Key Highlights

  • Net income was USD 156 million, down 17% on a prior-year tax item.
  • Revenue rose 5% to USD 1,017 million as loans grew 7%.
  • The net loss rate fell 99 basis points to 6.40%.
  • Consumer deposits rose 21% to USD 9.9 billion.

Earnings and Revenue

Bread Financial (NYSE:BFH) reported third-quarter 2026 results on Thursday. Net Income was USD 156 million, down 17% from a year earlier, when results included a USD 38 million favorable discrete tax item. Diluted Earnings per share were USD 3.82, a 4% decline.

Revenue rose 5% to USD 1,017 million on Loan growth, lower interest expense and higher merchant and interchange fees. Pretax pre-provision earnings, a non-GAAP measure, rose 7%. Credit sales grew 9% to USD 7.4 billion, with contributions from both new and existing Brand partners. End-of-period loans reached USD 18.9 billion, up 7%, and average loans were USD 18.6 billion, up 6%.

Total non-interest expenses were USD 487 million, up 2%, on higher information processing costs and annual merit increases. That equals 47.9% of revenue. Non-interest income was negative USD 78 million, USD 17 million lower than a year earlier, mainly because of higher retailer share arrangements. Net interest Margin was 18.9%, essentially flat year over year.

Credit Quality

The delinquency rate improved 47 basis points to 5.57%, and the net loss rate fell 99 basis points to 6.40%. Management tied the changes to Underwriting discipline, a shifting product mix and the maturing of higher-quality vintages. Prime customers, defined as those with risk scores above 650, made up 64% of cardholders.

The reserve rate fell 60 basis points to 11.2%, reflecting the improved credit metrics. Loan growth raised the provision for credit losses, partly offset by the lower reserve rate. Chief Financial Officer Perry Beberman cautioned that persistently weak consumer confidence, the cumulative effect of higher interest rates and global conflicts remain uncertainties for spending, borrowing and payment trends.

Funding and Capital

Consumer deposits rose 21% to USD 9.9 billion, which management tied to its focus on improving the funding profile. Total Liquidity was USD 7.1 billion, more than 30% of total assets. Tangible Book Value per common share rose nearly USD 11 to USD 66.95, up 19%.

The common Equity tier 1 ratio was 13.1%, down 90 basis points from a year earlier, which the company described as the result of Capital optimization. It repurchased 700,000 shares for USD 75 million in the quarter, an average of about USD 107 per share, and bought back USD 24 million of subordinated debt. The quarterly Dividend is USD 0.25 per common share, 9% above the prior quarter.

Full-Year Guidance

Management sharpened its full-year guidance. Average loan growth is guided to about 4%, narrowed from a prior range of low to mid single digits. Revenue growth is guided to about 5%, driven mainly by average loan growth. The net loss rate is guided to 6.9% to 7.0%, below 7.0%, and the effective tax rate to 25% to 27%, with timing of discrete items causing variability.

Figures to Follow

Net income fell 17% while revenue rose 5% and pretax pre-provision earnings rose 7%. The gap traces to the prior-year tax item and a larger provision tied to loan growth. The 6.40% quarterly net loss rate compares with the full-year range of 6.9% to 7.0%, so the loss rate in the final quarter is a figure that bears on that range. Other reference points include the 5.57% delinquency rate, deposit growth against the 21% pace, the 13.1% CET1 ratio as repurchases continue, and the 11.2% reserve rate.