Credit quality among the top six issuers of credit cards continues to improve this year. The 30+ day delinquency rate in the second quarter (Q2/14) declined 35 basis points (bps) from the prior quarter and 42 bps from one-year ago. According to CardData, the average 30+ day delinquency rate among the top U.S. card issuers for Q2/14 stood at 1.74%, compared to 2.09% for Q1/14 and 2.16% for the Q2/13.
Among the Big 6 U.S. card issuers: Bank of America (BofA) reported the largest year-on-year (Y/Y) decline of 83 bps, followed by Chase (JPM) with a 28 bps decline, Capital One (COF) reported a 22 bps drop and Citibank (CITI) showing a 14 bps Y/Y decrease. American Express (AXP) reported a 20 bps drop. Discover (DS) was the only Big 6 issuer to report an increase, with a 5 bps uptick.
JPM, the nation’s leading issuer and the #1 Visa issuer, posted a 20 bps sequential decline and a 28 bps annual decline in 30+ day bank credit card delinquency in the second quarter. For the second quarter, Chase reported a 30+ day bank credit card delinquency rate of 1.41%, compared to 1.61% for Q1/14 and 1.69% in Q2/13. The 90+ day delinquency rate was 0.69% for Q2/14, 0.80% for Q1/14 and 0.82% for Q2/13.
BOFA posted a 35 bps sequential decline and an 85 bps annual decline in 30+ day bank credit card delinquency in the second quarter. BofA noted the number of 30+ days performing delinquent loans, excluding fully-insured loans, declined across all consumer portfolios from the year-ago quarter, again reaching record low levels in the U.S. credit card portfolio. For the second quarter, BofA reported a 30+ day bank credit card delinquency rate of 2.89%, compared to 3.24% for Q1/14 and 3.72% in Q2/13. The 30 day to 89 day delinquency rate was 1.91% for Q2/14, 2.24% for Q1/14 and 2.43% for Q2/13. The 90+ day delinquency rate was 0.98% for Q1/14, 1.10% for Q1/14 and 1.29% for Q2/13.
COF does not break-out 30+ day and 90+ day delinquency rates for its U.S. credit card business. However, the nation’s third largest issuer reported its U.S. bank credit card 30+ day delinquency ratio decreased 19 bps from the prior quarter and 22 bps from Q2/13. COF reported a 2.83% 30+ day delinquency rate for the second quarter, compared to 3.02% in the prior quarter and 3.05% in the year ago quarter.
CITI posted a 20 bps sequential decline and a 14 bps annual decline in 30+ day bank credit card delinquency in the first quarter. CITI noted delinquency rates improved in Citi-branded cards and Citi retail services versus the prior year period and ended the quarter at close to historically low levels. For the second quarter, CITI reported a 30+ day bank credit card delinquency rate of 1.67%, compared to 1.87% for Q1/14 and 1.81% in Q2/13. The 30 day to 89 day delinquency rate was 0.80% for Q2/14, 0.90% for Q1/14 and 0.85% for Q2/13. The 90+ day delinquency rate was 0.87% for Q2/14, 0.97% for Q1/14 and 0.96% for Q2/13.
DS posted a 5 bps Y/Y gain in the 30+ day credit rate but a 9 bps decline sequentially. For the second quarter, DS reported a 30+ day bank credit card delinquency rate of 1.63%, compared to 1.72% for Q1/14 and 1.58% in Q2/13. The 90+ day delinquency rate was 0.80% for Q1/14, 0.87% for Q1/14 and 0.80% for Q2/13.
AXP, due to a unique product mix among the Big 6, has consistently reported a very low 30+ day delinquency rate of 1.1% for the past four quarters. However, for Q2/14 the rate dropped to 0.90%. AX does not disclose the 90+ day delinquency rate.
RAM Research projects the U.S. bank credit card 30+ day delinquency ratio among the Big 6 U.S issuers will drop 20 bps in the third quarter.
RESOURCES:
For additional data on Credit Card Delinquency visit CardData®. For historical news and commentary on Credit Card Delinquency visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. Custom RAM Research® projects on Credit Card Delinquency are available exclusively through CardWeb.com.®
NOTES:
JPM CHASE: Period-end credit card loans included loans held-for-sale of $304 million, $326 million and $310 million at March 31, 2014, December 31, 2013 and September 30, 2013, respectively. These amounts are excluded when calculating delinquency rates and the allowance for loan losses to period-end loans. There were no loans held-for-sale at June 30, 2013 and March 31, 2013.
BANK OF AMERICA: In addition to the U.S. credit card portfolio in the Consumer & Business Banking segment, the remaining U.S. credit card portfolio is reported in the Global Wealth Management segment.
CAPITAL ONE: The transfer of the Best Buy Stores, L.P. (“Best Buy”) portfolio to held for sale resulted in an increase in the average yield for Domestic Card and Total Credit Card of 121 basis points and 110 basis points, respectively, in Q3 2013, 168 basis points and 152 basis points, respectively, in Q2 2013 and 107 basis points and 97 basis points, respectively, in Q1 2013. The sale of the Best Buy portfolio was completed on September 6, 2013.
CITIBANK: Under U.S. GAAP, historical balance sheet information is not restated to reflect discontinued operations. Since the numerator portion of the ratio calculation excludes the income statement items under U.S. GAAP, related to the Credicard discontinued operations, the averages used in the ratio calculations have been adjusted to exclude the Credicard discontinued operations. Includes the impact of adding approximately 13 million credit card accounts and $7 billion of loans related to the previously announced acquisition of Best Buy’s U.S. credit card portfolio in the third quarter of 2013
