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Card issuers see charge-offs decline in June

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Card issuers see charge-offs decline in June

Cardissuers saw mixed results in delinquencies for the month of June, butcharge-offs declined for all card issuers for the period.

'sdelinquency rate remained flatat 1.12%. Discover FinancialServices' delinquency rate rose to 1.35% in June from 1.28% in , and 'sdelinquency rate increased to 1.87% from 1.85%. 's delinquency rate alsoincreased, rising to1.47% from 1.44%.

sawdelinquencies decline slightly to 1.49% from 1.50%, and 'sdelinquencies edged down to 0.74% in June from 0.81% in the previous month.

Charge-offsfell across the board for card issuers. Discover's charge-off rate fell to1.54% from 1.74%, while JPMorgan's rate declined to 2.23% from 2.44%.

Thecharge-off rate at Bank of America declined to 2.54% from 2.73% in the previousmonth, and Citigroup's charge-off rate fell to 2.17% from 2.81% in May.

KeefeBruyette & Woods analyst Sanjay Sakhrani said in a research note thatDiscover's card metrics for the second quarter seemed to be generally in linewith to slightly better than estimates. He noted that the net charge-off ratewas in line with expectations and the delinquency rate was slightly better thanexpected.

CapitalOne's charge-off rate decreased to 1.70% from 1.91%. The company's domesticcard segment had a30-plus-day performing delinquency rate of 3.14% in June, compared with 3.01%in May. The annualized net charge-off rate decreased to 3.93% from 3.99%.

The30-plus-day performing delinquency rate in the international card business roseto 3.24% from 3.15% in the previous month, while the annualized net charge-offrate decreased to 3.52% from 3.67%. Capital One's auto finance segment saw anincrease in its 30-plus-day performing delinquency rate to 5.59% from 5.48%, andthe annualized net charge-off rate for the segment rose to 1.46% from 1.17%.

In aseparate note, Sakhrani stated that Capital One's credit quality and loangrowth were in line with to slightly better than his estimates for the secondquarter. He added that the net charge-off rate for the U.S. card segment was inline with estimates and the delinquency rate was in line with to slightlyhigher than expectations, noting that the company's delinquency rate tends toseasonally increase 5 basis points to 10 basis points in June.

AmericanExpress also saw a decline in its net loss rate in June. The annualized defaultrate, net of recoveries, in its master trust fell to 0.98% from 1.28% in theprevious month. The card company also reporteddelinquency and charge-off numbers for the U.S. consumer services and U.S.small-business segments. The net write-off rate in the U.S. consumer servicessegment, based on principal only, was 1.3% in June, down from 1.6% in May. Thedelinquency rate for the segment rose slightly to 1.1% from 0.9%.

Thenet write-off rate in the U.S. small-business segment, based on principal only,was 1.2% in June, down from 1.3% in May. The delinquency rate for the segmentwas 1.1%, compared with 1.0% in the previous month.

Sakhranisaid that American Express' credit quality was in line with expectations forthe second quarter but noted that the delinquency rate was slightly higher thanestimated. He said the company's net charge-off rate declined in June due to the benefit ofthe initial acceleration in loan growth.

Portfolioyields declined for most card issuers in June. However, American Express'portfolio saw its yield rise to 21.94% in June, compared with 19.88% in May,and Bank of America Corp. saw portfolio yield rise to 16.03% from 15.89%.

Citi'syields dropped to 17.37% from 18.92%, and JPMorgan's yield fell to 18.54% from18.62%. Discover saw its yield decline to 18.31% in June from 19.17% in May,and Capital One's portfolio yield declined to 20.68% from 21.17%.

 

Click here for the underlying data for credit card master trust yields, net charge-offs and delinquencies.

The monthly performance of the trust is reported in the 10-D filing, which can be accessed under the Documents section of a company's briefing book page on the SNL website.