NEW YORK ( TheStreet) -- U.S. consumers continue to deleverage, but that doesn't keep two of the major credit card lenders from continuing to expand. One of the lovely things about credit card lenders is the availability of monthly loan balance and credit quality information for several major lenders, along with separate monthly master trust reports for all, which provide credit quality detail on their entire managed card portfolios, including securitized loans. American Express ( AXP) late on Thursday reported its average credit card balances on the company's balance sheet grew to $54.6 billion during July from $54.4 billion during June. That's an increase of "only" 0.4% during the month, but it works out to an annualized growth rate of 4.4%, which is quite strong when considering that overall consumer credit balances in the U.S. continue to decline. The company's credit card portfolio balances were up 3.8% year-over-year. Discover Financial Services ( DFS) was the only other major U.S. card lender showing portfolio growth during July, with average card balances growing to $49.6 billion from $49.5 billion during June. That's slower growth of just 0.2% for the month, and an annualized growth rate of 2.4%. Then again, average card balances were up 4.6% from a year earlier. Capital One ( COF) reported average credit card loan balances held for investment of $69.9 billion during July, declining 0.4% from July. Average credit card balances were down 13% from a year earlier, which includes the transfer of about $7 billion in Best Buy credit card loans to held-for-sale during the first quarter. Capital One expects to complete the sale of the Best Buy loans, for roughly book value, to Citigroup ( C) during September. When discussing the challenging environment for card lenders in a note on Friday, FBR analyst Scott Valentin pointed out that while the second quarter saw year-over-year "credit spending increases at all major banks," consumers' "payment rates increased 133 bps month-over-month, or MOM, from 24.2% in June to 25.5% in July, resulting in subdued receivables growth. "The MOM paydown rate increase of 133 bps, compared to historical MOM paydown changes of +37 bps in 2012, -59 bps in 2011, -1 bp in 2010, and +70 bps in 2009," Valentin wrote. "July's average industry payment rate of 25.5% compares with 24.2% in June and 23.6% in July 2012."
Consumers are still being careful, which is not surprising, considering how tapped out they were just a few years ago.
Credit Quality Is Beautiful
Hand-in-hand with the high paydown activity is the continued improvement in credit card loan quality, based on master trust data compiled by FBR:- Discover reported the lowest annualized net charge-off rate for managed credit card receivables, of 1.80% during July, improving from 2.20% in June. That was the lowest July net charge-off rate for the six largest U.S. card lenders. Discover also reported early stage delinquencies of 0.44% of total card receivables, increasing slightly from 0.43% in June. Those are very strong numbers, illustrating just how profitable the credit card business can be, when you factor in double-digit interest rates.
- American Express reported a July net charge-off rate of 1.88%, improving from 2.04% in June. Early state delinquencies made up 0.37% of total managed card balances in July, up slightly from 0.34% the previous month. American Express had the lowest delinquency rate among the six largest card lenders during July.
- Capital One reported a July net charge-off rate for credit card loans of 2.54%, improving from 2.74% during July, as the bank continues to work through the HSBC (HBC) U.S. credit card portfolio it acquired last year. The company's early state delinquencies made up 0.80% of total card balances during July, up slightly from 0.79% the previous month.
- Citigroup (C) reported a July net charge-off rate for credit cards of 2.83%, improving from 2.89% in June. The company's early-stage credit card delinquency rate was 0.56% in July, increasing from 0.48% the previous month.
- JPMorgan Chase (JPM) saw its credit card net charge-off rate improve to 3.01% in July from 3.18% in June. Early-stage delinquencies were flat at 0.46%.
- Bank of America (BAC) had the highest credit card net charge-off rate of 3.68% in July, however, this was a major improvement from 4.21% in June. The bank's early state card delinquency rate as 0.68% in July, improving slightly from 0.69% the previous month.
