Fitch: Prime U.S. Credit Card ABS Hit New Milestone; Retail Stumbles
NEW YORK -- September 4, 2013
The credit quality of the U.S. consumer continues to rebound as credit card
ABS performance registered positive gains across the board this past month,
according to the latest monthly index results from Fitch Ratings.
All major variables improved, including chargeoffs, delinquencies, yield,
monthly payment rate (MPR) and excess spread. Additionally, several of these
metrics managed to break record levels in August.
Fitch's 60+ Day Delinquency Index for August (covering the July collection
period) registered yet another record low in dropping four basis points (bps).
Late stage delinquencies, which measure the percentage of receivables
associated with accounts that are delinquent in excess of 60 days, fell to
1.30%, a fifth consecutive monthly decline. Chargeoffs also improved for the
fourth straight month and registered another 25 basis point (bps) drop to
3.37%. Current loss levels have plunged to levels not seen in over seven years
and are 29% lower year-over-year.
Excess spread measures continue to gradually rise and are still reaping the
benefits of improved loss performance and steady yields. Excess spread on a
three-month average basis increased 37 bps in August to 12.32%, an all-time
high. The robust excess spread levels provide ample cushion for the trusts and
Another record-breaker in August was MPR, which outperformed all other
variables during the month. MPR increased almost 2% from last month to 26.05%,
registering an all-time high after falling the previous month. Current MPR
levels remain well above Fitch's long term index average of 16.86%.
Fitch's Prime Credit Card index was established in 1991 and tracks more than
$113 billion of prime credit card ABS backed by approximately $239 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.
Unlike the prime index, Fitch's Retail Credit Card Index results were mixed in
August. Retail chargeoffs declined for the third consecutive month, dropping
further 27 bps to 6.08%. Losses have declined 11.88% since the same period
last year. On the other hand, late stage delinquencies have remained
relatively flat and averaged 2.30% for the last three months, possibly
indicating an end to declining levels of chargeoffs for the remainder of the
year. Late payments have decreased 12.45% over the past year.
Both gross yield and excess spread worsened this month. Gross yield declined
34 bps month over month at around 27%, while three month average excess spread
levels also fell 95 bps to 16.10%. Three month average excess spread has
increased approximately 10% over the past year.
Fitch's Retail Credit Card index tracks more than $20 billion of retail or
private label credit card ABS backed by approximately $32 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
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. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.
Fitch, Inc., One State Street Plaza, New York, NY 10004
Press spacebar to pause and continue. Press esc to stop.