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Bread Financial NYSE: BFH reported fourth quarter and full-year 2025 results that management described as “strong” and in line with expectations, supported by partner additions, improving credit trends, and continued progress in deposits and capital actions.
New partners, renewals, and product mix
Chief Executive Officer Ralph Andretta said the company executed on its “responsible growth” objective in 2025, signing seven major new brand partners and renewing multiple existing programs. Andretta highlighted significant expansion in the Home vertical with Bed Bath & Beyond, Furniture First, and Raymour & Flanigan. The company also signed and launched Crypto.com and added Bread Pay installment lending relationships with Cricket Wireless and Vivint.
On renewals, Andretta said Bread Financial extended its partnership with Caesars Entertainment and noted that all of the company’s top 10 programs are now renewed until at least 2028. He pointed to the June launch of an enhanced fee-based Caesars Rewards credit card as an example of product innovation aimed at accelerating rewards and experiences.
Andretta said the company’s vertical and product expansion is helping diversify income and risk, noting that co-brand represented 52% of credit sales in the fourth quarter, up from 48% a year earlier.
Fourth quarter results and capital actions
In the fourth quarter, Bread Financial generated net income available to common stockholders of $53 million. Excluding a $42 million post-tax impact from expenses related to debt repurchases, adjusted net income was $95 million and adjusted earnings per diluted share were $2.07, management said. Tangible book value per common share rose 23% year-over-year to $57.57, and return on average tangible common equity was 8% for the quarter and 20% for the full year.
The company repurchased $120 million of common shares in the quarter (1.9 million shares) and ended the period with $240 million remaining under its current authorization. Andretta said the company returned $350 million of capital to shareholders in 2025, including $310 million in common share repurchases representing 12% of year-end 2024 outstanding shares, and also raised its quarterly dividend 10% during the fourth quarter.
Funding, balance sheet, and deposits
CFO Perry Beberman emphasized progress in funding and capital structure. Andretta said direct-to-consumer deposit balances increased 11% year-over-year and have grown for 20 consecutive quarters, representing 48% of fourth quarter average total funding, up from 43% a year earlier.
Beberman said deposits were 78% of total funding at quarter-end, with the majority FDIC-insured direct-to-consumer deposits. Liquidity totaled $6.0 billion in liquid assets and undrawn credit facilities, representing 26.4% of total assets.
Following credit rating upgrades, Beberman said the company issued a $500 million senior note at 6.75% and fully paid down a $900 million 9.75% senior note, reducing the rate by 300 basis points and shrinking the note size by $400 million. The company also issued $75 million of preferred shares in the fourth quarter, which Beberman said added Tier 1 capital and provided additional flexibility; he said Bread Financial may issue additional preferred shares in the future as part of ongoing capital optimization.
On deposits, Beberman said management’s longer-term objective is to move the direct-to-consumer mix toward levels “more in line with larger peers,” describing a goal of roughly 70%+ of total funding over time, while keeping pricing competitive and noting direct-to-consumer funding is better than brokered CDs of similar tenor.
Credit trends and consumer spending
Management repeatedly pointed to improving credit metrics in 2025. Andretta said the full-year net loss rate was 7.7%, better than the company’s outlook and initial expectations, and he expects gradual improvement to continue in 2026. In the fourth quarter, the net loss rate was 7.4% and delinquency was 5.8%, down 10 basis points year-over-year and 20 basis points sequentially. The reserve rate improved to 11.2%, down 70 basis points year-over-year, reflecting improving credit metrics and higher-quality new vintages.
In discussing consumer behavior, Andretta said credit sales rose 2% year-over-year in the quarter due to higher transaction sizes and frequency. He said consumers continued to allocate more of their budgets to non-discretionary spend, while travel and entertainment spending increased versus the fourth quarter of 2024.
When asked about underwriting, Andretta said there was no “general loosening,” emphasizing the company continues to underwrite “for profit” and makes gradual adjustments as credit improves. Beberman said internal data has been encouraging, citing improving roll rates and noting the company’s early entry rate is now below pre-pandemic levels, while late-stage roll rates have also been improving—an important factor for loss improvement.
2026 outlook: loan growth inflection, NIM crosscurrents, and operating leverage
Beberman said the 2026 outlook assumes consumer resilience, inflation remaining above the Federal Reserve’s 2% target, a generally stable labor market, and interest rate decreases that will modestly pressure net interest income given the company is “slightly asset sensitive.” Bread Financial expects full-year 2026 average credit card and other loan growth in the low single digits, supported by a stable partner base and new business launches, but partially offset by strong cardholder payment rates.
Total revenue growth is also anticipated to be in the low single digits, largely tracking average loan growth. Beberman said net interest margin is expected to be near to slightly above the full-year 2025 rate, with tailwinds from pricing changes and improving cost of funds offset by Federal Reserve rate cuts, fewer billed late fees as delinquencies improve, and a shift toward lower-risk product mix that often carries lower revenue yield. He also said retailer share arrangements are expected to be higher due to higher sales, pricing changes, and lower credit losses.
For credit, the company guided to a 2026 net loss rate of 7.2% to 7.4% and a normalized effective tax rate of 25% to 27%. Beberman said Bread Financial expects to deliver positive operating leverage in 2026 excluding the pre-tax impacts from debt repurchases, while continuing to invest in technology modernization, product innovation, and AI.
On AI, Andretta said the company has more than 200 machine learning models embedded in the business, has deployed “thousands of bots” that have saved over 1 million hours of manual work, and has more than 60 AI initiatives underway, including efforts tied to fraud protection, underwriting performance, call center effectiveness, and workflow automation.
About Bread Financial NYSE: BFH
Bread Financial, formerly known as Alliance Data Systems, is a Columbus, Ohio–based financial services company that specializes in providing private label credit programs, co-brand credit cards and digital payment solutions for retail partners. The company designs, issues and services proprietary credit products, enabling merchants to offer branded financing options that drive customer loyalty and increase basket sizes at the point of sale. Through its Bread technology platform, Bread Financial delivers installment-based payment options that integrate directly into e-commerce and in-store checkout experiences.
In addition to its core credit offerings, Bread Financial provides analytics, marketing and loyalty services to help merchants better understand consumer behavior and optimize promotional strategies.
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