Late stage delinquency among the nation’s Big 6 issuers will be pushed higher in 2015 as 30 day to 89 day delinquency begins its climb in the first quarter. Forecaster RAM Research projects 90+ day delinquency among the Big 6 will inch up from an average of 99 basis points (bps) in Q4/14 to 105 bps by end-of-year (EOY) 2015.
Credit card Asset-Backed Securities (ABS) metrics for the February reporting period will weaken slightly in line with seasonal trends, but should remain near record levels of strength. The Monthly Payment Rate (MPR) fell to 27.36% in January and will likely slightly decline through the first quarter due to seasonal trends.
JPMorgan Chase reported fourth-quarter 2010 net income of $4.8 billion, an increase of 47% compared with $3.3 billion for the fourth quarter of 2009 while full-year 2010 net income was $17.4 billion, an increase of 48% compared with $11.7 billion for the prior year. For the Card Services division, net income was $1.3 billion, compared with a net loss of $306 million in the prior year, and total merchant processing volume was $127.2 billion on 5.6 billion total transactions processed. Meanwhile, end-of-period loans were $137.7 billion, a decrease of $25.7 billion, or 16%, from the prior year and an increase of $1.2 billion, or 1%, from the prior quarter. Average loans were $135.6 billion, a decrease by 17% of $27.6 billion from the prior year and $4.5 billion from the prior quarter. With this, net revenue was $4.2 billion, a decrease of $902 million, or 18%, from the prior year. The provision for credit losses was $671 million, compared with $4.2 billion in the prior year and $1.6 billion in the prior quarter, thanks to lower net charge-offs and a reduction of $2.0 billion to the allowance for loan losses due to lower estimated losses.
Alliance Data Systems Corporation loyalty and marketing solutions has been issued $450 million of public, fixed-rate, term asset-backed securities by World Financial Network Credit Card Master Note Trust. Issued as part of the securitization program for Alliance Data’s private label credit card banking subsidiary, World Financial Network National Bank (WFNNB), the securities consist of four series of notes rated AAA through BBB with an average life of five years and carry a weighted average fixed-rate of just under 5%. The Company’s private label credit card business currently employs three sources of funding for its roughly $5 billion portfolio, representing approximately 100 retailer programs.
Alliance Data Systems loyalty and marketing solutions has closed $1.5 billion in conduit liquidity facilities, resulting in an increase of $175 million in overall conduit capacity. It has renewed a $275 million conduit facility for its Utah industrial bank subsidiary, “World Financial Capital Bank,” while its private label credit card banking subsidiary, “World Financial Network National Bank,” has completed the renewal of its $1.2 billion conduit facility. The facilities fund both existing and new private label credit card programs, currently only finance less than $750 million in card assets, providing a large source of untapped liquidity to fund growth and/or portfolio acquisitions.
Moody’s Latin America has assigned a rating of Aaa.ar (Argentine National Scale) and of Ba3 (Global
Scale, Local Currency) to the Debt Securities (VDF) of Fideicomiso
Financiero Tarjeta Privada XVIII issued by Banco de Valores – acting
solely in its capacity as Issuer and Trustee and also assigned ratings of Ca.ar (Argentine National Scale) and Ca
(Global Scale, Local Currency) to the subordinated Certificates. Banco de Valores S.A. (Issuer and Trustee) issued one class of
peso-denominated, floating-rate bonds (VDF) and a residual piece (CP),
all of them backed by a pool of credit card receivables originated and
serviced by Banco Privado de Inversiones (BPI). BPI is the seller of the receivables and the primary servicer of the
transaction. The bank was founded in 1993 to provide financial services
to the middle-high and high income segment of the market. In 1996, BPI
began issuing MasterCard and Visa credit cards to its customers.
The VDF original balance is equal to 80% of the original pool balance.
At closing, the VDF were backed by credit card outstanding balance
generated by eligible accounts. The ownership of those accounts remains
with the originator but the receivables assigned to the trust. The
transaction has five reserve funds: an expenses fund, a liquidity reserve
fund, a backup servicer replacement fund, and sinking funds for the
interest and principal. The VDF will bear a floating interest rate (BADLAR + 300bps) with a
minimum rate of 13% and a maximum rate of 22%. If an early amortization
event occurs, the revolving period will terminate automatically. Moody’s considered the credit enhancement provided in this transaction
through the initial subordination levels (20% for VDF), as well as the
historical performance of BPI’s portfolio. In addition, Moody’s
considered factors common to consumer loans securitizations such as
delinquencies, payments rate and losses; as well as specific factors
related to the Argentine market, such as the probability of an increase
in losses if there are changes in the macroeconomic scenario in Argentina.
Moody’s Investors Service has assigned a
definitive rating of Aaa to the Applause 2010-1 Beneficial Interests
backed by credit card receivables valued at JPY 6.0 billion. The rating addresses the expected loss posed to investors by the legal
final maturity date. The structure allows for timely payments of
dividends (in scheduled amounts, on scheduled payment dates), and
ultimate payment of principal by the legal final maturity date.
The Seller entrusted a pool of eligible credit card receivables and cash
to the Asset Trustee, which then issued the Series 2010-1 Beneficial
Interests (Senior Beneficial Interests), a Subordinated Beneficial
Interest, a Seller’s Beneficial Interest and a Reserve Beneficial
Interest. Entrustment of the receivables was perfected against third parties under
the Perfection Law (the Law Prescribing Exceptions, Etc. to the Civil
Code Requirement for Setting Up Against a Third Party to an Assignment of
Claims and Chattels [Law No. 104, 1998]). Unless a specific event occurs,
perfection against the obligors will not be made. While the seller holds the Subordinated Beneficial Interest, Seller’s
Beneficial Interest and Reserve Beneficial Interest, the Series 2010-1
Beneficial Interests was transferred to Investors.
Moody’s Investors Service has assigned a provisional rating of (P)Aaa to Ocean 2010-1 Beneficial Interests backed by credit card receivables valued at approximately JPY 10 billion.
The rating addresses the expected loss posed to investors by the legal
final maturity date. The underlying assets comprise credit card receivable. Having factored in receivables’ attributes, historical data on the seller’s entire pool, ongoing performance data on existing securitization pools, and credit card industry trends, Moody’s estimates the annual default rate at 12% to 14%; the rating agency also believes that the monthly principal payment rate will range from 5% to 7%, and the yield from 16% to 18%. These parameters are estimated based on the transaction’s definition, which may differ from the seller’s definition. The structure allows for timely payments of
dividends (in scheduled amounts, on scheduled payment dates), and ultimate payment of principal by the legal final maturity date. The seller, as initial Servicer, has substantial experience in the credit card industry. Moody’s has examined the seller’s operations and considers the company sufficiently capable of servicing the underlying pool. If a servicer replacement event were to occur, the Asset Trustee would be able to dismiss the Servicer. A back-up servicer will be appointed at closing.
The principal methodology used in rating the transaction was “Moody’s
Approach To Rating Credit Card Receivables-Backed Securities,” published in April 2007
JPMorgan Chase& Co. reported fourth-quarter 2009 net income of $3.3
billion, compared with net income of $702 million in the fourth quarter
of 2008, with retail Financial Services reporting a net loss of $399
million, compared with net income of $624 million in the prior year, and
a net revenue of $7.7 billion, a decrease of $1.0 billion (12%). The
provision for credit losses was $4.2 billion, an increase of $653
million from the prior year and $241 million from the prior quarter.
Retail Banking reported net income of $1.0 billion, relatively flat
compared with the prior year, with net revenue of $4.5 billion, also
flat compared with the prior year, and the provision for credit losses
was $248 million, compared with $268 million in the prior year. For
Chase Card Services, there was a net loss of $306 million, compared with
a net loss of $371 million in the prior year.
4Q/09 CARD SERVICE RESULTS
($ millions) 4Q09 3Q09 4Q08 $ O/(U) O/(U) % $ O/(U) O/(U) %
Net Revenue $5,148 $5,159 $4,908 ($11) -% $240 5%
Credit Losses 4,239 4,967 3,966 (728) (15) 273 7
Noninterest Expense 1,396 1,306 1,489 90 7 (93) (6)
Net Loss ($306) ($700) ($371) $394 56% $65 18%
SOURCE: CHASE
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Delinquency for Capital One’s U.S. credit cards rose for the third month in September and charge-offs resumed an uptick after dropping to its lowest level in four months. U.S. Card delinquency increased from 5.09% in August to 5.38% for September. The charge-off ratio also rose from 9.32% in August to 9.77% for September. One-year ago delinquency stood at 4.20% and charge-offs at 6.34%. Capital One previously reported a second quarter managed delinquency rate (30+ days) for U.S. credit cards of 4.77% for the second quarter, compared to 5.08% for 1Q/09 and 3.85% for the second quarter of 2008. The net charge-off rate for U.S. credit cards rose to 9.23% for the second quarter, compared to 8.39% for the first quarter and 6.26% one-year ago. For complete details on Capital One’s second quarter and monthly performance, visit CardData (www.carddata.com).
CAPITAL ONE HISTORICAL
DELINQUENCY CHARGE-OFF
Sep 08: 4.20% 6.34%
Oct 08: 4.48% 6.54%
Nov 08: 4.70% 6.98%
Dec 08: 4.78% 7.71%
Jan 09: 5.02% 7.82%
Feb 09: 5.10% 8.06%
Mar 09: 5.08% 9.33%
Apr 09: 5.04% 8.56%
May 09: 4.90% 9.41%
Jun 09: 4.77% 9.73%
Jul 09: 4.83% 9.83%
Aug 09: 5.09% 9.32%
Sep 09: 5.38% 9.77%
Source: CardData.com
Chase posted a net loss of $700 million for its Card Services division for the third quarter. EOP managed loans were $165.2 billion down 11% from the prior year and down 4% from the prior quarter. The decrease from the prior year was due to lower charge volume and a higher level of charge-offs. Charge volume was $82.6 billion, a decrease of 12% from the prior year. Return on equity was negative 19%, down from positive 8% in the prior year. Pretax income to average managed loans (ROO) was negative 2.61%, compared with positive 1.17% in the prior year and negative 2.46% in the prior quarter. Net interest income as a percentage of average managed loans was 10.15%, up from 8.18% in the prior year and 9.93% in the prior quarter. Merchant processing volume was $103.5 billion, on 4.5 billion total transactions processed.