Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q1 2022 Earnings Presentation
21 slides from Bread Financial's earnings presentation, Apr 28, 2022
Slide 1: Bread Financial First Quarter 2022 Results
Bread Financial First Quarter 2022 Results April 28, 2022 Ralph Andretta President & CEO Perry Beberman EVP & CFO
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be
Slide 3: A tech-forward financial services company
A tech-forward financial services company providing simple, personalized payment, lending, and saving solutions ©2022 Bread Financial 3
Slide 4: Our Ongoing Business Transformation
Our Ongoing Business Transformation Leading provider of tech-forward payment, lending, and saving solutions Expanding our product suite and direct-to-consumer offerings Enhancing our core technology and digital capabilities Improving our capital ratios and reducing our leverage Increasing emphasis o
Slide 5: Key Highlights
Key Highlights Continued progress toward our long-term financial goals • Rebranded to Bread Financial to reflect our broad suite of digitally-enabled payment, lending, and saving solutions focused on consumer choice, ease, and trust • Consistent double-digit sales growth, up 14% versus 1Q21 • Growth
Slide 6: Business Development Highlights
Business Development Highlights New Bread Cashback Card Brand Partner Announcements & Renewals Select New Bread Pay Partners • Unlimited 2% cashback • No annual fee • No foreign transaction fees • Premium protection benefits • American Express lifestyle benefits • Instant mobile acquisition and wall
Slide 7: Financial Results
Financial Results ($ in millions, except per share amounts) 1Q22 1Q21 $ Change % Change Income from continuing operations, net of taxes $211 $268 $(57) (21) % (Loss) income from discontinued operations, net of taxes (1) 18 (19) (102) Net income $210 $286 $(76) (26) % ********************************
Slide 8: First Quarter 2022 Financial Highlights
First Quarter 2022 Financial Highlights Continuing Operations $921 million $211 million $4.21 Revenue Net Income from Diluted EPS Continuing Operations from Continuing Operations • Credit sales of $6.9 billion were up 14% versus 1Q21 • First quarter average loans of $16.7 billion were up 5% versus 1
Slide 9: Financial Results – Continuing Operations
Financial Results – Continuing Operations ($ in millions, except per share) 1Q22 1Q21 $ Change % Change 2022 YTD FY21 % Change Total interest income $1,068 $942 $126 13 % $3,868 (2) % Total interest expense 79 107 (28) (26) 383 (23) Net interest income 989 835 154 18 3,485 PPNR 1 Growth* Total non-i
Slide 10: Net Interest Margin
Net Interest Margin Net Interest Margin Detail Interest-Bearing Liability Costs & Funding Mix Loan yield Avg. earning asset yield Net interest margin Cost of total int.-bearing liab. Cost of deposits 26.6% 2.8% 25.6% 25.2% 25.6% 2.6% 23.9% 24.1% 23.9% 2.5% 2.5% 2.5% 23.8% 2.3% 22.1% 21.3% 20.8% 20.9
Slide 11: Credit Quality and Allowance
Credit Quality and Allowance Delinquency Rate Net Loss Rate 6.0% 5 year Max rate: 6.0% 7.6% 5 year Max rate: 7.6% 7.0% 5 year Avg rate: ~5.0% 4.7% 5.8% 6.0% 5 year Avg rate: ~6.0% 4.3% 4.4% 4.1% 5.1% 3.8% 3.9% 5.0% 4.8% 3.8% 4.4% 5 year Min rate: 3.3% 3.3% 5 year Min rate: 3.9% 3.9% 1Q20 2Q20 3Q20 4
Slide 12: 2022 Financial Outlook
2022 Financial Outlook Full Year 2021 Full Year 2022 Commentary Actuals Outlook • Continued sales momentum and net partner additions driving strong profitable growth • On a year-over-year basis, expect year-end loan growth to be stronger than full year average Average loans Up low loan growth given
Slide 13: Appendix
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Slide 14: Average Loans and Credit Sales
Average Loans and Credit Sales $30.0 50% 9% 5% $25.0 1% 2% -4% -5% -12% -13% -14% 0% $20.0 $18.3 -50% $16.7 $15.0 $16.1 $15.8 $15.8 $16.1 $15.3 $15.3 $15.5 -100% $10.0 $8.8 ($ in billions) $7.7 $7.4 $7.4 $6.9 -150% $5.0 $6.1 $6.2 $6.0 $4.8 $0.0 -200% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Aver
Slide 15: Total Non-Interest Expenses
Total Non-Interest Expenses 1Q22 vs. 1Q21 Change in Non-Interest Expenses Total Non-Interest Expenses +6% Employee comp. & benefits: $20 13% $426 Card and processing: $4 5% $402 Info. processing & comm.: $5 8% Marketing: (27)% $(11) Depreciation & amortization: (16)% $(4) Other: $10 20% 1Q21 1Q22 $
Slide 16: Summary Financial Highlights
Summary Financial Highlights Continuing Operations 1Q22 vs 1Q22 vs 2 1Q22 1Q21 4Q21 2022 YTD FY21 ($ in millions) 1Q21 4Q21 Credit sales $6,887 $6,043 14% $8,778 (22)% $29,603 Average credit card and other loans $16,650 $15,785 5% $16,086 4% $15,656 End-of-period credit card and other loans $16,843
Slide 17: Summary Financial Highlights
Summary Financial Highlights Continuing Operations ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2022 YTD F Credit sales $6,099 $4,799 $6,152 $7,657 $6,043 $7,401 $7,380 $8,778 $6,887 $29,6 Year-over-year change (3)% (36)% (21)% (18)% (1)% 54% 20% 15% 14% Average credit card and other
Slide 18: Financial Results
Financial Results Continuing Operations ($ in millions, except per share) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2022 YTD FY21 Total interest income $1,227 $860 $915 $950 $942 $915 $994 $1,017 $1,068 $3,868 Total interest expense 146 127 114 112 107 100 91 84 79 383 Net interest income 1,081 7
Slide 19: Net Interest Margin
Net Interest Margin 1Q22 YTD 2022 Interest Income / Average Yield / Interest Income / Average Yield / ($ in millions) Average Balance Average Balance Expense Rate Expense Rate Cash and investment securities $3,794 $2 0.3% $3,480 $7 0.21% Credit card and other loans 16,650 1,066 25.6% 15,656 3,861 24
Slide 20: Capital and Liquidity
Capital and Liquidity Tangible Common Equity/ Tangible Assets Ratio(1) Parent Level: +2.6% • Liquidity as of March 31, 2022, of $0.8 billion, consisting of cash on hand plus revolver capacity 7.8% Bank Level (Banks Combined): • As of March 31, 2022, the banks finished the quarter with $2.9 billion i
Slide 21: Sales and New Account Data
Sales and New Account Data In-store vs. Digital Sales 42% 63% 57% 58% 59% 61% 64% 65% 63% $5.7 $4.5 $4.6 $4.8 $4.4 $3.8 $3.5 $3.6 $2.0 $ in billions 58% 37% 43% 42% 41% 39% 36% 35% 37% $3.2 $3.1 $2.3 $2.8 $2.6 $2.4 $2.8 $2.6 $2.5 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 1Q20 2Q20 3Q20 4Q20 1Q21
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