The nation’s second largest Visa and MasterCard issuer continues to struggle with sluggish outstandings and purchase dollar volume (PDV) growth, but credit card quality continues to improve. However, Bank of America’s signed up 1.3 million accounts in the second quarter, an 18% year-on-year (YOY) gain, the highest level since Q3/08, but yield fell 22 basis points (bps) in Q2/15.
BofA reported a decline of 0.7% in YOY in end-of-period (EOP) U.S. bank credit card outstandings of $88.4 billion for the second quarter (Q2/15). Meanwhile, Purchase Dollar Volume (PDV) for BofA’s U.S. bank credit cards rose 4.5% YOY to $56.0 billion.
BofA noted its U.S. debit card Q2/15 PDV also increased 2.0% YOY to $70.8 billion.
BofA noted credit card issuance remained strong in the second quarter. The company issued 1.3 million new credit cards, up 18% from the 1.1 million cards issued in the year-ago quarter.
The 30+ day delinquency rate for U.S. bank credit cardholders declined 23 basis points (bps) from Q2/14 and down 13 bps from the prior quarter. For Q2/15, 30+ day delinquency stood at 1.68%, compared to 1.81% in Q1/15 and 1.91% in Q2/14. The 90+ day delinquency rate also sank by 14 bps YOY and down 7 bps quarter-to-quarter (QOQ) to 0.84%.
In another good sign, bank credit card charge-offs dropped 43 bps from the year ago quarter to 2.68%. Sequentially, charge-offs declined 16 bps.
Additionally, BofA reported its gross interest yield declined 22 bps from Q2/14 to 9.08%.
BofA noted Consumer Banking posted net income of $1.7 billion, up 4 percent from the year-ago quarter, as the business reduced expenses for the fourth consecutive quarter and asset quality continued to improve. These factors were partially offset by a decline in net interest income. Revenue was down 1 percent from the second quarter of 2014 to $7.5 billion, as the allocation of asset liability management (ALM) activities and lower card yields and card loan balances were partially offset by higher noninterest income. Noninterest income of $2.6 billion was up 2 percent, driven by higher card income and higher mortgage banking income.
BOFA CREDIT CARD OUTSTANDINGS
Q2/14: $89.0 billion
Q3/14: $89.0 billion
Q4/14: $91.9 billion
Q1/15: $87.3 billion
Q2/15: $88.4 billion
Source: Bank of America; CardData
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