Highly profitable bank. Overvaluated / Hold.

Bread Financial Holdings Inc. (NYSE BFH) is a highly profitable bank focused on growing its portfolio of receivables, partners and customers. Although the company still distributes little of its earnings in the form of buybacks and dividends, the retained capital is reinvested at attractive rates, which compensate for the low payout. In a pessimistic scenario, the minority interest is protected by US$48.89 per share of tangible common equity, which is probably undervalued due to the volume of provisions made over the last two years. Bread Financial is a more complex thesis compared to the other banks in my portfolio, as it deals with regulatory uncertainties that challenge its business model. However, the shareholder who tolerated the high volatility has been rewarded. After all, the asset rose 52% from January to the end of July 2024, surpassing my price ceiling of US$50.00 per share. From now on, the two main points of attention are losses and how the company will adapt to the new late fee regulation. Even so, recent results have been quite positive.