Bread Financial's Q1 2025: Navigating Contradictions in Late Fee Regulations, Loan Growth, and Consumer Trends

Late fee regulation impact on NIM, loan growth acceleration expectations, credit risk management and consumer behavior, late fee regulation impact, consumer behavior and economic recovery are the key contradictions discussed in Bread Financial's latest 2025Q1 earnings call.



Strong Financial Performance:
- Bread Financial reported net income of $138 million and earnings per diluted share of $2.78 for Q1 2025.
- The company showed resilience amidst a challenging macroeconomic environment, attributed to strategic credit tightening actions and improved operational efficiency.

Capital and Liquidity Management:
- Bread Financial successfully completed a $400 million subordinated notes offering, enhancing total risk-based capital ratio by more than 200 basis points.
- The company also completed a $150 million share repurchase program, reflecting confidence in its intrinsic value and financial resilience.

Improving Credit Quality and Consumer Behavior:
- The net loss rate was 8.2%, down 30 basis points from the previous year, with late-stage roll rates showing favorable trends.
- This improvement is attributed to prudent underwriting, disciplined credit management, and product diversification efforts, despite ongoing economic uncertainty.

Deposit and Credit Sales Growth:
- Direct-to-consumer deposits increased to $7.9 billion, up 13% year-over-year, approaching $8 billion.
- Credit sales grew 1% year-over-year due to higher general-purpose spending and overall transaction volume, supported by lower gas prices and consumer purchasing power.