Credit Quality Is BeautifulHand-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.