Fitch: U.S. Credit Card ABS Still Strong as 1H'16 Closes
Performance for U.S. credit card ABS remains intact as first half of 2016 draws to a close, according to the latest monthly index results from Fitch Ratings.
The Bureau of Economic Analysis reported that retail sales improved for the month of May, increasing 0.5%; excluding autos, retail sales grew 0.4%. While slower than the 1.3% growth for month of April, the percentage was higher than expected and retail sales are 2.5% higher year-over-year (YOY). The Bureau of Labor Statistics reported that current four-week average remained healthy at 267,000 for the week of June 25. Four-week average claims are slightly lower month-over-month and remain near historic lows.
Prime credit card metrics improved for the most part this month, with some metrics at or nearing historic levels. Fitch's Prime Credit Card 60+ Delinquency Index decreased for the third straight month to 0.94%, two basis-points lower than the previous record low from July of last year. The delinquency index is 2.88% below prior year levels and well below the historical high of 4.54% reached in December 2009.
Fitch's Prime Credit Card Monthly Payment Rate (MPR) Index also improved, rising to 29.46%. The index is now at its second highest value historically. Fitch's Prime Credit Card Three-Month Excess Spread Index improved as well this month, and increased to 14.11%. Fitch's Prime Credit Card Chargeoff Index remained relatively flat with a nominal increase of three bps this month to 2.81%. The index is 1.08% lower YOY and current performance remains well below the 2009 peak of 11.52%.
Fitch's Prime Credit Card Index was established in 1991 and tracks approximately $133.2 billion of prime credit card ABS backed by over $218 billion of principal receivables. The index is primarily composed of general purpose portfolios originated by institutions such as Bank of America, Citibank, Chase, Capital One, Discover, etc.
Retail credit card metrics performed in line with seasonal trends for the month of June, with improvements in both 60+ delinquencies and chargeoffs. Fitch's Retail Credit Card 60+ Day Delinquency Index decreased for the fourth consecutive month to 2.23%, while Fitch's Retail Chargeoff Index fell to 6.53% for the month of June.
Meanwhile, Fitch's Retail Credit Card Gross Yield Index declined for the third month in a row to 27.69%. Fitch's MPR Index also fell to 15.45% for the month of June, and Three-Month Excess Spread Index decreased to 17.91%.
Fitch's Retail Credit Card Index was established in 2004 and tracks approximately $19.6 billion of retail or private label credit card ABS backed by over $27.9 billion of principal receivables. The index is primarily composed 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'.
Stephanie Lobaccaro, +1-212-908-0769
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
Herman C. Poon, +1-212-908-0847
Sandro Scenga, +1-212-908-0278