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Fitch: U.S. Credit Card Delinquencies Rise for the First Time in a Year



  Fitch: U.S. Credit Card Delinquencies Rise for the First Time in a Year

Business Wire

NEW YORK -- November 14, 2012

U.S. credit card delinquencies did something they have not done in twelve
months... increase, according to the latest Credit Card Performance Index
results from Fitch Ratings.

This comes as credit card defaults fell to a new five-year low for October.

Late stage delinquencies snapped a 12-month streak by rising two basis points
(bps) to 1.71% in October. Throughout 2012 thus far, however, late payments
have remained well below the 3% average of the prime index since inception.
Early stage delinquencies, or receivables associated with accounts 30 days
past due, remained relatively flat from the previous month at 2.21%. Fitch
expects chargeoffs to remain relatively stable as delinquencies hover at these
current levels.

Fitch's Prime Credit Card Chargeoff Index for October posted its second
month-over-month improvement, decreasing another 13 bps to 4.16%. The decline
this month in cardholder defaults represents the lowest level since early 2007
and is down 25% year-over-year. From its peak in September 2009, this decrease
also marks an astonishing 64% drop. Aside from a small blip for Citibank, the
large trusts which make up the majority of the index including Bank of
America, Capital One, Chase, and Discover; all reported monthly improvements
in default rates.

Both gross yield and monthly payment rate (MPR) indexes slipped slightly,
although MPR is still holding steady at historically strong levels. MPR
registered at 21.54% in October, compared to the 12 month-average of 21.67%.
Gross yield retracted minimally by 22 bps and remained at the 18% mark in
October.

With a continued decline in chargeoffs and stable yield performance,
three-month excess spread measures managed to remain at near record highs
while improving for the sixth consecutive month. It squeezed a gain of three
bps during the September reporting period to 11.20%. Monthly excess spread
decreased by 13 bps to 11.19%.

Fitch's Prime Credit Card index was established in 1991 and tracks more than
$107 billion of prime credit card ABS backed by approximately $259 billion of
principal receivables. The index is primarily comprised of general purpose
portfolios originated by institutions such as Bank of America, Citibank,
Chase, Capital One, Discover, etc.

Retail credit card ABS maintained strong momentum into the month of October,
with improvements in most performance metrics from the previous month. Similar
to the prime index, chargeoffs fell again and declined to levels not seen
since the end of 2007, while delinquencies ticked upward for the second
straight month.

Fitch's Retail Credit Card Chargeoff Index improved in October and decreased
26 bps to 6.57% while registering a 60-month low. The decline marks the third
straight month of improvement and is now roughly 50% lower than its peak
exhibited in mid-2010. Late stage delinquency metrics, however, backed off
recent lows yet remained relatively stable from the previous month, with an
increase of only three bps to 2.71%.

Meanwhile, three-month average excess spread on retail portfolios continues to
make headlines as it improves yet again for the eighth straight month. Both
monthly and three-month average excess spread measures posted record highs,
with the latter topping another 11 bps and settling in right under 15%. For
the month, gross yield also improved to 27.26% while MPR slipped to 15.03%.

Fitch's Retail Credit Card index tracks more than $28 billion of retail or
private label credit card ABS backed by approximately $50 billion of principal
receivables. The index is primarily comprised of private label portfolios
originated and serviced by Citibank (South Dakota) N.A., GE Money Bank and
World Financial Network National Bank. More than 165 retailers are
incorporated including Wal-Mart, Sears, Home Depot, Federated, Loews, J.C.
Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's, among others.

ABS ratings on both prime and retail credit card trusts are expected to remain
stable given available credit enhancement, loss coverage multiples, and
structural protections afforded investors.

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
Cynthia Ullrich, +1-212-908-0609
Senior Director
or
Michael Dean, +1-212-908-0556
Managing Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com
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