The nation’s fastest growing Visa and MasterCard major issuer, and the #1 near-prime/sub-prime issuer continues to plow along with solid growth in purchase dollar volume (PDV) and growth in credit card outstandings. RAM Research projects Capital One (COF) will deliver $50.9 billion in PDV and $72.4 billion in outstandings for the first quarter.
While three of the nation’s four largest issuers struggle with growth in U.S. outstandings Capital One (COF) emerges as the only major U.S issuer not facing erosion or stagnation, but real growth. COF’s End-of-Year (EOY) U.S. credit card outstandings have produced a compound annual growth rate (CAGR) of 9.63% between 2010 and 2014, according to CardData
The nation’s second largest issuer, Bank of America (BofA), has slowly recovered from the “Great Credit Meltdown” of 2008-2009. BofA’s End-of-Year (EOY) U.S. credit card outstandings have produced a compound annual growth rate (CAGR) of -8.25% between 2009 and 2013, according to CardData.
The number of open U.S. credit card accounts among the top four issuers was essentially flat for all of 2014, rising 0.6% year-on-year (Y/Y), but declining 0.6% quarter-to-quarter (Q/Q). While the top two issuers lost ground last year, Capital One is the only issuer with real account growth.
Capital One (COF) reported a 7% year-on-year (Y/Y) rise in fourth quarter (Q4/14) after-tax U.S. bank credit card profits to $487 million, but sequentially declined 11.5%. However, Purchase Dollar Volume (PDV) rose 15.5% in the quarter to $58.2 billion.
Synchrony Financial (f/k/a GE Capital Retail Finance) posted a 19.9% surge in fourth quarter (Q4/14) profits to $531 million, but slipped slightly from the prior quarter. Period-end loan receivables growth for the retail payment card giant remained strong at 7%, driven by purchase volume and average active account growth.
Bank of America (BofA) reported a decline of 0.8% in Year-on-Year (Y/Y) average U.S. bank credit card outstandings of $88.4 billion for the fourth quarter (Q4/14). Meanwhile, Purchase Dollar Volume (PDV) for BofA’s U.S. bank credit cards rose 2.6% Y/Y and up 3.9% Quarter-to-Quarter (Q/Q) to $69.2 billion
Citibank faced a rough 2014 as fourth quarter (Q4/14)net revenues declined 8% sequentially (Q/Q) and flat year-on-year (Y/Y) to $16.5 billion. Citi’s Global Consumer Banking business declined 2% Q/Q and flat Y/Y to $9.5 billion for Q4/14.
While profits among the world’s largest payment card networks rose 4.4% in the third quarter (Q3/14), the figure for the fourth quarter will be relatively flat in the fourth quarter (Q4/14), compared to one year ago. During 2015, profits will near $5.0 billion in Q2/15 or Q3/15.
The decline in the U.S. bank credit card charge-off ratio will likely bottom in the fourth quarter, dipping below the 3.00% mark for the first time since the first quarter 1995, but then heading higher throughout 2015. On a weighted basis charge-offs should come in around 3.01%, while the unweighted ratio should slide to 2.96% for the fourth quarter.
Bank credit card charge-offs, among the Top 100 U.S. banks, continue to decline in the third quarter to 3.01%. The ratio is the lowest since the third quarter of 1985. The ratio is down 31 basis points (bps) from one year ago, down 87 bps from two years ago and down a stunning 736 bps from five years ago.
Charge-offs among the nation’s top six credit card issuers will likely drop to 2.33% in the fourth quarter, but will likely inch up in the first quarter as delinquency ramps up. The fourth and first quarter are somewhat skewed due to the seasonality denominator.