Released on October 26, 2023, Bread Financial Holdings Inc (BFH, Financial)'s Q3 2023 earnings report reveals a resilient financial performance despite a challenging macroeconomic environment. The company's net income stood at $171 million, with earnings per diluted share of $3.42, and a return on equity of 25%. The tangible book value per share exceeded $42, nearly triple the level of the first quarter of 2020, underscoring BFH's progress in building long-term shareholder value.
Financial Performance and Challenges
BFH's third-quarter results were impacted by a reduction in overall consumer spending, persistent inflation pressure, higher interest rates, and the company's proactive credit tightening actions. Despite these challenges, the company's net income increased by $37 million, or 28%, relative to the third quarter of 2022. The company's revenue also increased by $52 million, or 5%, in the same period.
Financial Achievements
BFH successfully closed on the Dell Technologies consumer credit portfolio purchase of approximately $400 million and launched the Dell Pay program. The company also launched a credit card program for Ross Dress for Less, the largest off-price apparel and home fashion chain in the United States. BFH completed its authorized $35 million share repurchase plan, representing 935,000 shares.
Income Statement, Balance Sheet, Cash Flow Statement Highlights
BFH's income from continuing operations increased by $39 million, or 29%, compared to the third quarter of 2022. The company's total non-interest expenses increased by $16 million, or 3%, as card and processing expenses increased by 26%. The company's common equity tier 1 capital ratio increased to 12.9% from 11.5% in the third quarter of 2022.
Company's Performance Analysis
BFH's third-quarter financial results highlight the company's focus on prudent growth and expense discipline. The company achieved a 5% year-over-year revenue growth on a 3% growth in expenses. The company's third-quarter net interest margin increased sequentially as a result of seasonality and lower reversals of interest and fees due to lower gross losses in the quarter.
Other Pertinent Details
BFH is proactively developing plans to address potential changes in regulation, particularly in anticipation of the CFPB's issuance of its final rule on credit card late fees. The company's seasoned leadership team remains focused on generating strong returns through prudent capital and risk management.
Explore the complete 8-K earnings release (here) from Bread Financial Holdings Inc for further details.
