Bread Financial Holdings, Inc. (NYSE: BFH), a tech-forward financial services company that provides simple, personalized payment, lending, and saving solutions, today announced financial results for the fourth quarter and full year ended December 31, 2025.
Q4 2025 Financial Performance
Bread Financial’s quarter was defined by resilient consumer spending and a tightening of the ship regarding risk management.
Revenue: $975 million, up 5.3% year-over-year, beating estimates of $955 million.
Adjusted Net Income: $95 million, excluding a $42 million post-tax debt repurchase expense.
Net Interest Margin (NIM): 18.9%, a notable beat driven by pricing improvements and lower funding costs.
Capital Return: The company repurchased 1.9 million shares ($120 million) in Q4 alone, totaling $310 million in buybacks for 2025.
Conference Call Highlights: The Strategic “Bread” Basket
During the conference call, CEO Ralph Andretta and CFO Perry Beberman highlighted a “disciplined approach to underwriting” and a significant tech-forward pivot.
Credit Quality “Meaningfully Improved”
Management emphasized that the net loss rate fell to 7.4% in Q4 (down 60 basis points YoY), better than their earlier guidance. “We underwrite for profit,” stated CEO Ralph Andretta, emphasizing that the company is prioritizing high-quality loan growth over volume in a fluctuating macro environment.
The AI Transformation
Bread Financial has moved beyond the pilot phase with its Artificial Intelligence initiatives:
Manual Work Reduction: AI bots have eliminated over 1 million hours of manual work.
Machine Learning: More than 200 machine learning models are now active across underwriting, fraud detection, and customer service.
High-Profile Partnerships & Renewals
The company continues to diversify its vertical reach, announcing:
New Signings: Bed Bath & Beyond (e-commerce), Furniture First, and Raymour & Flanigan.
Key Renewal: The renewal of the Caesars Rewards credit card program, a top-10 partner, through at least 2028.
Co-Brand Mix: Now accounts for 52% of credit sales, reducing reliance on single-merchant private label cards.
2026 Guidance: Cautious Optimism
Management outlined a forward view for 2026, balancing growth potential with macro uncertainty:
Revenue and loan growth: Projected to grow in low single digits, aligned with average loan expansion.
Credit trends: Net loss rate expected to continue improving towards mid-7% levels.
Expense discipline: Adjusted non-interest expenses are anticipated to stay controlled, enabling margin resilience.
Leadership underscored that outcomes will remain sensitive to economic factors such as interest rate policy, consumer spending behavior, and competitive dynamics, suggesting measured optimism rather than aggressive guidance.
The Investor Takeaway
Bread Financial has successfully navigated the high-interest-rate environment by aggressively de-risking its portfolio. The 23% year-over-year increase in tangible book value of $57.57 suggests that the company is trading at an attractive valuation relative to its assets. By lowering its funding costs through debt refinancing, reducing rates by 300 basis points and expanding its deposit base, Bread is better positioned to weather any potential economic cooling in 2026.
