Fitch: U.S. Credit Card ABS Maintains Stability to Begin 2H'16
Performance of U.S. credit card ABS is staying the course as monthly payment rates continue to climb, according to the latest monthly index results from Fitch Ratings.
The Bureau of Labor Statistics reported four-week average jobless claims as of July 30 to be 260,250, about 11,000 lower than one year ago and 5,000 less than the month of June. Optimism about the labor market in July helped keep the Conference Board Consumer Confidence Index high. After falling to 92.6 in May, the index improved to 98 the following month and maintained most of that momentum, clocking in at 97.3 for the month of July. Despite sluggish GDP growth of 1.2% for the second quarter, jobless claims and consumer confidence bode well for U.S. credit card ABS metrics.
Prime credit card metrics, specifically 60+ delinquencies and monthly payment rate (MPR), reached new records. Fitch's Prime Credit Card 60+ Delinquency Index decreased further for the fourth straight month to 0.93%, one basis-point (bp) lower than the previous record low from last month. The delinquency index is 2.11% below prior year levels and well below the historical high of 4.54% reached in December 2009. In addition, Fitch's Prime Credit Card MPR Index further improved, increasing 85 bps to 30.31%. The index now stands at its highest value historically. Fitch's Prime Credit Card Chargeoff Index improved to 2.52% for the month of July. The index is 4.55% lower year-over-year and current performance remains well below the 2009 peak of 11.52%. Fitch's Prime Credit Card Gross Yield and Three-Month Excess Spread Indices experienced minimal movement this month.
Fitch's Prime Credit Card Index was established in 1991 and tracks approximately $139.1 billion of prime credit card ABS backed by over $220.5 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 showed positive movement for both gross yield and MPR. Fitch's Retail Credit Card MPR Index increased to 16.56% for the month of July. After declining for the past three months, Fitch's Retail Credit Card Gross Yield Index improved to 29.17%. The index is 6.34% higher than the previous year. Fitch's Retail Credit Card 60+ Day Delinquency Index moderately increased for the first time in five months. The index now stands at 2.29%, while Fitch's Retail Chargeoff Index rose to 6.64% for the month of July.
Fitch's Retail Credit Card Index was established in 2004 and tracks approximately $19.4 billion of retail or private label credit card ABS backed by over $27.8 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