U.S. card yield, as an average for the nation’s Top 4 issuers, remained at record levels in the third-quarter posting a small uptick sequentially. All of the issuers, except Chase, posted higher yields in the third-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 rose 5 basis points (bps) sequentially at 12.29% and up 35 bps year-on-year (YOY) for the third-quarter (3Q/19), compared to 12.24% for the prior quarter, and 11.94% for 3Q/18, according to CardData.
Credit 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 3Q/19 the sequential increase ranged from 6 bps for Citibank to 15 bps for Capital One. Sub-prime card specialist, COF, with 32% of its U.S. credit card portfolio carrying FICO scores of 660 or below, leads the peer group with a yield of 15.73%. BAC reported the lowest yield ratio of 10.85% for 3Q/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 third-quarter jump 30 bps, compared to the second-quarter, as the denominator changes, notes Robert McKinley, Senior Analyst for CardFlash, CardData, and CardTrak.
Chase [JPM] Yield Metric
For 3Q/19, Chase’s yield of 11.40% dropped 8 bps sequentially, and down by 10 bps YOY. Chase’s U.S. credit card yield for 2Q/19 was 11.48% and 11.50% for 3Q/18. In 2015 Chase posted a yield of 12.22% for the third-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 3Q/19, Capital One’s yield of 15.73% was up 15 bps sequentially, but flat YOY. Capital One’s U.S. credit card yield for 2Q/19 was 15.58% and 15.73% for 3Q/18. In 2015, Capital One posted a yield of 14.35% for the third-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 3Q/19, Bank of America’s U.S. credit card yield of 10.85% was up 9 bps sequentially, and up 65 bps YOY. Bank of America’s U.S. credit card yield for 2Q/19 was 10.76% and 10.20% for 3Q/18. In 2015, Bank of America posted a yield of 9.15% for the third-quarter. Over the past five-years, Bank of America reached a previous peak of 10.80% in the first-quarter of 2019. Bank of America’s yield represents gross interest yield.
Citibank [C] Yield Metric
For 3Q/19, Citibank’s U.S. bank credit card yield, excluding U.S. retail credit cards) of 11.19% was up 6 bps sequentially, and up 85 bps YOY. Citibank’s U.S. credit card yield for 2Q/19 was 11.13% and 10.34% for 3Q/18. In 2015, Citibank posted a yield of 10.28% for the third-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 Third-Quarter Report on the Top 4 U.S. Issuers Quarterly U.S. Credit Card Yields [2015-2019] Available for Immediate Download
Other Quarterly Payments Related Reports
SOURCES: Chase; Bank of America; Capital One; Citibank; RAM Research; CardData; CardTrak; CardFlash; Bankcenter; CardBuzz; PYVNTS; PYRPTS; Ruebud Media; Red 3 Media; The Cardworthy Company; Robear’s List