect? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 23, 2025 / 12:30PM, BFH.N - Q3 2025 Bread Financial Holdings Inc Earnings Call

Question: Mihir Bhatia - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Understood. Thank you.

Question: Jeffrey Adelson - Morgan Stanley - Analyst : Hey. Good morning, guys. Just wanted to focus a little bit more on the pipeline and the signings you announced this quarter. It seems like the home vertical was more of a focus for you this quarter. Is that something you're looking to focus on here, maybe creating a little bit more of a network effect around the home area and launching a joint card like one of your competitor has? And then are there any other verticals you'd call out as areas of focus for you going forward? I mean, you mentioned the healthy or the robust pipeline so maybe just sort of focus on what's in the pipeline.

Question: Jeffrey Adelson - Morgan Stanley - Analyst : Okay. Great. And maybe just a follow-up on capital return. You've been on a little bit of a roll here with the buyback authorizations. I guess, just maybe any sort of way to think about like what needs to happen for you to move past this medium-term 13% to 14%? Is it just settling the preferred, maybe getting your credit rating up to investment grade. I think you're now a couple of notches away. And have you thought about maybe establishing a larger repurchase authorization? Or do you prefer to be a little bit more on the quarterly cadence or half year cadence here?

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : Hey. Good morning, guys. I was looking through your slide deck and my rough math has like your BNPL sales volume up maybe 100%. That's probably a dirty calculation. But I guess, there's a lot of investor interest in the BNPL space, certainly over the last couple of months. I was just curious, do you guys offer or have like a dual BNPL proprietary card today? And is there an opportunity there to kind of do more

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : Got it. I guess what I'm getting at is I look at companies like Quanta and Affirm like they're really leveraging that point of sale to bring customers into the ecosystem. I guess, what I'm asking is -- what are your thoughts around I know Brett historically has been kind of a white label solution for retailers. But is there an opportunity to be a little more aggressive on the front foot there to kind of bring more customers in into the platform?

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : That actually makes sense. Okay. Real quick for me, last one. Thinking about like AI and automation and the potential there, like I've seen some reports that like AI and automation could have a multi triple-digit kind of basis point impact on efficiency ratios in the credit card, the banking space, like how are you guys thinking about that longer term? I guess, the -- I would imagine there's like an opportunity there, but just maybe can you frame that out longer time for us? Thank you.

Question: Reginald Smith - JPMorgan Chase & Co - Analyst : Perfect. Thank you, guys.

Question: Dominick Gabriele - Compass Point Research and Trading LLC - Analyst : Hey, guys. Thanks so much for the call and I don't know what to say. Congrats on the buyback and the execution here. It's many years in the making. At some point, though, when do you think the industry stops using the terminology resilient consumer? Because at the end of the day, we mentioned that across the credit spectrum, all the vintage scores improving. You said that -- actually, it sounds like there's acceleration in the improvement of your delinquencies at quarter end. I mean, when do we get to the point when we just say the consumer is solid across the spectrum and credit looks pretty good and it's trending back down. I guess, what are you guys seeing as far as that? And then I just have a follow-up.

Question: Dominick Gabriele - Compass Point Research and Trading LLC - Analyst : And there's always cracks, right? There's always something that in credit land where there's some sort of issue, but it feels like generally the consumer, I mean, is improving. And I guess when you -- Mastercard came out actually with their holiday spend and it looks like they expect some deceleration and year over year versus our last estimate, about a 1% deceleration. And so if you think about what you guys are seeing at the end of the quarter, you mentioned that spending has actually decelerated a little bit. That's pretty much in line with what we're seeing on an inter-quarter basis. So do you think that retailers seeing that potential forecast within their own models would trigger more discounts? And how does those discounts kind of affect Bread in a period where maybe versus a period where less discounts were given? Thanks so much, guys, and great results.