- Key insights: Bread Financial beat analysts’ estimates on revenue and net income for the quarter ended Dec. 31, 2025 as credit sales ticked up and delinquencies and charge-offs declined.
- What’s at stake: Bread would be the one of the credit card issuers most impacted by any systemic change to credit-card interest rates.
- Forward look: The issuers outlook for 2026 called for average loan growth and revenue to be up in the low-single digits when compared with 2025.
Bread Financial had little to say about the Trump administration’s proposed 10% cap on
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Bread Financial would be one of the publicly traded credit card issuers most impacted by the proposed cap to interest rates, according to a Morgan Stanley research note. Synchrony Financial, one of Bread’s competitors in the co-branded retail credit card space, would also likely see earnings impact from a cap, along with Capital One and American Express.
“We don’t have much more to add to [the narrative],” Bread’s Chief Financial Officer Perry Beberman told American Banker in an interview. “The big banks, the trade groups, they basically have outlined very clearly what the unintended consequences will be to consumers in restricting credit and for retailers affecting spend, and then what that means to the broader economy.”
Critics say a 10% interest rate cap would reduce the
“There’s still a lot of unknowns around what the proposal is,” Beberman said. “I don’t want to speculate on what will end up being required if anything comes to be.”
Instead, Bread is focused on issues it can control, such as capital management and streamlining its operations.
“We really had good results in 2025 and it has demonstrated the disciplined approach to growing responsibly, building our financial resilience – and that even means in the face of changing regulatory environment [or] political environment – and then advancing our operational excellence, really primed us for good growth in this coming year,” he said.
In 2026, Bread expects average loan growth to be up in the low-single digits compared to full-year 2025; revenue is also expected to be up in the low-single digits. The lender’s net loss rate is expected to be in the range of 7.2% to 7.4%.
That outlook is based on the assumption that consumers remain resilient, inflation remains above the Federal Reserve’s target rate of 2%, a “generally stable” labor market, and
TD Cowen analyst Moshe Orenbuch called the quarter’s earnings “very positive given the broad beat and overall better-than-expected guidance.”
Quarterly earnings beat estimates
For the quarter ended December 31, 2025, revenue came in at $975 million, a 5.3% increase from the same period last year and ahead of analysts’ consensus of $955.27 million, according to S&P Capital IQ. Net income landed at $53 million, of $1.16 per diluted share. Analysts expected $8.09 million, or 15 cents per diluted share.
Total non-interest expense jumped 3.5% to $555 million.
The lender’s net interest income increased 1% to $1.05 billion, and its net interest margin rose to 18.9%, compared with 17.8% in the same prior-year period, largely due to the gradual build of pricing changes, lower funding costs, and growth in direct-to-consumer deposits, according to Bread. Direct-to-consumer deposits jumped 11% to $8.5 billion, representing 48% of Bread’s total funding, up from 43% a year ago.
Deposits have grown for 20 consecutive quarters, CEO Ralph Andretta said on the company’s quarterly call with analysts Thursday.
Average loans decreased 1% to $18 billion due to increased payment rates from consumers. Credit sales rose 2% to $8.1 billion, thanks to increased transaction sizes and frequencies.
“We are nearing an inflection point for loan growth as we enter 2026,” Andretta said.
Delinquencies and net charge-offs declined during the quarter, leading to a reduction in provisions for credit losses. Thirty-plus-day delinquencies fell 10 basis points to 5.8%, and the net loss rate 60 basis points to 7.4%. Provisions for credit losses fell 11% to $373 million
Keefe Bruyette and Woods analyst Sanjay Sakhrani call the earnings beat “impressive,” with “better portfolio yields and NCO rate compared to our estimates.”
Bread talks AI
Bread is looking to continue its investment in AI in the coming year by building on the foundation it has created in risk management, automated controls, and “always-on” monitoring, Beberman said.
“When we look at our enterprise AI roadmap, we now have more than 60 initiatives in motion, with early wins contributing to improved fraud protection, better underwriting performance, enhanced call center effectiveness and increased automation workflows.”
Beberman said Bread has more than 200 machine learning models embedded into its business, with thousands of bots deployed that have saved one million manual work efforts.
“Our go-forward areas of focus are on three basic things: First AI tools to improve personal productivity and efficiency,” Beberman said. Use cases include content summarization for contract and document reviews, content generation for personalized marketing collateral and customer communications, or back-office intelligent search capabilities.
“Second, we’re going to accelerate development and advancement of our core technology and data platforms, specifically leveraging AI tools to modernize code and accelerate everyone to the cloud,” he said.
And, of course, Bread is thinking about agentic commerce. “[We are] making sure that we are developing intelligent and agentic applications, and that will expand the reach of our products, automate full processes, and unlock new and improved customer experiences,” Beberman said.