The stage is set for rough seas for the U.S. card industry going forward. Three indicators signal risk new account bookings surged since 2011; active credit card lines now exceed $3.4 trillion; and 30-day credit card delinquency deteriorated in first quarter 2017.
Exceeding year’s pace, Chase opened up 2.5 million accounts in 1Q/17, compared to 2.7 million in 4Q/16 and 2.3 million for 1Q/16.
Average early stage delinquency (30+ days) for the first quarter (1Q/17), among the nation’s Top 4 issuers, decreased 5 basis points (bps) sequentially, but rose year-on-year (YOY) by 24 bps, according to CardData.
Citibank and Capital One posted small downticks in 1Q/17. Citi is skewed by its rapidly growing outstandings from the acquisition of the American Express/Costco cobrand deal. Cap One is somewhat skewed by first quarter seasonality and 37% of its portfolio scoring less than 660 FICO.
Early stage delinquency (30+ days) among the nation’s top 6 issuers rose sharply by 26 basis points (bps) year-on-year (YOY) in the first quarter (1Q/17).
For 1Q/17 the nation’s largest issuers posted an average delinquency ratio of 2.01%, compared to 2.02% in the prior quarter, and 1.75% one-year ago, according to CardData.
The 30+ day delinquency rate, seasonally adjusted (SA), among the top 100 U.S. banks for the first quarter (1Q/17) increased 5 basis points (bps) sequentially (QTQ), and up 27 bps year-on-year (YOY).
On a not seasonally adjusted basis (NSA), the delinquency rate among the top 100 U.S. banks for 1Q/17, decreased 2 bps QTQ and up 25 bps YOY.
Compared to two years ago, the SA delinquency ratio is up 30 bps, and the NSA delinquency ratio is up 31 bps, according to CardData.
Mercator Advisory Group’s latest research, U.S. Credit Card Debt: Circle the Wagons and Fortify, says U.S. households are adding new credit despite sky-high volumes of outstanding credit card debt, auto finance, and student loans. Adding new customers and coming up with new payment tools is exciting, but issuers need to keep their eye-on-the ball particularly since the lending growth is outpacing household income growth.
Mercator says from a lender’s lens, growth is terrific, but from an investment view, question arises: Can the U.S. household carry all this debt? Bankers need to harness their credit card portfolios with leading-edge collection tools and execute the right strategies to rehabilitate fragile household budgets. The focus needs to be on collection tools, technology, and staff development,