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MBNA Credit Update Sows Anxiety

The card issuer shows a rise in delinquent loans. Its shares fall 10%.
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Another wave of concern about the condition of U.S. loan portfoliossparked a minor selloff in several credit card issuers Wednesday.

The anxiety had its roots in an

SEC

filing by

MBNA

(KRB)

showing net credit losses at Jan. 31 were 5.49% of loan receivables, not counting securitized loans or loans it soon plans to securitize. Meanwhile, the delinquency ratio for loan receivables, or loans 30 days or more past due, was 4.45% in January.

The figures were 4.74% and 4.35% on Dec. 31. MBNA, the No. 2 credit card issuer and one that supposedly keeps close tabs on the solvency of its borrowers, said credit quality has been hurt by the weak economy and noted that seasonality usually causes the percentages to rise in January. Nevertheless, the company's shares were recently down $1.65, or 10%, to $14.85.

Also falling was

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Capital One

(COF) - Get Capital One Financial Corporation Report

, down $1.12, or 3.5%, to $30.98, and

Providian

(PVN)

, down 14 cents, or 2.2%, to $6.25.

American Express

(AXP) - Get American Express Company Report

hung in at roughly unchanged.

In a research note, Goldman Sachs said MBNA's filing showed a "weaker pattern" in credit quality than it had previously expected, and the investment house lowered its 2003 earnings estimate to $1.63 from $1.65. It also dropped its 2004 estimate to $1.80 from $1.85. The company also had its long-term credit rating trimmed last week by Fitch.