Fitch: U.S. Credit Card Chargeoffs Rise for First Time in 2012

  Fitch: U.S. Credit Card Chargeoffs Rise for First Time in 2012

Business Wire

NEW YORK -- June 13, 2012

Performance on U.S. credit card ABS hit a few seasonal bumps this past month,
though the outlook remains bright for the remainder of this year, according to
the latest index results from Fitch Ratings.

Prime credit card ABS performance is still showing long term improvements
despite some mild month-over-month volatility. Chargeoffs increased last
month, while delinquencies improved further to reach 17-year lows. In
addition, monthly payment rates and portfolio yields both declined. The
results were impacted by seasonal trends and day count issues.

Fitch's Chargeoff Index, which covers the April collection period, increased
27 basis points (bps) to 5.44%. The result was driven largely by day count
mechanics at a single large issuer (Citibank). Absent that anomaly, chargeoffs
would have remained flat. The percentage of receivables associated with
accounts delinquent 60 days or more decreased by 11 bps to 2.03%.

The prime monthly payment rate fell 53 bps to 21.44%. Seasonal trends again
drove the movement, though this decrease is milder than the average
contraction of 88 bps experienced every May. Monthly payment rates have been
essentially unchanged at around 21% over the past year.

Gross yield has declined over the past year by 200 bps as the discount option
has expired for most trusts. The discount option is a feature by which trusts
can supplement revenue (consisting of interest, fees, recoveries and
interchange) with the principal collections on a small, designated percentage
of principal receivables, typically 2% to 5%. Yield is used to cover losses,
cost of funds and trust expenses, with the remainder designated excess spread.
The three month average excess spread for the Prime credit card index is
10.37% which is slightly off of the record highs observed recently but well
above the 6% long term average.

Fitch's Prime Credit Card index was established in 1991 and tracks $113
billion of prime credit card ABS. The index is primarily composed of general
purpose portfolios originated by institutions such as Bank of America,
Citibank, Chase, Capital One, Discover, etc.

Retail credit card ABS have exhibited a similar stable pattern. Although yield
declined 84 bps month-over-month to 25.36%, it has hovered around 25% for the
past year. Monthly payment rates remain around 15%.

Retail gross chargeoffs fell to 7.99% and are still inching toward
pre-recessionary levels (260 bps lower year over year). Late stage (60+day)
delinquencies fell below 3% for the first time in six years reaching 2.98%,
well below the 4.11% average since the inception of the index in 2004.

Fitch's Retail Credit Card index measures the performance of trusts containing
a majority of receivables from private label credit cards for use with
specific retailers. The Fitch Retail Index tracks about $27 billion of ABS and
is primarily composed of private label portfolios originated and serviced by
Citibank, GE Money Bank, and World Financial Network Bank. More than 165
retailers are incorporated including Wal-Mart, Sears, Home Depot, Federated,
Lowe's, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's,
among others.

Additional information is available at 'www.fitchratings.com'

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Herman Poon, +1-212-908-0847
Director
Fitch Inc.
1 State Street Plaza
New York, NY 10004
or
Michael Dean, +1-212-908-0556
Managing Director
or
Cynthia Ullrich, +1-212-908-0609
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com