Fitch: Brimming Consumer Confidence Holds U.S. Credit Card ABS Steady
Despite a slight decline in U.S. credit card ABS performance metrics this month, strengthening consumer confidence and steady labor market kept performance near historic levels across the board, according to the latest monthly index results from Fitch Ratings.
The Conference Board Consumer Confidence Index improved to 103 for the month of September, its highest level since January and second highest level in eight years. This improvement was driven by consumer expectations about the labor market. The four-week average jobless claims have continued to point to a strong labor market as they registered a healthy 271,750 as of the week ending Sept. 19 according to the U.S. Department of Labor. In addition, the Commerce Department revised second quarter GDP up to 3.9%, further indicating that U.S. credit card ABS performance should remain strong in the near term.
Prime credit card metrics retreated slightly this month after a strong August. Fitch's Prime Credit Card 60+ Day Delinquency Index remained in record territory, as it held steady at 0.96% for September. This marks the fourth month in a row where this index has registered below 1%. Current performance remains 79% lower than its peak level from December 2009. After reaching a historical high last month, Fitch's Prime Monthly Payment Rate (MPR) Index decreased slightly to 27.23%. The index is 3.07% higher year-over-year (YOY). Fitch's Prime Gross Yield Index and Fitch's Prime Three-Month Excess Spread Index also fell this month.
Fitch's Prime Credit Card Chargeoff Index ticked up 10 basis points to 2.64% in September. The index is 2.22% lower YOY and 77% below its all-time high of 11.52% (reached in September 2009). Despite the dip in prime performance this month, metrics remain in a healthy range and are well below crisis peaks.
Fitch's Prime Credit Card Index was established in 1991 and tracks over $142.6 billion of prime credit card ABS backed by approximately $245.8 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 metrics performed slightly better this month. Fitch's Retail Credit Card Gross Yield Index rose to 28.99% for the month of September, a 1.76% increase from August. Fitch's Retail Three-Month Excess Spread Index improved 3.08% from last month to 19.05%, reaching a new record high. This index is 6.13% higher YOY.
Fitch's Retail Credit Card Chargeoff Index declined 1.64% to 6% for a fourth straight monthly decline. The index is 1.64% lower month-over-month (MOM) and 55.26% lower than its all-time high of 13.41% from March 2010. Fitch's Retail Credit Card 60+ Day Delinquency Index ticked up to 2.27% for the month of September. However, it remains 5.42% lower YOY. Fitch's Retail MPR Index fell to 15.78% this month, a decline of 1.74% from August.
Fitch's Retail Credit Card Index was established in 2004 and tracks more than $20.5 billion of retail or private label credit card ABS backed by over $29.4 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A, Synchrony Financial (Formerly GE Capital Retail Bank), and Comenity Bank (formerly World Financial Network National Bank). More than 165 retailers are incorporated including Walmart, Sears, Home Depot, Federated, Lowes, J.C. Penney, L Brands, Bon Ton, and Dillard's, among others.
Additional information is available at 'www.fitchratings.com'.
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