CC Loss Provisions Q3/14
Three of the top credit card issuers beefed up provisions for credit card losses in the third quarter. Reports suggest late stage delinquency metrics may be signaling a possible inflection point in credit loss performance.
Big 6 Q3/14 Delinquency
The top six U.S. credit card issuers are all reporting a slight uptick in delinquency for the third quarter. However, Bank of America held steady. Therefore, charge-offs will likely head higher in the first quarter of 2015 as the fourth quarter denominator will be higher.
Big 6 Q3/14 Charge-Offs
Among the nation’s top six credit card issuers charge-offs for the third quarter (Q3/14) of 2.49% are down 51 basis points (bps) year-on-year (Y/Y) and down 15 bps, quarter-to-quarter (Q/Q). However, the trend may reverse in the fourth quarter as delinquency took a turn North in the third quarter.
Big 4 Q3/14 Delinquency
The top four U.S. Visa and MasterCard issuers are seeing a credit quality reversal as delinquency rates headed higher in the third quarter. Chase, Capital One and Citibank all reported upticks in the 30+ day delinquency rate, while Bank of America held steady.
Big 4 Q3/14 Profits
Pre-tax profits among the nation’s top four bank credit card issuers declined 10.7% in the third quarter (Q3/14), compared to one year ago. Sequentially net income rose by 9.4%, according to CardData.
Big 4 Q314 Outstandings
U.S. bank credit card outstandings for the third quarter were essentially flat year-on-year (Y/Y), historically and disappointingly weak compared to the prior quarter. Rising a mere 70 basis points (bps) from one-year ago.
Big 4 Q3 Charge-Offs
Among the nation’s top four Visa and MasterCard (V/M) issuers, bank credit card charge-offs for the third quarter (Q3/14) of 2.83% are down 56 basis points (bps) year-on-year (Y/Y) and down 41 bps, quarter-to-quarter (Q/Q). However, the trend may reverse in the fourth quarter as delinquency took a turn North in the third quarter.
Credit Card PDV Q3/14
Bank credit card purchase dollar volume (PDV) increased 8.6% year-on-year (Y/Y) and 0.7% quarter-on quarter (Q/Q) in the third quarter (Q3/14), as outstandings continue to contract. The change in consumer behavior is significant for issuers who rely on interest income to subsidize purchase-based reward program expenses, according to CardData.
BofA Card Q3/14
Bank of America (BofA) reported a decline of 1.2% in Year-on-Year (Y/Y) average U.S. bank credit card outstandings of $88.9 billion for the third quarter (Q3/14). Meanwhile, Purchase Dollar Volume (PDV) for BofA’s U.S. bank credit cards rose 1.9% Y/Y and flat Quarter-to-Quarter (Q/Q) to $53.8 billion.
Charge-Offs Q3
CardWeb.com’s CardData financial database projects bank credit charge-offs among the nation’s top four Visa and MasterCard (V/M) issuers will decline four bps for the third quarter to 3.20%. Chase and Citi report Q3 results on October 14th before the market opening. BofA reports October 15th before the market opening. Cap One reports October 16th after the market close.
BofA Chip Debit
Bank of America (BofA) is starting today to add chip technology on all new and reissued consumer and small business debit cards. BofA has been issuing chip consumer, commercial and corporate credit cards in the U.S. since 2012.
Digital Disbursements
Bank of America has introduced a new payment solution that enables companies to make payments to their customers digitally, eliminating the need to issue a check. With the new Digital Disbursements payments are directly routed to the bank account of the individual payee’s choosing using either a mobile phone number or email address as the identifier.