Bread Financial Holdings’ ( BFH Quick Quote BFH - Free Report) operating income of $9.08 per share for the first quarter of 2023 beat the Zacks Consensus Estimate by 26.1% and came ahead of our estimate of $4.06. The bottom line more than doubled year over year. Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Behind the Headlines
Revenues increased 40% year over year to $1.3 billion, resulting from higher average loan balances and improved loan yields. The top line beat the consensus estimate by 23.9% and surpassed our estimate of $1.1 billion.
Credit sales of $7.4 billion increased 7%, driven by brand partner additions and growth across brand partners. Average receivables of $19.4 billion were up 17% year over year. Total interest income increased 13% to $1.1 billion and missed our estimate of $1.2 billion. The net interest margin contracted 40 basis points to 19%. Total non-interest expenses increased 28% to $544 million, primarily attributable to an increase in compensation and benefit expense and information processing and communication expense as well as card and processing expenses. Our estimate was $399.3 million. The delinquency rate of 5.7% deteriorated 160 basis points year over year, while the net loss rate of 7% deteriorated 220 basis points from the year-ago period. Pre-tax pre-provision earnings increased 4% year over year to $515 million, reflecting profitable growth and continued success with business transformation efforts. Our estimate was $611.8 million. Financial Update
As of Mar 31, 2023, cash and cash equivalents were $3.6 billion, down 7.2% from the 2022 level.
At quarter-end, long-term debt and other debt was down 1.2% from 2021-end to $1.9 billion. Tangible book value of $38.44 per share as of Mar 31, 2023 improved 30.7% over 2022 end. Cash from operations decreased 19.9% year over year to $398 billion. Capital expenditure at Bread Financial decreased 52.2% year over year to $11 million in the same period. Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Jun 16 to stockholders of record as of May 12.
Management estimates average receivables growth in the mid-single-digit range from the 2022 level.
Total revenue growth is expected to be closely aligned with average loan growth. Net interest margin is expected to remain similar to 19.2% in 2022. Total non-interest expenses are expected to reflect positive operating leverage. Total expenses will increase, given the ongoing investment in technology modernization, digital advancement, marketing, and product innovation, along with strong portfolio growth. The net loss rate is guided at about 7%. Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold). You can see
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