Consumers credit card behavior improved since exiting the recession as evidenced by the growth of credit card limits in particular among the subprime credit card market. Yet, even with the solid improvements, the year-over-year figures indicate a slight increase in delinquency rates. Experian found the first six months of 2016 has shown that the total…
Yields among the nation’s top 6 credit card issuers are expected to remain healthy in the second quarter with Capital One leading the way with its average yield hovering at 14.2%. Chase and Discover are effectively tied for second place at 12%+.
Capital One (COF), the nation’s fastest growing major credit card issuer, is also posting the highest yields, besting competitors by 200 basis points (bps) in the first quarter. However, COF has the highest delinquency and charge-offs, hallmarks of the sub-prime exposure, according to CardData.
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
Over the past year bank-issued credit card limits have soared by 43.5% to $12.68 billion. Retail-issued credit card limits also rose by16.2% to $6.87 billion.
Capital One’s second quarter Spark Business Barometer discovered that millennials (18-33-year-olds) were the most optimistic group surveyed when asked about their sales volume, economic outlook and plans for growth.
ACI Worldwide (ACIW) announced Southern Auto Finance Company (SAFCo) has selected its UP Bill Payment Solution to increase consumer convenience and reduce payment processing costs. SAFCo customers will be able to pay their loans electronically on a mobile device, computer or via phone with a debit card or ACH (Automated Clearing House). Recently named to SubPrime Auto Finance News’ list of Top 100 sub-prime auto lending, recovery and financial service providers, SAFCo is a leading automotive financing company that operates in 14 states. As the company expands its national reach, it is constantly working to improve processes and offer innovative solutions, including bill pay advancement. After conducting a broad vendor evaluation, SAFCo chose ACI’s comprehensive and integrated electronic bill payment solution.
Credit card credit availability levels off and is heading south. A new study found that credit lines are contracting at their slowest rate in a year, with average credit lines for sub-prime and prime accounts (down 1.2% and 1.4% respectively) continuing to contract at a faster rate than super-prime accounts (down just 0.3%). The report also found that the credit card market is shifting toward rewards cards.
First Data electronic commerce and payment processing announced Equifax is set offer its ” Confidence Score” solution alternative scoring tool that provides access to hard-to-locate information on sub-prime, thin-file, and no credit score consumers. The First Data “Confidence Score” solution will help Equifax’s financial institution clients to identify new account applicants who have low credit scores or little credit history and to facilitate new account opening and review decisions. Each new account applicant is screened and assigned a score between 1 and 999.
Citigroup posted a 1Q/11 net income of $3.0 billion from $1.3 billion in 4Q/10 while revenue totaled $19.7 billion, up 7% from 4Q/10 but down 22% from 1Q/10 revenues of $16.5 billion. This was thanks in part to continued credit improvement as Citigroup net credit losses declined for the seventh consecutive quarter to $6.3 billion. With this, March, gross yield reached 26.73%, the highest point since April 2010, as the 12-month average gross yield was 25.43% compared to the 12-month average of 25.04% at the March 2010 reporting period. Meanwhile, the Monthly payment rate (MPR) posted a 12-month average of 12.80%, up slightly from 12.06% at the March 2010 reporting period, indicating consumers are paying off their credit card debts slightly more quickly. Moreover, net chargeoffs declined to a 12-month average of 12.27%, down from 13.22% at the March 2010 reporting period, according to Fitch ratings, as the 12-month average 60+ day delinquencies were 5.40% compared to the year ago average of 6.15%.
Citigroup reported 3Q/10 net income of $2.2 billion for a third consecutive quarterly operating profit, but was down $529 million, or 20%, from the prior quarter. The Transaction Services segment saw a net income of $920 million and was down 1% from the prior quarter, reflecting consistent strength in the business, despite a low rate environment, and continued investments, as growth in Latin America and Asia was offset by declines in North America and EMEA. On a global scale, North America saw a 3Q/10 Regional Consumer Banking segment revenue of $3.7 billion, flat since the previous quarter and down from the year ago figure of $3.8 billion, while the EMEA saw 3Q/10 revenue of $349 million, compared with $376 million in 2Q/10 and the year ago figure of $415 million. Meanwhile, North American Transaction Services saw revenues of $620 million for the quarter, compared with $636 million last quarter and $643 million in 3Q/09, and EMEA Transaction Services totaled $835 million for the quarter, compared with $848 million last quarter and $845 million last year.
Citigroup reported 2Q/10 net income of $2.7 billion or $0.09 per diluted share, on revenues of $22.1 billion, including Transaction Services with $929 million in net income, for a second consecutive profitable quarter. Provisions for credit losses and for benefits and claims declined $2.0 billion sequentially to $6.7 billion, the lowest level since the third quarter of 2007, reflecting continued improvement in credit quality. This helped increase Regional Consumer Banking’s net income by 16% sequentially to $1.2 billion. Citigroup has been focusing on Transaction Services and Regional Consumer Banking. Regional Consumer Banking (“RCB”) revenues were $8.0 billion, down $50 million, or 1%, sequentially, as declines in North America and EMEA were partially offset by continued growth in Asia and Latin America. Transaction Services revenues were $2.5 billion, up $65 million, or 3%, sequentially, with growth across all international regions. Transaction Services net credit losses were $1 million, flat compared to the prior quarter. The $35 million net loan loss reserve release in the quarter was $17 million higher than the prior quarter’s release. Net credit losses in Local Consumer Lending declined $403 million, or 8%, sequentially to $4.5 billion, mainly driven by Retail Partner Cards.