Three of the top four U.S. Visa and MasterCard issuers are seeing a continuing credit quality reversal in 2014 as delinquency rates headed higher in the fourth quarter. Bank of America (BofA) posted a five basis points (bps) downtick in Q4 but it is insignificant as their 90+ delinquency rate headed higher.
The decline in the U.S. bank credit card delinquency ratio will likely remain flat in the fourth quarter and then reverse course for all of 2015. On a weighted basis 30+ day delinquency will should come in around 2.29%, while the unweighted ratio should edge up slightly to 2.17% for the fourth quarter.
Bank credit card delinquency among the Top 100 U.S. banks continue to decline in the third quarter to 2.16%. The ratio is the lowest in more than 25 years, down 26 basis points (bps) from one year ago, down 65 bps from two years ago and down a stunning 447 bps from five years ago.
Among the top six U.S. credit card issuers, the average 30+day delinquency rate is likely to top 2.00% in the fourth quarter, reversing a four year downward trend. The average 30+day delinquency rate was 1.93%, compared to 1.83% in the second quarter, and compared to 2.12% in the year-ago quarter, according to CardData..
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.
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.
The nation’s Big 6 credit card issuers reported a big decline in delinquency ratios during the second quarter. The leading indicator for charge-offs is now at a record low and headed lower in the third quarter.
Top Visa and MasterCard issuers continue to realize the rewards of lower delinquency as ratios drop significantly in the second quarter to new bottoms. Chase, the nation’s top issuer. posted a 20 basis points (bps) sequential decline and a 28 bps annual decline in 30+ day bank credit card delinquency in the second quarter.
Credit quality for VISA and MasterCards (V/M) issued by the top four U.S. bank credit card issuers continues to improve. The 30+ day delinquency rate in the first quarter declined 16 basis points from the prior quarter and 52 basis points from one-year ago. According to CardData, the average 30+ delinquency rate among the top U.S. issuers for the first quarter stood at 2.64%, compared to 3.16% for Q1/2013 and 2.80% for the final quarter of 2013.
MasterCard is hosting its annual Americas Global Risk Management Conference in San Diego, bringing together hundreds of financial services and fraud security professionals from North and South America, including Central America and the Caribbean. Last year’s Americas conference attracted hundreds of industry leaders from 28 countries representing more than 145 unique financial institutions and service provider organizations. This year’s conference will offer thought-provoking presentations and break-out sessions by well-renowned industry experts to focus on the United States Secret Service’s initiatives to detect and prevent payment card fraud, new trends that criminals are using to steal payment card data, and how the agency works to support financial organizations in protecting the payment system.
Bank credit card outstandings among four of the top U.S. players increased a paltry 1.5% during the second quarter compared to 2Q/05 but jumped 2.6% sequentially. Among the top five players who break-out their U.S. portfolios only Capital One posted above average growth. The nation’s top issuer, Bank of America, posted a 7.6% year-on-year gain in global outstandings. (BofA no longer discloses its domestic portfolio statistics.) Industrywide credit card outstandings increased 8.6% year-on-year according to CardData ([www.carddata.com]). Chase, Citibank, Capital One and Discover hold a collective marketshare of 48%. Among the big four from the top five, Capital One grew 5.0% while Chase posted a 1.5% gain and Citibank a 1.0% increase. Discover’s domestic portfolio decreased by 0.5%.
BIG FOUR PLAYERS
($ billions outstandings)
2Q/06 1Q/06 2Q/05 CHNG
Chase 139.3 134.3 137.3 +1.5%
Citi 111.3 109.7 110.2 +1.0%
Cap One 48.7 47.1 46.4 +5.0%
Discover 44.1 43.6 44.3 -0.5%
TOTAL 343.3 334.7 338.2 +1.5%
INDUSTRY 721.4 704.1 664.5 +8.6%
Source: CardData (www.carddata.com)
VA-based Online Resources reported that fourth quarter revenue increased 39% over 4Q/04 to $15.8 million. Net income nearly tripled to $2.9 million. Last year, ORCC increased end-users, with a 32% increase in banking account presentation, a 27% increase in banking billpayers and a 42% increase in active cardholders. The Company also expanded potential service distribution, increasing the total client base to 829 including a 16% increase in the pool of potential banking and cardholder users. ORCC is projecting first quarter income between $16.5 million and $17.0 million and net income between $1.3 million and $1.7 million. For complete details on ORCC’s latest results, visit CardData ([www.carddata.com]).