Bread Earnings: Reserve Releases Drive Strong Earnings, but Prospects for Loan Growth Are Meager
No-moat-rated Bread solid second-quarter results that were better than expected, though a combination of tighter credit standards and lower spending on the company’s cards is creating meaningful headwinds to loan growth and revenue. Net revenue decreased 1.4% from last year and 5.2% from last quarter to $939 million. On the other hand, diluted earnings per share increased to $2.66 from $0.95 last year, which translates to a return on equity of 16.7%. That said, the company’s bottom-line results benefited from a $92 million credit reserve release during the quarter that inflated the firm’s earnings.