The nation’s third largest Visa and MasterCard issuer continued to struggle in the third quarter (3Q/16) with sluggish outstandings (OUT) and purchase dollar volume (PDV) growth, but other metrics, especially credit risk management are above peer group averages Year-On-Year (YOY).
Pre-tax net income edged down 2.5% YOY to $1218 million in 3Q/16, compared to $1216 million in the prior quarter and $1249 million for the year ago quarter. For 2015, BofA averaged $1234 million per quarter.
End-of-Period (EOP) U.S. credit card outstandings slipped down by 0.6% YOY, compared to a 0.3% YOY decline for 2Q/16. At the end of 3Q/16 BofA had $88.8 billion in U.S. EOP credit card outstandings, compared to $88.1 billion at the end of the prior quarter and $88.3 billion at the end of the year ago quarter.
Average U.S. credit card outstandings were flat YOY growth for 3Q/16. During the third quarter BofA had $88.2 billion in U.S. average credit card outstandings, compared to $86.7 billion for 2Q/16 and $88.2 billion for 3Q/15.
BofA U.S. credit card PDV, excluding business cards, increased 1.9% YOY to $57.6 billion, compared to $56.7 billion for 2Q/16 and $56.5 billion for 3Q/15.
Early-stage and late-stage delinquency continued to improve in the third quarter, besting industry trends among the Top 4 issuers.
BofA U.S. consumer credit card early-stage (30+ day) delinquency decreased 7 basis points (bps) YOY and 8 bps Quarter-To-Quarter (QTQ) for 3Q/16. The issuer reported a 30+ day delinquency ratio of 1.64%, compared to 1.58% for 2Q/16 and 1.71% for 3Q/15.
U.S. consumer credit card late-stage (90+ day) delinquency declined 3 bps YOY and 0 bps QTQ for 3Q/16. The issuer reported a 90+ day delinquency ratio of 0.79%, compared to 0.79% for 2Q/16 and 0.82% for 3Q/15.
U.S. consumer credit card charge-off (CO) ratio was down 1 bps YOY and down 21 bps QTQ for 3Q/16. BofA reported a charge-offs ratio of 2.45% for 3Q/16, compared to 2.66% for 2Q/16 and 2.46% for 3Q/15.
BofA’s U.S. consumer credit card gross interest yield (YLD) improved both YOY and QTQ. For the third quarter BofA’s YLD was 9.30%, compared to 9.20% for the prior quarter, and 9.15% for the year ago quarter.
The issuer’s risk-adjusted margin (RAM) fell sharply QTQ by 40 bps for 3Q/16 to 9.11%, but up 32 bps YOY. BofA’s RAM for 2Q/16 was 8.79% and 9.51% for 3Q/15.
On par with last year, BofA opened up 1.2 million accounts in 3Q/16, compared to 1.3 million in 2Q/16 and 1.3 million for 3Q/15.
BofA has an estimated 35.5 million gross accounts (GAC) and 33.9 million active accounts (AAC) at the end of the third quarter.
BofA’s U.S. debit card PDV rose 2.5% YOY to $71.0 billion got 3Q/16, compared to $72.1 billion for the prior quarter and $69.3 billion one-year ago.
For additional analysis, charts and graphs on BofA’s 3Q/16 performance access CardData.
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