U.S. card yield, as an average for the nation’s Top 4 issuers, remained at record levels in the second-quarter despite a small downtick sequentially. All of the issuers posted lower yields in the second-quarter from the prior quarter. However, this is fourth consecutive quarter wherein all of the Top 4 exceeded 10%.
The U.S. Top 4 Issuers (Chase [JPM], Capital One [COF], Bank of America [BAC], Citibank [C]) credit card yield dipped 10 basis points (bps) sequentially at 12.24% but up 94 bps year-on-year (YOY) for the second-quarter (2Q/19), compared to 12.34% for the prior quarter, and 11.31% for 2Q/18, according to CardData.
Card Yield Analysis
Citibank and Bank of America joined the double-digit yield club in the third-quarter of last year and hit individual records in the first-quarter of this year. For 2Q/19 the sequential decline ranged from 4 bps for Bank of America to15 bps for Chase. Sub-prime card specialist, COF, with 34% of its U.S. credit card portfolio carrying FICO scores of 660 or below, leads the peer group with a yield of 15.60%. BAC reported the lowest yield ratio of 10.76% for 2Q/19, based on current analysis of RAM Research.
While there are slight variations in the reported yield data definition reported by issuers, the average timeline and trend-line are meaningful. Historically yields for the second-quarter decline 10 bps to 30 bps, compared to the first-quarter, as the denominator changes. If the Fed continues to cut rates, card issuers benefit from the repricing lag, while at the same time cardholders may go on a credit diet if the economy sours, which offsets yield, notes Robert McKinley, Senior Analyst for CardFlash, CardData, and CardTrak.
Chase [JPM] Yield Metric
For 2Q/19, Chase’s yield of 11.48% dropped 15 bps sequentially, but soared by 110 bps YOY. Chase’s U.S. credit card yield for 1Q/19 was 11.63% and 10.38% for 2Q/18. In 2015 Chase posted a yield of 12.35% for the second-quarter. Over the past five-years, Chase yield peaked at 12.54% in 4Q/15. The Chase yield represents total net revenue (non-interest revenue + net interest income) as percentage of average loans.
Capital One [COF] Yield Metric
For 2Q/19, Capital One’s yield of 15.60% was down 9 bps sequentially, but up 55 bps YOY. Capital One’s U.S. credit card yield for 1Q/19 was 15.69% and 15.05% for 2Q/18. In 2015, Capital One posted a yield of 13.95% for the second-quarter. Over the past five-years, Capital One reached a peak of 15.73% in 3Q/18. Capital One yield represents the average yield on credit card loans held for investment.
Bank of America [BAC] Yield Metric
For 2Q/19, Bank of America’s U.S. credit card yield of 10.76% was down 4 bps sequentially, but up 90 bps YOY. Bank of America’s U.S. credit card yield for 1Q/19 was 10.80% and 9.86% for 2Q/18. In 2015, Bank of America posted a yield of 9.08% for the second-quarter. Over the past five-years, Bank of America reached a peak of 10.80% in the first-quarter of 2019. Bank of America’s yield represents gross interest yield.
Citibank [C] Yield Metric
For 2Q/19, Citibank’s U.S. bank credit card yield, excluding U.S. retail credit cards) of 11.13% was down 11 bps sequentially, and up 119 bps YOY. Citibank’s U.S. credit card yield for 1Q/19 was 11.24% and 9.94% for 2Q/18. In 2015, Citibank posted a yield of 10.39% for the second-quarter. Over the past five-years reached a peak of 11.24% in the first-quarter of 2019. Citibank’s average yield is calculated as gross interest revenue earned divided by average loans.
Complete Second-Quarter Report on the Top 4 U.S. Issuers Quarterly U.S. Credit Card Yields [2015-2019] Available for Immediate Download
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