The bank card default rate increased 16 basis points (bps) in November from the previous month, to 2.91%. For all consumer credit the composite ratio was 0.97% in November, up three bps from the previous month.
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The charge-off ratio for the top 100 U.S bank credit card issuers edged up 5 basis points (bps) in the third quarter but remains at historic lows.
Capital One’s third quarter earnings were relatively good as the company delivered a 1.43% return on average assets (ROAA), up from the sequential quarter which was impacted by a large restructuring charge, but down 8 basis points from the year-ago quarter.
The charge-off ratio for the top 100 U.S bank credit cards has been slowing edging upward, rising 10 basis points (bps) in the fourth quarter and 1 bps in the first quarter. RAM Research projects charge-offs will rise to 3.02% for the second quarter.
Average losses in the first-quarter 2015 for the top six issuers were 213 basis points (bps) below their 2010-2014 averages and now at an unsustainable level over the long term. Analysts are saying the industry may be approaching the inflection point in credit performance.
The average charge-off ratio among the nation’s four largest issuers increased 12 basis points (bps) quarter-to-quarter (QOQ) to 3.09% in the first quarter (Q1/15). The top 100 U.S. banks posted a 10 bps increase QOQ to 3.07%, according to CardData.
Discover’s U.S. end-of-period (EOP) credit card loans grew 5.5% year-on-year (YOY) and continues to outpace the top Visa and MasterCard issuers. Since 2009, Discover has experienced sequential growth at a compound annual growth rate (CAGR) of 5.5%, exceeded only by Capital One among the top ten issuers.
Discover’s U.S. Purchase Dollar Volume (PDV) is growing 4.7% annually. slower than its peer group, however Discover is outpacing the top Visa and MasterCard in outstandings growth. RAM Research forecasts Q1/15 U.S. PDV will slightly exceed $27 billion.
While the Chase credit card portfolio has consistently posted robust purchase dollar volume (PDV), outstandings declined between 2009 and 2013, with a compound annual growth rate (CAGR) of -1.24%, according to CardData. However, Chase turned the corner last year with a 2.5% year-on-year (YOY) gain.
The 30+ day delinquency ratio continues to hover at a 25+ year low and charge-offs for the past two quarters hit the lowest level since 1986. However, both metrics may be headed higher this year as Q3 and Q4 metrics among the biggest issuers uptick.
Given the uptick in bank credit card delinquency in the third and fourth quarters, it is likely charge-offs will start to climb upwards as early as the first quarter and will continue to march north for the rest of 2015.