Bread's credit sales get a boost from installment loans

• Key insights: Bread Financial posted a strong earnings beat in the second quarter, with double-digit growth in credit sales that were buoyed by growth in the lender's point-of-sale installment loans. 
• What's at stake: Bread is the latest bank to benefit from increased consumer spending and improved delinquency and charge-off rates. 
• Forward look: The company adjusted its outlook to reflect better loan growth, revenue and loss rate expectations.  

Bread Pay, Bread Financial's point-of-sale installment loan, was a quiet winner in the second quarter, driving credit sales amid a wider earnings beat. 

Bread Pay accounted for nearly one-third of Bread's loan growth during the second quarter, Chief Financial Officer Perry Beberman told American Banker in an interview following the institution's earnings call. Credit sales increased 11% year over year to $7.5 billion during the quarter, with period-end loans rising 5% to $18.5 billion. 

"BreadPay continues to be an important lending instrument in our suite of products," Beberman said. 

Bread retailer clients such as home security company Vivint, Cricket Wireless and Home Depot led growth for the installment loans.  

"Some of our focus has been a strategy shift over the past couple years. It's moving more towards larger retailers, rather than accumulating 10,000 mom and pop shops," Beberman said. "That's not our strategy." 

Bread will white label the installment loan product, and offers different models based on what the merchant is selling. For example, a $1,000 loan might be extended for the purchase of a phone, or a $3,000 loan for a home security system. 

"For the Home Depot [loans], they may have an open line for a period of time, a six-month window that they're doing a construction project, and they can keep drawing on that and then it'll amortize over a certain term." 

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Credit sale growth was "broad based" and also aided by growth in co-brand sales — especially in travel, home and sporting goods, Bread CEO Ralph Andretta said on the company's earnings call with analysts. 

More consumers stayed current with their bills, too. Delinquencies were down 48 basis points year over year to 5.25% and net loss rates fell 90 basis points to 6.98%.  

All together, it was a good quarter for the lender, according to analysts. Revenue was up 7% to $993 million, and net income was up 5% to $146 million, or $3.55 per diluted share. Analysts expected net income of $114 million, or $2.74 per diluted share. 

"Bread delivered a strong 2Q26 driven by strong non-net-interest income on stronger purchase volume relative to our expectations," Keefre Bruyette & Woods analyst Sanjay Sakhrani said in a research note. "NII was slightly weaker, likely related to better credit trends and its impact on lower late fees. Credit quality beat our expectations and provided a strong tailwind for EPS upside." 

The results spurred adjustments to Bread's outlook for the rest of the year to reflect better revenue, loan growth and loss rate expectations. The company now expects loan growth and revenue to be up in the low- to mid-single-digit range, and net losses to be between 7% and 7.1%. At the end of 2025, net losses were 7.7%.