Bread Financial at KBW Fintech Payments Conference: Resilient Consumers Drive Optimism

On Thursday, 13 November 2025, Bread Financial Holdings (NYSE:BFH) presented at the KBW Fintech Payments Conference 2025. The company's Chief Financial Officer, Perry Beberman, highlighted the resilience of Middle America consumers amidst economic challenges and outlined optimistic future prospects. Despite a slight dip in loan growth, Bread Financial anticipates a positive inflection in 2026, supported by strategic partnerships and improved capital management.

Key Takeaways

• Bread Financial anticipates loan growth to turn positive in 2026, aiming for low to mid-single digit rates.
• The company's capital position has strengthened, allowing for increased share buybacks and debt reduction.
• Resilient consumer behavior is driving improved payment patterns and reducing delinquency rates.
• New partnerships in the home vertical, including with Bed Bath & Beyond, are expected to fuel growth.
• The company successfully refinanced senior notes, reducing the coupon rate from 9.75% to 6.75%.

Financial Results

• Credit Trends:

- Payment patterns are improving, reflecting consumer strength.

- Delinquency trends are expected to gradually improve, with a target of 6% through the cycle.

• Loan Growth:

- Current loan growth is slightly negative but expected to inflect positively in 2026.

- Growth is projected to reach low to mid-single digit rates.

• Capital Management:

- The CET1 ratio stands at 14%, at the top of the target range.

- An additional $200 million was authorized for share buybacks.

- Total debt reduced to $900 million.

- Senior notes were refinanced at a lower rate, improving capital efficiency.

• Net Interest Margin (NIM):

- Influenced by delinquency rates, loss rates, and pricing changes.

- Significant changes in NIM are not anticipated.

Operational Updates

• Consumer Behavior:

- Consumers are adapting to higher prices and opting for affordable alternatives.

• Partnership Model:

- Focus on supporting brand partners and maintaining responsible underwriting.

- Recent partnerships include Bed Bath & Beyond, Raymour & Flanigan, and Furniture First.

• Tech Platform:

- Bread Financial's tech stack attracted Crypto.com as a client, showcasing flexibility and strength.

- The company is monitoring AI developments and plans to adopt innovations swiftly.

• Installment Lending:

- Slow and steady growth in installment lending, with potential as a platform for personal loans.

Future Outlook

• Loan Growth:

- Expected to improve in 2026, reaching low to mid-single digit growth rates.

• Underwriting:

- No significant changes planned in underwriting standards.

• Capital Priorities:

- Continued focus on growth, debt reduction, and shareholder returns.

• M&A:

- Open to portfolio acquisitions if financially viable.

Q&A Highlights

• Consumer Health:

- No significant issues observed; more customers are making minimum payments.

• November Performance:

- Performance is promising, potentially surpassing October's results.

• Bread Financial's Strengths:

- Confidence in the company's improving story and its ability to operate independently.

For more detailed insights, please refer to the full transcript.

Full transcript - KBW Fintech Payments Conference 2025:

Sanjay Sakhrani, Interviewer/Analyst: For our next presentation, we have Bread Financial. The CFO is Perry Beberman. He's served in the CFO role since 2021 and brings over 30 years of experience in financial services, including 17 years at Bank of America, as well as MBNA, right?

Perry Beberman, CFO, Bread Financial: That's right.

Sanjay Sakhrani, Interviewer/Analyst: Great to see you here, Perry. Thank you for joining our conference again. I wanna start really high level, talk about the health of the consumer. I think if there's one term that's been repeatedly used by a lot of the companies here, as well as you guys on your earnings calls, the consumer's been resilient despite choppy backdrop. Could you just talk a little bit about how your consumer's behaving, some of the divergence we're seeing in some of the cohorts out there, and what do you think is driving that?

Perry Beberman, CFO, Bread Financial: Yeah, I appreciate you having us here, so thank you.

Sanjay Sakhrani, Interviewer/Analyst: By the way, your monthly data looked great this morning, so congratulations on that. Maybe you can speak to that.

Perry Beberman, CFO, Bread Financial: Yeah, continued improvement.

Sanjay Sakhrani, Interviewer/Analyst: Yeah.

Perry Beberman, CFO, Bread Financial: That's a demonstration of the resiliency that we're seeing with the consumer. We've been talking about the resiliency now, I'd say for, you know, well over a year in that, you know, consumers who we serve is basically in Middle America. Those households and families have been contending with that high inflation. If you think about inflation, that's up probably 30% post-pandemic. That's a big impact. Over the, I think it's been eight out of nine quarters, something like that, where real wage growth has outpaced inflation. More recently, it was like 3.5% wage growth versus 3% inflation. That's good for the typical American household. That helps them manage their budgets. They've adjusted to the higher prices. Even though inflation's 3%, there was not this big step up. They've adjusted to that higher price.

Wages have kind of caught up. That is what I think is allowing them to be resilient. You know, I think you've also heard the term choice full. That was something that started to emerge over the last few months. I think that's right. Retailers are saying that. We see that with consumers and our retail brand partners. Consumers may not be going for that, the highest priced product, that biggest name brand, and they're going a shelf down, if you want to say that. They're making choices. Maybe it's not the 65-inch TV, maybe it's a 55-inch TV. They're managing through things. I think that is what is encouraging in what we're seeing. More recently, you know, we're seeing credit sales continue to remain pretty resilient and strong even through October, early November. I'm a little cautious with what we're seeing early November.

The first week of November is your first time you start seeing some of that holiday buy going on.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: If you recall last year, there's a little bit of a pause in some of the, I'll say, purchasing by consumers as they were trying to see what was gonna happen with the election. I think that was a big fascination and there's a little bit of a holdback. Obviously, the rest of the season was okay. I don't read too much in the first week of November, but we'll see how the whole holiday season plays out.

Sanjay Sakhrani, Interviewer/Analyst: Got it. I kind of touched on this, the divergence we're seeing in some areas. What do you think is driving that?

Perry Beberman, CFO, Bread Financial: You know, we've talked about the K economy for a few years and, you know, the top end, call it the top 10-20%, I think have been immune to this inflation environment that we just talked about. Because again, if they look at their personal wealth, if you have a 401(k) account, you have real estate, if you have general investments, life seems pretty good. You know, if inflation's up 3-4%, you kind of shrug it off. It's Middle America that has to contend with that. And then the lower part of that K is where you talk about low income. That's not really who we serve. We serve more Middle American income. We're not clear that we're concentrated in that super prime. I think you get a divergence in the story of what's really driving the economy and where you hear concerns.

You know, when you look at the soft data being consumer sentiment, consumer confidence clearly trending in the wrong direction.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: That could be more of an emotional feeling about what's going to happen, less about the real hard data. The hard data we talked about, wage growth.

Sanjay Sakhrani, Interviewer/Analyst: Right.

Perry Beberman, CFO, Bread Financial: Employment, things are, that's all stable. I think that's some of the divergence you're seeing around, emotional sentiment versus facts right now.

Sanjay Sakhrani, Interviewer/Analyst: Got it. When you think about like the important numbers or indicators for the consumer, what do you guys look at to gauge, you know, what the prospective health could be?

Perry Beberman, CFO, Bread Financial: You know, we serve 30 million accounts. We got lots and lots of data. We see real payment behaviors of our own customers. We see both the on us behaviors that we track, their on us payments, but we also have all their credit bureau data. We are seeing continued improvements in payment patterns, and that shows the health of the consumer is strong. Things we watch for are obviously a lot of things around employment, making sure that there are no spikes in unemployment. I think you are seeing right now maybe it is a little bit softer labor market, but it clearly has not resulted in significant movement in unemployment. Now, who knows when we will actually get the real data on that, but right now we are not seeing anything that is showing signs of cracks in who we serve.

I know that was a term used. I think that's more subprime issues where maybe lenders who are less experienced leaned in and they got exposed.

Sanjay Sakhrani, Interviewer/Analyst: Yeah, I think that's fair. So maybe you're speaking to the credit trends that you guys are seeing. Again, another month of improvement. Seems like it's been a pretty steady, consistent path towards normal. Curious sort of how you're thinking about getting to normal and, you know, can this just continue into 2026 based on your current underwriting discipline?

Perry Beberman, CFO, Bread Financial: Yeah, our full expectation is that we continue a slow, gradual path to get to our 6% through the cycle target. That delinquency trend continues to improve. The pace of improvement I think will be dependent on a lot of the macro considerations. You know, do tariffs result in, you know, a slowdown of improvement in inflation? I'd still expect us to improve our delinquency trends and loss trends. It just may slow the pace of improvement a little bit. Does wage growth slow? I mean, there's those considerations, but with our underwriting practices, I have full expectation that next year's loss rate should improve in the same range and the improvement we saw year over year this year. I have full confidence we'll continue to see improvement.

Sanjay Sakhrani, Interviewer/Analyst: Is this like tariff impact, is that something you can see?

Perry Beberman, CFO, Bread Financial: It's mixed because it's hard to see it precisely. I think you just have to keep watching the inflation data to see how that pulls through. It goes back to if a particular product has a 20% increase in price and the customer sees that, and that's product A, and product B is maybe not inflation impacting, they're gonna go for product B or being choiceful. I'll use a TV as an example. I'm not gonna get the 65-inch TV. I can't afford that extra 20%. I'm gonna go for the one that is still in my budget. If I had $500 to spend, I'm gonna spend $500. I may not go for the top tier brand. I may go for the next brand or a different size. Consumers have choices.

I think that's the encouraging part, where inflation may creep in. If it's in clothing, if it's consumers all have choices.

Sanjay Sakhrani, Interviewer/Analyst: Yeah.

Perry Beberman, CFO, Bread Financial: They can meet their need with a product that fits within their price point.

Sanjay Sakhrani, Interviewer/Analyst: Okay. And then as we think about the reserve rate, things stand at around 11.7% right now. You mentioned sort of the path and trajectory of credit. Like how do we think about its path, the reserve rate's path?

Perry Beberman, CFO, Bread Financial: Its path should largely follow delinquency. Think about losses are a lagging indicator. Delinquency is probably more of a forward indicator. Delinquency is a measure of the credit quality within the current portfolio. That is a key metric that runs through the model. My associate credit quality of your portfolio at a point in time. As that has come down, that's gonna kick out a lower reserve rate all to itself. On top of that, you have overlays for credit risk overlays. Right now I've said for a while that we are pretty heavily weighted into the, we call S3, S4 scenarios. That's an adverse and severely adverse. I would expect that will also be a tailwind to the reserve rate over time as we start to rebalance that, those risk weightings.

Sanjay Sakhrani, Interviewer/Analyst: Okay.

Perry Beberman, CFO, Bread Financial: As you look in the next year, you should expect to continue to see that reserve rate glide down. Nothing I expect to be big and chunky, but nice continued movements down as delinquency improves. And we have more confidence in the economy that will allow us to, you know, remix those risk weightings.

Sanjay Sakhrani, Interviewer/Analyst: Can you remind us, Cecil, day one was around?

Perry Beberman, CFO, Bread Financial: around 9.3-9.5, somewhere in that range.

Sanjay Sakhrani, Interviewer/Analyst: Is it fair to assume like we just steadily march towards that if credit normalizes, or how should we think about?

Perry Beberman, CFO, Bread Financial: Probably around, we said around the 10% mark.

Sanjay Sakhrani, Interviewer/Analyst: Got it.

Perry Beberman, CFO, Bread Financial: Because that did not have much of a risk weighting or credit overlay, so.

Sanjay Sakhrani, Interviewer/Analyst: Understood. Got it. So you know, you talked a little bit about the change in behavior of consumers this year. I understand like November's a little funky, but just in general, consumers are willing to spend a little bit more than they were last year, it sounds right. So can you just talk about like, what can drive loan growth to a better place than it is right now? 'Cause you did see another month of negative loan growth.

Perry Beberman, CFO, Bread Financial: We did. Our loan growth has been pretty consistent throughout the year, slightly down. I think you're seeing that among similar performers of, like, I'll say credit peers, like people who serve the same sort of space.

Sanjay Sakhrani, Interviewer/Analyst: Right.

Perry Beberman, CFO, Bread Financial: Some of it is we're still operating in an environment of elevated gross losses. As gross losses come down, you're no longer losing those loans out the back door when you're bringing in new vintages at the top. The new vintages are a little smaller, better credit quality, not backfilling the what's, you know, charging off. At the same time, you're having improving payment rates. You also have improving payment rates, which means not as many of those credit sales are translating into loans that are evolving, still at a good pace. Also, you have improving payment rates on the existing portfolio. That's a little bit of a headwind to growth, but I'll take improving payment rates.

Sanjay Sakhrani, Interviewer/Analyst: Of course.

Perry Beberman, CFO, Bread Financial: All day, because that means we are go, we're start, we will hit that inflection point in, you know, I'll say 2026, and then you're starting to hit that, you know, low to mid-single digit growth rate.

Sanjay Sakhrani, Interviewer/Analyst: Okay.

Perry Beberman, CFO, Bread Financial: In the near term.

Sanjay Sakhrani, Interviewer/Analyst: Okay. So you think like we can get back to low to single digits maybe as we move into next year?

Perry Beberman, CFO, Bread Financial: Absolutely.

Sanjay Sakhrani, Interviewer/Analyst: Okay. And, like specific initiatives that you think can drive, are there specific initiatives that could drive that? Like do you think you on the margin can loosen underwriting?

Perry Beberman, CFO, Bread Financial: Yeah, I never like to think about that we're in the position to materially loosen or contract. We, you know, we have been in the business of serving our brand partners. You know, that's 90% plus of what we do is we're in the partnership space. If we were concentrated the other way and we were a brand company, we were our own branded credit cards with a predominance, we could easily contract it fast, loosen it, drive down the loss rate faster by putting on much tighter new vintages. When you're in the brand partner space and our goal is to approve as many customers as we can, where we're gonna get the right return and not be as focused on loss rate, that means we didn't overly impact a brand partner.

We've had brand partners, who are going through, say, an RFP process and looking for a new partner because they were overly impacted by their current bank's policy to restrict credit. They really wanna know, we're getting all these questions. What would you do in that situation? I wanna just point to listen to what I've said on, you know, conversations like this or talk to our brand partners. We work with them. We understand it's important that we're there to support them, but make sure we get the right returns. We look at the new vintages and making sure that they are trending to our target of, say, 6% through the cycle loss rate, but that it means a little slower pace of improving our overall loss rate.

If I wanna improve that loss rate faster, instead of saying a new vintage at 6%, we put 'em on at 4%, but that would really contract sales.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: For our brand partners. Some of it is we have not overly tightened. At the same time, we are not gonna overly unwind. It is gonna naturally happen through customers coming in with better credit scores, you know, better bureaus on us, behaviors looking better that will qualify them for line increases. We bring people in with lower lines and grow those lines over time. That has always been our philosophy, continues to be the philosophy. I think it is gonna be a natural growth on the margin. Nothing that I think is like open the barn doors, you know, this watershed moment that all of a sudden, boy, the lines are gonna grow fast and there is gonna be this loan growth. It is just keep slow, steady, doing what we do, do it well. That is how we will get the right returns.

We do have a really good pipeline of new business. You've seen some of the new signings in the home vertical. There's more to come. I feel confident that that will also continue to provide a nice tailwind.

Sanjay Sakhrani, Interviewer/Analyst: I wanna talk about that, but maybe first you mentioned there are RFPs out there, right? Like as we think about the pipeline, how does the pipeline look outside of what you've already won?

Perry Beberman, CFO, Bread Financial: It's been a good pipeline. I mean, it's consistent. The one thing I'm, you know, really proud of, you know, my colleagues at Bread is, you know, we get a look at almost everything. I mean, you won't see us chase the $10 billion plus size portfolios. A lot of those times, whether it's the big names like a Walmart, Amazon, Apple Card, they just come with very thin returns, a very controlling partner. And one, a company of our size, probably not positioned to have that type of concentration risk. You know, we like the startup programs called Denovo programs. Some of those, when we say Denovo, could be a brand new program to that partner or others had a partnership somewhere else and didn't bring the portfolio with them.

It's new to us and they grow, they're not very capital intensive and those are a great way to grow the future loans. The pipeline out there has been robust in that you have other peers, I'll say, reshaping their thoughts on what's important to them, where they're focusing. If you're thinking about a portfolio that could be $500 million-$1 billion, for us, that's meaningful.

Sanjay Sakhrani, Interviewer/Analyst: Right.

Perry Beberman, CFO, Bread Financial: For some of these players that have created hyperscale, maybe that's not gonna get the attention. Maybe that partner says, hey, I wanna a little more attention. I want some more custom analytics, more custom marketing programs, and we're the partner for them.

Sanjay Sakhrani, Interviewer/Analyst: Got it. And maybe you could talk a little bit about Bed Bath & Beyond, Raymour & Flanigan. Those are in the home vertical that you mentioned. How, you know, how excited are you about those partnerships? And, you know, obviously those, those would be the building blocks, I would assume, for growth as well next year.

Perry Beberman, CFO, Bread Financial: Absolutely. You know, for all, for those plus Furniture First, the ones that we just announced, and there are more announcements to come, these are companies that understand credit. They have had programs before, and we call them Denovo in that they are new to us, but they are not new programs to them. They know how to sell the credit product. They know how important it is to their business. That should come with a confidence that there will be a certain degree of originations that will then translate into loan growth. We are very encouraged by those new signings.

Sanjay Sakhrani, Interviewer/Analyst: Right. So you have been pushing towards co-brand relative to private label, as a management team coming into this business. Maybe you could just talk about the return profile of each of those businesses and then how do you see the mix changing over the next couple of years?

Perry Beberman, CFO, Bread Financial: Yeah, I think I'll start with the last one. The mix, I think, will continue to gradually move a little more co-brand. When we go back and look at the past five years, there's been a slow, gradual, I'll say reduction of private label as a percent of total loans and then co-brand becoming a little bit of an increasing mix. But I break co-brand down into two cohorts of programs. One is, I call it retail co-brand. And that's one where a partner who would traditionally have been private label now has a co-brand offering. And private label may be now more the downsell where if you thought five, 10 years ago, it might've been solely private label only. It's not that far different in terms of performance. You're probably picking up a little bit more of a higher end customer, not super prime.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: A little higher end. And they get to a little larger line and they can, you capture some everyday purchases, a little stickier accounts. So we like that. You still have, you know, higher, say lower risk, higher risk customers, lower scores that are in retail co-brand. They still have high APRs, lower lines, but you also have a mix of some that get larger lines and a little bit lower pricing. So it is less uniform in pricing because you can do some risk-based pricing in there. Still like the returns. Because if you think about the way we approach the business, we are very disciplined with capital allocation. And so we will assign different capital to different risk profiles. So you differentiate capital, think about it based on credit risk.

If I have a low risk cohort of customers or that loan pool will get a lower amount of capital assigned, but it still has to hurdle to achieve our overall objectives and return on capital. Similarly, high risk is gonna get a high amount of capital assigned to it. It has to hurdle. When you put the whole puzzle together, co-brands do perform differently, but each co-brand, depending upon the, I'll say the retail partner, will perform differently. You have co-brands that are just general top of wallet type cards like NFL, AAA, Caesars. Those perform again differently. They all have a different role to play in the company in terms of how they will achieve the overall 6% through the cycle, making sure we're hitting our, you know, mid-twenties ROTCE that we've committed to.

We have good line of sight into that and, you know, it all fits together for us to get there.

Sanjay Sakhrani, Interviewer/Analyst: Can we talk a little bit about some model points like the NIM? You know, that obviously has had some headwinds, tailwinds as well. Maybe you could just talk about its progression from here and into 2026.

Perry Beberman, CFO, Bread Financial: Geez, there's so many moving parts. It goes back to kind of our earlier conversation. What's the pace at which delinquency improves? Because that pace will dictate how fast late fees come down, right? 'Cause late fees will come down as delinquencies come down. That's a headwind. At the same time, pace at which losses improve. If losses improve faster or slower, that will tell you how fast we're gonna get the, I'll say the benefit of less reversal of interest and fees. That's a, I'll call that a tailwind. That's a good guy. You also have our pricing changes that we put in place that are continuing to produce somewhat of a tailwind. We have lower prime rates that's gonna come through. We're slightly asset sensitive. It's a little bit of a headwind.

You have all these moving parts with, again, also a little bit of a slow mix of the portfolio, a little more, you said co-brand.

Sanjay Sakhrani, Interviewer/Analyst: Right.

Perry Beberman, CFO, Bread Financial: Comes a little bit lower yield, but the pricing change that we have in place probably offset that. It is more, I do not expect big moves in net interest margin, but I promise you, you know, Brian will let me give you more clarity on 2026 NIM as we get to our January earnings. It is a lot of.

Sanjay Sakhrani, Interviewer/Analyst: You don't wanna give us guidance today?

Perry Beberman, CFO, Bread Financial: Not guidance today. I think I might get in trouble.

Sanjay Sakhrani, Interviewer/Analyst: No. All right. And I guess like just on the repricing, from the late fees, like where are we in the cycle of that? Does that sort of filter through still into next year and the year after? I know it takes a little time.

Perry Beberman, CFO, Bread Financial: Yeah.

Sanjay Sakhrani, Interviewer/Analyst: Maybe you just talk about the duration of the impact.

Perry Beberman, CFO, Bread Financial: It is. The duration of the impact is a multi-year, called benefit that will come through in terms of the APR pricing. Obviously, any partner that had introduced some promotional fees upfront, you get that immediately. That may go out of market if they do not feel it is providing the benefit to them. A lot of that is revenue share related. Again, some of the things that we put in market to get partners to act early, they enjoyed a disproportionate amount of the revenue share and knowing that if the late fee rule went into effect, things were going to flip. Other partners came in later to the game. Some of those APR changes are still working their way through just because the payment allocation through CardAC takes a while for those to burn into the portfolio.

We had other partners that no change was made because they really wanted to wait to see, we're not making a change unless that late fee change happens. There were a number that sat on the sidelines. There is no impact. It is just a matter of now we're into what I'd say is this normal course of business, readjusting pricing when we need to, and continue to work with them through these,

Sanjay Sakhrani, Interviewer/Analyst: Got it. Maybe just switching to capital management, you guys have obviously been more assertive and aggressive recently. You added $200 million to the share buyback authorization. Your CET1 ratio is now at 14%, you know, the top of your target range. Maybe just help us think about, you know, capital priorities from here.

Perry Beberman, CFO, Bread Financial: Yeah. I think when you look at the third quarter results, I think for us, that was an inflection point. We finally got to a place where I think you and I talked, I think, you know, for those of you who do not know, Sanjay was a guest analyst at my very first board meeting, literally the first week I joined the company. You think about where our capital levels were then to where they are today, it is remarkable. Our capital priorities have not changed, right? We had said all along we were gonna, you know, support the company with responsible growth, continue to do that. It is a focus. We are paying down debt.

You think about where we are in our overall debt as of last week, based on the refinance of our 9.75% coupon senior notes, we reissued at a 6.75%, 300 basis point improvement.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: The ratings upgrade that we got leading into that, we paid off another over $200 million of our senior notes. Our total company debt is down to $900 million, which is a great place for us to be. You know, we are real pleased with our debt structure. As you mentioned, our capital ratios, we hit the targets we set out. Again, we're not done. You know, I think there's still an opportunity we talked about at our investor day, introducing preferreds into our capital stack. That 13, you know, right now we are in that 13-14% range. We hope to get that target down to a 12-13% capital target range. We are at the point now where we are gonna generate a lot of cash, a lot of capital.

We're into that fun part of, you know, fueling growth and then returning, you know, to the shareholders as appropriately. I would expect this to be now the normal course of business.

Sanjay Sakhrani, Interviewer/Analyst: Okay. Maybe just talk about M&A. You mentioned there's like players in the market that, you know, strategically might be pulling away a little bit. Like, are all of those opportunities gonna be just to win a portfolio and RFP, or could there be portfolio acquisition opportunities?

Perry Beberman, CFO, Bread Financial: I think some of that is dependent upon that particular issuer, right? If they decide they want to exit a chunk of the business, a pool, it sounds good in theory, but if it's a pool of partners, each partner contract has to be negotiated because those partners are under contract for a period of time. It's not as if the issuer just has the right to assign that to a new, to a new partner like us. You have to go in and win it. 'Cause I think it basically would trigger that partner to do an RFP. It's a bit more complicated than somebody saying, hey, here's six partners. Would you like to take them from us?

That is something we are always open to, we will compete for, but everything has to make the, you know, the right economic sense to ensure we can achieve the returns that we have committed to. I will tell you, generally speaking, the peers we compete with out there are pretty rational. They are seasoned firms. Every once in a while, you get some firm that goes a little overzealous. That is fine. We are not going to chase a deal if the economics do not make sense. We want to win because they value the capabilities we bring, the partnership model, the team that we bring to bear. That is why we are having really good success right now.

Sanjay Sakhrani, Interviewer/Analyst: Maybe this is a good transition to buy now, pay later, because I think that obviously Bread, you guys were the pioneers in sort of making a transition from card to buy now, pay later. Yet when you look at, sort of, the industry, the card industry, they've not necessarily embraced buy now, pay later as much as buy now, pay later. The industry has grown more in itself. Could you just talk about how we reconcile that?

Perry Beberman, CFO, Bread Financial: Yeah. I think when you think about, when you say the industry, I would bifurcate that into two different industries. One are mature financial institutions that are disciplined with capital, understand you have to hold capital, have capital returns, have been through different economic cycles, are looking for the economics on the core of what we do. When we think about buy now, pay later, split pay, it's something we didn't lean into because there were some irrational competitors out there putting multi-tens of millions of dollars signing bonuses in place. The transaction economics weren't even making sense. You come to find out, oh, well, they were offering warrants to brand partners in their company to sign up. That's not the game we're in. That's a different model.

Again, for us, we're in the lending space, payments, and if it makes sense, we'll do the deals. I wanna go over real well with our regulators if we went that route. You know, for us, we like the installment lending space. We've been getting good economics in there and we'll slow and steadily grow that. We're in the space of lending in that brand partner ecosystem, trying to offer our brand partners a full suite of products if they want installment lending, private label, co-brand. We can offer that to them.

Sanjay Sakhrani, Interviewer/Analyst: Mm-hmm.

Perry Beberman, CFO, Bread Financial: It more gives them customer choice.

Sanjay Sakhrani, Interviewer/Analyst: As we think about just diversifying the model, installment lending is a function of that.

Perry Beberman, CFO, Bread Financial: Yes.

Sanjay Sakhrani, Interviewer/Analyst: Are there other verticals that you guys would consider going into that helps diversify and expose you to other lending verticals?

Perry Beberman, CFO, Bread Financial: I think you could see that we've established a home vertical, which is nice. We'll continue to expand that. 'Cause I do believe diversification of verticals is a good thing. I think that's been a real focus of Ralph and the leadership team from his early days when probably a bit more concentrated in soft goods, like in my clothing retail, now diversifying more broadly into electronics, travel, more recently home. These are all good things. Even Crypto.com, right? These are different ways to, you know, find different customer groups to lend to. I think we'll continue to do that. The installment lending, I expect to be a good platform to grow, as well as we can lean on that platform for personal loans. That's something we can also do more direct-to-consumer personal loans.

You can, you know, lean into as appropriate, but you gotta do it in a very responsible way, make sure we get the returns that we like the risk profile, and that will continue to fuel some growth.

Sanjay Sakhrani, Interviewer/Analyst: Okay. Great. I have a couple more and then we'll open up to the ques to the audience. Like just in terms of the platform, the tech platform, you know, some of your peers talk about it and how it sort of separates itself. You guys obviously, as I mentioned, you know, made some upgrades, purchased Bread to offer capabilities. I remember one of the analysts day where you guys talked, demonstrated sort of the range of options the consumer can have in terms of products. As we think about like the capabilities of the platform, do you guys feel like you're in a good place and, you know, have invested enough in it?

Perry Beberman, CFO, Bread Financial: I'd say we are in a good place. I think the demonstration of that is winning Crypto.com, a very sophisticated tech stack. We won them because of our ability and flexibility and being nimble to do that. In fact, winning Crypto.com helped us win some other deals because that was a demonstration of how far we've come with our tech stack. You know, when you say, are we satisfied? Never satisfied, right? I think things are moving pretty fast and we're really excited. I mean, we have a phenomenal Chief Technology Officer, Allegra Driscoll, who's very forward-thinking and will be a fast follower with all the new developments of what's happening in AI. Again, there'll be some companies out there leaning in, I'll say spending a lot of investment dollars. I think you do a lot by being very smart and being a fast follow.

You know, things are becoming far less expensive to do today than what they were five years ago.

Sanjay Sakhrani, Interviewer/Analyst: Yeah.

Perry Beberman, CFO, Bread Financial: The throughput within the tech team is increasing at a quick pace. I do expect continued efficiency, productivity, but also increased capabilities that are gonna emerge as these use cases evolve. I am excited about that, but I am excited by our team's ability to embrace those opportunities.

Sanjay Sakhrani, Interviewer/Analyst: Can we talk about agentic commerce? It's something we talked a lot about in this payments conference. I'm just curious how you guys are plotting and planning for it because you could see it as an opportunity, you could see it as a threat. I'm just curious how Bread thinks of it.

Perry Beberman, CFO, Bread Financial: Yeah. It's certainly something that's evolving quickly. One where our team is being very watchful of it. It's something where our brand partners are being watchful, right? Because it's about how do you wanna lend to consumers? And again, this is still a lending space and do customers want loyalty as part of their lending experience? I don't know how the agent's going to define a good value. Remember the whole premise of partnership programs like this is to create an engagement model for the consumer when they're making a purchase and getting rewarded for it. They'll come back and purchase again. For us, being able to unlock that, you know, that lending so they can buy something today, pay for it over time.

I don't think that's going to change, you know, how what the agentic model looks like and how the consumer can make choices. It means our value proposition has to be really strong for that to still be the preference that the ultimate human consumer has chosen to assign to their agent on their behalf. So I don't know. It, it's going to evolve. We'll be well positioned to, to make sure we win our fair share.

Sanjay Sakhrani, Interviewer/Analyst: Yeah. It's really early days and there's a lot happening. I mean, I think we're still trying to figure it all out. Anyway, let us open it up to the audience, see if there's any questions. There's one over there. Thank you. I, when I look at your credit stats and I look at your monthly data, it looks really good. And it seems, you know, the commentary is obviously, you know, positive on the consumer and the health of consumer. You know, we've heard, I think from a number of folks, some cross currents on what's, what's happening with the consumer.

Just wondering, like when we look at, you know, the different buckets, is there anywhere out there where maybe you guys aren't seeing it yet, but that you're, you know, sort of focused on whether it's, you know, recent grads or students or, you know, super low FICO, or is there any sort of like cohort that you're looking at that, that maybe, you know, is not on the radar yet, but could potentially be, you know, out there?

Perry Beberman, CFO, Bread Financial: Yeah. Excellent question. Because as we look, we do look at lots of different slices and dices of the portfolio. And we are, I mean, I continue to be encouraged that we're not seeing necessarily, we'll call, we're not seeing any cracks. In fact, we're seeing more customers who were making no payment, moving to min payment or multiples of min pay. We are seeing a little bit fewer customers making pay in full payments going to like a multiple of their min pay. That may be something which is a little softening at the top end, but the encouragement is that more people are coming out of delinquency, we're seeing some improvements in roll rate. All of this is still on balance, really good as we talked about, but not seeing any particular cracks.

I think we'll continue to watch, that we talk about inflation. It kind of creeps up the prime ladder. The people who have been contending with this, I'll say on the lower end of our portfolio, have gotten a handle on it. They've been dealing with this for years, right? So they've adjusted. It's just, you know, does it start to creep up? And that's something we're watchful of.

Sanjay Sakhrani, Interviewer/Analyst: Any other questions? This one right there.

I think you mentioned loan growth should inflect in 2026 and we talked about low to mid single digit, but you think.

Perry Beberman, CFO, Bread Financial: I'm sorry, what was that last part?

The loan growth inflecting in 2026. You talked about low to mid single digit, but you think about like nominal GDPs too, and then unemployment's low and your credits are normalizing. You talked about signing new partnerships. Do you think it could be mid single plus at some point or you just don't want to really open the credit box? You just wanna.

Yeah. I think.

Sanjay Sakhrani, Interviewer/Analyst: He wants guidance too.

Perry Beberman, CFO, Bread Financial: Oh, I know you want guidance.

I was gonna say, but it just seems like given where we are in the economy's still really good, your credit's going the right way, you're signing new partnerships, it just seems like it's really conservative.

Yeah. Wow. Thank you. That would be ideal if it were conservative. I think when you look at a year like this where, you know, the consumer's moderated a little bit, you, a few things have to go right to do better than low single digits, meaning you need to really see consumer health improve. It's gonna be macro dependent. If that happens, you can, you know, pick up maybe another percentage point on that. If losses come down faster than this slow, steady improvement, sure, we can get there faster. It's just, you know, we're trying to be realistic. This credit environment is not improving quickly. We're not gonna get to 6% next year like that. I think again, as I said earlier, I expect a similar type of gradual grind of improvement that we saw going from 2024 through 2025.

That's gonna be 2025 to 2026. And that's kind of, will slow some of that growth. But I do, I am very encouraged by new partners we're signing. There's more new partners. That'll set us up well for through 2026 into 2027. It's just, there's nothing chunky coming that I think is going to, you know, have a step up function. You know, our, at our investor day, we said we'd be, you know, in the near term more of that low mid single digit, and then maybe we get to that mid to high. But some of it is got macro really has to improve.

I think you implied November was a little slower on credit sales. I think that's just a slowdown ahead of the holidays.

November slow. No. Oh, so November, again, November's looking so far pretty good. I mean, I say pretty good, maybe a little better than even October. It's just, I am a little cautious of evaluating November of this year to November of last year. 'Cause last year we were talking about a soft first start of November because of elections. People were kind of holding back, people very concerned about the outcome of that election. And then after the election, you know, spend resumed. The compare point is a little soft compare point. This is probably, probably more of a normal.

Sanjay Sakhrani, Interviewer/Analyst: Meaning like you're seeing good growth this November, but part of it is because you have an easy comp.

Perry Beberman, CFO, Bread Financial: Yes.

Sanjay Sakhrani, Interviewer/Analyst: You don't wanna over exaggerate the improvement you've seen because it's an easy comp.

Perry Beberman, CFO, Bread Financial: That's right.

Sanjay Sakhrani, Interviewer/Analyst: That could normalize over the course of November.

Perry Beberman, CFO, Bread Financial: I would expect that will normalize over the course of November.

Sanjay Sakhrani, Interviewer/Analyst: That's the point you're making. Got it.

Perry Beberman, CFO, Bread Financial: This question there.

Sort of pivoting the other way. You know, you said you're signed partnerships, you're getting a trend on that. I'm just sort of thinking big picture, you know, obviously that you haven't had loan growth for an extended period of time, quite a long time. You're only a $3 billion market cap. The way we talk about the market, it just sounds like it's a much more competitive market than it's been in the past. Is there an opportunity that you think that maybe you could actually execute better with inside a larger institution where you could bring your sort of, your capabilities to somebody else?

There's always opportunities to pair up with different organizations. Now with what we do, you know, our capabilities are really good. I mean, I think you, but you talk about $3 billion market cap. I think there's a little bit of a, you know, still people not fully understanding our story and how strong our company is, how much we put into deleveraging our company, building our capital ratios, and the sheer capital generation we're about to inflect into, and that, that should, you know, allow for a re-rate of our multiple. That just hasn't happened yet. I think there's a re-rate coming. You've seen it from the improvements in our overall company ratings. We're gonna, we're able to go on the offensive now because of how far we've come with our capital and capital stack. You know, I do think there's an opportunity there.

Sometimes, you know, I'd say when you're in the partnership space, you're far more effective working with brand partners, being nimble where we are. This is our business. We're not fighting for technology dollars with a big firm. I came from a big firm. Others at our company have come from a big firm. You can't get the capital, you can't get the tech dollars to get done what you wanna get done 'cause you're competing against a wealth management division or an auto division or these others. Here, this is our business. We can compete really well. I think that's one of our strengths.

Sanjay Sakhrani, Interviewer/Analyst: Any other questions in the audience? All right. I wanna stop right there. Thank you, Perry.

Perry Beberman, CFO, Bread Financial: Thanks.

Sanjay Sakhrani, Interviewer/Analyst: Appreciate it.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.