Credit Card Loans Increase for BNPL Provider Bread—But So Do Net Losses

Bread Financial Holdings Inc. on Monday released a performance update for July, indicating it posted credit card and other loans totaling $17.8 billion last month, a 12% year-over-year increase.

The Columbus, Ohio-based provider of personalized payment, lending, and savings solutions said average credit card and other loans for the month totaled $17.4 billion, up from $15.5. billion in July last year.

But while card and other loans increased during the period, net principal losses crept up, totaling $65 million, compared to $55 million last year, creating a net loss rate of 4.5%, compared to 4.2% a year earlier. Bread attributes the increase in net principal losses, and the net loss rate, to a planned transition of credit card processing services. Further information about the transition was not immediately available.

“Excluding the transition impact, which is timing-related, the net loss rate for July 2022 would have increased sequentially following seasonal trends,” the company said in a prepared statement.

Delinquencies of more than 30 days, minus principal, totaled $810 million for July, up from $518 million for the same period a year earlier. Overall, the company’s delinquency rate was 4.8%, compared to 3.4% from a year ago.

Bread, whose product suite includes private-label and co-branded credit cards, including the Bread Cashback American Express Credit Card, says its 30-days-and-over delinquencies minus principal for July, and consequentially the delinquency rate itself, were also impacted by the planned transition of credit card processing services. “We expect insignificant timing-related impacts in our delinquency rates for the remainder of the year,” the company says.

In addition to its card-based products, Bread offers loans in the hot buy now, pay later business, installment loans, and direct-to-consumer solutions. It also offers Bread Savings products, including savings accounts and certificates of deposit.